CSSSSB 25(FIN): "An Act establishing the sustainable energy transmission and supply development program in the Alaska Industrial Development and Export Authority; relating to the interest rates of the Alaska Industrial Development and Export Authority; and relating to taxes paid on interests in property owned by the Alaska Industrial Development and Export Authority and to the local contribution for public education funding related to that property."
00 CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 25(FIN) 01 "An Act establishing the sustainable energy transmission and supply development 02 program in the Alaska Industrial Development and Export Authority; relating to the 03 interest rates of the Alaska Industrial Development and Export Authority; and relating 04 to taxes paid on interests in property owned by the Alaska Industrial Development and 05 Export Authority and to the local contribution for public education funding related to 06 that property." 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 SHORT TITLE. This Act may be known as the Alaska Sustainable Strategy for 11 Energy Transmission and Supply (ASSETS) Act. 12 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 13 read:
01 LEGISLATIVE INTENT. The legislature intends to appropriate, during fiscal years 02 2013 and 2014, amounts that total $250,000,000 to carry out the purposes of this Act. 03 * Sec. 3. AS 14.17.410(b) is amended to read: 04 (b) Public school funding consists of state aid, a required local contribution, 05 and eligible federal impact aid determined as follows: 06 (1) state aid equals basic need minus a required local contribution and 07 90 percent of eligible federal impact aid for that fiscal year; basic need equals the sum 08 obtained under (D) of this paragraph, multiplied by the base student allocation set out 09 in AS 14.17.470; district adjusted ADM is calculated as follows: 10 (A) the ADM of each school in the district is calculated by 11 applying the school size factor to the student count as set out in AS 14.17.450; 12 (B) the number obtained under (A) of this paragraph is 13 multiplied by the district cost factor described in AS 14.17.460; 14 (C) the ADMs of each school in a district, as adjusted 15 according to (A) and (B) of this paragraph, are added; the sum is then 16 multiplied by the special needs factor set out in AS 14.17.420(a)(1) and the 17 high school vocational education factor set out in AS 14.17.420(a)(3); 18 (D) the number obtained for intensive services under 19 AS 14.17.420(a)(2) and the number obtained for correspondence study under 20 AS 14.17.430 are added to the number obtained under (C) of this paragraph; 21 (E) notwithstanding (A) - (C) of this paragraph, if a school 22 district's ADM adjusted for school size under (A) of this paragraph decreases 23 by five percent or more from one fiscal year to the next fiscal year, the school 24 district may use the last fiscal year before the decrease as a base fiscal year to 25 offset the decrease, according to the following method: 26 (i) for the first fiscal year after the base fiscal year 27 determined under this subparagraph, the school district's ADM adjusted 28 for school size determined under (A) of this paragraph is calculated as 29 the district's ADM adjusted for school size, plus 75 percent of the 30 difference in the district's ADM adjusted for school size between the 31 base fiscal year and the first fiscal year after the base fiscal year;
01 (ii) for the second fiscal year after the base fiscal year 02 determined under this subparagraph, the school district's ADM adjusted 03 for school size determined under (A) of this paragraph is calculated as 04 the district's ADM adjusted for school size, plus 50 percent of the 05 difference in the district's ADM adjusted for school size between the 06 base fiscal year and the second fiscal year after the base fiscal year; 07 (iii) for the third fiscal year after the base fiscal year 08 determined under this subparagraph, the school district's ADM adjusted 09 for school size determined under (A) of this paragraph is calculated as 10 the district's ADM adjusted for school size, plus 25 percent of the 11 difference in the district's ADM adjusted for school size between the 12 base fiscal year and the third fiscal year after the base fiscal year; 13 (F) the method established in (E) of this paragraph is available 14 to a school district for the three fiscal years following the base fiscal year 15 determined under (E) of this paragraph only if the district's ADM adjusted for 16 school size determined under (A) of this paragraph for each fiscal year is less 17 than the district's ADM adjusted for school size in the base fiscal year; 18 (G) the method established in (E) of this paragraph does not 19 apply to a decrease in the district's ADM adjusted for school size resulting 20 from a loss of enrollment that occurs as a result of a boundary change under 21 AS 29; 22 (2) the required local contribution of a city or borough school district is 23 the equivalent of a four mill tax levy on the full and true value of the taxable real and 24 personal property in the district, excluding property owned by the Alaska 25 Industrial Development and Export Authority that is exempt from city or 26 borough tax, as of January 1 of the second preceding fiscal year, as determined by the 27 Department of Commerce, Community, and Economic Development under 28 AS 14.17.510 and AS 29.45.110, not to exceed 45 percent of a district's basic need for 29 the preceding fiscal year as determined under (1) of this subsection. 30 * Sec. 4. AS 14.17.410(c) is amended to read: 31 (c) In addition to the local contribution required under (b)(2) of this section, a
