CSSSSB 25(L&C): "An Act establishing the sustainable energy transmission and supply development program in the Alaska Industrial Development and Export Authority; and relating to the interest rates of the Alaska Industrial Development and Export Authority."
00 CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 25(L&C) 01 "An Act establishing the sustainable energy transmission and supply development 02 program in the Alaska Industrial Development and Export Authority; and relating to 03 the interest rates of the Alaska Industrial Development and Export Authority." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 06 to read: 07 SHORT TITLE. This Act may be known as the Alaska Sustainable Strategy for 08 Energy Transmission and Supply (ASSETS) Act. 09 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 LEGISLATIVE INTENT. The legislature intends to appropriate, during fiscal years 12 2013 and 2014, amounts that total $250,000,000 to carry out the purposes of this Act. 13 * Sec. 3. AS 44.88.010(a) is amended to read: 14 (a) The legislature finds, determines, and declares that
01 (1) there exist areas of the state in which seasonal and nonseasonal 02 unemployment exist; 03 (2) this unemployment is a serious menace to the health, safety, and 04 general welfare, not only to the people in those areas, but also to the people of the 05 entire state; 06 (3) the state lacks the basic manufacturing, industrial, energy, export, 07 small business, and business enterprises and the other facilities referred to in this 08 subsection necessary to permit adequate development of its natural resources and the 09 balanced growth of its economy; 10 (4) the establishment and expansion of industrial, manufacturing, 11 energy, export, small business, and business enterprises in the state [ALASKA] and 12 the other facilities referred to in this subsection are essential to the development of the 13 natural resources and the long-term economic growth of the state, and will directly and 14 indirectly alleviate unemployment in the state; 15 (5) the expansion of export trade is vital to the health and growth of the 16 state's economy; 17 (6) many state [ALASKA] businesses could benefit from additional 18 financial and technical assistance with respect to the exportation of their products and 19 services; 20 (7) the [UNITED STATES] Export-Import Bank of the United States 21 has been mandated by the Export-Import Bank Act Amendments of 1983 to provide 22 technical assistance and export financing support to small businesses in cooperation 23 with state export finance agencies; 24 (8) Alaska-based exporters can be effectively assisted through the 25 establishment, as part of the Alaska Industrial Development and Export Authority, of 26 an export financing program designed to work with the [U.S.] Export-Import Bank of 27 the United States and other federal, state, and private institutions; 28 (9) the achievement of the goal of full employment, and of 29 establishment and continuing operation and development of industrial, manufacturing, 30 energy, export, small business, and business enterprises in the state will be accelerated 31 and facilitated by the creation of an instrumentality of the state with powers to incur
01 debt, to own and operate facilities, to make and insure loans to finance and to assist 02 private lenders to make loans to finance the establishment, operation, and development 03 of industrial, manufacturing, energy, export, small business, and business enterprises; 04 (10) it is in the public interest to promote the prosperity and general 05 welfare of all citizens of the state by 06 (A) stimulating commercial and industrial growth and 07 expansion by encouraging an increase of private investment by banks, 08 investment houses, insurance companies, and other financial institutions, 09 including pension and retirement funds, to help satisfy the need for economic 10 expansion; 11 (B) encouraging the production of raw materials and goods for 12 export, the expansion of exports and raw materials and goods, and the 13 rendering of services abroad by residents of the state through the establishment 14 of a program that provides financial assistance in cooperation with federal, 15 state, and private institutions for these purposes in the form provided in this 16 chapter; 17 (C) creating the Alaska Industrial Development and Export 18 Authority with the powers necessary to accomplish the objectives stated in this 19 paragraph, including the power to issue taxable and tax-exempt bonds and to 20 acquire ownership interests in projects as provided in this chapter; 21 (11) it is in the state's interest to import private capital to create new 22 economic activity which would not otherwise take place in the state. 23 * Sec. 4. AS 44.88.010(b) is amended to read: 24 (b) It is declared to be the policy of the state, in the interests of promoting the 25 health, security, and general welfare of all the people of the state, and a public 26 purpose, to increase job opportunities and otherwise to encourage the economic 27 growth of the state, including the development of its natural resources, through the 28 establishment and expansion of manufacturing, industrial, energy, export, small 29 business, and business enterprises and the other facilities referred to in (a) of this 30 section by creating the Alaska Industrial Development and Export Authority with the 31 powers, duties, and functions as provided in this chapter.
