04/15/2012 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 121(RLS)                                                                                                
                                                                                                                                
     "An Act  establishing the commercial  charter fisheries                                                                    
     revolving  loan fund,  the  mariculture revolving  loan                                                                    
     fund, and the Alaska  microloan revolving loan fund and                                                                    
     relating  to those  funds and  loans from  those funds;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
9:10:52 AM                                                                                                                    
                                                                                                                                
Senator  Thomas  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for   CSHB  121(RLS),  Work   Draft  27-GH1728\S                                                                    
(Bullard, 4/14/12).                                                                                                             
                                                                                                                                
Co-Chair Stedman OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
DARWIN PETERSON, STAFF, SENATOR  BERT STEDMAN, explained the                                                                    
changes  in   the  committee  substitute.  He   stated  that                                                                    
Sections 1 to 11 were  new sections that would establish the                                                                    
Community Quota  Entity revolving  loan fund, and  was based                                                                    
on language  from SB 204. He  stated that the intent  of the                                                                    
program was  to assist small coastal  communities throughout                                                                    
Southeast Alaska and  the Gulf of Alaska  to form non-profit                                                                    
community  entities that  may be  eligible  for up  to a  $1                                                                    
million loan from the State  to purchase up to 50,000 pounds                                                                    
of fishing quota  that would be held in  trust for community                                                                    
residents. Currently there were  45 coastal communities that                                                                    
could qualify,  because they meet the  requirements of being                                                                    
off the road system with a  population of 1500 or less and a                                                                    
history  of  fishing.  After   consulting  with  the  Alaska                                                                    
Bankers Associations,  side-bars were placed on  the program                                                                    
to satisfy  some of their concerns.  On page 3, line  14 the                                                                    
interest deferment was reduced from  10 years to 2 years. On                                                                    
page  3,  line  15  the language  expressly  prohibited  the                                                                    
Community Quota  Entity from refinancing their  loan through                                                                    
the  State.  The language  was  also  adjusted to  make  the                                                                    
Community Quota  Entity a pilot  program, that  would sunset                                                                    
in  five years.  The fiscal  note appropriated  $10 million,                                                                    
which was  enough for  ten communities.  In five  years, the                                                                    
legislature could  revisit the  program. If the  program had                                                                    
proven  to be  successful, the  legislature could  decide if                                                                    
the  program should  continue.  In  addition, the  committee                                                                    
substitute placed  an interest  rate floor on  loans offered                                                                    
through the  Commercial Fishing Loan  Fund. The  floor would                                                                    
be  the  prime  rate  plus one  percentage  point,  plus  an                                                                    
additional percentage point determined  by the Department to                                                                    
represent risk.  This would  promote interest  rates offered                                                                    
through  the State's  loan program  that  were more  closely                                                                    
based on market  forces and would discourage  the State from                                                                    
offering  artificially  low   subsidized  rates  that  would                                                                    
compete with the private sector.                                                                                                
                                                                                                                                
Mr. Peterson  stated that Section  12 set up  the Commercial                                                                    
Charter Fisheries  Revolving Loan  Fund. He stated  that the                                                                    
committee substitute  removed the sub-sections  referring to                                                                    
vessels, so loans  could only be used  for purchase permits.                                                                    
Loans  for   fishing  vessels  could  be   accessed  through                                                                    
conventional lenders. He stated that  page 7, lines 13 to 15                                                                    
limited the  loan amount for  a charter halibut permit  to a                                                                    
value  determined by  the Department,  based  on a  12-month                                                                    
rolling average  set quarterly, not  to exceed  $100,000. He                                                                    
explained that the average price  for halibut permits ranged                                                                    
from $29,000 to $61,000.                                                                                                        
                                                                                                                                
Co-Chair  Stedman  REMOVED  his OBJECTION.  There  being  NO                                                                    
FURTHER OBJECTION, Work Draft 27-GH1728\S was ADOPTED.                                                                          
                                                                                                                                
9:15:32 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  explained  that there  was  current  work                                                                    
regarding  HB  121,  and  wondered if  Mr.  Curtis  had  any                                                                    
remarks for the committee.                                                                                                      
                                                                                                                                
CURTIS THAYER, DEPUTY  COMMISSIONER, DEPARTMENT OF COMMERCE,                                                                    
COMMUNITY AND ECONOMIC  DEVELOPMENT, explained the different                                                                    
fishing  revolving loan  funds. He  remarked that  with this                                                                    
particular loan, there  was delayed payment for  up to seven                                                                    
years.                                                                                                                          
                                                                                                                                
Co-Chair Stedman discussed the  fiscal notes in the members'                                                                    
packets.                                                                                                                        
                                                                                                                                
Co-Chair Hoffman  MOVED to report  SCS CSHB 121(FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SCS CSHB 121(FIN)  was REPORTED out of committee  with a "do                                                                    
pass" recommendation  and with four new  fiscal impact notes                                                                    
from  the Senate  Finance Committee  for  the Department  of                                                                    
Commerce, Community and Economic Development.