01 city or borough school district in a fiscal year may make a local contribution of not 02 more than the greater of 03 (1) the equivalent of a two mill tax levy on the full and true value of 04 the taxable real and personal property in the district, excluding property owned by 05 the Alaska Industrial Development and Export Authority that is exempt from 06 city or borough tax, as of January 1 of the second preceding fiscal year, as 07 determined by the Department of Commerce, Community, and Economic 08 Development under AS 14.17.510 and AS 29.45.110; or 09 (2) 23 percent of the district's basic need for the fiscal year under 10 (b)(1) of this section. 11 * Sec. 5. AS 14.17.490(b) is amended to read: 12 (b) A city or borough school district is not eligible for additional funding 13 authorized under (a) of this section unless, during the fiscal year in which the district 14 receives funding under (a) of this section, the district received a local contribution 15 equal to at least the equivalent of a four mill tax levy on the full and true value of the 16 taxable real and personal property in the district, excluding property owned by the 17 Alaska Industrial Development and Export Authority that is exempt from city or 18 borough tax, as of January 1 of the second preceding fiscal year as determined by the 19 Department of Commerce, Community, and Economic Development under 20 AS 14.17.510 and AS 29.45.110. 21 * Sec. 6. AS 44.88.010(a) is amended to read: 22 (a) The legislature finds, determines, and declares that 23 (1) there exist areas of the state in which seasonal and nonseasonal 24 unemployment exist; 25 (2) this unemployment is a serious menace to the health, safety, and 26 general welfare, not only to the people in those areas, but also to the people of the 27 entire state; 28 (3) the state lacks the basic manufacturing, industrial, energy, export, 29 small business, and business enterprises and the other facilities referred to in this 30 subsection necessary to permit adequate development of its natural resources and the 31 balanced growth of its economy;
01 (4) the establishment and expansion of industrial, manufacturing, 02 energy, export, small business, and business enterprises in the state [ALASKA] and 03 the other facilities referred to in this subsection are essential to the development of the 04 natural resources and the long-term economic growth of the state, and will directly and 05 indirectly alleviate unemployment in the state; 06 (5) the expansion of export trade is vital to the health and growth of the 07 state's economy; 08 (6) many state [ALASKA] businesses could benefit from additional 09 financial and technical assistance with respect to the exportation of their products and 10 services; 11 (7) the [UNITED STATES] Export-Import Bank of the United States 12 has been mandated by the Export-Import Bank Act Amendments of 1983 to provide 13 technical assistance and export financing support to small businesses in cooperation 14 with state export finance agencies; 15 (8) Alaska-based exporters can be effectively assisted through the 16 establishment, as part of the Alaska Industrial Development and Export Authority, of 17 an export financing program designed to work with the [U.S.] Export-Import Bank of 18 the United States and other federal, state, and private institutions; 19 (9) the achievement of the goal of full employment, and of 20 establishment and continuing operation and development of industrial, manufacturing, 21 energy, export, small business, and business enterprises in the state will be accelerated 22 and facilitated by the creation of an instrumentality of the state with powers to incur 23 debt, to own and operate facilities, to make and insure loans to finance and to assist 24 private lenders to make loans to finance the establishment, operation, and development 25 of industrial, manufacturing, energy, export, small business, and business enterprises; 26 (10) it is in the public interest to promote the prosperity and general 27 welfare of all citizens of the state by 28 (A) stimulating commercial and industrial growth and 29 expansion by encouraging an increase of private investment by banks, 30 investment houses, insurance companies, and other financial institutions, 31 including pension and retirement funds, to help satisfy the need for economic
