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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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 appointments. 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 joined. 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 adopted. 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 representation. 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.