Legislature(2009 - 2010)BARNES 124

03/17/2010 03:15 PM House LABOR & COMMERCE

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* first hearing in first committee of referral
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Heard & Held
Heard & Held
                    HB 363-AIDEA MEMBERSHIP                                                                                 
3:28:45 PM                                                                                                                    
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 363, "An  Act relating  to the membership  of the                                                               
Alaska Industrial Development and Export Authority."                                                                            
3:28:51 PM                                                                                                                    
ROB  EARL,   Staff,  Representative  Bob  Herron,   Alaska  State                                                               
Legislature,  explained  that  AIDEA's  mission  is  to  promote,                                                               
develop,  and  advance  economic growth  and  diversification  in                                                               
Alaska by  providing various means  of financing  and investment.                                                               
He related that AIDEA fulfills  this mission by providing Alaskan                                                               
businesses  with long-term  commercial and  development financing                                                               
at  a reasonable  cost.    He detailed  that  AIDEA  is a  public                                                               
development  finance  corporation  independent of  direct  agency                                                               
control, although  it is associated with  Department of Commerce,                                                               
Community,  &  Economic  Development   (DCCED).    A  significant                                                               
percentage of the return on  AIDEA's assets is redistributed as a                                                               
dividend and  is deposited to  the state  General Fund (GF).   He                                                               
noted that this year's dividend was $23 million.                                                                                
MR. EARL related that currently,  AIDEA consists of a five-member                                                               
board  which includes  the Commissioners  of  the Departments  of                                                               
Revenue (DOR)  and Department of Commerce,  Community, & Economic                                                               
Development   (DCCED),  plus   an   additional  department   head                                                               
appointed by the governor, and  two public members.  This creates                                                               
a commissioner to private sector ratio  of 3-2, which is the same                                                               
as  the Alaska  Energy Authority  (AEA) board  by statute.   This                                                               
bill,  HB  363,  as  written   would  restructure  the  board  by                                                               
replacing two  commissioners with  two additional  private sector                                                               
members.   This would result  in four private sector  members and                                                               
the commissioner of  DOR.  The bill would  require private sector                                                               
members to possess business expertise and leadership skills.                                                                    
3:31:27 PM                                                                                                                    
REPRESENTATIVE  HOLMES  made  a  motion  to  adopt  Amendment  1,                                                               
labeled 26-LS1503\A.1, Cook, 3/16/10, which read:                                                                               
     Page 1, lines 6 - 7:                                                                                                       
          Delete all material and insert:                                                                                       
               "(1)  the commissioner of revenue and the                                                                        
       commissioner of commerce, community, and economic                                                                        
     development; and"                                                                                                      
     Page 1, line 8:                                                                                                            
          Delete "four"                                                                                                     
          Insert "five"                                                                                                     
     Page 2, lines 1 - 2:                                                                                                       
          Delete all material and insert:                                                                                       
          "(b)  If a commissioner [MEMBER] described in                                                                     
     (a)(1) [OR (a)(2)] of this section is unable to attend                                                                     
     a meeting of the authority, the"                                                                                           
     Page 2, line 13:                                                                                                           
          Delete "two"                                                                                                          
          Insert "three"                                                                                                        
     Page 2, line 17:                                                                                                           
          Delete "one member shall serve a two-year term"                                                                       
          Insert "two members shall serve two-year terms"                                                                       
CHAIR OLSON objected for the purpose of discussion.                                                                             
3:31:51 PM                                                                                                                    
ERIN  HARRINGTON, Staff,  Representative  Alan Austerman,  Alaska                                                               
State Legislature,  provided some background on  the interim work                                                               
on  economic development  that led  to the  introduction of  this                                                               
bill.    The  research  included  information  on  other  states'                                                               
