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HB 376: "An Act establishing a state bank; relating to insurance, mortgage lending, securities, and permanent fund dividends; and providing for an effective date."

00                             HOUSE BILL NO. 376                                                                          
01 "An Act establishing a state bank; relating to insurance, mortgage lending, securities,                                 
02 and permanent fund dividends; and providing for an effective date."                                                     
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 06.60.015(a) is amended to read:                                                                   
05            (a)  The following persons are exempt from the mortgage lender or mortgage                                   
06       broker licensing requirements of this chapter:                                                                    
07                 (1)  a depository institution;                                                                          
08                 (2)  a subsidiary that is                                                                               
09                      (A)  owned and controlled by a depository institution; and                                         
10                      (B)  regulated by a federal banking agency;                                                        
11                 (3)  an institution regulated by the Farm Credit Administration; or                                     
12                 (4)  a federal, state, or local government agency, including an agency                                  
13       that arranges or provides financing for mortgage loans, and the Alaska State Bank                             
14       established under AS 44.90.010.                                                                               
01    * Sec. 2. AS 36.30.990(1) is amended to read:                                                                      
02                 (1)  "agency"                                                                                           
03 (A)  means a department, institution, board, commission,                                                                
04 division, authority, public corporation, the Alaska Pioneers' Home, the Alaska                                          
05 Veterans' Home, or other administrative unit of the executive branch of state                                           
06            government;                                                                                                  
07                      (B)  does not include                                                                              
08                           (i)  the University of Alaska;                                                                
09                           (ii)  the Alaska Railroad Corporation;                                                        
10                           (iii)  the Alaska Housing Finance Corporation;                                                
11 (iv)  a regional Native housing authority created under                                                                 
12 AS 18.55.996 or a regional electrical authority created under                                                           
13                 AS 18.57.020;                                                                                           
14 (v)  the Department of Transportation and Public                                                                        
15 Facilities, in regard to the repair, maintenance, and reconstruction of                                                 
16 vessels, docking facilities, and passenger and vehicle transfer facilities                                              
17                 of the Alaska marine highway system;                                                                    
18                           (vi)  the Alaska Aerospace Corporation;                                                       
19                           (vii)  the Alaska Retirement Management Board;                                                
20                           (viii)  the Alaska Seafood Marketing Institute;                                               
21 (ix)  the Alaska children's trust and the Alaska                                                                        
22                 Children's Trust Board;                                                                                 
23 (x)  the Alaska Industrial Development and Export                                                                       
24                 Authority;                                                                                              
25                           (xi)  the Alaska State Bank;                                                              
26    * Sec. 3. AS 39.25.110(11) is amended to read:                                                                     
27 (11)  the officers and employees of the following boards, commissions,                                                  
28       and authorities:                                                                                                  
29                      (A)  [REPEALED                                                                                     
30                      (B)]  Alaska Permanent Fund Corporation;                                                           
31 (B) [(C)]  Alaska Industrial Development and Export Authority;                                                      
01                      (C) [(D)]  Alaska Commercial Fisheries Entry Commission;                                       
02                      (D) [(E)]  Alaska Commission on Postsecondary Education;                                       
03                      (E) [(F)]  Alaska Aerospace Corporation;                                                       
04                      (F) [(G)  REPEALED                                                                             
05                      (H)]  Alaska Gasline Development Corporation and subsidiaries                                      
06            of the Alaska Gasline Development Corporation;                                                               
07                      (G)  Alaska State Bank;                                                                        
08    * Sec. 4. AS 39.50.200(b) is amended by adding a new paragraph to read:                                            
09                 (65)  the board of directors of the Alaska State Bank (AS 44.90.100).                                   
10    * Sec. 5. AS 43.23 is amended by adding a new section to read:                                                     
11 Sec. 43.23.058. Purchase of Alaska State Bank shares. (a) An applicant for a                                          
12 permanent fund dividend who is eligible under this chapter to receive a permanent                                       
13 fund dividend, or the applicant's authorized representative, may direct that all or part                                
14 of the amount of the dividend payment be used to purchase shares of the Alaska State                                    
15       Bank established under AS 44.90.010 at a discounted rate.                                                         
16 (b)  The department shall prepare the permanent fund dividend application to                                            
17 allow an applicant, or the applicant's authorized representative, to direct the                                         
18 department to purchase shares of the Alaska State Bank established under                                                
19 AS 44.90.010 at a discounted rate, as authorized under (a) of this section, and to                                      
20 provide the information that the department determines is necessary to implement (a)                                    
21       of this section.                                                                                                  
22    * Sec. 6. AS 44 is amended by adding a new chapter to read:                                                        
23                      Chapter 90. Alaska State Bank.                                                                   
24                 Article 1. Establishment, Name, and Purposes.                                                         
25 Sec. 44.90.010. Establishment of bank. (a) The Alaska State Bank is                                                   
26 established in the department as a public corporation of the state. The exercise by the                                 
27 bank of the powers given to the bank under this chapter is considered to be for a public                                
28       purpose.                                                                                                          
29 (b)  The primary purpose of the bank is to promote infrastructure, education,                                           
30 science, technology, infrastructure maintenance, engineering, and productive capacity                                   
31 in the state through the sale or leveraging of financial instrument packages, including                                 
01       the sale or leveraging of financial instrument packages that facilitates access to                                
02       Federal Reserve System and United States Department of the Treasury                                               
03 (1)  transactions that provide reserve and capital requirements for the                                                 
04 bank to use in fractional reserve banking; in this paragraph, "fractional reserve                                       
05 banking" means a process by which a bank holds reserves that are a fraction of the                                      
06       amount of its deposit liability; and                                                                              
07                 (2)  funds that can be distributed for other purposes of the bank.                                      
