00                           HOUSE BILL NO. 229 am                                                                        
01 "An Act authorizing the Alaska Railroad Corporation to participate in a project                                         
02 consisting of the acquisition, construction, improvement, maintenance, equipping, or                                    
03 operation of real and personal property, including facilities and equipment, for the                                    
04 Kenai gasification project and Port MacKenzie rail link, authorizing the corporation to                                 
05 issue bonds to finance all or a portion of the project, and identifying these as bonds for                              
06 an essential public and governmental purpose; and providing for an effective date."                                     
07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
08    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
09 to read:                                                                                                                
10       LEGISLATIVE FINDINGS, INTENT, AND STATEMENT OF PURPOSE. (a) The                                                 
11 legislature finds that                                                                                                  
12            (1)  Agrium's urea and ammonia plants in the northern Kenai Peninsula are in                                 
13 danger of being permanently shut down because of a lack of adequate natural gas feedstock in                            

01 the area;                                                                                                               
02            (2)  closure of the Agrium plants will result in a loss of a significant number of                           
03 high paying jobs and tax base for the northern Kenai Peninsula as well as tax revenue to the                            
04 state;                                                                                                                  
05            (3)  Agrium's Kenai gasification project will bring low-sulfur coal from Healy                               
06 to North Kenai where a low-emission coal gasification plant and electrical generation plant                             
07 will be built on land adjacent to Agrium's existing urea and ammonia plants;                                            
08            (4)  producing gas from coal will provide Agrium with an alternative feedstock                               
09 to natural gas, which is in short supply in Southcentral Alaska, and will allow Agrium to                               
10 continue to operate its urea and ammonia plants for the foreseeable future;                                             
11            (5)  the Kenai gasification project will also generate competitively priced                                  
12 electricity for the regional power grid and excess carbon dioxide that could be used to                                 
13 enhance oil recovery from the wells in Cook Inlet;                                                                      
14            (6)  the Alaska Railroad Corporation is uniquely suited to serve essential                                   
15 functions of the state by providing, among other things, rail transportation of coal and other                          
16 freight and by financing all or a portion of the Kenai gasification project;                                            
17            (7)  the Kenai gasification project furthers the purposes of both the state and                              
18 the Alaska Railroad Corporation by creating a new market for the state's coal reserves at                               
19 Healy, which will be transported by rail and barge to the northern Kenai Peninsula, creating                            
20 revenue for the Alaska Railroad Corporation and for the state and providing employment                                  
21 opportunities for residents of the state;                                                                               
22            (8)  these results are essential purposes of the state, and the achievement of                               
23 these purposes is critical to the health and welfare of the state.                                                      
24       (b)  The purpose of this Act is to clarify the statutory functions and powers of the                              
25 Alaska Railroad Corporation by expressly including the power to participate in the Kenai                                
26 gasification project and to finance all or a portion of the project with bonds as described in                          
27 this Act.                                                                                                               
28       (c)  It is the intent of the legislature that                                                                     
29            (1)  this Act be construed broadly to permit the Alaska Railroad Corporation                                 
30 the greatest flexibility to accomplish the purposes described in (b) of this section within the                         
31 limitations set out in this Act; and                                                                                    

