HB 304: "An Act relating to the commercial fishing loan program; and providing for an effective date."
00 HOUSE BILL NO. 304 01 "An Act relating to the commercial fishing loan program; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 16.10.300 is amended to read: 05 Sec. 16.10.300. Declaration of policy. It is the policy of the state, under 06 AS 16.10.300 - 16.10.370, to support the participation of resident commercial 07 fishermen in those areas and fisheries of the state in which the financing needs of 08 fishermen are not adequately served by private lending institutions [PROMOTE 09 THE REHABILITATION OF THE STATE'S FISHERIES, THE DEVELOPMENT 10 OF A PREDOMINANTLY RESIDENT FISHERY, AND THE CONTINUED 11 MAINTENANCE OF COMMERCIAL FISHING GEAR AND VESSELS 12 THROUGHOUT THE STATE BY MEANS OF LONG-TERM LOW INTEREST 13 LOANS]. 14 * Sec. 2. AS 16.10 is amended by adding a new section to read:
01 Sec. 16.10.311. Powers of the department. (a) The department may 02 (1) make loans to individual commercial fishermen who have been 03 state residents for a continuous period of two years immediately preceding the date of 04 application for a loan under AS 16.10.300 - 16.10.370 for the repair, restoration, or 05 upgrading of existing vessels and gear, for the purchase of entry permits and gear, for 06 the purchase of quota shares for fisheries in or off the state, for the construction and 07 purchase of vessels or, to the extent allowed under (c) of this section, to satisfy past 08 due federal tax obligations that may result in the execution on and involuntary transfer 09 of the individual's entry permits, if the individual 10 (A) either 11 (i) because of lack of training or lack of employment 12 opportunities in the area of residence, does not have occupational 13 opportunities available other than commercial fishing; or 14 (ii) is economically dependent on commercial fishing 15 for a livelihood and commercial fishing has been a traditional way of 16 life in the state for the individual; and 17 (B) has submitted a substantially identical application for a 18 loan to two private commercial lenders, one of which must be the Alaska 19 Commercial Fisheries and Agriculture Bank, and has been denied a loan by 20 both private lenders; 21 (2) make loans for the purchase of fishing quota shares by a 22 community quota entity eligible under federal statute or regulation to purchase the 23 fishing quota shares if the community quota entity is not eligible or qualified for 24 financing from other recognized commercial lending institutions to purchase the 25 fishing quota shares; 26 (3) adopt regulations necessary to carry out the provisions of 27 AS 16.10.300 - 16.10.370, including regulations to establish reasonable fees for 28 services provided and regarding loans for an entry permit and for which an entry 29 permit is used as collateral; 30 (4) establish amortization plans for repayment of loans, which may 31 include extensions for poor fishing seasons or for adverse market conditions for
01 Alaska products; 02 (5) enter into agreements with other state agencies or agencies of the 03 federal government to carry out the purposes of AS 16.10.300 - 16.10.370; 04 (6) enter into agreements with other state agencies to create an 05 outreach program to make loans under AS 16.10.300 - 16.10.370 in rural areas of the 06 state; 07 (7) allow an assumption of a loan if 08 (A) the applicant has been a state resident for a continuous 09 period of two years immediately preceding the date of the request for an 10 assumption; and 11 (B) approval of the assumption would be consistent with the 12 purpose of AS 16.10.300 - 16.10.370; an applicant for a loan assumption may 13 not be disqualified because the applicant does not meet the loan eligibility 