successes  on  economic  development   efforts.    One  important                                                               
discovery  was  that these  states  attributed  their success  to                                                               
collaborative efforts  by the private  sector with  government to                                                               
provide input on activities of  state government as it related to                                                               
economic   development.     The  informal   group  held   ongoing                                                               
discussions and  worked with Representatives Munoz  and Herron to                                                               
integrate the private sector input into the bill.                                                                               
3:33:45 PM                                                                                                                    
MR. EARL discussed  Amendment 1.  He explained  the original bill                                                               
had removed the  DCCED commissioner position from  the board, but                                                               
discussions  concluded  it  was   important  to  keep  the  DCCED                                                               
commissioner on  the proposed board  due to the  expertise he/she                                                               
can offer.   Additionally, Amendment 1 would expand  the board to                                                               
a seven-member board  to allow subcommittees to  be appointed and                                                               
for  a broader  pool of  applicants  for the  governor to  select                                                               
CHAIR  OLSON  removed his  objection.    There being  no  further                                                               
objections, Amendment 1 was adopted.                                                                                            
3:35:07 PM                                                                                                                    
MR. EARL, in  response to Representative T.  Wilson, related that                                                               
he is open to regional representation.                                                                                          
REPRESENTATIVE  T. WILSON  asked whether  private sector  members                                                               
might have a conflict of interest issue.                                                                                        
MR. EARL answered that currently  two public members serve on the                                                               
board.  The board follows  Roberts Rules of Order, which includes                                                               
provisions for addressing conflicts of interest.                                                                                
3:36:18 PM                                                                                                                    
REPRESENTATIVE HOLMES  recalled that the AIDEA  board also serves                                                               
as the AEA board.  She asked  if the language that applies to the                                                               
public members  is broad enough  to encompass diversity,  such as                                                               
AIDEA's  interest in  having  someone serve  that  has an  energy                                                               
background serve.                                                                                                               
MR. EARL  agreed the AIDEA  board also  serves as the  AEA board.                                                               
He believed the language in HB  363 was broad enough to allow the                                                               
governor the  discretion to address  board member diversity.   He                                                               
stated the sponsor  is open to the idea of  clarifying the energy                                                               
experience required of applicants.                                                                                              
3:37:21 PM                                                                                                                    
REPRESENTATIVE  HOLMES assumed  that  would  include people  with                                                               
experience  gained  in  energy  cooperatives,  or  at  the  local                                                               
government level working with energy issues.                                                                                    
MR.  EARL  responded that  it  is  not  the sponsor's  intent  to                                                               
exclude persons with the experience mentioned.                                                                                  
3:38:07 PM                                                                                                                    
REPRESENTATIVE  NEUMAN asked  whether  AEA and  AIDEA boards  are                                                               
MR. EARL  answered that by statute  the AIDEA and AEA  boards are                                                               
the same board.                                                                                                                 
REPRESENTATIVE NEUMAN asked when  reviewing projects, whether the                                                               
boards are  involved in  the discussion of  projects such  as the                                                               
renewable energy projects.                                                                                                      
3:39:22 PM                                                                                                                    
TED LEONARD, Executive Director,  Alaska Industrial Development &                                                               
Export  Authority  (AIDEA)  and Alaska  Energy  Authority  (AEA),                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED), introduced himself.                                                                                                    
3:39:53 PM                                                                                                                    
REPRESENTATIVE  NEUMAN  asked   when  considering  the  renewable                                                               
energy  projects  of  up  to  $550  million,  for  the  depth  of                                                               
discussions  that the  AIDEA or  AEA board  membership holds  and                                                               
whether specific projects are reviewed.                                                                                         
MR.  LEONARD  responded  AIDEA  has  not  been  involved  in  the                                                               