08            (c)  The bank is not subject to regulation by the department under AS 06.01 or                               
09       AS 06.05. The bank is subject to regulation by the department under AS 21 when it                                 
10 offers insurance. The bank is exempt from AS 45.45.010 - 45.45.090 when lending                                         
11 money under this chapter. The bank is not subject to AS 10.06 (Alaska Corporations                                      
12       Code) or AS 10.20 (Alaska Nonprofit Corporation Act).                                                             
13 (d)  The bank shall exercise the powers granted by this chapter for the benefit                                         
14 of the people of the state, for their well-being and prosperity, and for the improvement                                
15       of their social and economic conditions.                                                                          
16 Sec. 44.90.020. Use of name. (a) The bank shall conduct business under the                                            
17       name of "Alaska State Bank."                                                                                      
18 (b)  Within the scope of authority that the bank grants, the president of the                                           
19 bank may execute instruments on behalf of the bank, including an instrument that                                        
20       grants, conveys, or otherwise affects an interest in or lien on real or personal property.                        
21 (c)  An officer or employee of the bank may execute instruments on behalf of                                            
22 the bank if the board authorizes the officer or employee to execute the instruments on                                  
23       behalf of the bank.                                                                                               
24 Sec. 44.90.030. Other purposes of the bank. In addition to the primary                                                
25       purposes of the bank described in AS 44.90.010(b), the purposes of the bank are to                                
26 (1)  provide financing, insurance, and funding for economic                                                             
27 development projects and packages of financial instruments in the state; in this                                        
28 paragraph, "economic development project" includes a project for infrastructure,                                        
29       infrastructure maintenance, and productive capacity;                                                              
30                 (2)  provide stability to the financial sector in the state;                                            
31 (3)  facilitate transactions with the Federal Reserve System and the                                                    
01       United States Department of the Treasury;                                                                         
02                 (4)  receive funding from the state and the federal government;                                         
03                 (5)  increase access to capital and financial services for new and                                      
04       existing businesses and the customers of those businesses;                                                        
05                 (6)  promote long-term economic growth in the state;                                                    
06                 (7)  reduce the costs of public and private banking and financial                                       
07       services;                                                                                                         
08                 (8)  promote science, technology, and engineering in the state;                                         
09                 (9)  increase the economic efficiency and productivity of the state and                                 
10       of individuals in the state;                                                                                      
11                 (10)  leverage packages of bonds, grants, and stocks;                                                   
12                 (11)  increase educational levels in the state; and                                                     
13                 (12)  provide grants to schools, colleges, and universities in the state.                               
14                 Article 2. Management and Operation of Bank.                                                          
15 Sec. 44.90.100. Board of directors. (a) A board of directors shall manage the                                         
16       bank.                                                                                                             
17 (b)  The board shall specify locations for and maintain places of business in                                           
18 which the bank will operate and shall adopt and enforce bylaws and procedures for the                                   
19       transaction of the bank's business.                                                                               
20 Sec. 44.90.110. Composition of board. The board consists of the governor,                                             
21 the commissioner of commerce, community, and economic development, the                                                  
22 commissioner of revenue, and the commissioner of labor and workforce development.                                       
23 Three members of the board constitute a quorum to transact business and exercise the                                    
24       rights, duties, and powers of the board.                                                                          
25 Sec. 44.90.120. Board chair and officers. The governor shall act as the chair                                         
26       of the board. The board shall select the president and other officers of the bank.                                
27 Sec. 44.90.130. Employees. The bank may hire employees. The executive                                                 
28 director, other officers of the bank, and employees of the bank are state employees and                                 
29       are in the exempt service under AS 39.25.                                                                         
30 Sec. 44.90.140. Advisory board. (a) The board shall appoint an advisory                                               
31       board of directors. The advisory board shall consist of seven members.                                            
01 (b)  The members of the advisory board shall consist of representatives of the                                          
02 financial, business, agricultural, and labor sectors of the state and a representative                                  
03 from the University of Alaska. The members of the advisory board may include                                            
04       employees of the bank.                                                                                            
05 Sec. 44.90.150. Advisory board meetings and activities. (a) The advisory                                              
06 board shall meet regularly with the management of the bank to review the bank's                                         
07 operations and finances to determine whether the advisory board has                                                     
08 recommendations to improve management performance, customer service, and the                                            
09       internal methods, procedures, and operating policies of the bank.                                                 
10 (b)  The advisory board shall meet regularly with the board to discuss the                                              
11 advisory board's recommendations and to provide advice, expertise, and information at                                   
12       the request of the board.                                                                                         
13 (c)  The advisory board shall recommend to the board the criteria for the board                                         
14 to establish for placing a project in a category under AS 44.90.610 and, for each                                       
15 investment proposal the bank receives, the category under AS 44.90.610 in which the                                     
16       board shall place the investment proposal.                                                                        
17 (d)  At the request of the board, the advisory board shall recommend additional                                         
18       objectives for the bank's operations.                                                                             
19 (e)  The advisory board shall provide advice and consultation to the board                                              
20       regarding the appointment of bank officers.                                                                       
21 (f)  The members of the advisory board shall participate as voting members on                                           
22       loan committees.                                                                                                  
23 (g)  The advisory board shall recommend objectives for the bank to achieve the                                          
24       bank's science, technology, infrastructure, and productive capacity goals.                                        
25 (h)  The advisory board shall meet with the public on a regular schedule to                                             
26       provide the public with information on its activities.                                                            
27 Sec. 44.90.160. Review committee. (a) The board shall establish and maintain                                          
28 a review committee to review investment proposals submitted to the bank and to assist                                   
29 the persons submitting the investment proposals to provide investment proposals that                                    
30       are complete and coherent.                                                                                        
31 (b)  The board shall identify and make public the requirements that the review                                          
01       committee applies when reviewing investment proposals to determine whether the                                    
02       investment proposals are complete and coherent.                                                                   
03            (c)  The members of the review committee may not be members of the board                                     
04       or members of the advisory board.                                                                                 
05            Sec. 44.90.170. Confidentiality of records. The following records of the bank                              