14 requirements of (1)(A) or (B) of this subsection; 15 (8) prequalify loan applicants for a limited entry permit loan or a quota 16 shares loan and charge a fee not to exceed $50 for prequalification; 17 (9) charge and collect the fees established under this subsection; 18 (10) refinance a debt obligation, not to exceed $100,000, to another 19 lender incurred by a borrower or borrowers if the borrower or borrowers otherwise 20 qualify for a loan under AS 16.10.300 - 16.10.370; the department shall collect a 21 refinancing loan origination charge of one-half of one percent of the amount of the 22 debt obligation that has been refinanced when the first refinancing payment is due. 23 (b) In determining whether an individual commercial fisherman is reasonably 24 likely to be able to repay a loan made under AS 16.10.300 - 16.10.370, the 25 commissioner shall consider the individual commercial fisherman's income from 26 commercial fishing and from all other sources. 27 (c) The department may not make a loan to an individual under (a)(1) of this 28 section to satisfy past due federal tax obligations unless the individual has filed past 29 and current federal tax returns with the federal government and has executed an 30 agreement with the federal government for repayment of past due federal tax 31 obligations. During an individual's lifetime, the individual may receive only one loan
01 to satisfy past due federal tax obligations under (a)(1) of this section, whether under 02 (a)(1) of this section or under any version of former AS 16.10.310(a). A loan made 03 under (a)(1) of this section to satisfy past due federal tax obligations may not exceed 04 $35,000. 05 * Sec. 3. AS 16.10.320(a) is amended to read: 06 (a) Except as permitted in (d) [(h)] of this section, a loan under AS 16.10.300 07 - 16.10.370 08 (1) may not exceed an original [A] term of 15 years [, EXCEPT FOR 09 EXTENSIONS UNDER AS 16.10.310(a)(4)]; 10 (2) must bear a fixed annual rate of interest of not less than 6.5 11 percent nor more than 10.5 [MAY NOT BEAR INTEREST EXCEEDING 10 1/2] 12 percent; 13 (3) may not exceed $100,000; 14 (4) must be secured by a first priority lien and appropriate security 15 agreement; 16 (5) [(4)] may not exceed 80 [90] percent of the [APPRAISED] value, 17 as determined by the department, of the collateral used to secure the loan; and 18 (6) [(5)] may not be made to a person who has a past due child support 19 obligation established by court order or by the child support services agency under 20 AS 25.27.160 - 25.27.220 at the time of application. 21 * Sec. 4. AS 16.10.320(d) is amended to read: 22 (d) [THE TOTAL OF BALANCES OUTSTANDING ON LOANS MADE 23 TO A BORROWER UNDER AS 16.10.310(a)(1)(A) MAY NOT EXCEED $300,000. 24 THE TOTAL OF BALANCES OUTSTANDING ON LOANS MADE TO A 25 BORROWER UNDER AS 16.10.310(a)(1)(B) MAY NOT EXCEED $100,000. THE 26 TOTAL BALANCES OUTSTANDING ON LOANS MADE TO A BORROWER 27 UNDER AS 16.10.310(a)(1)(C) MAY NOT EXCEED $300,000. THE TOTAL OF 28 BALANCES OUTSTANDING ON LOANS MADE TO A BORROWER UNDER 29 AS 16.10.310(a)(1)(D) TO SATISFY PAST DUE FEDERAL TAX OBLIGATIONS 30 MAY NOT EXCEED $30,000.] The total of balances outstanding on loans made 31 under AS 16.10.311(a)(2) [AS 16.10.310(a)(1)(E)] may not exceed $2,000,000 per
