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28th Legislature(2013-2014)

Bill Text 28th Legislature


00 Enrolled SB 140                                                                                                         
01 Creating the Arctic infrastructure development program and fund in the Alaska Industrial                                
02 Development and Export Authority; and relating to dividends from the Alaska Industrial                                  
03 Development and Export Authority.                                                                                       
04                           _______________                                                                               
05    * Section 1. AS 44.88.088(a) is amended to read:                                                                   
06            (a)  The authority shall adopt a policy for payment of a dividend from the                                   
07       revolving fund, [AND A DIVIDEND FROM] the Alaska Industrial Development and                                   
08       Export Authority sustainable energy transmission and supply development fund                                      
09       (AS 44.88.660), and the Arctic infrastructure development fund (AS 44.88.810) to                              
10       the state each fiscal year. The dividends for a fiscal year shall be made available by the                        
11       authority before the end of that fiscal year. The authority shall notify the                                      
12       commissioner of revenue when the dividends for a fiscal year are available for                                    
13       appropriation. The amount of the dividend payable from the                                                        
14                 (1)  revolving fund for a fiscal year may not be less than 25 percent nor                               
01       more than 50 percent of the net income of the revolving fund for the base fiscal year;                            
02       however, in no event, may the dividend payable from the revolving fund for a fiscal                               
03       year exceed the total unrestricted net income of the revolving fund for the base year;                            
04                 (2)  Alaska Industrial Development and Export Authority sustainable                                     
05       energy transmission and supply development fund (AS 44.88.660) for a fiscal year                                  
06       may not be less than 25 percent nor more than 50 percent of the net income of the                                 
07       Alaska Industrial Development and Export Authority sustainable energy transmission                                
08       and supply development fund for the base fiscal year; however, [IN NO EVENT,                                      
09       SHALL] the dividend payable from the Alaska Industrial Development and Export                                     
10       Authority sustainable energy transmission and supply development fund for a fiscal                                
11       year may not exceed the total unrestricted net income of the Alaska Industrial                                
12       Development and Export Authority sustainable energy transmission and supply                                       
13       development fund for the base year;                                                                           
14                 (3)  Arctic infrastructure development fund (AS 44.88.810) for a                                    
15       fiscal year may not be less than 25 percent nor more than 50 percent of the net                               
16       income of the Arctic infrastructure development fund for the base fiscal year;                                
17       however, the dividend payable from the Arctic infrastructure development fund                                 
18       for a fiscal year may not exceed the total unrestricted net income of the Arctic                              
19       infrastructure development fund for the base year.                                                            
20    * Sec. 2. AS 44.88.088(b)(2) is amended to read:                                                                   
21                 (2)  "net income" means the change in net position, or the equivalent                                   
22       term under generally accepted accounting principles, of the revolving fund, [OR] the                          
23       change in net position of the Alaska Industrial Development and Export Authority                                  
24       sustainable energy transmission and supply development fund (AS 44.88.660), or the                            
25       change in net position of the Arctic infrastructure development fund                                          
26       (AS 44.88.810) as set out in the audited financial statements of the authority for the                        
27       base fiscal year, excluding amounts attributable to intergovernmental transfers, capital                          
28       contributions, grants, or impairment losses on development projects financed under                                
29       AS 44.88.172;                                                                                                     
30    * Sec. 3. AS 44.88.088(b)(3) is amended to read:                                                                   
31                 (3)  "unrestricted net income" means the unrestricted change in net                                     
01       position, or the equivalent term under generally accepted accounting principles, of the                           
02       revolving fund, [OR] the Alaska Industrial Development and Export Authority                                   
03       sustainable energy transmission and supply development fund (AS 44.88.660), or the                            
04       Arctic infrastructure development fund (AS 44.88.810) as set out in the audited                               
05       financial statements of the authority for the base fiscal year, excluding amounts                                 
06       attributable to intergovernmental transfers, capital contributions, grants, or impairment                         
07       losses on development projects financed under AS 44.88.172.                                                       
08    * Sec. 4. AS 44.88.159(a) is amended to read:                                                                      
09            (a)  The interest rate on a loan purchased from the proceeds of tax-exempt                                   
10       bonds secured by the Alaska Industrial Development and Export Authority sustainable                               
11       energy transmission and supply development fund (AS 44.88.660) under                                              
12       AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund                                     
13       (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased                               
14       from the proceeds of tax-exempt bonds or expected by the authority to be purchased                                
15       from the proceeds of tax-exempt bonds under AS 44.88.155 shall be determined under                                
16       the regulations adopted by the authority under AS 44.88.085(g)(2)(C) and shall be not                             
17       less than the cost of funds to the authority. In this subsection, "cost of funds" means                           
18       the true interest cost expressed as a rate on tax-exempt bonds of the authority plus an                           
19       additional percentage as determined by the authority to represent the allocable                                   
20       expenses of operation, costs of issuance, and loan servicing costs.                                               
21    * Sec. 5. AS 44.88.159(b) is amended to read:                                                                      
22            (b)  The interest rate on a loan purchased from the proceeds of taxable bonds                                
23       secured by the Alaska Industrial Development and Export Authority sustainable                                     
24       energy transmission and supply development fund (AS 44.88.660) under                                              
25       AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund                                     
