Legislature(2009 - 2010)BARNES 124

03/29/2010 03:15 PM LABOR & COMMERCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 202(CRA) Out of Committee
Moved Out of Committee
          HB 419-COMMERCIAL FISHING & AGRICULTURE BANK                                                                      
4:12:19 PM                                                                                                                    
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE   BILL  NO.   419,   "An  Act   relating   to  the   board,                                                               
investigations,  and   examinations  of  the   Alaska  Commercial                                                               
Fishing  and Agriculture  Bank;  and providing  for an  effective                                                               
4:12:24 PM                                                                                                                    
JENNIFER SENETTE, Staff, Representative Kurt Olson, Alaska State                                                                
Legislature, on behalf of the prime sponsor of HB 419, offered a                                                                
brief explanation  of the  bill.  This  bill would  eliminate the                                                               
designation for  a "resident  farmer" to be  required as  a board                                                               
member.     She  explained  that   the  Commercial   Fishing  and                                                               
Agriculture  Bank (CFAB)  created by  the legislature  came at  a                                                               
time when the emphasis was  on agriculture.  When the Agriculture                                                               
Revolving  Loan  Fund  (ARLF) was  later  established,  the  loan                                                               
market  for  the number  of  people  who qualified  as  "resident                                                               
farmer"  has dwindled.    The removal  of  the "resident  farmer"                                                               
requirement  also demonstrates  the extent  to which  the program                                                               
has  evolved.    Additionally,  HB 419  would  require  the  CFAB                                                               
financial  records be  examined  by the  Department of  Commerce,                                                               
Community, & Economic Development (DCCED) at 36 month intervals.                                                                
4:14:27 PM                                                                                                                    
SENATOR JOHN  COGHILL, Alaska State  Legislature, in  response to                                                               
Representative Neuman,  answered no.   He  stated that  this bill                                                               
does not apply to the ARLF.                                                                                                     
4:15:26 PM                                                                                                                    
REPRESENTATIVE  NEUMAN asked  whether  the CFAB  falls under  the                                                               
same umbrella as the ARLF.                                                                                                      
SENATOR COGHILL provided  a brief history of CFAB.   He explained                                                               
that CFAB is  a private organization authorized to  loan based on                                                               
value  of a  commercial fishing  permit.   The AFRL  is based  on                                                               
whole  different  system,  he  stated.   At  the  time  CFAB  was                                                               
established, Alaska contemplated agriculture  as an industry, but                                                               
the possibilities have  not grown to the extent  that fishing has                                                               
grown.   The agriculture loan  portfolio is quite  small compared                                                               
to the  fishing loan portfolio.   The initial requirement  was to                                                               
have a  "resident farmer" participate.   He read  the definition.                                                               
A  "resident farmer"  means a  person who  is a  resident of  the                                                               
state  and  who  is  engaged in  commercial  agriculture  in  the                                                               
state."  He related that the  state envisioned the CFAB as a coop                                                               
limited  to  agriculture  and  fishing.   The  ARLF  provided  an                                                               
infusion  of  cash  managed  by  the  state  in  a  manner  quite                                                               
different  than a  private organization.    The state  envisioned                                                               
that  Alaska would  have  a vibrant  agriculture  industry.   The                                                               
proposal to  take the  requirement for  "resident farmer"  out of                                                               
statute   recognizes  that   the  pool   of  people   engaged  in                                                               
agriculture  has  diminished.   Thus,  it  is more  difficult  to                                                               
fulfill the board role of "resident farmer."                                                                                    
4:19:04 PM                                                                                                                    
SENATOR COGHILL related that the  Agriculture Revolving Loan Fund                                                               
(ARLF)'s purpose is to promote  the development of agriculture as                                                               
an industry  throughout the state  by means of  moderate interest                                                               
rate  loans.   Quite often  the fund  has been  managed based  on                                                               
"state  policy" decisions.   The  CFAB is  a private  cooperative                                                               
serving  and owned  by Alaskans  and makes  investments based  on                                                               
"private decisions."                                                                                                            
4:19:31 PM                                                                                                                    
REPRESENTATIVE  NEUMAN asked  if the  Agriculture Revolving  Loan                                                               
Fund  (ARLF) is  autonomous and  does  not fall  under the  state                                                               
government.  He assumed the CFAB is autonomous.                                                                                 
SENATOR COGHILL agreed the CFAB  is a totally private enterprise.                                                               
He explained an  annual audit is currently conducted.   This bill                                                               
would  allow the  state  to examine  CFAB every  36  months.   He                                                               
agreed it  is a  "very different  creature" than  the ARLF.   The                                                               
only commonality shared between the  ARLF and CFAB is agriculture                                                               
4:20:55 PM                                                                                                                    
