SB 66: "An Act creating a new markets tax credit assistance guarantee and loan program within the Alaska Industrial Development and Export Authority; and providing for an effective date."
00 SENATE BILL NO. 66 01 "An Act creating a new markets tax credit assistance guarantee and loan program 02 within the Alaska Industrial Development and Export Authority; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 44.88.155(c) is amended to read: 06 (c) Money and other assets of the enterprise development account may be used 07 to secure bonds of the authority issued to finance the purchase of loans for projects, 08 [OR MAY BE USED] to purchase participation in the loans for projects, or to fund a 09 new markets tax credit assistance guarantee or loan under AS 44.88.700 - 10 44.88.799. 11 * Sec. 2. AS 44.88 is amended by adding a new article to read: 12 Article 8. New Markets Tax Credit Assistance Program. 13 Sec. 44.88.700. New markets tax credit assistance guarantees and loans. (a) 14 Subject to the requirements of AS 44.88.700 - 44.88.799, the authority may
01 (1) guarantee new markets tax credit assistance leveraged loans; and 02 (2) make new markets tax credit assistance leveraged loans. 03 (b) New markets tax credit assistance guarantees and loans are limited to 04 projects within the state for which new markets tax credits are allocated by a qualified 05 community development entity. 06 (c) The authority shall determine that the project will promote economic 07 development in the state before guaranteeing a leveraged loan or making a leveraged 08 loan under AS 44.88.700 - 44.88.799. 09 (d) The authority may agree to restrictions and guidelines arising from the 10 federal new markets tax credit program, including for the seven year tax credit period 11 of the new markets tax credit project 12 (1) interest only payments on the leveraged loan; 13 (2) substantially all capital to remain invested in the project; 14 (3) acceptable collateral may be an interest in a qualified community 15 development entity or an investment entity rather than in the project; and 16 (4) substantive restrictions on foreclosure of collateral. 17 Sec. 44.88.710. Effect of guarantee. (a) A guarantee under AS 44.88.700 - 18 44.88.799 does not create a debt or liability of the state. 19 (b) A guarantee under AS 44.88.700(a)(1) may not be terminated, canceled, or 20 revoked except under its terms. A guarantee held by a participating financial 21 institution is presumed to be valid. 22 Sec. 44.88.715. Qualifications of applicant for new loan guarantee. (a) A 23 business enterprise which qualifies for new markets tax credits for a project may apply 24 for a loan guarantee under AS 44.88.700(a)(1). 25 (b) The authority may establish additional applicant qualifications by 26 regulation. These qualifications may vary depending upon the type of business the 27 applicant is engaged in. 28 Sec. 44.88.720. Application loan guarantee. An applicant for a loan 29 guarantee shall provide information that the authority may require by regulation. The 30 authority may require submission of an economic benefit analysis prepared by a 31 person acceptable to the authority.
01 Sec. 44.88.730. Conditions of loan guarantee. (a) The authority may 02 guarantee a loan under AS 44.88.700 - 44.88.799 if the 03 (1) loan 04 (A) is commercially reasonable; 05 (B) contains payment provisions satisfactory to the authority; 06 and 07 (C) is secured by acceptable collateral; 08 (2) project 09 (A) is allocated new markets tax credits by a qualified 10 community development entity; 11 (B) promotes economic development in the state; and 12 (C) is not a housing project; 13 (3) borrower demonstrates the ability to repay the loan from either or 14 both of the following: 15 (A) net cash flow from the borrower; 16 (B) proceeds from the sale of current assets that are collateral 17 for the loan if the sale, or receipt of proceeds from the sale, is an event that 18 creates a payment obligation; in this subparagraph, "current asset" means 19 property that will be or could be converted into cash in the normal operation of 20 a business within one year; 21 (4) term of the loan does not exceed 10 years; 22 (5) loan is originated with and serviced by a financial institution. 23 (b) The authority may provide a guarantee for up to 100 percent of a loan that 24 qualifies under AS 44.88.700 - 44.88.799. 25 Sec. 44.88.740. Servicing of guaranteed loans. (a) The financial institution 26 that holds a loan guaranteed by the authority under AS 44.88.700 - 44.88.799 shall 27 (1) service the loan; 28 (2) exercise diligence in collecting amounts due under the loan; and 29 (3) comply with all requirements of the loan guarantee agreement. 30 (b) Amounts received toward satisfaction of a default on a loan guaranteed 31 under AS 44.88.700 - 44.88.799 shall be allocated between the lender and the fund