26       (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased                               
27       from the proceeds of taxable bonds under AS 44.88.155 or expected by the authority                                
28       to be purchased from the proceeds of taxable bonds under AS 44.88.155 shall be                                    
29       determined under the regulations adopted by the authority under                                                   
30       AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In                           
31       this subsection, "cost of funds" means the true interest cost expressed as a rate on                              
01       taxable bonds, plus an additional percentage as determined by the authority to                                    
02       represent the allocable expenses of operation, costs of issuance, and loan servicing                              
03       costs.                                                                                                            
04    * Sec. 6. AS 44.88.159(d) is amended to read:                                                                      
05            (d)  The provisions of this section apply only to a loan participation purchased                             
06       under AS 44.88.155 - 44.88.159 or to a loan made under AS 44.88.650 - 44.88.690 or                            
07       44.88.800 - 44.88.840.                                                                                        
08    * Sec. 7. AS 44.88.159(e) is amended to read:                                                                      
09            (e)  The interest rate on a loan made under AS 44.88.650 - 44.88.690 or                                  
10       44.88.800 - 44.88.840 or a loan participation purchased directly from the assets of the                       
11       authority shall be determined under the regulations adopted by the authority under                                
12       AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as                                     
13       determined by the authority to represent the allocable expenses of operation and costs                            
14       of loan origination and servicing, plus the cost of funds. In this subsection,                                    
15                 (1)  "comparable financial security" means a type or category of                                        
16       financial security the authority identifies in the regulations adopted by the authority                           
17       under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to                                
18       the term and financial conditions of a loan participation or a loan made under                                    
19       AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 and for which a regularly                                   
20       published, nationally recognized market index is available;                                                       
21                 (2)  "cost of funds" means the earnings, expressed as an annual interest                                
22       rate, the authority would receive on a comparable financial security, and, for a loan                             
23       participation or a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840                          
24       with a fixed interest rate, the cost of funds must equal or exceed the minimum interest                           
25       rate;                                                                                                             
26                 (3)  "minimum interest rate" means the five-year return on investment                                   
27       funds of the authority, expressed as an annual interest rate, achieved by all internal and                        
28       external investment managers of the authority combined.                                                           
29    * Sec. 8. AS 44.88.159(f) is amended to read:                                                                      
30            (f)  In determining an interest rate under the regulations adopted by the                                    
31       authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the                               
01       minimum interest rate required under (a), (b), or (e) of this section for a loan                                  
02       participation purchased by the authority or a loan made under AS 44.88.650 -                                      
03       44.88.690 or 44.88.800 - 44.88.840 to resolve lending limits or reserve restrictions                          
04       imposed on the financial institution and may instead determine to retain the interest                             
05       rate existing at the time the authority makes the loan or purchases the authority's loan                          
06       participation.                                                                                                    
07    * Sec. 9. AS 44.88.159(g) is amended to read:                                                                      
08            (g)  The authority may, in the regulations adopted by the authority under                                    
09       AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations                             
10       determined by the authority to meet sufficient job creation, rural development, Arctic                        
11       infrastructure development, renewable energy development, or other economic                                   
12       development criteria incentive rate rebates of not more than one percent of the interest                          
13       rate charged on the authority's portion of a loan participation. The following standards                          
14       apply to the program:                                                                                             
15                 (1)  the payment of an incentive rate rebate may reduce the interest rate                               
16       to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this                     
17       section;                                                                                                          
18                 (2)  the authority may not commit to pay an incentive rate rebate for a                                 
19       proposed loan participation if the total of the amount of the proposed loan                                       
20       participation plus the combined outstanding balance of all loan participations for                                
21       which the authority has committed to pay incentive rate rebates would exceed five                                 
22       percent of the total of the amount of the proposed loan participation plus the combined                           
23       outstanding balance of all loan participations of the authority;                                                  
24                 (3)  an incentive rate rebate may not accrue for more than five years                                   
25       after the date the loan participation is purchased;                                                               
26                 (4)  the authority may establish a separate account for the incentive rate                              
27       rebate program.                                                                                                   
28    * Sec. 10. AS 44.88 is amended by adding new sections to read:                                                   
29                 Article 9A. Arctic Infrastructure Development.                                                        
30            Sec. 44.88.800. Arctic infrastructure development program. The Arctic                                      
31       infrastructure development program is created in the authority to promote and provide                             
01       financing for Arctic infrastructure development.                                                                  
02            Sec. 44.88.810. Arctic infrastructure development fund. The Arctic                                         
03       infrastructure development fund is established in the authority. The fund consists of                             
04       appropriations made to the fund by the legislature, money or other assets transferred to                          
05       the fund by a majority vote of the members of the authority under AS 44.88.050 from                               