06       are confidential and are not public records subject to disclosure under AS 40.25.110 -                            
07       40.25.121:                                                                                                        
08                 (1)  commercial and financial information of a customer of the bank,                                    
09       whether obtained directly or indirectly, except as required by a court;                                           
10 (2)  internal or interagency memoranda or letters, except as required by                                                
11       a court;                                                                                                          
12 (3)  except as provided in AS 44.90.700, information that is contained                                                  
13 in or related to an examination, operating, or condition report prepared by, on behalf                                  
14 of, or for the use of a state or federal agency responsible for regulating or supervising                               
15       activities of the bank.                                                                                           
16 Sec. 44.90.180. Cooperation with authority. The board may work with the                                               
17 Alaska Industrial Development and Export Authority on bank projects under this                                          
18       chapter, including funding projects jointly.                                                                      
19 Sec. 44.90.190. Contracts and procurement. The bank is not subject to the                                             
20 procurement requirements of AS 36.30 when the bank procures services or property                                        
21 for use by the bank. The bank may contract with professional advisors, counsel,                                         
22 technical experts, and agents to carry out the bank's powers and duties under this                                      
23       chapter.                                                                                                          
24                   Article 3. Powers and Duties of the Bank.                                                           
25            Sec. 44.90.200. Bank powers. The bank may                                                                  
26 (1)  solicit, receive, and accept money or its equivalent on deposit from                                               
27 private customers, whether the deposit is made subject to a check or is evidenced by a                                  
28       certificate of deposit, passbook, note, receipt, or other writing;                                                
29 (2)  negotiate for and discount promissory notes and other evidences of                                                 
30 indebtedness, sell and buy money or its equivalent, lend money on personal or real                                      
31       property or other security, and perform other similar financial operations;                                       
01                 (3)  sell shares in the bank;                                                                           
02                 (4)  accept appropriations of money by the legislature;                                                 
03                 (5)  provide its services to persons in the state, in the United States, and                            
04       outside the United States;                                                                                        
05                 (6)  make, purchase, guarantee, or hold loans                                                           
06                      (A)  for state and federal financial institutions or other financial                               
07            institutions;                                                                                                
08                      (B)  that are obtained as security pledged for, or that originated                                 
09            in the restructuring of, a loan that the bank originates or participates in;                                 
10                      (C)  for agencies or other instrumentalities of this state; or                                     
11 (D)  that the United States or an agency of the United States                                                           
12            insures or guarantees in whole or in part;                                                                   
13 (7)  make participation loans or purchase participation interests in loans                                              
14 that are made or held by a bank, bank holding company, lending agency, or other                                         
15 financial institution if the loan meets underwriting standards that are generally                                       
16       accepted by state or federal financial regulatory agencies;                                                       
17 (8)  invest money of the bank in a manner consistent with the policies                                                  
18       of the board;                                                                                                     
19 (9)  lease, assign, sell, exchange, transfer, convey, grant, pledge, or                                                 
20       mortgage real and personal property;                                                                              
21 (10)  perform the acts necessary, convenient, advisable, or desirable to                                                
22 carry out the powers expressly granted or necessarily implied in this chapter, through                                  
23       its president, officers, agents, or employees, or by contracts with another person;                               
24                 (11)  act as a custodian institution for financial institutions;                                        
25                 (12)  issue bank loans to a financial institution;                                                      
26 (13)  take the action necessary to satisfy federal requirements for the                                                 
27 operation of the bank, including obtaining insurance for depositors from the Federal                                    
28       Deposit Insurance Corporation;                                                                                    
29 (14)  perform the functions and provide the services of a clearinghouse,                                                
30 including providing domestic and foreign exchange, and rediscount commercial paper                                      
31       on terms prescribed by the board;                                                                                 
01                 (15)  issue loans to a partnership or to form a partnership;                                            
02                 (16)  make loans for large projects involving state infrastructure,                                     
03       natural resources, industry, or technology;                                                                       
04                 (17)  make loans to or for educational institutions;                                                    
05                 (18)  purchase or insure loans to finance the costs of manufacturing,                                   
06       industrial, enterprise, and insurance projects;                                                                   
07                 (19)  provide liquidity to local banks and credit unions;                                               
08                 (20)  issue stocks and bonds and act in the proprietary trading of stocks                               
09       and bonds with public and private interests consistent with 12 U.S.C. 1851 (Dodd-                                 
10       Frank Wall Street Reform and Consumer Protection Act);                                                            
11 (21)  issue stocks, bonds, and grants to be discounted, rediscounted,                                                   
12       packaged, reimbursed, leveraged, purchased, or held by the Federal Reserve System;                                
13 (22)  provide low-interest loans, bond reimbursements, and grants to                                                    
14       and for schools, colleges, universities, students, science, and technology in the state;                          
15 (23)  leverage projects and packages of stocks, bonds, and grants with                                                  
16 the state, municipalities, state agencies, public corporations, financial entities,                                     
17       corporations, and other persons;                                                                                  
18 (24)  roll over, discount, or rediscount public and private existing loans,                                             
19       mortgages, bonds, bills of exchange, tax credits, and promissory notes.                                           
20 Sec. 44.90.210. Deposits and other items accepted by the bank. (a) The                                                
21       bank may accept                                                                                                   
22 (1)  deposits, grants, bonds, stocks, shares, bills of exchange,                                                        
23 promissory notes, rediscounting, tax credits, treasury bills, and treasury currency from                                
24       private customers, state agencies, and federal agencies;                                                          
25                 (2)  appropriations from the legislature; and                                                           
26                 (3)  money from the federal government.                                                                 
27 (b)  The bank may accept deposits in cash and by electronic means from                                                  
28       marijuana-related businesses.                                                                                     
29 (c)  The bank shall create a computer application that is able to accept deposits,                                      
30 process point of sale and gift cards, automatically send tax payments to the state, and                                 
31       pay marijuana-related businesses.                                                                                 
01 (d)  To help marijuana-related businesses make deposits and to help other                                               
02 financial institutions receive deposits from marijuana-related businesses, the bank may                                 
03 create a division within the bank that works with the Financial Crimes Enforcement                                      