01 * Sec. 5. AS 44.88.105(d) is amended to read: 02 (d) The chair [CHAIRMAN] of the authority shall annually, not [NO] later 03 than January 2, certify in writing to the governor and the legislature the amount, if 04 any, required to restore a capital reserve fund to the capital reserve fund requirement. 05 The legislature may appropriate to the authority the amount certified by the chair 06 [CHAIRMAN] of the authority. The authority shall deposit the amounts appropriated 07 under this subsection during a fiscal year in the proper capital reserve fund. Nothing in 08 this section creates a debt or liability of the state. In this subsection, "capital reserve 09 fund" means a capital reserve fund that 10 (1) is created under this section on or before January 1, 1989; 11 (2) secures refunding bonds if the refunding bonds are issued to refund 12 bonds that are secured by a capital reserve fund created under this section on or before 13 January 1, 1989; or 14 (3) secures bonds issued on or after August 11, 1993, for an energy 15 project [A POWER TRANSMISSION INTERTIE]. 16 * Sec. 6. AS 44.88.155(d) is amended to read: 17 (d) A loan participation purchased by the authority with assets of the 18 enterprise development account or with proceeds of bonds secured by assets of the 19 enterprise development account 20 (1) may not exceed $20,000,000; however, in the case of a loan 21 participation for an energy project [A POWER TRANSMISSION INTERTIE], the 22 loan participation may exceed $20,000,000 with legislative approval; 23 (2) may not be purchased unless 24 (A) the project applicant is not, or, if the applicant is not a 25 single proprietorship, all members of the business enterprise or enterprises 26 constituting the project applicant are not, in default on another loan made by 27 the state or by a public corporation of the state; and 28 (B) at least 10 percent of the principal amount of the loan is 29 retained by the loan originator, or the loan is for financing improvements in 30 energy efficiency; 31 (3) may not be purchased if the loan to be purchased exceeds 75
01 percent of the appraised value of the collateral offered as security for the loan unless 02 the amount of the loan in excess of this limit is federally insured or guaranteed or is 03 insured by a qualified mortgage insurance company, except that the loan to be 04 purchased under this paragraph may not exceed the total of loan proceeds used to 05 refinance an existing debt plus the cost of new construction, expansion, or acquisition 06 unless the proceeds from the additional amounts of the loan to be purchased are 07 restricted to uses approved by the authority to finance commercial activity in the state 08 by a business enterprise; 09 (4) may not be purchased if the participation in the loan to be 10 purchased is for a term longer than the following, except that a loan under (A) or (C) 11 of this paragraph may not have a term longer than three-quarters of the authority's 12 estimate of the life of the collateral offered as security for the loan: 13 (A) 40 years from the date the loan is made in the case of a 14 loan participation for a project described in AS 44.88.900(9)(E); 15 (B) 50 years from the date the loan is made in the case of a loan 16 participation for an energy project [A POWER TRANSMISSION 17 INTERTIE]; 18 (C) 25 years from the date the loan is made in the case of a loan 19 participation for other projects; 20 (5) may be made only if the participation in the loan to be purchased 21 contains amortization provisions; the amortization provisions 22 (A) must be complete and satisfactory to the authority and 23 require periodic payments by the borrower; 24 (B) may allow the loan originator to amortize the portion of the 25 loan retained by the loan originator using a shorter amortization schedule than 26 the amortization schedule for the portion of the loan held by the authority if 27 (i) in the authority's opinion, the project financed can 28 support the increased debt service; and 29 (ii) the accelerated amortization schedule is required to 30 induce the originator to make the loan; 31 (6) may be made only if the participation in the loan to be purchased is
01 in the form and contains the terms and provisions with respect to insurance, repairs, 02 alterations, payment of taxes and assessments, default reserves, delinquency charges, 03 default remedies, acceleration of maturity, secondary liens, and other matters the 04 authority prescribes; and 05 (7) may be made only if the participation in the loan to be purchased is 06 secured as to repayment by a mortgage or other security instrument in the manner the 07 authority determines is feasible to assure timely repayment under the loan documents 08 entered into with the borrower. 09 * Sec. 7. AS 44.88.155(g) is amended to read: 10 (g) Notwithstanding any other provision of this section, the authority may 11 waive or modify the requirements of this section as it considers appropriate and 12 prudent in order to finance a project if the authority intends to own the project or in 13 order to finance an energy [A POWER TRANSMISSION INTERTIE] project. 