Legislature(2009 - 2010)HOUSE FINANCE 519

03/25/2009 01:30 PM House FINANCE

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Heard & Held
-- Testimony <Invitation Only> --
Presentation by Sponsor
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
HOUSE BILL NO. 20                                                                                                             
          "An Act relating to commercial fishing loans for                                                                      
          energy efficiency upgrades."                                                                                          
TIM  CLARK, STAFF,  REPRESENTATIVE  BRYCE EDGEMON,  discussed                                                                   
the CS of HB  20, which amends the Commercial  Fisheries Loan                                                                   
Act.  He elaborated  on the  sections  with amended  language                                                                   
(Copy on File).                                                                                                                 
2:31:41 PM                                                                                                                    
Mr. Clark finished  with the Retroactivity Clause  in section                                                                   
3. Section 4 sets an immediate effective date for the bill.                                                                     
2:32:32 PM                                                                                                                    
Representative Foster  wondered about preferential  treatment                                                                   
for people  in rural areas. He  voiced the need for  loans to                                                                   
be made  available to other  Alaskans, such as  Alaska Native                                                                   
artisans, as well as fishermen.                                                                                                 
2:33:53 PM                                                                                                                    
Mr.  Clark replied  that  he believed  that  artisans may  be                                                                   
eligible  for loans  under the  Rural Development  Initiative                                                                   
and possible  small business  or economic development  loans.                                                                   
Representative Foster wondered  why the loans were not coming                                                                   
from a bank, as would a car or home loan.                                                                                       
2:34:45 PM                                                                                                                    
Mr. Clark explained that the Commercial  Fishing Loan Act was                                                                   
established  in  early 1970,  at  a  time when  the  industry                                                                   
needed state assistance. He said  the program was a different                                                                   
way for fishermen, who may not  have had a credit history, to                                                                   
acquire loans.  Representative Foster pointed out  that there                                                                   
used  to be  small loans  available for  miners. He  stressed                                                                   
that not only fishermen needed loans to operate.                                                                                
2:36:49 PM                                                                                                                    
Co-Chair Stoltze  said that these  loans were  available only                                                                   
to  commercial fishermen.  Representative  Foster  maintained                                                                   
that there  are banks available  to provide loans  for viable                                                                   
2:37:31 PM                                                                                                                    
Mr.  Clark explained  that  the criteria  for  the loans  are                                                                   
directly related  to the needs  of fishermen. The  loans that                                                                   
are approved are directly related to commercial fishing.                                                                        
2:38:18 PM                                                                                                                    
Representative  Foster   wondered  if  the  loans   are  only                                                                   
available to Alaskan residents. Mr. Clark replied yes.                                                                          
GREG WINEGAR,  DIRECTOR, DIVISION OF INVESTMENTS,  DEPARTMENT                                                                   
OF  COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  stated                                                                   
that DCCED  supports the bill  with amendments. He  felt that                                                                   
the  amendments  were  consistent  with the  mission  of  the                                                                   
Commercial Fishing Loan Act.                                                                                                    
Co-Chair  Stoltze  moved Amendment  1,  26-LS0124\P.1,  Kane,                                                                   
6/26/09 (copy on file):                                                                                                         
     Page 2, line 1, following "permits;":                                                                                      
     Delete "or"                                                                                                                
     Insert "[OR]"                                                                                                              
     Page 2, line 4, following "efficiency;":                                                                                   
     Insert "or                                                                                                                 
     (iii)  for new construction related to a vessel for                                                                        
     the purpose of improving energy efficiency in a loan                                                                       
     amount not greater than $100,000;"                                                                                         
 Vice-Chair Thomas OBJECTED.                                                                                                    
2:40:11 PM                                                                                                                    
BEN MULLIGAN, STAFF REPRESENTATIVE  BILL STOLTZE, stated that                                                                   
the amendment  puts a clause  in place  to cap loans  for new                                                                   
vessel construction  at $100,000.  He explained that  in some                                                                   
cases  replacing  an  old  vessel   is  more  efficient  than                                                                   
investing in repair on the old vessel.                                                                                          
Co-Chair Hawker  wondered what would happen to  older vessels                                                                   
if replaced  by new  vessels. Mr.  Mulligan replied  that the                                                                   
vessel owner could sell the vessel  outright or for scrap. He                                                                   
said that  it would  be up to  the owner  of the vessel.  Co-                                                                   
Chair  Hawker felt  that  there was  a gap  in  the logic  of                                                                   
replacing  an  old vessel  that  could  be repaired  with  an                                                                   
entirely new vessel.                                                                                                            
2:41:04 PM                                                                                                                    
Representative  Foster  questioned  the practicality  of  the                                                                   
2:41:57 PM                                                                                                                    
Mr. Mulligan  replied that  the amendment left  it up  to the                                                                   
individual  boat owner to  decide the  best course  of action                                                                   
when upgrading vessels.                                                                                                         
Vice-Chair Thomas  explained how the fishing  industry works.                                                                   
He relayed that  he personally would not qualify  for a state                                                                   
loan because  he could qualify  for a bank loan.  He stressed                                                                   