04 Network of the United States Department of the Treasury to post specific guidelines                                     
05 and documents about federal regulations and the filing of suspicious activity reports                                   
06       with the Financial Crimes Enforcement Network.                                                                    
07 Sec. 44.90.220. Surety bonds. The bank may provide surety bonds for public                                            
08       and private construction projects in the state.                                                                   
09 Sec. 44.90.230. General powers. To further its purposes, the bank may, in                                             
10       addition to its other powers,                                                                                     
11                 (1)  sue and be sued;                                                                                   
12                 (2)  have a seal and alter it at pleasure;                                                              
13 (3)  make and alter bylaws for its organization and internal                                                            
14       management;                                                                                                       
15                 (4)  adopt regulations governing the exercise of its corporate powers;                                  
16 (5)  acquire an interest in a project as necessary or appropriate to                                                    
17       provide financing for the project, whether by purchase, gift, or lease;                                           
18 (6)  accept gifts, grants, or loans from, and enter into contracts or other                                             
19 transactions regarding them with, a federal agency, an agency or instrumentality of the                                 
20       state, a municipality, a private organization, or another person;                                                 
21 (7)  make deposits in national banks and in state banks, trust                                                          
22 companies, and mutual savings banks operating in accordance with the laws of the                                        
23       state;                                                                                                            
24 (8)  enter into contracts with respect to the exercise of its powers, and                                               
25 do all things necessary or convenient to carry out its corporate purposes and exercise                                  
26       the powers granted in this chapter; and                                                                           
27 (9)  exercise the incidental powers that are necessary or required to                                                   
28 enable the bank to carry on effectively the business for which the bank was                                             
29       established.                                                                                                      
30 Sec. 44.90.240. Investment in property and banking premises. The bank                                                 
31       may acquire, purchase, hold, and convey real and personal property                                                
01 (1)  if the book asset value of the purchase or investment does not                                                     
02 exceed 60 percent of the capital and surplus of the bank and if the property is                                         
03 necessary for the convenient transaction of its business, including buildings containing                                
04 offices, equipment, furniture and fixtures, leasehold improvements, parking lots, and                                   
05 real property reasonably anticipated to be necessary for future expansion of the bank;                                  
06 (2)  when necessary to pay debts previously contracted in the course of                                                 
07       the bank's business; and                                                                                          
08                 (3)  at sale under judgment, decree, lien, or mortgage foreclosure,                                     
09       against security held by the bank.                                                                                
10 Sec. 44.90.250. Sale of discounted bank shares. The bank may sell bank                                                
11       shares at a discounted rate                                                                                       
12                 (1)  directly to an individual who is a resident of the state;                                          
13                 (2)  to the Department of Revenue under AS 43.23.058.                                                   
14                       Article 4. Financial Provisions.                                                                
15 Sec. 44.90.300. Deposit interest. The bank shall pay interest on money                                                
16 received on deposits made by customers of the bank at a rate that is comparable to the                                  
17 average statewide interest rates paid by financial institutions and may offer other                                     
18 financial products to state agencies on a competitive basis with other financial                                        
19       institutions.                                                                                                     
20 Sec. 44.90.310. Excess income. As soon as possible after the end of each                                              
21 calendar year, the board shall determine the amount of income, if any, earned by the                                    
22 bank in that calendar year that exceeds the amount of money that is necessary to pay                                    
23 for the expenses of administering the activities of the bank. The bank shall deposit this                               
24       excess income in the bank fund.                                                                                   
25 Sec. 44.90.350. Project and bond leveraging. (a) The bank shall leverage the                                          
26 funding for projects and financial packages to promote the purposes of the bank,                                        
27 except that the bank investment may not exceed 35 percent of the total cost of a single                                 
28 project or single financial package when combining all bonds, grants, obligations,                                      
29       shares, insurance, and loans from the bank for the project.                                                       
30 (b)  The bank investment may exceed the limit of 35 percent set under (a) of                                            
31       this section                                                                                                      
01 (1)  if a person is disrupting the project by hostile, illegal, or predatory                                            
02       financial action, as determined by the board or advisory board;                                                   
03 (2)  for an individual infrastructure project, productive capacity project,                                             
04 or financial package if the governor, the Alaska Industrial Development and Export                                      
05 Authority, the president of the University of Alaska, the board, and the advisory board                                 
06       place the project or package in the category described under AS 44.90.610(1); or                                  
07 (3)  for a research and development project related to education,                                                       
08 whether for profit or not for profit, if the board, advisory board, and president of the                                
09 University of Alaska identify the project as a project under AS 44.90.610(1); however,                                  
10 the bank may not invest more than 80 percent of the total amount invested in the                                        
11       research and development project related to education.                                                            
12 Sec. 44.90.360. Investment fund activity prohibited or restricted. (a) The                                            
13       employees, directors, and investors in the bank may not use the bank                                              
14 (1)  for a sale of a borrowed security in anticipation that the security                                                
15 price will fall and can be paid back from the profits earned after repurchasing the                                     
16       security at a lower price;                                                                                        
17 (2)  for the purchase of assets by paying a percentage of the value of the                                              
18       assets and borrowing the balance from a bank or broker.                                                           
19 (b)  The bank shall require, to the extent determined by the board, that the                                            
20 financial instruments that are received or sold by the bank comply with the investment                                  
21 standards established by P.L. 111-203 (Dodd-Frank Wall Street Reform and                                                
22 Consumer Protection Act) and by 7 U.S.C. 1 - 27f (Commodity Exchange Act) as 7                                          
23 U.S.C. 1 - 27f (Commodity Exchange Act) existed before enactment of P.L. 111-203                                        
24       (Dodd-Frank Wall Street Reform and Consumer Protection Act).                                                      
25 (c)  The board shall place derivatives, including high risk derivatives that are                                        
26       predatory financial instruments in the category established under AS 44.90.610(4).                                
27 (d)  The bank may not issue or invest in derivatives that are credit default                                            
28 swaps and may not issue or invest in other derivatives unless the derivatives comply                                    
29 with federal law. The bank shall severely restrict or penalize the use of high risk                                     
30 derivatives, including credit default swaps and predatory financial instruments. In this                                
31 subsection, "credit default swap" means a financial contract under which a buyer of                                     
01       debt attempts to eliminate possible loss arising from default by the issuer of the debt.                          