01 expansion; 02 (B) encouraging the production of raw materials and goods for 03 export, the expansion of exports and raw materials and goods, and the 04 rendering of services abroad by residents of the state through the establishment 05 of a program that provides financial assistance in cooperation with federal, 06 state, and private institutions for these purposes in the form provided in this 07 chapter; 08 (C) creating the Alaska Industrial Development and Export 09 Authority with the powers necessary to accomplish the objectives stated in this 10 paragraph, including the power to issue taxable and tax-exempt bonds and to 11 acquire ownership interests in projects as provided in this chapter; 12 (11) it is in the state's interest to import private capital to create new 13 economic activity which would not otherwise take place in the state. 14 * Sec. 7. AS 44.88.010(b) is amended to read: 15 (b) It is declared to be the policy of the state, in the interests of promoting the 16 health, security, and general welfare of all the people of the state, and a public 17 purpose, to increase job opportunities and otherwise to encourage the economic 18 growth of the state, including the development of its natural resources, through the 19 establishment and expansion of manufacturing, industrial, energy, export, small 20 business, and business enterprises and the other facilities referred to in (a) of this 21 section by creating the Alaska Industrial Development and Export Authority with the 22 powers, duties, and functions as provided in this chapter. 23 * Sec. 8. AS 44.88.155(d) is amended to read: 24 (d) A loan participation purchased by the authority with assets of the 25 enterprise development account or with proceeds of bonds secured by assets of the 26 enterprise development account 27 (1) may not exceed $20,000,000; however, in the case of a loan 28 participation for qualified energy development [A POWER TRANSMISSION 29 INTERTIE], the loan participation may exceed $20,000,000 with legislative approval; 30 (2) may not be purchased unless 31 (A) the project applicant is not, or, if the applicant is not a
01 single proprietorship, all members of the business enterprise or enterprises 02 constituting the project applicant are not, in default on another loan made by 03 the state or by a public corporation of the state; and 04 (B) at least 10 percent of the principal amount of the loan is 05 retained by the loan originator, or the loan is for financing improvements in 06 energy efficiency; 07 (3) may not be purchased if the loan to be purchased exceeds 75 08 percent of the appraised value of the collateral offered as security for the loan unless 09 the amount of the loan in excess of this limit is federally insured or guaranteed or is 10 insured by a qualified mortgage insurance company, except that the loan to be 11 purchased under this paragraph may not exceed the total of loan proceeds used to 12 refinance an existing debt plus the cost of new construction, expansion, or acquisition 13 unless the proceeds from the additional amounts of the loan to be purchased are 14 restricted to uses approved by the authority to finance commercial activity in the state 15 by a business enterprise; 16 (4) may not be purchased if the participation in the loan to be 17 purchased is for a term longer than the following, except that a loan under (A) or (C) 18 of this paragraph may not have a term longer than three-quarters of the authority's 19 estimate of the life of the collateral offered as security for the loan: 20 (A) 40 years from the date the loan is made in the case of a 21 loan participation for a project described in AS 44.88.900(9)(E); 22 (B) 50 years from the date the loan is made in the case of a loan 23 participation for qualified energy development [A POWER 24 TRANSMISSION INTERTIE]; 25 (C) 25 years from the date the loan is made in the case of a loan 26 participation for other projects; 27 (5) may be made only if the participation in the loan to be purchased 28 contains amortization provisions; the amortization provisions 29 (A) must be complete and satisfactory to the authority and 30 require periodic payments by the borrower; 31 (B) may allow the loan originator to amortize the portion of the
01 loan retained by the loan originator using a shorter amortization schedule than 02 the amortization schedule for the portion of the loan held by the authority if 03 (i) in the authority's opinion, the project financed can 04 support the increased debt service; and 05 (ii) the accelerated amortization schedule is required to 06 induce the originator to make the loan; 07 (6) may be made only if the participation in the loan to be purchased is 08 in the form and contains the terms and provisions with respect to insurance, repairs, 09 alterations, payment of taxes and assessments, default reserves, delinquency charges, 10 default remedies, acceleration of maturity, secondary liens, and other matters the 11 authority prescribes; and 12 (7) may be made only if the participation in the loan to be purchased is 13 secured as to repayment by a mortgage or other security instrument in the manner the 14 authority determines is feasible to assure timely repayment under the loan documents 15 entered into with the borrower. 16 * Sec. 9. AS 44.88.155(g) is amended to read: 17 (g) Notwithstanding any other provision of this section, the authority may 18 waive or modify the requirements of this section as it considers appropriate and 19 prudent in order to finance a project if the authority intends to own the project or in 20 order to finance qualified energy development [A POWER TRANSMISSION 21 INTERTIE PROJECT]. 22 * Sec. 10. AS 44.88.159(a) is amended to read: 23 (a) The interest rate on a loan purchased from the proceeds of tax-exempt 24 bonds secured by the sustainable energy transmission and supply development 25 fund (AS 44.88.710) under AS 44.88.700 - 44.88.740 or a loan participation 26 purchased from the proceeds of tax-exempt bonds or expected by the authority to be 27 purchased from the proceeds of tax-exempt bonds under AS 44.88.155 shall be 28 determined under the regulations adopted by the authority under 29 AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In 30 this subsection, "cost of funds" means the true interest cost expressed as a rate on tax- 31 exempt bonds of the authority plus an additional percentage as determined by the