analysis on  AEA projects, but  does consider its  own contracts,                                                               
such as contracts pertaining to  alternative energy programs.  He                                                               
said he  cannot really elaborate  on the entire process  that AEA                                                               
uses  or when  the  AIDEA's board  is  also the  AEA  board.   He                                                               
deferred  to   the  Executive  Director  of   the  Alaska  Energy                                                               
Authority to testify  on that matter.  He related  that AIDEA can                                                               
be involved, as  Mr. Earl mentioned, in the  process of financing                                                               
energy projects.   Currently, AIDEA  is working to  identify ways                                                               
to partner with AEA on projects.   In fact, AIDEA and AEA's staff                                                               
are currently meeting with officials  from the U.S. Department of                                                               
Energy to  find ways  to utilize  the federal  stimulus guarantee                                                               
programs to fund energy projects in the state.                                                                                  
3:41:56 PM                                                                                                                    
REPRESENTATIVE NEUMAN  related Amendment 1 increased  the private                                                               
sector members that  serve on the AIDEA board,  and asked whether                                                               
the  expertise  would  include  power  generation  experience  or                                                               
different types of similar work.   He further asked how conflicts                                                               
of interest would be resolved.                                                                                                  
MR.  EARL answered  that under  Amendment 1  there would  be five                                                               
public members and two commissioners.   He offered that the board                                                               
would follow  Roberts Rules  of Order and  members would  need to                                                               
declare  a conflict  of interest,  and  the board  would vote  on                                                               
whether  a conflict  exists.   The expertise  required for  board                                                               
members would be left to  the governor's discretion.  No specific                                                               
requirement  is  specified  in  the bill  to  require  an  energy                                                               
expert, but he stated that he is open to the idea.                                                                              
CHAIR OLSON  pointed out  that the  appointment process  would be                                                               
the same process as for other boards and commissions.                                                                           
MR.  EARL noted  that  AIDEA  board members  are  not subject  to                                                               
legislative approval.                                                                                                           
3:43:41 PM                                                                                                                    
MR. LEONARD elaborated  that the AIDEA board does  have to follow                                                               
the  Ethics  Act.    He  affirmed that  board  members  would  be                                                               
required to  identify a  conflict of interest  and with  a larger                                                               
board he envisioned it would be  easier to vote on those types of                                                               
issues.     He  suggested  that  the   requirement  for  business                                                               
experience could  be expanded to  add "and  industry experience."                                                               
He  suggested  that AIDEA,  in  working  with the  bill  sponsor,                                                               
discussed  the  importance  of having  expertise  from  different                                                               
sectors   including   industry    expertise,   natural   resource                                                               
extraction, logistics,  energy, and  communications.   He pointed                                                               
out that  industry could be  added to provide  legislative intent                                                               
that the qualifications of board  members include a broader range                                                               
than what would normally be considered business expertise.                                                                      
3:45:18 PM                                                                                                                    
CHAIR OLSON referred  to page 1, lines 12 -  13, and suggested it                                                               
should  read, "...has  expertise in  private sector  business and                                                               
industry, and possess demonstrated leadership skills."                                                                          
3:45:27 PM                                                                                                                    
REPRESENTATIVE  HOLMES   made  a   motion  to   adopt  Conceptual                                                               
Amendment 2, on  page 1, lines 12 - 13  after business, to insert                                                               
"and/or industry".                                                                                                              
REPRESENTATIVE T. WILSON objected for purpose of discussion.                                                                    
REPRESENTATIVE  HOLMES   offered  her  belief  that   this  would                                                               
incorporate  the  language suggested  by  Mr.  Leonard and  would                                                               
ensure industry participation.                                                                                                  
REPRESENTATIVE NEUMAN thought this language was an improvement.                                                                 
REPRESENTATIVE T. WILSON removed her objection.                                                                                 
There  being no  further  objection, Conceptual  Amendment 2  was                                                               
REPRESENTATIVE  NEUMAN  asked  whether financial  disclosures  of                                                               
