Legislature(2003 - 2004)

02/27/2003 01:43 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 112                                                                                                            
     An Act relating to the authority of the Alaska                                                                             
     Industrial Development and Export Authority to issue                                                                       
     bonds; and providing for an effective date.                                                                                
RON   MILLER,    EXECUTIVE   DIRECTOR,   ALASKA    INDUSTRIAL                                                                   
DEVELOPMENT   AND   EXPORT  AUTHORITY   (AIDEA),   ANCHORAGE,                                                                   
explained that  HB 112 would  extend AIDEA's general  bonding                                                                   
authority to  July 1, 2007.   Without extension,  AIDEA would                                                                   
need   legislative   authorization   to   issue   bonds   for                                                                   
development projects under $10  million dollars.  AIDEA would                                                                   
also  be restricted  from issuing  any bonds  to finance  the                                                                   
purchase   of   loan   participations   without   legislation                                                                   
Mr. Miller provided  examples of bonds that  AIDEA has issued                                                                   
that would  require legislative  authorization after  July 1,                                                                   
2003 if the bonding authority were to sunset.                                                                                   
   ·    $8,020,000 AIDEA Revolving Fund Bonds, Series 1995A,                                                                    
        which   provided  tax-exempt   funds   for   a   loan                                                                   
        participation made to Kodiak Fish-Meal  Company for a                                                                   
        fish by-product processing plant.                                                                                       
   ·    $7,000,000 AIDEA Revolving Fund Bonds, Series 1991A,                                                                    
        which provided  tax-exempt  funds  for the  expansion                                                                   
        and improvement of  the Unalaska Marine Center.   The                                                                   
        project had legislative authorization.                                                                                  
Mr. Miller continued, the following  requirement would not be                                                                   
affected by HB 112:                                                                                                             
   ·    All development projects over $10,000,000 dollars                                                                       
        for which bonds are to be issued  require legislative                                                                   
        authorization prior to issuing bonds.                                                                                   
   ·    Prior to issuing bonds over $6,000,000 dollars,                                                                         
        AIDEA is required to receive approval  from the local                                                                   
        government in which the projects are to be located.                                                                     
   ·    All development projects for which bonds are to be                                                                      
        issued  require  AIDEA  to  make  findings  that  the                                                                   
        project is economically and financially feasible.                                                                       
Mr.  Miller  noted  that  recently,  AIDEA  has  only  issued                                                                   
refunding and  conduit revenue bonds, which are  not affected                                                                   
by HB 112.   If the bill does not pass, AIDEA  would continue                                                                   
to  have the  ability to  issue refunding  bonds and  conduit                                                                   
revenue bonds;  however, the sunset extension  provides AIDEA                                                                   
the  flexibility   to   assist  in  the   financing   of  key                                                                   
development  projects.   If the authorization  is allowed  to                                                                   
sunset  and  depending   on  the  timing  of   the  potential                                                                   
projects,   AIDEA   may   have  to   wait   for   legislative                                                                   
authorization to  issue bonds.   Allowing the  bond authority                                                                   
to  sunset  would  eliminate  a  tool  for  AIDEA  to  assist                                                                   
projects  that  could  provide  an economic  benefit  to  the                                                                   
Co-Chair  Harris  MOVED  to ADOPT  work  draft  #23-GH1018\D,                                                                   
Cook,  2/25/03  as  the  version   of  the  bill  before  the                                                                   
Committee.  (Copy on File).                                                                                                     
There being NO OBJECTION, it was adopted.                                                                                       
Co-Chair Harris asked in the new  Section 2, what the repeals                                                                   
references in Sections #3 and #19 were.                                                                                         
Mr.  Miller responded  that  was a  sunset  provision on  the                                                                   
municipal tax exemption provision  connected with the Red Dog                                                                   
Mine.   The legislation  was passed  in FY00,  and there  was                                                                   
some question  over the tax assessment.   Prior to  1999, use                                                                   
of that  system was not assessed  by the State  tax assessor.                                                                   
In 1999,  the determination was  changed and the  legislature                                                                   
in 2000, passed law to address the situation.                                                                                   
The Lone  Mountain Transportation  System  is an AIDEA  owned                                                                   
project.   TECK COMINCO  has a none-exclusive  use on  it for                                                                   
which they  pay.   For unknown reasons,  the tax  assessor in                                                                   
1999, decided to  access TECK COMINCO's use  of that facility                                                                   
for borough  tax purposes.   The  proposed legislation  would                                                                   
remove that sunset.                                                                                                             
Co-Chair Harris suggested that  Representative Moses would be                                                                   
interested in the  Unalaska Marine Center project.   He asked                                                                   
if the  Legislature did not  authorize the bill,  would there                                                                   
need  to  be  another  piece  of  legislation.    Mr.  Miller                                                                   
responded that was  an example of a project  that AIDEA would                                                                   
have had  to get  legislative authorization  for.   AIDEA did                                                                   
move forward with  that project in 1991 and  they did receive                                                                   
some legislative authorization on the project.                                                                                  
Representative Stoltze referenced  Section 2, indicating that                                                                   
had been a product of Senator Halford.                                                                                          
ROBERT FUNT, ATTORNEY, REPRESENTING  TECK COMINCO, ANCHORAGE,                                                                   
indicated  that he  had  been working  on  the project  since                                                                   
1999.   He  offered  to  answer  questions of  the  Committee                                                                   
regarding the assessment or related to the Red Dog Mine.                                                                        
Representative Stoltze referenced  Section 2.  He stated that                                                                   
he would  not want  to see  these types  of assets  acting as                                                                 
'impediments'  to areas  wanting to organize.   He  supported                                                                   
repealing those sections.                                                                                                       
Representative Foster MOVED to  report CS HB 112 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
CS HB  112 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass" recommendation  and with a  zero fiscal note #1  by the                                                                   
Department of Community & Economic Development.                                                                                 

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