01 community eligible under federal statute or regulation to establish or participate in the 02 establishment of a community quota entity. [EXCLUDING LOANS MADE UNDER 03 AS 16.10.310(a)(1)(C), (D), AND (E), THE TOTAL OF BALANCES 04 OUTSTANDING ON ALL LOANS, INCLUDING DEBT REFINANCING UNDER 05 AS 16.10.310(a), MADE TO A BORROWER UNDER AS 16.10.300 - 16.10.370 06 MAY NOT EXCEED $300,000.] 07 * Sec. 5. AS 16.10.320(e) is amended to read: 08 (e) Two or more individual commercial fishermen who each satisfy the 09 requirements specified in AS 16.10.311 [AS 16.10.310(a)(1)(B)] may jointly, whether 10 operating as a corporation, partnership, joint venture, or otherwise, obtain a 11 commercial fishing loan for the repair, restoration, or upgrading of an existing vessel 12 and gear, for the purchase of gear, and for the construction or the purchase of a fishing 13 vessel. Loans granted under this subsection may not exceed the amount specified in 14 (a) [(d)] of this section multiplied by the number of qualified commercial fishermen 15 applying for the loan. 16 * Sec. 6. AS 16.10.320 is amended by adding new subsections to read: 17 (k) An individual borrower may not be liable, at any one time or in any 18 capacity, for repayment of more than two loans made under AS 16.10.300 - 16.10.370. 19 (l) The department may not permit or record a payment in reduction of 20 principal to a loan for which any amount of interest due and payable has not been paid. 21 * Sec. 7. AS 16.10.325 is amended to read: 22 Sec. 16.10.325. Guarantors. A person may act as guarantor if the borrower 23 has insufficient collateral to secure a loan for the purposes described in AS 16.10.311 24 [AS 16.10.310(a)(1)(B) OR (C)]. The loan agreement must [SHALL] specifically 25 describe the property of the guarantor to be used as collateral by the borrower and 26 shall be signed by the guarantor and the borrower. The department shall provide the 27 guarantor with a copy of all notices sent to the borrower by the department. If the loan 28 is for the purchase of an entry permit or quota shares, the guaranty by the guarantor 29 may not constitute a lien, mortgage, or encumbrance on or pledge of the entry permit 30 or quota shares. 31 * Sec. 8. AS 16.10.333(a) is amended to read:
01 (a) Loans under AS 16.10.311 [AS 16.10.310(a)] may be made to an 02 individual commercial fisherman for the purchase of a limited entry permit upon 03 certification by the commission that the fisherman is a person who qualifies as a 04 transferee for the permit under AS 16.43 and the regulations adopted by the 05 commission. 06 * Sec. 9. AS 16.10.335(a) is amended to read: 07 (a) If the debtor defaults upon a note for which a limited entry permit has been 08 pledged as security under AS 16.10.333 or 16.10.338, the commissioner shall provide 09 the debtor, by both certified and first class mail sent to the debtor's last known address 10 on file with the commissioner, with a notice of default that includes 11 (1) a description of the security given for the note including the 12 number assigned to the pledged permit by the commission; 13 (2) the date upon which the default occurred; 14 (3) the amount of the debtor's outstanding principal and interest as of 15 the date of the default notice, the total amount remaining on the note less unearned 16 interest, and the amount of daily interest; 17 (4) a statement that the debtor may, within 15 days after the postmark 18 date of the notice, request a hearing to submit evidence showing the debtor has not 19 defaulted; 20 (5) a statement that the note may be reinstated if the note [IT] is 21 brought current within 120 days after the postmark date of the notice; 22 (6) a statement that [, UNDER AS 16.10.310(a)(4),] the debtor may 23 reinstate the note by submitting to the commissioner a plan of repayment if the 24 commissioner accepts the debtor's plan of repayment; 25 (7) the place where reinstatement of the note or payment in full may be 26 made; and 27 (8) a notice in at least 10-point bold type stating: IMPORTANT: 28 YOUR FAILURE TO REINSTATE OR PAY THIS NOTE IN FULL BY THE DATE 29 SPECIFIED WILL RESULT IN A FORFEITURE OF ALL RIGHTS TO THE 30 PERMIT AND THE POSSIBILITY OF LEGAL ACTION BEING INSTITUTED 31 AGAINST YOU.