02            (e)  In this section, "predatory financial instrument" means a high risk                                     
03       investment that can cause debt-pyramiding, asset-stripping, or a debt for equity change                           
04       of ownership.                                                                                                     
05            Sec. 44.90.370. Bonds of the bank. (a) The bank may issue bonds, including                                 
06       bonds on which the principal and interest are payable                                                             
07                 (1)  exclusively from the income and receipts or other money derived                                    
08       from the project financed with the proceeds of the bonds;                                                         
09                 (2)  exclusively from the income and receipts or other money derived                                    
10 from designated projects or development projects or other sources whether or not the                                    
11 projects are financed, insured, or guaranteed in whole or in part with the proceeds of                                  
12       the bonds; or                                                                                                     
13                 (3)  from the income, receipts, and other assets of the bank.                                           
14 (b)  The bank shall authorize its bonds by resolution of the bank. The bonds                                            
15 must be dated and mature as the resolution provides. The resolution may provide the                                     
16 interest rate, the denominations, the form, the registration privileges, the manner of                                  
17 execution, the medium of payment, the place of payment, and the terms of redemption                                     
18       for the bonds.                                                                                                    
19 (c)  The bonds of the bank, regardless of form or character, are negotiable                                             
20 instruments for all the purposes of AS 45.01 - AS 45.08, AS 45.12, AS 45.14, and                                        
21       AS 45.29 (Uniform Commercial Code).                                                                               
22 (d)  The bank may sell its bonds at public or private sale in the manner, for the                                       
23       price, and at the time that the bank determines.                                                                  
24 (e)  Before issuing bonds, the bank shall provide for consideration that the                                            
25 bank judges is at least sufficient to pay the principal of and interest on the bonds as the                             
26 bonds become due, to create and maintain the reserves for the payments that the bank                                    
27 considers necessary or desirable, and to meet all obligations and necessary costs in                                    
28       connection with the bonds.                                                                                        
29 (f)  The superior court may hear and determine actions relating to the bonds of                                         
30 the bank, including actions or other proceedings brought to foreclose or otherwise                                      
31 enforce a mortgage, pledge, assignment, or security interest brought by or for the                                      
01 benefit or security of a holder of the bank's bonds or by a trustee or other                                            
02       representative of the holders.                                                                                    
03 (g)  The bank may combine, for the purposes of a single offering, bonds                                                 
04       financing more than one project.                                                                                  
05 Sec. 44.90.380. Infrastructure and productive capacity projects. If a project                                         
06 is not subject to AS 36.05.005 - 36.05.110, the bank shall require the owners of                                        
07 infrastructure projects or productive capacity projects that are leveraged through the                                  
08 bank and that exceed $25,000 to require that the contractors and subcontractors on                                      
09 those projects pay their laborers, mechanics, and field surveyors wages that are not                                    
10 less than the current prevailing rate of wages required by AS 36.05.010, based on the                                   
11 date of the contract for the project, not on the receipt of bids. In this section, "laborer,                            
12       mechanic, or field surveyor" has the meaning given in AS 36.95.010.                                               
13 Sec. 44.90.390. Terms of loans. The board shall determine the monetary                                                
14 increments for bonds and loan terms and allow for the creation of bonds that have a                                     
15       term of 100 years.                                                                                                
16 Sec. 44.90.400. Tax exemption. (a) The bank and its property, franchises,                                             
17 capital, reserves, surpluses, income, and other money are exempt from taxation by the                                   
18       state or a municipality.                                                                                          
19 (b)  All obligations issued under this chapter are considered to be issued by a                                         
20 body corporate and public of the state and for an essential public and governmental                                     
21 purpose, and the obligations, and the interest and income on and from the obligations,                                  
22 and all fees, charges, funds, revenue, income, and other money pledged or available to                                  
23 pay or secure the payment of the obligations, or interest on the obligations, are exempt                                
24       from taxation except for transfer, inheritance, and estate taxes.                                                 
25 Sec. 44.90.410. Reserves against deposits. As provided by the regulations of                                          
26 the bank, the bank shall maintain a reserve fund sufficient to maintain liquidity and                                   
27       meet all reasonable demands of depositors.                                                                        
28 Sec. 44.90.420. Bond debt reimbursement schedules. The board shall                                                    
29 publish bond debt reimbursement schedules each year on a date appropriate for                                           
30       industrial and educational timetables.                                                                            
31 Sec. 44.90.430. Nonpayment of tax. The board may declare an individual                                                
01       financial instrument void if a court determines that a tax imposed on a transaction                               
02       involving the financial instrument has not been paid.                                                             
03 Sec. 44.90.440. Acquisition of property to satisfy or protect previous loan.                                          
04 The bank may accept property of any kind to satisfy or protect a loan previously made                                   
05 by the bank in good faith and in the ordinary course of business. The bank shall enter                                  
06 the property on the books at cost or fair market value, whichever amount is less. The                                   
07 bank shall dispose of property acquired to satisfy or protect previous loans over the                                   
08       periods that the bank establishes by regulation.                                                                  
09                     Article 5. Alaska State Bank Fund.                                                                
10 Sec. 44.90.500. Alaska state bank fund. (a) The Alaska state bank fund is                                             
11 established in the general fund. The bank fund consists of money appropriated to the                                    
12 bank fund, money received from the Federal Reserve System and the United States                                         
13 Treasury, interest received by the bank, and income received by the bank, including                                     
14       the excess income calculated under AS 44.90.310.                                                                  
15 (b)  The bank may spend the money appropriated to the bank fund to                                                      
16 implement the provisions of this chapter without further appropriation. Appropriations                                  
17 to the bank fund do not lapse under AS 37.25.010, but remain in the bank fund for                                       
18       future disbursements.                                                                                             
19 (c)  The legislature may appropriate to the bank fund the income and interest                                           
20       received by the bank.                                                                                             
21            (d)  Nothing in this section creates a dedicated fund.                                                       
22 Sec. 44.90.510. Fund use limit. During a fiscal year of the bank, the bank may                                        
23 not use more than 25 percent of an amount that is equal to the value of the bank fund                                   