01 authority to represent the allocable expenses of operation, costs of issuance, and loan 02 servicing costs. 03 * Sec. 11. AS 44.88.159(b) is amended to read: 04 (b) The interest rate on a loan purchased from the proceeds of taxable 05 bonds secured by the sustainable energy transmission and supply development 06 fund (AS 44.88.710) under AS 44.88.700 - 44.88.740 or a loan participation 07 purchased from the proceeds of taxable bonds under AS 44.88.155 or expected by the 08 authority to be purchased from the proceeds of taxable bonds under AS 44.88.155 09 shall be determined under the regulations adopted by the authority under 10 AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In 11 this subsection, "cost of funds" means the true interest cost expressed as a rate on 12 taxable bonds, plus an additional percentage as determined by the authority to 13 represent the allocable expenses of operation, costs of issuance, and loan servicing 14 costs. 15 * Sec. 12. AS 44.88.159(d) is amended to read: 16 (d) The provisions of this section apply only to a loan participation purchased 17 under AS 44.88.155 - 44.88.159 or to a loan made under AS 44.88.700 - 44.88.740. 18 * Sec. 13. AS 44.88.159(e) is amended to read: 19 (e) The interest rate on a loan made under AS 44.88.700 - 44.88.740 or a 20 loan participation purchased directly from the assets of the authority shall be 21 determined under the regulations adopted by the authority under 22 AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as 23 determined by the authority to represent the allocable expenses of operation and costs 24 of loan origination and servicing, plus the cost of funds. In this subsection, 25 (1) "comparable financial security" means a type or category of 26 financial security the authority identifies in the regulations adopted by the authority 27 under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to 28 the term and financial conditions of a loan participation or a loan made under 29 AS 44.88.700 - 44.88.740 and for which a regularly published, nationally recognized 30 market index is available; 31 (2) "cost of funds" means the earnings, expressed as an annual interest
01 rate, the authority would receive on a comparable financial security, and, for a loan 02 participation or a loan made under AS 44.88.700 - 44.88.740 with a fixed interest 03 rate, the cost of funds must equal or exceed the minimum interest rate; 04 (3) "minimum interest rate" means the five-year return on investment 05 funds of the authority, expressed as an annual interest rate, achieved by all internal and 06 external investment managers of the authority combined. 07 * Sec. 14. AS 44.88.159(f) is amended to read: 08 (f) In determining an interest rate under the regulations adopted by the 09 authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the 10 minimum interest rate required under (a), (b), or (e) of this section for a loan 11 participation purchased by the authority or a loan made under AS 44.88.700 - 12 44.88.740 to resolve lending limits or reserve restrictions imposed on the financial 13 institution and may instead determine to retain the interest rate existing at the time the 14 authority makes the loan or purchases the authority's loan participation [A 15 PORTION OF THE LOAN]. 16 * Sec. 15. AS 44.88.159(g) is amended to read: 17 (g) The authority may, in the regulations adopted by the authority under 18 AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations 19 determined by the authority to meet sufficient job creation, rural development, 20 renewable energy development, or other economic development criteria incentive 21 rate rebates of not more than one percent of the interest rate charged on the authority's 22 portion of a loan participation. The following standards apply to the program: 23 (1) the payment of an incentive rate rebate may reduce the interest rate 24 to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this 25 section; 26 (2) the authority may not commit to pay an incentive rate rebate for a 27 proposed loan participation if the total of the amount of the proposed loan 28 participation plus the combined outstanding balance of all loan participations for 29 which the authority has committed to pay incentive rate rebates would exceed five 30 percent of the total of the amount of the proposed loan participation plus the combined 31 outstanding balance of all loan participations of the authority;