that the  loans are  meant for  fishermen who are  struggling                                                                   
financially. He  told of the cost  of fuel and the  burden it                                                                   
can  place on  the  fishermen. He  explained  that boats  are                                                                   
often recycled among fishermen.                                                                                                 
2:43:52 PM                                                                                                                    
Representative Kelly  remarked that he read  the amendment in                                                                   
a different  way. He hoped  that the  loans were going  to be                                                                   
issued to upgrade old boats and not to buy new vessels.                                                                         
2:44:59 PM                                                                                                                    
Representative Fairclough  referred to page 2, line  4 of the                                                                   
bill. She understood  that the amendment does  not pertain to                                                                   
new vessels.  Co-Chair  Stoltze clarified  the intent  of the                                                                   
amendment was to  not put energy efficiencies  on a deficient                                                                   
boat. Representative Fairclough  maintained that the language                                                                   
was unclear.                                                                                                                    
2:45:52 PM                                                                                                                    
Mr. Winegar understood that the  amendment did pertain to new                                                                   
vessels. He remarked  that the purchase of new  vessels would                                                                   
be limited.                                                                                                                     
Vice-Chair Thomas WITHDREW his OBJECTION.                                                                                       
2:46:56 PM                                                                                                                    
Representative  Kelly  maintained that  the  language in  the                                                                   
amendment was unclear.                                                                                                          
2:47:27 PM                                                                                                                    
Vice-Chair Thomas reiterated his support of the amendment.                                                                      
2:48:17 PM                                                                                                                    
Representative  Kelly felt  that some  vessels had been  left                                                                   
out of the bill altogether.                                                                                                     
2:49:14 PM                                                                                                                    
Representative  Foster asked  about the  delinquency rate  on                                                                   
the  loans.  Mr.  Winegar  explained  that  the  rate  was  7                                                                   
percent.  Representative  Foster thought  that  the rate  was                                                                   
high. Mr. Winegar  thought the rate would  decline throughout                                                                   
the year.  He pointed  out that the  fund has performed  well                                                                   
from   a   financial   standpoint.    Representative   Foster                                                                   
maintained that  the rate of  return was disappointing.   Mr.                                                                   
Winegar assured that the overall  numbers speak favorably for                                                                   
the program.                                                                                                                    
2:50:51 PM                                                                                                                    
Representative    Kelly   thought    there   was    still   a                                                                   
misunderstanding  of whether or not  the bill applies  to new                                                                   
boats.   He requested  clarification  from the Department  of                                                                   
Law (LAW).                                                                                                                      
Co-Chair  Hawker  understood  that  the  bill  addresses  new                                                                   
vessels.   He requested clarification.   Mr. Winegar  said he                                                                   
could  not  answer  the  question.  Co-Chair  Hawker  thought                                                                   
clarification was warranted.                                                                                                    
2:52:25 PM                                                                                                                    
Co-Chair Stoltze contended the  bill should be held until the                                                                   
language could be clarified by LAW.                                                                                             
Representative  Foster  expressed  frustration  with  special                                                                   
interest   groups.  He   felt   that  fishermen   are   given                                                                   
preferential treatment  that is  not extended to  miners. Co-                                                                   
Chair  Stoltze responded  that  he understood  Representative                                                                   
Foster's concerns.                                                                                                              
2:54:21 PM                                                                                                                    
Representative  Gara reported  on constituent comments  about                                                                   
expanded eligibility for the loans.  He understood that there                                                                   
was a class of people that did not qualify for the loans.                                                                       
2:55:56 PM                                                                                                                    
Mr. Winegar  explained  that there are  separate sections  in                                                                   
the statute  that addressed the  issue.  Under Section  A the                                                                   
applicant does not  have to have been turned down  by a bank.                                                                   
Section B  requires that the  applicant has tried  to qualify                                                                   
for a bank  loan and has  been turned down. A  lower interest                                                                   
rate distinguishes the difference.                                                                                              
Representative  Gara commented  that his constituents  wanted                                                                   
loans to improve energy efficiency.                                                                                             
Mr.  Clark  explained that  the  intent  of  the bill  is  to                                                                   
correct  inequities,  widen  eligibility,  and  to  encourage                                                                   
conversion of vessels to prevent high energy costs.                                                                             
2:58:53 PM                                                                                                                    
Representative Kelly reported that he had similar                                                                               
constituent concerns.                                                                                                           
HB 20 was HEARD and HELD in Committee for further                                                                               

Document Name Date/Time Subjects
01 HB35 Sponsor Statement.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
03 HB35 Sectional.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
04 Bellotti v Baird.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
05 State v. Planned Parenthood.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
06 Court Forms re Bypass.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
11 HB35 Backup.pdf HFIN 3/25/2009 1:30:00 PM
HB 35
Amendment 1 to HB 20.pdf HFIN 3/25/2009 1:30:00 PM
HB 20
Amendment 2 to HB 20.pdf HFIN 3/25/2009 1:30:00 PM
HB 20
HB 35 Overview by Rep. Coghill.pdf HFIN 3/25/2009 1:30:00 PM
HB 35