24 at the beginning of that fiscal year for one construction project, productive capacity                                  
25 project, or financial package, unless the process of rediscounting with the Federal                                     
26 Reserve System and combining with the United States Treasury results in an amount                                       
27       of more than 25 percent.                                                                                          
28                           Article 6. Projects.                                                                        
29 Sec. 44.90.600. Setting project priorities. The board shall determine the                                             
30 priority of each project proposed for bank investment. The board shall place each                                       
31 project proposed for bank investment in one of the four categories of priority                                          
01       described under AS 44.90.610. The board shall establish the requirements that an                                  
02       investment proposal must meet to be placed in a category described under                                          
03       AS 44.90.610.                                                                                                     
04            Sec. 44.90.610. Project categories. The following categories of projects for                               
05       bank investment are listed in descending order of priority:                                                       
06                 (1)  the first category applies to projects for education, science,                                     
07       technology, productive capacity, and infrastructure; under this category, a project will                          
08       receive grants, stock purchases, bond reimbursement, and low interest rates;                                      
09                 (2)  the second category applies to projects for education, science,                                    
10 technology, productive capacity, and infrastructure; under this category, a project will                                
11 receive interest rates below the market interest rate, limited stock purchases, and                                     
12       limited bond reimbursements;                                                                                      
13 (3)  the third category applies to productive capacity, infrastructure, and                                             
14 commercial business projects; under this category, a project will receive competitive                                   
15       interest rates;                                                                                                   
16 (4)  the fourth category applies to projects with financial instruments                                                 
17 that present a high risk of loss; the bank will charge the projects in this category higher                             
18 interest rates than the other categories under this section, and the bank may impose                                    
19       other requirements that the board determines are appropriate.                                                     
20 Sec. 44.90.620. Science and technology projects. (a) The board shall consider                                         
21 funding science and technology projects that the University of Alaska, the Alaska                                       
22 Industrial Development and Export Authority, or the advisory board identifies as                                        
23       qualified for placement under AS 44.90.610(1), (2), or (3).                                                       
24 (b)  When determining whether the bank will fund science and technology                                                 
25 projects, the board shall select projects that apply the principles of industrial science                               
26 and efficiency, including principles of industrial science and efficiency that are                                      
27 associated with amperage, brightness, British thermal units, clarity, conductivity,                                     
28 dynamics, energy coherence, energy conversion, energy flux density, horsepower,                                         
29 intelligence, joules, luminosity, the machine tool principle, miniaturization, newtons,                                 
30 plasma coherence, potential population density, the principle of least action,                                          
31 productivity, qualitative transformation, radiancy, reliability, renewability, self-                                    
01       organization, sustainability, thermal efficiency, throughput, torque, transparency,                               
02       volumetric energy density, volumetric energy efficiency, voltage, wattage, and work                               
03       flux density. In this subsection,                                                                                 
04                 (1)  "amperage" means the volume of electricity;                                                        
05                 (2)  "brightness" means the intensity of light emanating from a surface                                 
06       or a point source;                                                                                                
07                 (3)  "British thermal unit" means the amount of heat required to raise                                  
08       the temperature of one pound of water by one degree Fahrenheit;                                                   
09                 (4)  "clarity" means the quality of being clear, radiant, coherent, lucid,                              
10       intelligible, sharp in image or sound, or easy to see or hear;                                                    
11 (5)  "conductivity" means the degree to which a specified material                                                      
12       conducts electricity or heat;                                                                                     
13 (6)  "dynamics" means the cause of change or growth of an object,                                                       
14       force, motion, development, or intensity of a phenomenon or process;                                              
15 (7)  "energy coherence" means, for industrial policy, the ability to                                                    
16 select and utilize a particular phenomenon, wavelength, or process in the electrometric                                 
17       spectrum;                                                                                                         
18 (8)  "energy conversion" means to transform one form of energy to                                                       
19       another form of energy;                                                                                           
20 (9)  "energy flux density" means the amount of action or qualitative                                                    
21       transformation effected for each cross sectional area in an energy function;                                      
22 (10)  "horsepower" means the comparison of the output of horses with                                                    
23 that of engines, generally considered a unit of power equal to 550 foot-pounds a                                        
24       second;                                                                                                           
25 (11)  "intelligence" means the ability to acquire and apply cognition,                                                  
26       knowledge, and skills;                                                                                            
27 (12)  "joule" means a unit of energy equal to the energy transferred to,                                                
28 or work done on, an object when a force of one newton acts on that object in the                                        
29       direction of its motion through one meter;                                                                        
30 (13)  "luminosity" means the total amount of energy emitted by an                                                       
31       object for each unit of time;                                                                                     
01 (14)  "machine tool principle" means the process of a scientist                                                         
02 recognizing a paradox and testing a hypothesis using an experimental apparatus that                                     
03 becomes a machine tool or technology that is used by industry or commerce to                                            
04       improve productivity or efficiency;                                                                               
05 (15)  "miniaturization" means the process of designing and                                                              
06 manufacturing smaller versions of mechanical, optical, and electronic products or                                       
07       other devices;                                                                                                    
08 (16)  "newton" means the force required to cause a mass of one                                                          
09 kilogram to accelerate at a rate of one meter a second squared in the absence of other                                  
10       force-producing effects;                                                                                          
11 (17)  "plasma coherence" means, for industrial policy, the ability to                                                   
12 select and use a particular phenomenon, wavelength, or process in the fourth state of                                   
13       matter that is an ionized gas having self-organizing properties;                                                  