board members are required.                                                                                                     
MR.  EARL  answered  yes.     Public  financial  disclosures  are                                                               
required of board members.                                                                                                      
3:47:10 PM                                                                                                                    
REPRESENTATIVE  T. WILSON  asked whether  regional representation                                                               
should be considered.  She did not  want the pool to be too small                                                               
and asked  whether regional representation should  be required or                                                               
would happen naturally.                                                                                                         
MR. EARL  related it  would be  up to the  governor, but  did not                                                               
mind the additional direction.                                                                                                  
3:48:05 PM                                                                                                                    
REPRESENTATIVE  T.  WILSON  made  a motion  to  adopt  Conceptual                                                               
Amendment 3.   She suggested  regional membership  should include                                                               
one rural  member, one member  from the Interior, and  one member                                                               
from Southeast Alaska to provide better diversity on the board.                                                                 
CHAIR OLSON  suggested the  committee could  provide a  letter of                                                               
intent, but offered  his belief that it is already  the intent of                                                               
AIDEA,  the  governor,  and  the  co-sponsors  to  have  regional                                                               
membership on  the board.  He  noted the bill is  co-sponsored by                                                               
members from Southcentral, Western Alaska, and Southeast Alaska.                                                                
REPRESENTATIVE    T.   WILSON    said   she    thought   regional                                                               
representation  on the  AIDEA board  was  important since  energy                                                               
diversity exists in each of the communities.                                                                                    
REPRESENTATIVE T.  WILSON offered to  work with the  bill sponsor                                                               
to develop language.                                                                                                            
ERIN  HARRINGTON, Staff,  Representative  Alan Austerman,  Alaska                                                               
State Legislature,  stated she has  seen rural member  defined as                                                               
someone representing  a community  of less  than 2,500  people or                                                               
located  off  the road  system.    She  was  not certain  how  to                                                               
identify an Interior member.                                                                                                    
REPRESENTATIVE T. WILSON withdrew Conceptual Amendment 3.                                                                       
CHAIR OLSON  related that  language could  still be  developed to                                                               
address regional representation.                                                                                                
3:50:56 PM                                                                                                                    
REPRESENTATIVE  BUCH expressed  an interest  in having  the AIDEA                                                               
board include members representing  a cross section of interests,                                                               
including  small  businesses  and  industry.    Additionally,  he                                                               
thought  board  member  appointments should  overlap  to  provide                                                               
continuity and consistency to the AIDEA board.                                                                                  
3:51:49 PM                                                                                                                    
REPRESENTATIVE  NEUMAN referred  to Section  1 and  to the  AIDEA                                                               
board composition.  He thought  legislative intent could be added                                                               
to provide regional representation on  the board.  In response to                                                               
Chair  Olson, he  offered his  belief that  the sponsors  will be                                                               
willing to  work with  Representative T.  Wilson on  language and                                                               
said he did not wish to hold up the bill.                                                                                       
REPRESENTATIVE T.  WILSON mentioned that there  are five Judicial                                                               
Districts in  Alaska, which may  be a  way to arrive  at regional                                                               
3:53:42 PM                                                                                                                    
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on  HB 363 and announced that it                                                               
would be held over.                                                                                                             

Document Name Date/Time Subjects
HB363 AIDEA Strategic Plan.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
Mar 17 Packet Info.pdf HL&C 3/17/2010 3:15:00 PM
HB363 Fiscal Note-CED-AIDEA-3-12-10.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
HB363 Sponsor Statement ver A.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
HB363 ver A.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
HB363 Supporting Documents AIDEA Board Fact Sheet & Member Info.PDF HL&C 3/17/2010 3:15:00 PM
HB 363
HB363 Supporting Documents Briefing Paper Economic Development in State Government.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
HB412 Fiscal Note-CED-INV-Corrected-2-26-10.pdf HL&C 3/17/2010 3:15:00 PM
HB 412
HB412 Sectional Analysis ver A.pdf HL&C 3/17/2010 3:15:00 PM
HB 412
HB412 ver A.pdf HL&C 3/17/2010 3:15:00 PM
HB 412
HB 412 Transmittal Letter.pdf HL&C 3/17/2010 3:15:00 PM
HB 412
HB412 Supporting Documents DCCED Micro Loans.pdf HL&C 3/17/2010 3:15:00 PM
HB 412
HB363 AIDEA Reponse To Questions.pdf HL&C 3/17/2010 3:15:00 PM
HB 363
HB363 Amendment A.1.pdf HL&C 3/17/2010 3:15:00 PM
HB 363