01 * Sec. 10. AS 16.10.338 is amended to read: 02 Sec. 16.10.338. Entry permits as collateral. (a) Alaska limited entry 03 permits may be used as security for loans under AS 16.10.311 [AS 16.10.310(a)]. The 04 provisions of AS 16.10.335 and 16.10.337 apply to Alaska limited entry permits 05 pledged as security for loans in accordance with this section. 06 (b) If a limited entry permit is pledged for security for a loan made under 07 AS 16.10.311 [AS 16.10.310(a)(1)(B)] for the repair, restoration, upgrading, 08 construction, or purchase of a vessel and the borrower thereafter fails to make a 09 payment or defaults, the commissioner shall, in addition to the notice provided under 10 AS 16.10.335(a), notify the borrower that subject to the commissioner's acceptance the 11 borrower may sell the vessel, apply the sales proceeds to the debt, and renegotiate 12 payment of the balance due on the loan to avoid the immediate loss of the limited 13 entry permit that has been pledged for security for the loan. 14 (c) If a limited entry permit is pledged for security for a loan made under 15 AS 16.10.311 [AS 16.10.310(a)(1)(C)] for the purchase of quota shares and the 16 borrower thereafter fails to make a payment or defaults, the commissioner shall, in 17 addition to the notice provided under AS 16.10.335(a), notify the borrower that subject 18 to the commissioner's acceptance the borrower may sell the quota shares, apply the 19 sales proceeds to the debt, and renegotiate payment of the balance due on the loan to 20 avoid the immediate loss of the limited entry permit that has been pledged for security 21 for the loan. 22 * Sec. 11. AS 16.10.340(a) is amended to read: 23 (a) There is a commercial fishing revolving loan fund to carry out the purpose 24 of AS 16.10.300 - 16.10.370. The commissioner shall administer the fund. 25 * Sec. 12. AS 16.10.340 is amended by adding new subsections to read: 26 (d) There is established as a special account within the commercial fishing 27 revolving loan fund the foreclosure expense account. The commissioner may expend 28 money credited to the foreclosure expense account when necessary to protect the 29 state's security interest in collateral on loans granted under AS 16.10.300 - 16.10.370 30 or to defray expenses incurred during foreclosure proceedings after a default by an 31 obligor.
01 (e) On February 1 of each calendar year, the department shall submit to the 02 legislature a report of summaries, analyses, and projections as of December 31 of the 03 preceding calendar year that sets out the net cash balance of the fund available and 04 necessary to carry out the purpose of AS 16.10.300 - 16.10.370 during the two fiscal 05 years following the submission of the report. 06 (f) If the legislature determines that the fund contains money that is excess to 07 that needed to carry out the purpose of AS 16.10.300 - 16.10.370 or for the orderly 08 liquidation of all loans made under former provisions of AS 16.10.300 - 16.10.370 or 09 of all assets owned or acquired in connection with those loans, then the legislature 10 may appropriate the excess money for any public purpose. 11 * Sec. 13. AS 16.10.353(b) is amended to read: 12 (b) A person obtaining a loan under AS 16.10.300 - 16.10.370 [AFTER JUNE 13 28, 1991] may, by signing a form prepared for the purpose, designate the names of 14 persons and organizations to whom a copy of the notice required by AS 16.10.335 15 must be sent. 16 * Sec. 14. AS 16.10.355 is amended to read: 17 Sec. 16.10.355. Disposal of property acquired by default or foreclosure. 18 The department shall dispose of property acquired through default or foreclosure of a 19 loan made under AS 16.10.300 - 16.10.370, former provisions of AS 16.10.300 - 20 16.10.370, or former AS 16.10.650 - 16.10.720. Disposal shall be made in a manner 21 that serves the best interests of the state, and may include the amortization of 22 payments over a period of years, but may not be by lease. 23 * Sec. 15. AS 16.10.310, 16.10.315, 16.10.320(b), 16.10.320(h), 16.10.320(i), 16.10.339, 24 16.10.340(c), 16.10.342, 16.10.350, and 16.10.520(f) are repealed. 25 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 SAVING. Nothing in this Act may impair the rights and duties, as they existed before 28 the effective date of this Act, of parties to loans entered into under provisions of AS 16.10.300 29 - 16.10.370 that are amended or repealed by this Act. A loan entered into under provisions of 30 AS 16.10.300 - 16.10.370 that are amended or repealed by this Act is subject to those terms 31 and provisions of AS 16.10.300 - 16.10.370 and the loan agreement that were in effect when
01 the loan was originally made or subsequently modified by the state and the borrower unless 02 the loan agreement is amended after the effective date of this Act and the parties expressly 03 agree to be bound by provisions of AS 16.10.300 - 16.10.370 that are in effect on the date that 04 the loan agreement is amended. 05 * Sec. 17. This Act takes effect July 1, 2006.