14 (18)  "potential population density" means the number of people for                                                     
15       each square mile or for each square meter supported by infrastructure and technology;                             
16 (19)  "principle of least action" means a universal efficiency principle                                                
17       in physics;                                                                                                       
18 (20)  "productivity" means the amount of output a worker can produce                                                    
19 in a given period or the effectiveness of effort as measured in terms of the rate of                                    
20       output for each unit of input;                                                                                    
21 (21)  "qualitative transformation" means the functional change in the                                                   
22       nature and character of a process;                                                                                
23 (22)  "radiancy" means the amount of radiation or heat that is emitted,                                                 
24       reflected, transmitted, or received by a given surface area;                                                      
25                 (23)  "reliability" means the                                                                           
26 (A)  degree to which the result of a measurement, calculation, or                                                       
27            specification can be depended on to be accurate; or                                                          
28                      (B)  rate of failure in production or a process;                                                   
29 (24)  "renewability" means a source of energy that is not depleted when                                                 
30       used;                                                                                                             
31 (25)  "self-organization" means a process composed of many parts                                                        
01       spontaneously acquiring its structure or function through self-assembly;                                          
02                 (26)  "sustainability" means meeting the needs of the present without                                   
03       compromising future generations;                                                                                  
04                 (27)  "thermal efficiency" means the percentage of energy taken from                                    
05       combustion that is converted to mechanical work or the ratio of hot and cold input and                            
06       output when measuring heat loss;                                                                                  
07                 (28)  "throughput" means the rate of production or processing;                                          
08                 (29)  "torque" means the measurement of the ability of a rotating                                       
09       element to overcome turning resistance;                                                                           
10 (30)  "transparency" means the quality of allowing the passage of a                                                     
11       specified form of radiation without appreciable scattering;                                                       
12                 (31)  "voltage" means the pressure of electricity;                                                      
13 (32)  "volumetric energy density" means the amount of energy stored in                                                  
14       a given system or area of space for each unit of volume or mass;                                                  
15 (33)  "volumetric energy efficiency" means the measurement, by                                                          
16 volume, of the ratio of maximum theoretical energy potential to actual measured use                                     
17       or work;                                                                                                          
18 (34)  "wattage" means the amount of electricity used by a power-                                                        
19       consuming device;                                                                                                 
20 (35)  "work flux density" means the amount of action or qualitative                                                     
21       transformation effected for each cross sectional area in a work function.                                         
22                  Article 7. General Administrative Provisions.                                                        
23 Sec. 44.90.700. Examinations and audits. (a) In addition to any other                                                 
24 regulation allowed or required under this chapter, the department shall examine the                                     
25 bank at least once each calendar quarter to verify and ensure that the bank is                                          
26 complying with the regulations of the board. The department shall report the results of                                 
27 the examination to the board. The department's report is a public record subject to                                     
28       disclosure under AS 40.25.110 - 40.25.121.                                                                        
29 (b)  The bank shall have an audit of the accounts and financial affairs of the                                          
30       bank performed by an independent auditor at least once every two years.                                           
31 Sec. 44.90.710. Regulations. The bank shall adopt regulations consistent with                                         
01       this chapter and other applicable law to                                                                          
02                 (1)  ensure the safety and soundness of the bank, adhere to sound                                       
03       underwriting practices, and reflect applicable standards for safety and soundness as                              
04       provided in 12 C.F.R. 364;                                                                                        
05                 (2)  specify limits for loans and other obligations the bank makes or                                   
06       undertakes;                                                                                                       
07                 (3)  specify reserve requirements;                                                                      
08                 (4)  set other requirements that the board considers necessary to                                       
09       administer the bank under this chapter;                                                                           
10                 (5)  determine borrower eligibility;                                                                    
11                 (6)  set loan guidelines and terms, including                                                           
12                      (A)  maximum loan amounts;                                                                         
13                      (B)  required loan-to-value ratios; and                                                            
14                      (C)  a method for determining loan interest rates;                                                 
15 (7)  identify the characteristics of projects eligible for loans or purchase                                            
16       of loans; and                                                                                                     
17 (8)  establish the qualifications of loan originators and servicers and the                                             
18       method of allocating amounts available for the purchase of loans.                                                 
19 Sec. 44.90.720. Public meetings. The board shall hold public meetings on a                                            
20       regular basis.                                                                                                    
21 Sec. 44.90.730. Nonapplicability of Administrative Procedure Act. Except                                              
22 for AS 44.62.310 - 44.62.319 (Open Meetings Act), the provisions of the                                                 
23 Administrative Procedure Act regarding the adoption of regulations (AS 44.62.040 -                                      
24       44.62.320) do not apply to the bank.                                                                              
25 Sec. 44.90.740. Regulation adoption procedure. (a) Except as provided in                                              
26 AS 44.90.750, at least 15 days before adopting regulations, the bank shall give public                                  
27 notice of the proposed regulation by publishing the notice in at least three newspapers                                 
28 of general circulation in the state and by mailing a copy of the notice to every person                                 
29 who has filed a request for notice of proposed regulations with the bank. The public                                    
30 notice must include a statement of the time, place, and nature of the proceedings for                                   
31 the regulations and must include an informative summary of the subject of the                                           
01       proposed regulatory action.                                                                                       
02 (b)  On the date and at the time and place designated in the notice, the bank                                           
03 shall give each interested person, an authorized representative of the person, or both,                                 
04 the opportunity to present statements, arguments, and viewpoints orally or in writing.                                  