14 * Sec. 8. AS 44.88.159(a) is amended to read: 15 (a) The interest rate on a loan purchased from the proceeds of tax-exempt 16 bonds secured by the sustainable energy transmission and supply development 17 fund (AS 44.88.710) under AS 44.88.700 - 44.88.740 or a loan participation 18 purchased from the proceeds of tax-exempt bonds or expected by the authority to be 19 purchased from the proceeds of tax-exempt bonds under AS 44.88.155 shall be 20 determined under the regulations adopted by the authority under 21 AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In 22 this subsection, "cost of funds" means the true interest cost expressed as a rate on tax- 23 exempt bonds of the authority plus an additional percentage as determined by the 24 authority to represent the allocable expenses of operation, costs of issuance, and loan 25 servicing costs. 26 * Sec. 9. AS 44.88.159(b) is amended to read: 27 (b) The interest rate on a loan purchased from the proceeds of taxable 28 bonds secured by the sustainable energy transmission and supply development 29 fund (AS 44.88.710) under AS 44.88.700 - 44.88.740 or a loan participation 30 purchased from the proceeds of taxable bonds under AS 44.88.155 or expected by the 31 authority to be purchased from the proceeds of taxable bonds under AS 44.88.155
01 shall be determined under the regulations adopted by the authority under 02 AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In 03 this subsection, "cost of funds" means the true interest cost expressed as a rate on 04 taxable bonds, plus an additional percentage as determined by the authority to 05 represent the allocable expenses of operation, costs of issuance, and loan servicing 06 costs. 07 * Sec. 10. AS 44.88.159(d) is amended to read: 08 (d) The provisions of this section apply only to a loan participation purchased 09 under AS 44.88.155 - 44.88.159 or to an energy loan made under AS 44.88.700 - 10 44.88.740. 11 * Sec. 11. AS 44.88.159(e) is amended to read: 12 (e) The interest rate on an energy loan made under AS 44.88.700 - 13 44.88.740 or a loan participation purchased directly from the assets of the authority 14 shall be determined under the regulations adopted by the authority under 15 AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as 16 determined by the authority to represent the allocable expenses of operation and costs 17 of loan origination and servicing, plus the cost of funds. In this subsection, 18 (1) "comparable financial security" means a type or category of 19 financial security the authority identifies in the regulations adopted by the authority 20 under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to 21 the term and financial conditions of a loan participation or an energy loan made 22 under AS 44.88.700 - 44.88.740 and for which a regularly published, nationally 23 recognized market index is available; 24 (2) "cost of funds" means the earnings, expressed as an annual interest 25 rate, the authority would receive on a comparable financial security, and, for a loan 26 participation or an energy loan made under AS 44.88.700 - 44.88.740 with a fixed 27 interest rate, the cost of funds must equal or exceed the minimum interest rate; 28 (3) "minimum interest rate" means the five-year return on investment 29 funds of the authority, expressed as an annual interest rate, achieved by all internal and 30 external investment managers of the authority combined. 31 * Sec. 12. AS 44.88.159(f) is amended to read:
01 (f) In determining an interest rate under the regulations adopted by the 02 authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the 03 minimum interest rate required under (a), (b), or (e) of this section for a loan 04 participation purchased by the authority or an energy loan made under 05 AS 44.88.700 - 44.88.740 to resolve lending limits or reserve restrictions imposed on 06 the financial institution and may instead determine to retain the interest rate existing at 07 the time the authority makes the loan or purchases the authority's loan 08 participation [A PORTION OF THE LOAN]. 09 * Sec. 13. AS 44.88.159(g) is amended to read: 10 (g) The authority may, in the regulations adopted by the authority under 11 AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations 12 determined by the authority to meet sufficient job creation, rural development, 13 renewable energy development, or other economic development criteria incentive 14 rate rebates of not more than one percent of the interest rate charged on the authority's 15 portion of a loan participation. The following standards apply to the program: 16 (1) the payment of an incentive rate rebate may reduce the interest rate 17 to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this 18 section; 19 (2) the authority may not commit to pay an incentive rate rebate for a 20 proposed loan participation if the total of the amount of the proposed loan 21 participation plus the combined outstanding balance of all loan participations for 22 which the authority has committed to pay incentive rate rebates would exceed five 23 percent of the total of the amount of the proposed loan participation plus the combined 24 outstanding balance of all loan participations of the authority; 25 (3) an incentive rate rebate may not accrue for more than five years 26 after the date the loan participation is purchased; 27 (4) the authority may establish a separate account for the incentive rate 28 rebate program. 29 * Sec. 14. AS 44.88 is amended by adding new sections to read: 30 Article 7A. Sustainable Energy Transmission and Supply. 31 Sec. 44.88.700. Sustainable energy transmission and supply development
