Legislature(2009 - 2010)

2009-01-26 Senate Journal

Full Journal pdf

2009-01-26                     Senate Journal                      Page 0078
SB 84                                                                                                                         
SENATE BILL NO. 84 BY THE SENATE RULES COMMITTEE                                                                                
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
          "An Act relating to bonding limitations and                                                                           
          confidentiality of records and information of the                                                                     
          Alaska Industrial Development and Export Authority;                                                                   
          and providing for an effective date."                                                                                 
was read the first time and referred to the Labor and Commerce and                                                              
Finance Committees.                                                                                                             
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Commerce, Community                                                                     
          and Economic Development                                                                                              

2009-01-26                     Senate Journal                      Page 0079
Governor's transmittal letter dated January 23:                                                                                 
Dear President Stevens:                                                                                                         
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to bonding limitations                                                          
and confidentiality of records and information of the Alaska Industrial                                                         
Development and Export Authority (AIDEA).                                                                                       
This bill would accomplish five things. Section 1 of the bill would                                                             
exclude refunding and conduit revenue bonds from the 12-month bond                                                              
limit of the Authority. AS 44.88.095(a) precludes AIDEA from issuing                                                            
more than $400,000,000 of bonds during any 12-month period.                                                                     
Enactment of the bill would ensure that the 12-month bond limit                                                                 
would never preclude AIDEA from issuing refunding bonds to                                                                      
refinance existing development finance project debt on more favorable                                                           
terms, or from issuing conduit revenue bonds for which AIDEA has no                                                             
financial obligation to pay. Conduit revenue bonds are payable by the                                                           
project developer and related parties, primarily from revenue                                                                   
generated by the project.                                                                                                       
Section 2 of the bill would eliminate the sunset of the statutory ability                                                       
of AIDEA issuing bonds. AS 44.88.095(g) severely limits the ability                                                             
of AIDEA to issue bonds. Before the July 1, 2007 statutory sunset,                                                              
AS 44.88.095(g) authorized AIDEA to issue most bonds without                                                                    
further legislative approval; the sole exception being bonds in excess                                                          
of $10,000,000 to assist in the financing of a development project                                                              
under AS 44.88.172 - 44.88.177. That authorization to issue bonds                                                               
ended on July 1, 2007, with the statutory sunset. AIDEA currently                                                               
requires legislative approval to issue any bonds, excepting refunding                                                           
and conduit revenue bonds.  Section 2 of the bill would amend                                                                   
AS 44.88.095(g) to eliminate the sunset and enable AIDEA to again                                                               
issue most bonds without legislative approval. AIDEA will still                                                                 
require legislative approval to issue bonds in excess of $10,000,000 to                                                         
assist in the financing of development projects, excluding refunding                                                            
Section 2 of the bill would also expressly clarify in statute that AIDEA                                                        
may use proceeds from refunding bonds to finance certain costs and                                                              
expenses associated with issuing the refunding bonds.                                                                           

2009-01-26                     Senate Journal                      Page 0080
AS 44.88.095(g) empowers AIDEA to issue refunding bonds for                                                                     
development projects, but does not provide sufficient clarity required                                                          
by bond markets to enable proceeds from the refunding bonds to be                                                               
used to pay more than the outstanding balance of the existing bonds.                                                            
The bill, if enacted, would enable AIDEA to issue refunding bonds,                                                              
the proceeds from which can be used to pay both the outstanding                                                                 
balance of the existing bonds and the costs of refinancing, funding                                                             
reserves, and other costs related to issuing refunding bonds for                                                                
development projects. The ability to use refunding bond proceeds to                                                             
pay these additional costs is anticipated to reduce the cost of financing,                                                      
which would provide a direct economic benefit to project developers.                                                            
Sections 3 and 4 of the bill would amend AS 44.88.215 to clarify                                                                
confidential records and information of AIDEA, and processes for                                                                
determining confidentiality. AS 44.88.215 assists the mission of                                                                
AIDEA by assuring borrowers, applicants, and project developers that                                                            
certain records and information provided to AIDEA will be kept                                                                  
confidential. AIDEA has heard complaints from borrowers, applicants,                                                            
and project developers because AS 44.88.215 does not clearly                                                                    
establish that AIDEA can retain the confidentiality of certain types of                                                         
documents. Sections 5 and 6 of the bill attempt to address these                                                                
concerns by clarifying that certain types of records and information are                                                        
confidential, defines "trade secrets" using the Alaska Uniform Trade                                                            
Secrets Act to clarify existing statutory language, and establishes                                                             
processes for the executive director of AIDEA to determine                                                                      
confidentiality of records and information.                                                                                     
Finally, Section 8 of the bill would make the Act effective on July 1,                                                          
I urge your prompt and favorable action on this measure.                                                                        
Sarah Palin