Legislature(2003 - 2004)
02/27/2003 01:43 PM House FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 authorization. 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 State. 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.