05 The bank shall consider all relevant matter presented to it before adopting the                                         
06       proposed regulations.                                                                                             
07            (c)  The bank may continue or postpone a hearing to a time and place                                         
08       determined by the bank and announced at the hearing before taking action to continue                              
09       or postpone the hearing.                                                                                          
10 (d)  The bank may adopt, amend, or repeal a regulation that varies from the                                             
11 informative summary specified in this section if the subject matter of the regulation                                   
12 remains the same and if the original notice of the proposed regulation reasonably                                       
13 notified the public of its subject matter so that a person could determine whether the                                  
14       bank's proposed regulation on the subject affected the person's interests.                                        
15 Sec. 44.90.750. Emergency regulations. (a) The bank may adopt emergency                                               
16 regulations if, in the order of the emergency regulation, the bank states the facts                                     
17 constituting the emergency and makes a finding that the emergency regulation is                                         
18 necessary for the immediate preservation of the orderly operation of the bank's                                         
19       programs.                                                                                                         
20 (b)  The requirements of AS 44.90.740 do not apply to the initial adoption of                                           
21 emergency regulations. However, the bank shall, within 10 days after adopting the                                       
22 emergency regulations, publish notice of the emergency regulations in accordance                                        
23       with the notice procedures in AS 44.90.740.                                                                       
24 (c)  An emergency regulation does not remain in effect for more than 120 days                                           
25 unless, before the expiration of that period, the bank adopts the emergency regulation                                  
26 as a permanent regulation in accordance with the procedures specified in                                                
27       AS 44.90.740.                                                                                                     
28 Sec. 44.90.760. Effective date of regulations. A regulation adopted by the                                            
29 bank takes effect immediately upon its adoption by the bank or at another time                                          
30       specified by the bank in its order of adoption.                                                                   
31 Sec. 44.90.770. Regulation distribution. (a) The bank shall make available to                                         
01 members of the public copies of the regulations adopted under this chapter. Within 45                                   
02 days after adoption of a regulation, the chair of the bank shall submit the regulation                                  
03 adopted to the chair of the Administrative Regulation Review Committee under                                            
04       AS 24.20.400 - 24.20.460.                                                                                         
05                     Article 8. Miscellaneous Provisions.                                                              
06            Sec. 44.90.800. Civil actions. A person may bring a civil action against the                               
07       state for a claim that arises out of a transaction that is connected with the operation of                        
08       the bank.                                                                                                         
09            Sec. 44.90.810. Prohibited bank practices. The bank may not engage in                                      
10 unfair, deceptive, or fraudulent practices, including predatory practices in loan                                       
11       origination.                                                                                                      
12 Sec. 44.90.820. Compliance with law. Except as otherwise provided by this                                             
13 chapter, the bank shall comply with all federal and state laws related to the bank's                                    
14       operations, including federal law related to issuing financial instruments.                                       
15                       Article 9. General Provisions.                                                                  
16 Sec. 44.90.990. Definitions. In this chapter, unless the context indicates                                            
17       otherwise,                                                                                                        
18 (1)  "advisory board" means the advisory board appointed under                                                          
19       AS 44.90.140;                                                                                                     
20 (2)  "bank" means the Alaska State Bank established under                                                               
21       AS 44.90.010;                                                                                                     
22 (3)  "bank fund" means the Alaska state bank fund created under                                                         
23       AS 44.90.500;                                                                                                     
24                 (4)  "board" means the board of directors of the Alaska State Bank;                                     
25 (5)  "customer" means a person that has transacted or is transacting                                                    
26 business with the bank, that has used or is using the services of the bank, or for whom                                 
27       the bank has acted or is acting as a fiduciary with respect to trust property;                                    
28 (6)  "department" means the Department of Commerce, Community,                                                          
29       and Economic Development;                                                                                         
30 (7)  "derivative" means a security with a price that depends on the                                                     
31       underlying asset;                                                                                                 
01                 (8)  "financial instruments" means bonds, grants, shares, insurance,                                    
02       loans, bills of exchange, promissory notes, treasury bills and treasury currency cash,                            
03       contractual rights, or other types of assets;                                                                     
04                 (9)  "grant" includes bond debt reimbursement;                                                          
05                 (10)  "infrastructure" means                                                                            
06 (A)  bridges, dams, highways, roads, pathways, waterways,                                                               
07 navigable water, railroads, electrical production and distribution, water                                               
08 management systems, communication systems, transportation systems,                                                      
09 agricultural structures, schools, universities, and other structures and facilities                                     
10            required for the operation of a society; and                                                                 
11 (B)  the maintenance of the structures and facilities described in                                                      
12            (A) of this paragraph;                                                                                       
13                 (11)  "leverage" means using debt to create new loans;                                                  
14 (12)  "productive capacity" means the physical plant, equipment,                                                        
15 vehicles, ships, trains, buildings, technology, and engineering services of a public or                                 
16       private enterprise;                                                                                               
17 (13)  "regulation" means the adoption, amendment, or repeal of a                                                        
18       regulation.                                                                                                       
19 Sec. 44.90.995. Short title. This chapter may be cited as the Alaska State Bank                                       
20       Act.                                                                                                              
21    * Sec. 7. AS 45.55.990(32) is amended to read:                                                                     
22 (32)  "security" means a note; stock; treasury stock; bond; debenture;                                                  
23 evidence of indebtedness; certificate of interest or participation in any profit-sharing                                
24 agreement; limited liability company interest under AS 10.50, notwithstanding the                                       
25 limitations of AS 45.08.103(c); collateral-trust certificate; preorganization certificate                               
26 or subscription; transferable share; investment contract; voting-trust certificate;                                     
27 certificate of deposit for a security; viatical settlement interest; certificate of interest or                         
28 participation in an oil, gas, or mining title or lease or in payments out of production                                 
29 under the title or lease or in any sale of or indenture or bond or contract for the                                     
30 conveyance of land or any interest in land; an option on a contract for the future                                      
31 delivery of agricultural or mineral commodities or any other commodity offered or                                       
01 sold to the public and not regulated by the Commodity Futures Trading Commission;                                       
02 however, the contract or option is not subject to the provisions of AS 45.55.070 if it is                               
03 sold or purchased on the floor of a bona fide exchange or board of trade and offered or                                 
04 sold to the public by a broker-dealer or agent registered under this chapter; investment                                
05 of money or money's worth including goods furnished or services performed in the                                        
06 risk capital of a venture with the expectation of some benefit to the investor where the                                
07 investor has no direct control over the investment or policy decision of the venture; or,                               
08 in general, any interest or instrument commonly known as a "security," or any                                           
09 certificate of interest or participation in, temporary or interim certificate for, receipt                              
10 for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing;                               
11 "security" does not include a participation agreement entered into under AS 14.40.802,                                  
12 a program account established under AS 06.65, [OR] an insurance or endowment                                            
13 policy or annuity contract under which an insurance company promises to pay a fixed                                     
14 or variable sum of money either in a lump sum or periodically for life or for some                                      
15 other specified period, or a share in the Alaska State Bank established under                                       
16       AS 44.90.010;                                                                                                 
17    * Sec. 8. The uncodified law of the State of Alaska is amended by adding a new section to                          
18 read:                                                                                                                   
19 APPLICABILITY. AS 44.90.430, added by sec. 6 of this Act, applies to instruments                                        
20 entered into on or after the effective date of this Act.                                                                
21    * Sec. 9. This Act takes effect July 1, 2019.