SB 300: "An Act relating to loan participations and development finance projects of the Alaska Industrial Development and Export Authority; and relating to loans from the rural development initiative fund."
00 SENATE BILL NO. 300 01 "An Act relating to loan participations and development finance projects of the Alaska 02 Industrial Development and Export Authority; and relating to loans from the rural 03 development initiative fund." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 44.88.159(e) is amended to read: 06 (e) The interest rate on a loan participation purchased directly from the assets 07 of the authority shall be determined under the regulations adopted by the authority 08 under AS 44.88.085(g)(2)(C) and shall be no less than the total of a percentage as 09 determined by the authority to represent the allocable expenses of operation and 10 costs of loan origination and servicing, plus the cost of funds. In this subsection, 11 (1) "comparable financial security" means a type or category of 12 financial security the authority identifies in the regulations adopted by the 13 authority under AS 44.88.085(g)(2)(C), that has a term and financial conditions 14 comparable to the term and financial conditions of a loan participation, and for
01 which a regularly published, nationally recognized market index is available; 02 (2) "cost of funds" means the earnings, expressed as an annual 03 interest rate, the authority would receive on a comparable financial security, and, 04 for a loan participation with a fixed interest rate, the cost of funds must equal or 05 exceed the minimum interest rate; 06 (3) "minimum interest rate" means the five year return on 07 investment funds of the authority, expressed as an annual interest rate, achieved 08 by all internal and external investment managers of the authority combined. 09 [HOWEVER, THE MINIMUM INTEREST RATE ON A LOAN PARTICIPATION 10 PURCHASED FROM ASSETS OF THE AUTHORITY MAY NOT BE LESS THAN 11 THE MINIMUM INTEREST RATE DETERMINED 12 (1) UNDER (a) OF THIS SECTION IF THE PROJECT IS OF A 13 TYPE THAT COULD BE FUNDED WITH TAX-EXEMPT BONDS; OR 14 (2) UNDER (b) OF THIS SECTION IF THE PROJECT IS OF A 15 TYPE THAT COULD NOT BE FUNDED WITH TAX-EXEMPT BONDS.] 16 * Sec. 2. AS 44.88.159 is amended by adding a new subsection to read: 17 (g) The authority may in the regulations adopted by the authority under 18 AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations 19 determined by the authority to meet sufficient job creation, rural development, or other 20 economic development criteria, incentive rate rebates of no more than one percent of 21 the interest rate charged on the authority's portion of a loan participation. The 22 following standards apply to the program: 23 (1) the payment of an incentive rate rebate may reduce the interest rate 24 to a rate that is less than the minimum interest rate required under (a), (b) or (e) of this 25 section; 26 (2) the authority may not commit to pay an incentive rate rebate for a 27 proposed loan participation if the total of the amount of the proposed loan 28 participation plus the combined outstanding balance of all loan participations for 29 which the authority has committed to pay incentive rate rebates would exceed five 30 percent of the total of the amount of the proposed loan participation plus the combined 31 outstanding balance of all loan participations of the authority;
01 (3) an incentive rate rebate may not accrue for more than five years 02 after the date the loan participation is purchased; 03 (4) the authority may establish a separate account for the incentive rate 04 rebate program. 05 * Sec. 3. AS 44.88.172(a) is amended to read: 06 (a) The economic development account is established in the revolving fund. 07 The economic development account consists of money or assets appropriated, loaned, 08 or transferred to the authority for deposit in the account and other money or assets 09 deposited in the account by the authority. While money is on deposit in the economic 10 development account, the money may be used only to finance, acquire, manage, and 11 operate development projects that the authority intends to own and operate. In this 12 subsection 13 (1) [THE TERM] "operate" includes operation directly by the 14 authority, [OR] by an agent of the authority, or by a person as determined under an 15 agreement between the authority and other owners of the development project; 16 (2) "own" includes ownership by the authority of all or a 17 percentage of a development project. 18 * Sec. 4. AS 44.88.610(a) is amended to read: 19 (a) The authority may use money from the rural development initiative fund to 20 make loans [A LOAN] of up to $150,000 [$100,000] to a person, or loans [A LOAN] 21 of up to $300,000 [$200,000] to two or more persons, to be used for working capital, 22 equipment, construction, or other commercial purposes by a business located in a 23 community with a population of 5,000 or less that is not connected by road or rail to 24 Anchorage or Fairbanks, or with a population of 2,000 or less that is connected by 25 road or rail to Anchorage or Fairbanks. [A PERSON WHO HAS RECEIVED A 26 LOAN UNDER THIS SUBSECTION MAY NOT BE GRANTED ANOTHER 27 LOAN UNTIL AFTER THE ORIGINAL LOAN IS ENTIRELY REPAID.] For 28 purposes of this subsection, 29 (1) "community" means a city as defined in AS 29.71.800 or a place in 30 the unorganized borough that is not incorporated as a city and in which 25 or more 31 individuals reside as a social unit; and
01 (2) "connected by road" does not include a connection by the Alaska 02 marine highway system. 03 * Sec. 5. AS 44.88.610(b) is amended to read: 04 (b) The authority shall require collateral for each loan made under this section 05 and shall require that a reasonable amount of money from other nonstate sources be 06 committed for use on any project or enterprise for which money from a loan will be 07 used. The authority by regulation may establish other conditions for loans. The 08 authority shall by regulation establish rates of interest that are not less than four [SIX] 09 percent a year and terms of repayment for loans made under this section.