REPRESENTATIVE NEUMAN stated  he did not want ARLF  to be "rolled                                                               
into" CFAB  and assumed  that the bill  would not  accomplish any                                                               
4:21:06 PM                                                                                                                    
REPRESENTATIVE  T. WILSON  asked why  farmers would  not want  be                                                               
part of CFAB.                                                                                                                   
SENATOR  COGHILL explained  it is  not  a matter  of desire,  but                                                               
rather  that only  a handful  of  commercial agriculture  farmers                                                               
currently exist.   Thus, the loan  portfolio is so small  that it                                                               
has become much more difficult  to fill the position of "resident                                                               
4:22:16 PM                                                                                                                    
LEILA KLINGER,  Chief Executive  Officer, Commercial  Fishing and                                                               
Agriculture Bank (CFAB), introduced herself.                                                                                    
4:23:27 PM                                                                                                                    
MS. KLINGER explained  that when CFAB was created in  1979 and in                                                               
1980  that   considerable  emphasis  was  placed   on  developing                                                               
agriculture  in  the state.    The  CFAB made  many  agricultural                                                               
loans, but few new agricultural loans  have been made in the past                                                               
10  years.   Since CFAB's  elected directors  are elected  by its                                                               
membership and the number of  farmers has dwindled, it has become                                                               
less necessary  to have a farmer  serve as a director.   The role                                                               
of CFAB  has shifted,  she stated.   It is  critical for  CFAB to                                                               
reach  into its  broad pool  of members,  consisting of  not only                                                               
fishers and  farmers, but tourism  operators and  other resource-                                                               
based  businesses to  maintain viability  of and  service to  its                                                               
MS. KLINGER  stated that it may  seem odd to seek  oversight, but                                                               
the  CFAB   represents  a  collection  of   diverse  but  related                                                               
fiduciary  responsibilities.    It   operates  as  a  cooperative                                                               
corporation  with a  fiduciary  relationship  and obligation  for                                                               
past, current,  and future  borrowers.  It  also has  a fiduciary                                                               
responsibility to  the state since  it is a  financial investment                                                               
of the state.  Additionally,  CFAB is the only private enterprise                                                               
with  the  authority to  encumber  a  Commercial Fishing  Limited                                                               
Entry (CFEC) permit  with a consensual lien.   Thus, CFAB's board                                                               
remains  sensitive  to  its diverse  fiduciary  responsibilities.                                                               
While CFAB is subject to an  annual audit by a professional firm,                                                               
the audits  tend to focus  on quantitative values  and accounting                                                               
protocol, but only  touch on the qualitative  aspects of lending,                                                               
policies,  practices, and  results.   However,  the state's  bank                                                               
examiners are trained and prepared  to evaluate the likelihood of                                                               
repayment  of loans.    The  examiners have  the  results of  the                                                               
experiences  of other  financial institutions  and can  establish                                                               
norms  or  guidelines  by  which   CFAB's  effectiveness  can  be                                                               
measured.   The  CFAB's  Board of  Directors  and management  are                                                               
enthusiastic in their support of HB 419, she stated.                                                                            
4:26:15 PM                                                                                                                    
REPRESENTATIVE T. WILSON related  her understanding that a farmer                                                               
must have a loan to serve on the CFAB Board of Directors.                                                                       
MS. KLINGER agreed.                                                                                                             
4:26:28 PM                                                                                                                    
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 419.                                                                                     
4:26:44 PM                                                                                                                    
REPRESENTATIVE T. WILSON moved to  report HB 419 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 419 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    

Document Name Date/Time Subjects
HB 202 Talking Points.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Fiscal Note-DPS-FLS-03-23-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Sponsor Statement.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Supporting Documents Letter-Realtors 3-25-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) ver S.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
HB202 - ISO Fact Sheet.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
HB 202 Changes from Original to CSHB 202 (CRA).pdf HL&C 3/29/2010 3:15:00 PM
HB 202
HB419 ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
SB264 Fiscal Note-1-1-031710-CED-Y.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Sectional Analysis ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Sponsor Statement ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents AS 44.81.270.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Chart of Examinations.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Discussion-Examination Legislation.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents History of CFAB.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Letter-Huppert 3-5-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Letter-Klingert 3-17-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
Mar 29 Packet Info.pdf HL&C 3/29/2010 3:15:00 PM
HB419 Fiscal Note-CED-BSS-3-26-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Five Year Delinquency Chart.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents CFAB Discussion Papers.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
CSHB202 (CRA) Supporting Documents Letter-HomeBuilders 3-25-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202