01 according to the guaranteed percentage of the loan until the principal balance and 02 accrued interest have been repaid. 03 Sec. 44.88.750. New markets tax credit assistance leveraged loan. (a) The 04 authority may make a new markets tax credit assistance leveraged loan under 05 AS 44.88.700(a)(2) only if the authority determines that an applicant for a new 06 markets tax credit assistance guarantee is unable to obtain a leveraged loan from a 07 financial institution under commercially reasonable terms. Before making the 08 determination, the authority shall require the applicant to document that at least two 09 financial institutions have reviewed an application for a leveraged loan for which the 10 authority would issue a new markets tax credit assistance guarantee for the loan, and 11 either rejected the application or approved the application subject to terms the 12 authority determines are commercially unreasonable. The authority may require the 13 applicant to submit applications for a leveraged loan to one or more additional 14 financial institutions. 15 (b) Subject to (a) of this section, the authority may make a new markets tax 16 credit assistance leveraged loan under AS 44.88.700 - 44.88.799 to the applicant to 17 finance a portion of the project using funds from the enterprise development account 18 (AS 44.88.155). 19 Sec. 44.88.760. Limitations of guarantees and leveraged loans. The 20 combined outstanding principal balance of loan guarantees and loans under 21 AS 44.88.700 - 44.88.799 may not exceed $50,000,000. 22 Sec. 44.88.770. Powers of the authority. The authority may 23 (1) adopt regulations to implement AS 44.88.700 - 44.88.799; 24 (2) establish terms and conditions for loan guarantees and loans, 25 subject to the requirements of AS 44.88.700 - 44.88.799; 26 (3) make and execute contracts and other instruments to implement 27 AS 44.88.700 - 44.88.799; 28 (4) charge reasonable fees and interest rates that the authority may 29 establish by regulation for the service it provides under AS 44.88.700 - 44.88.799; 30 (5) acquire real or personal property by purchase, transfer, or 31 foreclosure when the acquisition is necessary to protect the authority's interest in a
01 loan or a loan guarantee; 02 (6) exercise any other power necessary to implement AS 44.88.700 - 03 44.88.799; and 04 (7) to the extent the authority considers it to be in its best interest to do 05 so, use money to pay expenses relating to the liquidation of collateral securing loans 06 guaranteed or made by the authority under AS 44.88.700 - 44.88.799. 07 Sec. 44.88.799. Definitions. In AS 44.88.700 - 44.88.799, 08 (1) "federal new markets tax credit program" means the program 09 administered by the Community Development Financial Institutions Fund which 10 arises out of Section 45D of the Internal Revenue Code (26 U.S.C. 45D) and related 11 regulations; 12 (2) "new markets tax credit" means tax credits which arise out of 13 Section 45D of the Internal Revenue Code (26 U.S.C. 45D) and related regulations; 14 (3) "new markets tax credit assistance leveraged loan" and "leveraged 15 loan" mean a loan made into an investment entity, the proceeds of which, together 16 with other funds including tax credit equity, are invested as a qualified equity 17 investment in a qualified community development entity which will use the funds to 18 finance a project for which the entity allocates new markets tax credits; 19 (4) "qualified community development entity" has the same meaning 20 mean as the term is defined in Section 45D(c) of the Internal Revenue Code 21 (26 U.S.C. 45D(c)) and related regulations; and 22 (5) "qualified equity investment" means an equity investment in a 23 qualified community development entity which satisfies the conditions described in 24 Section 45D(b) of the Internal Revenue Code (26 U.S.C. 45D(b)) and related 25 regulations. 26 * Sec. 3. This Act takes effect immediately under AS 01.10.070(c).