06       any other fund controlled by the authority, and unrestricted loan repayments, interest,                           
07       or other income earned on loans, investments, or assets of the fund. The fund is not an                           
08       account in the revolving fund established in AS 44.88.060, and the authority shall                                
09       account for the fund separately from the revolving fund. The authority may create                                 
10       additional accounts in the fund. Subject to agreements made with the holders of the                               
11       authority's bonds or with other persons, the authority may transfer amounts in an                                 
12       account in the fund to another account in the fund. Amounts deposited in the fund may                             
13       be pledged to the payment of bonds of the authority or expended for the purposes of                               
14       AS 44.88.800 - 44.88.840. The authority has the powers and responsibilities                                       
15       established in AS 37.10.071 with respect to the investment of amounts held in the                                 
16       fund.                                                                                                             
17            Sec. 44.88.820. Use of fund balance. Subject to the requirements of                                        
18       AS 44.88.800 - 44.88.840, the authority may use money in the Arctic infrastructure                                
19       development fund (AS 44.88.810) for Arctic infrastructure development.                                            
20            Sec. 44.88.830. Qualified infrastructure development; powers and duties                                    
21       of the authority. (a) Subject to the limitations of AS 44.88.840, for Arctic                                    
22       infrastructure development, the authority may                                                                     
23                 (1)  use the Arctic infrastructure development fund (AS 44.88.810) to                                   
24       finance Arctic infrastructure development, insure project obligations, guarantee loans                            
25       or bonds, and establish reserves;                                                                                 
26                 (2)  acquire real or personal property by purchase, transfer, or                                        
27       foreclosure when the acquisition is necessary to protect the authority's interest in                              
28       financing;                                                                                                        
29                 (3)  defer principal payments or capitalize interest on Arctic                                          
30       infrastructure development;                                                                                       
31                 (4)  subject to AS 36.30.085(e), enter into lease agreements, sales-                                    
01       lease-back agreements, build-operate-transfer and operate-transfer agreements, or any                             
02       similar project financing agreement for a qualified Arctic infrastructure development;                            
03                 (5)  enter into agreements with government entities for the transfer and                                
04       control of infrastructure, facilities, rights-of-way, and studies;                                                
05                 (6)  contract for services with a professional advisor, including an                                    
06       attorney, bond counsel, engineer, or other technical expert necessary to fulfill the                              
07       purposes of the program; and                                                                                      
08                 (7)  subject to AS 44.88.090, borrow money and issue bonds.                                             
09            (b)  The authority shall adopt regulations to implement AS 44.88.800 -                                       
10       44.88.840, including                                                                                              
11                 (1)  a process for acquiring financing under this section;                                              
12                 (2)  qualifications for Arctic infrastructure development projects                                      
13       applying for financing under this section; and                                                                    
14                 (3)  fiscal controls and accounting procedures for the fund.                                            
15            Sec. 44.88.840. Limitations on financing. (a) Unless the authority has                                     
16       obtained legislative approval by law, the authority may not use the Arctic                                        
17       infrastructure development fund established in AS 44.88.810 to make                                               
18                 (1)  a loan for more than one-third of the capital cost of an Arctic                                    
19       infrastructure development; or                                                                                    
20                 (2)  a loan guarantee if the amount of the guarantee exceeds                                            
21       $20,000,000.                                                                                                      
22            (b)  Financing under AS 44.88.830 is limited to the projected life of the Arctic                             
23       infrastructure development, which may not be more than 40 years.                                                  
24            (c)  Notwithstanding (a) of this section, the authority may use the Arctic                                   
25       infrastructure development fund established in AS 44.88.810 as security for a bond                                
26       guarantee.                                                                                                        
27            (d) The authority may guarantee a loan under AS 44.88.830 if the loan is made                                
28       to a business with a majority interest held by state residents.                                                   
29    * Sec. 11. AS 44.88.900 is amended by adding new paragraphs to read:                                               
30                 (18)  "Arctic" means the area of the state north of the Arctic Circle,                                  
31       north and west of the boundary formed by the Porcupine, Yukon, and Kuskokwim                                      
01       Rivers, all contiguous seas, including the Arctic Ocean, and the Beaufort, Bering, and                            
02       Chukchi Seas, and the Aleutian Chain;                                                                             
03                 (19)  "Arctic infrastructure development" means                                                         
04                      (A)  the construction, improvement, rehabilitation, or expansion                                   
05            of a facility                                                                                                
06                           (i)  in the Arctic to aid in development or meet                                              
07                 emergency response needs; or                                                                            
08                           (ii)  in the state if the construction, improvement,                                          
09                 rehabilitation, or expansion supports or furthers the development of a                                  
10                 facility in the Arctic; or                                                                              
11                      (B)  the purchase, construction, improvement, rehabilitation, or                                   
12            expansion of a shore-based plant, facility, equipment, or assets used in support                             
13            of a fishery in the Arctic.                                                                                  
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