Enrolled SB 300: Relating to loan participations and development finance projects of the Alaska Industrial Development and Export Authority, to the powers of the authority, and to loans from the rural development initiative fund.
00Enrolled SB 300 01 Relating to loan participations and development finance projects of the Alaska Industrial 02 Development and Export Authority, to the powers of the authority, and to loans from the rural 03 development initiative fund. 04 _______________ 05 * Section 1. AS 44.88.080 is amended by adding a new paragraph to read: 06 (30) to consider, when exercising the powers listed in this section, the 07 interests of local governments impacted by the authority's activities to share in the 08 benefits of these activities, with appropriate consideration of the authority's ability to 09 meet debt obligations, issue new debt, and fulfill the authority's purposes. 10 * Sec. 2. AS 44.88.159(e) is amended to read: 11 (e) The interest rate on a loan participation purchased directly from the assets 12 of the authority shall be determined under the regulations adopted by the authority 13 under AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as 14 determined by the authority to represent the allocable expenses of operation and
01 costs of loan origination and servicing, plus the cost of funds. In this subsection, 02 (1) "comparable financial security" means a type or category of 03 financial security the authority identifies in the regulations adopted by the 04 authority under AS 44.88.085(g)(2)(C) that has a term and financial conditions 05 comparable to the term and financial conditions of a loan participation and for 06 which a regularly published, nationally recognized market index is available; 07 (2) "cost of funds" means the earnings, expressed as an annual 08 interest rate, the authority would receive on a comparable financial security, and, 09 for a loan participation with a fixed interest rate, the cost of funds must equal or 10 exceed the minimum interest rate; 11 (3) "minimum interest rate" means the five-year return on 12 investment funds of the authority, expressed as an annual interest rate, achieved 13 by all internal and external investment managers of the authority combined [. 14 HOWEVER, THE MINIMUM INTEREST RATE ON A LOAN PARTICIPATION 15 PURCHASED FROM ASSETS OF THE AUTHORITY MAY NOT BE LESS THAN 16 THE MINIMUM INTEREST RATE DETERMINED 17 (1) UNDER (a) OF THIS SECTION IF THE PROJECT IS OF A 18 TYPE THAT COULD BE FUNDED WITH TAX-EXEMPT BONDS; OR 19 (2) UNDER (b) OF THIS SECTION IF THE PROJECT IS OF A 20 TYPE THAT COULD NOT BE FUNDED WITH TAX-EXEMPT BONDS]. 21 * Sec. 3. AS 44.88.159 is amended by adding a new subsection to read: 22 (g) The authority may, in the regulations adopted by the authority under AS 23 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations 24 determined by the authority to meet sufficient job creation, rural development, or other 25 economic development criteria incentive rate rebates of not more than one percent of 26 the interest rate charged on the authority's portion of a loan participation. The 27 following standards apply to the program: 28 (1) the payment of an incentive rate rebate may reduce the interest rate 29 to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this 30 section; 31 (2) the authority may not commit to pay an incentive rate rebate for a
01 proposed loan participation if the total of the amount of the proposed loan 02 participation plus the combined outstanding balance of all loan participations for 03 which the authority has committed to pay incentive rate rebates would exceed five 04 percent of the total of the amount of the proposed loan participation plus the combined 05 outstanding balance of all loan participations of the authority; 06 (3) an incentive rate rebate may not accrue for more than five years 07 after the date the loan participation is purchased; 08 (4) the authority may establish a separate account for the incentive rate 09 rebate program. 10 * Sec. 4. AS 44.88.172(a) is amended to read: 11 (a) The economic development account is established in the revolving fund. 12 The economic development account consists of money or assets appropriated, loaned, 13 or transferred to the authority for deposit in the account and other money or assets 14 deposited in the account by the authority. While money is on deposit in the economic 15 development account, the money may be used only to finance, acquire, manage, and 16 operate development projects that the authority intends to own and operate. In this 17 subsection, 18 (1) [THE TERM] "operate" includes operation directly by the 19 authority, [OR] by an agent of the authority, or by a person as determined under an 20 agreement between the authority and other owners of the development project; 21 (2) "own" includes ownership by the authority of all or a 22 percentage of a development project. 23 * Sec. 5. AS 44.88.610 is amended to read: 24 Sec. 44.88.610. Rural development loans. (a) The authority may use money 25 from the rural development initiative fund to make loans [A LOAN] of up to $150,000 26 [$100,000] to a person, or loans [A LOAN] of up to $300,000 [$200,000] to two or 27 more persons, to be used for working capital, equipment, construction, or other 28 commercial purposes by a business located in a community with a population of 5,000 29 or less that is not connected by road or rail to Anchorage or Fairbanks, or with a 30 population of 2,000 or less that is connected by road or rail to Anchorage or Fairbanks. 31 [A PERSON WHO HAS RECEIVED A LOAN UNDER THIS SUBSECTION MAY
01 NOT BE GRANTED ANOTHER LOAN UNTIL AFTER THE ORIGINAL LOAN IS 02 ENTIRELY REPAID.] For purposes of this subsection, 03 (1) "community" means a city as defined in AS 29.71.800 or a place in 04 the unorganized borough that is not incorporated as a city and in which 25 or more 05 individuals reside as a social unit; and 06 (2) "connected by road" does not include a connection by the Alaska 07 marine highway system. 08 (b) The authority shall require collateral for each loan made under this section 09 and shall require that a reasonable amount of money from other nonstate sources be 10 committed for use on any project or enterprise for which money from a loan will be 11 used. The authority by regulation may establish other conditions for loans. The 12 authority shall by regulation establish rates of interest that are not less than four [SIX] 13 percent a year and terms of repayment for loans made under this section.