CSSB 73(FIN): "An Act relating to the loan participation program of the Alaska Industrial Development and Export Authority and to regulations of the Alaska Industrial Development and Export Authority; and providing for an effective date."
00 CS FOR SENATE BILL NO. 73(FIN) 01 "An Act relating to the loan participation program of the Alaska Industrial 02 Development and Export Authority and to regulations of the Alaska Industrial 03 Development and Export Authority; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 44.88.085(g) is amended to read: 06 (g) The authority shall adopt regulations necessary for the following purposes 07 in connection with its programs for the financing of projects under AS 44.88.155 - 08 44.88.159: 09 (1) determination of borrower eligibility; 10 (2) loan guidelines and terms, including 11 (A) maximum loan amounts; 12 (B) required loan-to-value ratios; and 13 (C) a method for determining loan interest rates [FOR THE 14 LOANS THAT ARE FINANCED DIRECTLY FROM THE ASSETS OF
01 THE AUTHORITY]; 02 (3) characteristics of projects eligible for loans or purchase of loans; 03 and 04 (4) the qualifications of loan originators and servicers and the method 05 of allocating amounts available for the purchase of loans. 06 * Sec. 2. AS 44.88.155(d) is amended to read: 07 (d) A loan participation purchased by the authority with assets of the 08 enterprise development account or with proceeds of bonds secured by assets of the 09 enterprise development account 10 (1) may not exceed $20,000,000 [$10,000,000]; however, in the case 11 of a loan participation for a power transmission intertie, the loan participation may 12 exceed $20,000,000 [$10,000,000] with legislative approval; 13 (2) may not be purchased unless 14 (A) the project applicant is not, or, if the applicant is not a 15 single proprietorship, all members of the business enterprise or enterprises 16 constituting the project applicant are not, in default on another loan made by 17 the state or by a public corporation of the state; and 18 (B) at least 10 [20] percent of the principal amount of the loan 19 is retained by the loan originator; 20 (3) may not be purchased if the loan to be purchased exceeds 75 21 percent of the appraised value of the collateral offered as security for the loan unless 22 the amount of the loan in excess of this limit is federally insured or guaranteed or is 23 insured by a qualified mortgage insurance company, except that [IN NO EVENT 24 MAY] the loan to be purchased under this paragraph may not exceed the total of loan 25 proceeds used to refinance an existing debt plus the cost of new construction, 26 expansion, or acquisition unless the proceeds from the additional amounts of the 27 loan to be purchased are restricted to uses approved by the authority to finance 28 commercial activity in the state by a business enterprise; 29 (4) may not be purchased if the participation in the loan to be 30 purchased is for a term longer than the following, except that [IN NO EVENT MAY] 31 a loan under (A) or (C) of this paragraph may not have a term longer than three-
01 quarters of the authority's estimate of the life of the collateral offered as security for 02 the loan: 03 (A) 40 years from the date the loan is made in the case of a 04 loan participation for a project described in AS 44.88.900(9)(E); 05 (B) 50 years from the date the loan is made in the case of a loan 06 participation for a power transmission intertie; 07 (C) 25 years from the date the loan is made in the case of a loan 08 participation for other projects; 09 (5) may be made only if the participation in the loan to be purchased 10 contains amortization provisions; the amortization provisions 11 (A) must be complete and satisfactory to the authority and 12 require periodic payments by the borrower; 13 (B) may allow the loan originator to amortize the portion of the 14 loan retained by the loan originator using a shorter amortization schedule than 15 the amortization schedule for the portion of the loan held by the authority if 16 (i) in the authority's opinion, the project financed can 17 support the increased debt service; and 18 (ii) the accelerated amortization schedule is required to 19 induce the originator to make the loan; 20 (6) may be made only if the participation in the loan to be purchased is 21 in the form and contains the terms and provisions with respect to insurance, repairs, 22 alterations, payment of taxes and assessments, default reserves, delinquency charges, 23 default remedies, acceleration of maturity, secondary liens, and other matters the 24 authority prescribes; and 25 (7) may be made only if the participation in the loan to be purchased is 26 secured as to repayment by a mortgage or other security instrument in the manner the 27 authority determines is feasible to assure timely repayment under the loan documents 28 entered into with the borrower. 29 * Sec. 3. AS 44.88.159(a) is amended to read: 30 (a) The interest rate on a loan participation purchased from the proceeds of 31 tax-exempt bonds or expected by the authority to be purchased from the proceeds of
01 tax-exempt bonds shall be determined under the regulations adopted by the 02 authority under AS 44.88.085(g)(2)(C) and shall be not less than [IS EQUAL TO] 03 the cost of funds to the authority. In this subsection, "cost of funds" means the true 04 interest cost expressed as a rate on tax-exempt bonds of the authority plus an 05 additional percentage as determined by the authority to represent the allocable 06 expenses of operation, costs of issuance, and loan servicing costs. 07 * Sec. 4. AS 44.88.159(b) is amended to read: 08 (b) The interest rate on a loan participation purchased from the proceeds of 09 taxable bonds or expected by the authority to be purchased from the proceeds of 10 taxable bonds shall be determined under the regulations adopted by the authority 11 under AS 44.88.085(g)(2)(C) and shall be not less than [IS EQUAL TO] the cost of 12 funds to the authority. In this subsection, "cost of funds" means the true interest cost 13 expressed as a rate on taxable bonds, plus an additional percentage as determined by 14 the authority to represent the allocable expenses of operation, costs of issuance, and 15 loan servicing costs. 16 * Sec. 5. AS 44.88.159(e) is amended to read: 17 (e) The interest rate on a loan participation purchased directly from the assets 18 of the authority shall be determined under the regulations adopted by the authority 19 under AS 44.88.085(g)(2)(C). However, the minimum interest rate on a loan 20 participation purchased from assets of the authority may not be less than the 21 minimum interest rate determined 22 (1) under (a) of this section if the project is of a type that could be 23 funded with tax-exempt bonds; or 24 (2) under (b) of this section if the project is of a type that could not be 25 funded with tax-exempt bonds. 26 * Sec. 6. AS 44.88.159 is amended by adding a new subsection to read: 27 (f) In determining an interest rate under the regulations adopted by the 28 authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the 29 minimum interest rate required under (a), (b), or (e) of this section for a loan 30 participation purchased by the authority to resolve lending limits or reserve restrictions 31 imposed on the financial institution and may instead determine to retain the interest
01 rate existing at the time the authority purchases a portion of the loan. 02 * Sec. 7. AS 44.88.900(7) is amended to read: 03 (7) "loan participation" means the purchase of a portion of a loan from 04 a financial institution if 05 (A) the financial institution has obtained a commitment from 06 the authority to purchase the portion of that loan before the financial institution 07 has disbursed money as part of the loan to the borrower; or 08 (B) the authority determines that purchasing a portion of a 09 preexisting loan will resolve lending limits or reserve restrictions imposed 10 on the financial institution by law or a state or federal regulatory agency, 11 or by the financial institution if the internal lending limit or reserve 12 restriction is acceptable to the authority; 13 * Sec. 8. This Act takes effect immediately under AS 01.10.070(c).