01 (3) an incentive rate rebate may not accrue for more than five years 02 after the date the loan participation is purchased; 03 (4) the authority may establish a separate account for the incentive rate 04 rebate program. 05 * Sec. 16. AS 44.88 is amended by adding new sections to read: 06 Article 7A. Sustainable Energy Transmission and Supply. 07 Sec. 44.88.700. Sustainable energy transmission and supply development 08 program. The sustainable energy transmission and supply development program is 09 created in the authority to promote and provide financing for qualified energy 10 development in the state to alleviate unemployment and contribute to the state's 11 economic welfare, economic diversity, and economic development. 12 Sec. 44.88.710. Alaska Industrial Development and Export Authority 13 sustainable energy transmission and supply development fund. The Alaska 14 Industrial Development and Export Authority sustainable energy transmission and 15 supply development fund is established in the authority. The development fund 16 consists of appropriations made to the development fund by the legislature, money or 17 other assets transferred to the development fund by the authority, and unrestricted loan 18 repayments, interest, or other income earned on loans, investments, or assets of the 19 development fund. The development fund is not an account in the revolving loan fund 20 established in AS 44.88.060, and the authority shall account for the development fund 21 separately from the revolving fund. The authority may create additional accounts in 22 the development fund. Subject to agreements made with the holders of the authority's 23 bonds or with other persons, the authority may transfer amounts in an account in the 24 development fund to another account in the development fund. Amounts deposited in 25 the development fund may be pledged to the payment of bonds of the authority or 26 expended for the purposes of AS 44.88.700 - 44.88.740. The authority has the powers 27 and responsibilities established in AS 37.10.071 with respect to the investment of 28 amounts held in the development fund. 29 Sec. 44.88.720. Use of fund balance. Subject to the requirements of 30 AS 44.88.710 - 44.88.740, the authority may use money in the Alaska Industrial 31 Development and Export Authority sustainable energy transmission and supply
01 development fund to assist in the construction, improvement, rehabilitation, and 02 expansion of qualified energy development. 03 Sec. 44.88.730. Qualified energy development; powers and duties of the 04 authority. (a) Subject to the limitations of AS 44.88.740, for qualified energy 05 development, the authority may 06 (1) use the Alaska Industrial Development and Export Authority 07 sustainable energy transmission and supply development fund to finance qualified 08 energy development, insure project obligations, guarantee loans or bonds, and 09 establish reserves; 10 (2) acquire real or personal property by purchase, transfer, or 11 foreclosure when the acquisition is necessary to protect the authority's interest in 12 financing; 13 (3) defer principal payments or capitalize interest on qualified energy 14 development financing; 15 (4) subject to AS 36.30.085(e), enter into lease agreements, sales- 16 lease-back agreements, build-operate-transfer, and operate-transfer agreements, or any 17 similar project financing agreement for a qualified energy development; 18 (5) enter into agreements with government entities for the transfer and 19 control of infrastructure, facilities, rights-of-way, and studies; 20 (6) contract for services with a professional advisor, including an 21 attorney, bond counsel, engineer, or other technical expert necessary to fulfill the 22 purposes of the program; 23 (7) subject to AS 44.88.090, borrow money and issue bonds; and 24 (8) pay off the principal of and interest on bonds issued by a 25 municipality to acquire, construct, improve, or equip a public utility if the municipality 26 continues to pay the authority the bond payments due under the terms of the bonds; the 27 authority shall retain the payments from the municipality in a sinking fund, and the 28 municipality may apply to use the funds for qualified energy development. 29 (b) The authority shall adopt regulations to implement AS 44.88.700 - 30 44.88.740, including 31 (1) an application process for acquiring financing under this section;
01 (2) qualifications for qualified energy development projects applying 02 for financing under this section; and 03 (3) fiscal controls and accounting procedures for the development 04 fund. 05 Sec. 44.88.740. Limitations on financing. (a) Unless the authority has 06 obtained legislative approval by law, the authority may not finance or participate in 07 financing of 08 (1) more than one-third of the capital cost of qualified energy 09 development; or 10 (2) a loan guarantee that exceeds $20,000,000. 11 (b) Financing under AS 44.88.730 is limited to the life of qualified energy 12 development, which may not be more than 13 (1) 30 years; or 14 (2) 50 years for a transmission line or hydroelectric qualified energy 15 development. 16 * Sec. 17. AS 44.88.900 is amended by adding new paragraphs to read: 17 (15) "development fund" means the sustainable energy transmission 18 and supply development fund created in AS 44.88.710; 19 (16) "qualified energy development" means a project in the state that 20 involves 21 (A) transmission, generation, conservation, storage, or 22 distribution of heat or electricity; 23 (B) liquefaction, regasification, distribution, storage, or use of 24 natural gas; 25 (C) distribution or storage of refined petroleum products. 26 * Sec. 18. Sections 2 and 8, ch. 10, SLA 2010, are repealed. 27 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 REVISOR'S INSTRUCTION. References to "this chapter" in AS 44.88 apply to sec. 30 16 of this Act and so should not be changed.