Legislature(2009 - 2010)

2010-02-10 House Journal

Full Journal pdf

2010-02-10                     House Journal                      Page 1454
HB 338                                                                                                                        
HOUSE BILL NO. 338 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
                                                                                                                                

2010-02-10                     House Journal                      Page 1455
     "An Act relating to the waiver of volume cap of recovery zone                                                              
     economic development bonds authorized by 26 U.S.C. 1400U-2                                                                 
     and reallocation by the Alaska Municipal Bond Bank Authority of                                                            
     the waived volume cap; relating to the waiver of volume cap of                                                             
     recovery zone facility bonds authorized by 26 U.S.C. 1400U-3                                                               
     and reallocation by the Alaska Industrial Development and Export                                                           
     Authority of the waived volume cap; increasing the total amount                                                            
     of bonds and notes that the Alaska Municipal Bond Bank                                                                     
     Authority may have outstanding; relating to revenue bonds issued                                                           
     by the Alaska Municipal Bond Bank Authority; and providing for                                                             
     an effective date."                                                                                                        
                                                                                                                                
was read the first time and referred to the Labor & Commerce and                                                                
Finance Committees.                                                                                                             
                                                                                                                                
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Zero, Dept. of Commerce, Community, & Economic Development                                                                  
2.  Fiscal, Dept. of Revenue                                                                                                    
                                                                                                                                
                                                                                                                                
The Governor's transmittal letter dated February 9, 2010, follows:                                                              
                                                                                                                                
"Dear Speaker Chenault:                                                                                                         
                                                                                                                                
Under the authority of Art. III, Sec. 18 of the Alaska Constitution, I                                                          
am transmitting a bill relating to the waiver of volume cap of recovery                                                         
zone economic development bonds authorized by 26 U.S.C. 1400U-2                                                                 
and reallocation by the Alaska Municipal Bond Bank Authority of the                                                             
waived volume cap; and relating to the waiver of volume cap of                                                                  
recovery zone facility bonds authorized by 26 U.S.C. 1400U-3 and                                                                
reallocation by the Alaska Industrial Development and Export                                                                    
Authority of the waived volume cap.                                                                                             
                                                                                                                                
The bill will benefit Alaskans by authorizing the Alaska Industrial                                                             
Development and Export Authority to administer the American                                                                     
Recovery and Reinvestment Act (ARRA) program.  The result                                                                       
subsidizes interest rates on bonds for government infrastructure and                                                            
private economic development, removes limitation on the Municipal                                                               

2010-02-10                     House Journal                      Page 1456
Bond Bank to allow for energy-related projects in addition to diesel                                                            
projects, and increases the bond limit to $1 billion.                                                                           
                                                                                                                                
The bill sets out legislative findings and intent for Secs. 4 and 5 of the                                                      
bill related to the federal authorization of recovery zone economic                                                             
development bonds and recovery zone facility bonds and the                                                                      
allocation of the volume cap of the bonds. The bill provides that it is                                                         
the Legislature's intent to define when volume cap is waived, and to                                                            
authorize the Alaska Municipal Bond Bank Authority to reallocate                                                                
waived recovery zone economic development bond volume cap, and to                                                               
authorize the Alaska Industrial Development and Export Authority to                                                             
reallocate waived recovery zone facility bond volume cap.                                                                       
                                                                                                                                
The bill will provide that unused recovery zone economic                                                                        
development bond volume cap is waived on June 30, 2010. The bill                                                                
will authorize the Alaska Municipal Bond Bank Authority to                                                                      
reallocate waived recovery zone economic development bond volume                                                                
cap.                                                                                                                            
                                                                                                                                
The bill will provide that unused recovery zone facility bond volume                                                            
cap will be waived on June 30, 2010. The bill will authorize the                                                                
Alaska Industrial Development and Export Authority to reallocate                                                                
waived recovery zone facility bond volume cap.                                                                                  
                                                                                                                                
The bill will increase the total amount of bonds and notes that the                                                             
Alaska Municipal Bond Bank Authority may have outstanding from                                                                  
$750,000,000 to $1,000,000,000. The bill will allow the Alaska                                                                  
Municipal Bond Bank Authority to expand its authorization to issue                                                              
bonds for energy projects and to amend the definition of "municipal                                                             
bond."                                                                                                                          
                                                                                                                                
The Alaska Municipal Bond Bank Authority's bonding authorization                                                                
has been increased several times in the last 30 years. In 2003, the limit                                                       
increased from $300,000,000 to $500,000,000, and in 2006, the limit                                                             
increased from $500,000,000 to $750,000,000. As of December 2009,                                                               
the Alaska Municipal Bond Bank Authority had $623,090,878 in                                                                    
outstanding bonds. This leaves $126,909,122 available for additional                                                            
loans to communities. Applications to the Alaska Municipal Bond                                                                 
Bank Authority over the next six months are expected to total                                                                   
approximately $150,000,000. This increase is a natural progression for                                                          

2010-02-10                     House Journal                      Page 1457
the program, and fits with the historically conservative increases in the                                                       
borrowing cap. The underlying loan portfolio of the Alaska Municipal                                                            
Bond Bank Authority is strong and has fully supported all loans for 35                                                          
years. Without passage of this bill, it is likely that municipalities will                                                      
not be able to take advantage of the program.                                                                                   
                                                                                                                                
The bill will repeal an existing limitation on the Alaska Municipal                                                             
Bond Bank Authority's authorization that limits municipal revenue                                                               
bonds issued by the bank to only diesel energy projects. With this                                                              
change, the banks will have the ability to provide financing for a wide                                                         
variety of energy projects. This change is consistent with the purpose                                                          
of the Alaska Municipal Bond Bank Authority - to assist                                                                         
municipalities in financing capital improvements and to allow                                                                   
municipalities to create and improve energy facilities across the state.                                                        
Further, the bill would eliminate the restriction in the definition of                                                          
"municipal bond" in AS 44.85.410(4)(E)(iii), which currently does not                                                           
authorize a lease for equipment or building improvement if the State is                                                         
the lessee. This change will allow small municipalities the ability to                                                          
finance community buildings if they plan to partner with the State to                                                           
achieve project efficiency.                                                                                                     
                                                                                                                                
The bill provides for an immediate effective date.                                                                              
                                                                                                                                
I urge your prompt and favorable action on this bill.                                                                           
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Sean Parnell                                                                                                                    
Governor"