01            (2)  other provisions of AS 42.40 in existence before the enactment of this Act                              
02 be similarly construed to complement the provisions of this Act.                                                        
03    * Sec. 2. AS 42.40 is amended by adding a new section to article 7 to read:                                        
04            Sec. 42.40.570. Kenai gasification project. The corporation may participate                                
05       in a project consisting of the acquisition, construction, improvement, maintenance,                               
06       equipping, and operation of real and personal property, including facilities and                                  
07       equipment for the transportation of coal from Healy to the northern Kenai Peninsula                               
08       and facilities and equipment for coal gasification and electrical power generation                                
09       adjacent to the Agrium fertilizer plants in the northern Kenai Peninsula. The                                     
10       corporation may finance all or a portion of the project through the issuance of its                               
11       bonds.                                                                                                            
12    * Sec. 3. AS 42.40.630 is amended by adding a new subsection to read:                                              
13            (c)  Before issuing bonds to provide the financing described in AS 42.40.570                                 
14       for real or personal property to be owned in whole or in part by an entity other than the                         
15       corporation, the corporation shall enter into one or more contracts, leases, or other                             
16       forms of agreement that will, in the judgment of the corporation, provide sufficient                              
17       consideration to                                                                                                  
18                 (1)  pay the principal of and interest on the bonds as they become due;                                 
19                 (2)  create and maintain any reserves for the bond payments that the                                    
20       corporation considers necessary or desirable; and                                                                 
21                 (3)  pay all costs necessary to issue, service, or additionally secure the                              
22       bonds, including trustee's fees and bond insurance premiums, unless these costs are to                            
23       be paid from bond proceeds or by a party other than the corporation.                                              
24    * Sec. 4. AS 42.40.695 is amended to read:                                                                         
25            Sec. 42.40.695. Public purpose of bonds. Bonds of the corporation issued to                                
26       finance facilities described in AS 42.40.550 and AS 42.40.560 and bonds of the                                
27       corporation issued to finance the acquisition, construction, improvement,                                     
28       maintenance, equipping, and operation of real and personal property, including                                
29       facilities and equipment, described in AS 42.40.570 [AS 42.40.550] are issued by a                        
30       public corporation and an instrumentality of the state for an essential public and                                
31       governmental purpose.                                                                                             

01    * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to                          
02 read:                                                                                                                   
03       LEGISLATIVE AUTHORIZATION AND APPROVAL. (a) Subject to the                                                        
04 requirements of AS 42.40.630(c), enacted by sec. 3 of this Act, the Alaska Railroad                                     
05 Corporation is authorized to issue bonds under the power granted to it in AS 42.40.250 to                               
06 participate in and finance all or a portion of the Kenai gasification project, including the                            
07 acquisition, construction, improvement, maintenance, equipping, and operation of real and                               
08 personal property, including facilities and equipment for the transportation of coal from Healy                         
09 to the northern Kenai Peninsula and facilities and equipment for coal gasification and                                  
10 electrical power generation adjacent to the Agrium fertilizer plants in the northern Kenai                              
11 Peninsula, and associated costs, including, without limitation, reserves for debt service and                           
12 capitalized interest, if necessary or appropriate, and costs of issuance. The maximum principal                         
13 amount of bonds that the Alaska Railroad Corporation may issue under this section is                                    
14 $2,900,000,000. The Alaska Railroad Corporation may issue the bonds in a single issuance or                             
15 in several issuances, without limitation as to number of issuances or timing, and as the Alaska                         
16 Railroad Corporation determines best furthers the purpose of financing the Kenai gasification                           
17 project and related real and personal property, including facilities and equipment described in                         
18 this section. The Alaska Railroad Corporation shall negotiate with Agrium U.S., Inc., or with                           
19 one or more other entities as the Alaska Railroad Corporation considers appropriate, and shall                          
20 enter into agreements with those entities or one or more other entities to provide revenue                              
21 sufficient to accomplish the purposes described in AS 42.40.630(c), enacted by sec. 3 of this                           
22 Act. In no event shall the general credit of the state be pledged for the repayment of these                            
23 bonds.                                                                                                                  
24       (b)  This authorization extends to bonds issued to refund the bonds authorized in this                            
25 Act. The principal amount of the bonds authorized in this Act may be increased in an issue of                           
26 refunding bonds in an amount equal to the costs of refunding if the refunding is undertaken to                          
27 achieve debt service savings.                                                                                           
28       (c)  This section constitutes the approval required by AS 42.40.285 for the issuance of                           
29 the bonds described in this section.                                                                                    
30       (d)  In this section, "bonds" means bonds, bond anticipation notes, notes, refunding                              
31 bonds, or other obligations.                                                                                            

01    * Sec. 6. This Act takes effect immediately under AS 01.10.070(c).