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