01 program. The sustainable energy transmission and supply development program is 02 created in the authority to promote and provide financing for energy projects in the 03 state to alleviate unemployment and contribute to the state's economic welfare, 04 economic diversity, and economic development. 05 Sec. 44.88.710. Alaska Industrial Development and Export Authority 06 sustainable energy transmission and supply development fund. The Alaska 07 Industrial Development and Export Authority sustainable energy transmission and 08 supply development fund is established in the authority. The development fund 09 consists of appropriations made to the development fund by the legislature, money or 10 other assets transferred to the development fund by the authority, and unrestricted loan 11 repayments, interest, or other income earned on loans, investments, or assets of the 12 development fund. The development fund is not an account in the revolving loan fund 13 established in AS 44.88.060, and the authority shall account for the development fund 14 separately from the revolving fund. The authority may create additional accounts in 15 the development fund. Subject to agreements made with the holders of the authority's 16 bonds or with other persons, the authority may transfer amounts in an account in the 17 development fund to another account in the development fund. Amounts deposited in 18 the development fund may be pledged to the payment of bonds of the authority or 19 expended for the purposes of AS 44.88.700 - 44.88.740. The authority has the powers 20 and responsibilities established in AS 37.10.071 with respect to the investment of 21 amounts held in the development fund. 22 Sec. 44.88.720. Use of fund balance. Subject to the requirements of 23 AS 44.88.710 - 44.88.740, the authority may use money in the Alaska Industrial 24 Development and Export Authority sustainable energy transmission and supply 25 development fund to assist in the construction, improvement, rehabilitation, and 26 expansion of energy projects. 27 Sec. 44.88.730. Energy projects; powers and duties of the authority. (a) 28 Subject to the limitations of AS 44.88.740, for energy projects the authority may 29 (1) use the Alaska Industrial Development and Export Authority 30 sustainable energy transmission and supply development fund to finance qualified 31 projects, insure project obligations, guarantee loans or bonds, and establish reserves;
01 (2) acquire real or personal property by purchase, transfer, or 02 foreclosure when the acquisition is necessary to protect the authority's interest in 03 financing; 04 (3) defer principal payments or capitalize interest on energy project 05 financing; 06 (4) subject to AS 36.30.085(e), enter into lease agreements, sales- 07 lease-back agreements, build-operate-transfer, and operate-transfer agreements, or any 08 similar project financing agreement for a qualified energy project; 09 (5) enter into agreements with government entities for the transfer and 10 control of infrastructure, facilities, rights-of-way, and studies; 11 (6) contract for services with a professional advisor, including an 12 attorney, bond counsel, engineer, or other technical expert necessary to fulfill the 13 purposes of the program; and 14 (7) subject to AS 44.88.090, borrow money and issue bonds. 15 (b) The authority shall adopt regulations to implement AS 44.88.700 - 16 44.88.740, including 17 (1) an application process for acquiring financing under this section; 18 (2) qualifications for an energy project applying for financing under 19 this section; and 20 (3) fiscal controls and accounting procedures for the development 21 fund. 22 Sec. 44.88.740. Limitations on financing. (a) Unless the authority has 23 obtained legislative approval by law, the authority may not finance or participate in 24 financing of 25 (1) more than one-third of the capital cost of an energy project; or 26 (2) a loan guarantee that exceeds $20,000,000. 27 (b) Financing under AS 44.88.730 is limited to the life of an energy project, 28 which may not be more than 29 (1) 30 years; or 30 (2) 50 years for a transmission line or hydroelectric energy project. 31 * Sec. 15. AS 44.88.900 is amended by adding new paragraphs to read:
01 (15) "development fund" means the sustainable energy transmission 02 and supply development fund created in AS 44.88.710; 03 (16) "energy project" means a project in the state that involves 04 (A) transmission, generation, storage, or distribution of heat or 05 electricity; 06 (B) liquefaction, regasification, distribution, storage, or use of 07 natural gas; 08 (C) conversion of natural gas, coal, or biomass to liquids; 09 (D) processing, refining, or upgrading of oil; 10 (E) distribution or storage of refined petroleum products; or 11 (F) enhanced oil recovery or carbon sequestration. 12 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 REVISOR'S INSTRUCTION. References to "this chapter" in AS 44.88 apply to sec. 15 14 of this Act and so should not be changed.