Legislature(1995 - 1996)
1996-01-17 Senate Journal
Full Journal pdf1996-01-17 Senate Journal Page 2151 SB 222 SENATE BILL NO. 222 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; providing an exemption from the procurement code for certain projects of the authority; and providing for an effective date. was read the first time and referred to the State Affairs, Transportation and Finance Committees. Zero fiscal notes published today from Department of Commerce and Economic Development, Department of Administration. Governors transmittal letter dated January 16: 1996-01-17 Senate Journal Page 2152 SB 222 Dear President Pearce: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill to boost Alaskas economy and create jobs in the state by strengthening the bonding authority of the Alaska Industrial Development and Export Authority (AIDEA). The bill also modifies AIDEAs business assistance program to make it more effective in light of the recent changes to the federal Small Business Administration loan guarantee program. In addition, the bill includes required bonding authority for several major development projects. The first basic component of the bill (sec. 2) restores AIDEAs bonding authority for development projects of $10,000,000 or less. AIDEAs general bonding authority expired June 30 and has severely restricted AIDEAs ability to assist not only in key development projects but also in conduit revenue financing transactions that do not involve the credit of AIDEA or the state. The second component of the bill makes needed changes to AIDEAs business assistance program (primarily secs. 5 through 12) and repeals the existing July 1, 1996 sunset provision for the program (sec. 17(2)). Recent changes in the federal small business administration program have left a financing void for Alaska small businesses. The bill will make changes in AIDEAs business assistance loan guarantee program allowing AIDEA, in conjunction with the states private financial institutions, to create additional financing opportunities for state businesses. The third component of the bill provides legislative authority for two important projects that exceed the $10 million dollar statutory threshold. Although there are legal questions as to whether this approval of bonds infringes on executive powers, I believe the legislature needs to participate in AIDEAs development agenda. This bill would authorize AIDEA to issue up to $60,000,000 in revenue bonds for expansion, improvement, and modification of AIDEAs existing port and transportation facilities serving the Red Dog Mine (sec. 18). Repayment of the bonds would be the obligation of mine developer Cominco, Ltd. The Red Dog already provides more than 350 jobs, 15 percent of the jobs in the Northwest 1996-01-17 Senate Journal Page 2153 SB 222 Arctic Borough. The expansion project will provide up to 70 more jobs and allow the mine to continue to be a major source of employment in the region for the next 50 years. The bill also provides a limited procurement exemption for contracts entered into by AIDEA related to the Red Dog Mine expansion and other similarly situated AIDEA projects (sec. 1). The second project this bill authorizes is AIDEAs acquisition of the Snettisham hydroelectric project (sec. 19). Congress recently authorized the Alaska Power Administrations sale of Snettisham to the state. This bill authorizes the issuance of up to $100,000,000 of AIDEA bonds to finance the acquisition. Repayment would be the responsibility of Alaska Electric Light and Power under a take-or- pay long-term power sales contract. Snettisham is a 78 megawatt facility that is expected to provide long-term rate stability for customers in Juneau and Douglas. Finally, the bill makes technical modifications to AIDEAs statutes (secs. 3, 4, 5, 6, 14, 15, 16, and 17(1)) and repeals previously granted bonding authority for fueling facilities at the Anchorage International Airport and the Midrex facility proposed for Point MacKenzie. AIDEA will not be required to issue bonds for either of these projects. In a time of dwindling state resources it is fortunate that we have a financially healthy agency like AIDEA to forge public-private partnerships that can strengthen the states economic base. This bill will enhance the tools available to AIDEA to further this mission. I urge your passage of this bill. Sincerely, /s/ Tony Knowles Governor