Legislature(2011 - 2012)HOUSE FINANCE 519
03/30/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB8 | |
| HB105 | |
| HB150 | |
| HB141 | |
| HB140 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 8 | TELECONFERENCED | |
| + | HB 10 | TELECONFERENCED | |
| + | HB 64 | TELECONFERENCED | |
| + | HB 105 | TELECONFERENCED | |
| + | HB 140 | TELECONFERENCED | |
| + | HB 141 | TELECONFERENCED | |
| += | HB 164 | TELECONFERENCED | |
| + | HB 103 | TELECONFERENCED | |
| + | HB 104 | TELECONFERENCED | |
| + | HB 120 | TELECONFERENCED | |
| + | HB 121 | TELECONFERENCED | |
| + | HB 125 | TELECONFERENCED | |
| + | HB 150 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 141
"An Act relating to loans for the purchase of fishing
quota shares by certain community quota entities; and
providing for an effective date."
4:01:54 PM
REPRESENTATIVE ALAN AUSTERMAN, SPONSOR, introduced his
staff that would discuss the bill.
STEVE RICCI, STAFF, REPRESENTATIVE ALAN AUSTERMAN,
discussed that HB 141 established a revolving loan fund for
the Community Quota Entity (CQE) Program. The program was
created in 2004 by the North Pacific Management Council in
response to the significant outmigration of commercial
longline quota from rural villages in the Gulf of Alaska.
The program allowed 21 communities in Southeast and 21
communities in Southcentral to purchase and lease quota to
residents, which would enable communities and fishermen to
be active participants in the fisheries that occurred off
of their shores. Since the inception of the CQE program and
purchase quota, only one of the eligible communities had
been able to utilize the legal authority that the program
provided. The most significant barrier to participation was
the ability to access financing. The bill established an
independent revolving loan fund to assist the communities
in the procurement of quota, which would help to support
the economy of rural, coastal communities; an active
fishing fleet would employ residents, provide tax revenues,
spend income locally, and allow the communities to be
sustainable and self-reliant. He pointed to the success of
a similar program (Community Development Quota (CDQ)
Program) that had been implemented to aid local residents
that did not have significant access to fisheries occurring
off their shores in the Bering Sea as a result of the
Individual Fishing Quota (IFQ) system; residents had been
provided 10 percent of the pollock quota.
4:05:42 PM
Representative Edgmon supported the legislation. He had
worked as the CDQ program manager when the CQE program was
in development. He highlighted the significance of the
economic development and number of jobs that could result
from the program.
Co-Chair Thomas wondered what the loan cap was per
community. He thought that poorer communities may not be
able to leverage as much as others such as Kodiak.
Mr. Ricci responded in two parts: First, Kodiak would not
be an eligible community under the program. Second, there
was a $1 million cap per community, which was approximately
33,000 pounds at current day prices.
Co-Chair Thomas wondered whether similar to the harbor
grant program, the loan fund would not allow revenue
sharing or direct capital grants from the legislature to be
used as matching grants. Mr. Ricci did not know.
Co-Chair Thomas remarked that he had helped to write the
program.
4:08:14 PM
Representative Costello requested that Mr. Ricci's written
comments be provided to the committee. Mr. Ricci responded
that he would provide them.
Representative Doogan asked whether the problem was that
people did not have the money to fish their quota. Mr.
Ricci replied that residents of the communities had seen
quota migrate from their communities to larger communities.
Individuals that had participated in the fishery had either
left or sold the quota and residents had been left with no
access to the fishery. The loan program would help the
communities to purchase quota and would allow individuals
to lease it from the community. The program required the
lessee to be a resident of the community that held the
quota.
Representative Hawker understood that the bill created a
revolving loan fund for the purpose of making loans under
the existing CQE program. He asked the sponsor to determine
whether there were underutilized funds in other revolving
loan programs that could be accessed to pay for the
program, which would eliminate the need for the general
fund appropriation request included in HB 140.
Mr. Ricci responded that he would work with the department
on the request.
Representative Wilson wondered why the state would hire
more employees to administer the program instead of
offering the loan through a financial institution.
Mr. Ricci responded that there would be one additional
person hired in the Division of Investments. He explained
that private banking institutions would not be able to
provide the necessary loan program terms to meet the needs
of the CQE communities. Since the inception of the CQE
program in 2004, private financial institutions had been in
place; however, they had not been able to provide the
financing that was necessary to make the program work
properly.
Representative Edgmon added that recipients could get a
much better interest rate through the loan program that had
been constructed much like the commercial fishing revolving
loan program that had been established in the early 1980s
to help fishermen access lower capital. He noted that the
commercial fishing loan program had been successful and had
contributed money back to the general fund.
Representative Hawker asked the sponsor to contemplate
whether it was possible to achieve the desired outcome
without creating a new revolving loan fund. He wondered
whether it could be structured as a loan guarantee program
or an interest subsidy to facilitate participation in the
commercial fisheries revolving loan funds. He did not want
to grow government or to create new agencies and programs.
He thought it would be more beneficial to capitalize and
take advantage of programs that already existed.
Representative Doogan wondered where the $45 million figure
in the bill came from. Mr. Ricci responded that each of the
42 communities would be eligible for $1 million under the
loan fund.
4:14:38 PM
Co-Chair Thomas noted that only a few entities were able to
use permits and IFQs as collateral for a loan, including
the State of Alaska and a halibut commission.
WANETTA AYERS, DIRECTOR, DIVISION OF ECONOMIC DEVELOPMENT,
DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC
DEVELOPMENT, agreed that it was problematic for financial
institutions to put a lien against a quota share and was
the reason the division had historically served the
purpose.
Co-Chair Thomas discussed that he had been involved in
fisheries for 35 years. He had watched the number of
employees on larger boats decrease from up to eight people
down to four. Individuals who had fished in the past were
left out of the fishery and were struggling in their
communities. He stressed that permits and IFQ's were
leaving Alaska; the loan program provided a key solution to
problem, given that it required the fishermen and employees
to be residents of the community that owned the CQE.
Communities would rotate who they leased the CQE to, which
provided an opportunity to spread jobs to multiple
residents.
4:18:07 PM
Representative Costello asked whether the program competed
with the Alaska Commercial Fishing and Agriculture Bank
(CFAB). Ms. Ayers responded that the question would be best
addressed by CFAB, but she did not believe that a CQE would
meet the CFAB lending standards.
Representative Hawker clarified that the intent of a loan
guarantee program that would access existing programs would
be to make borrowers credit worthy.
Co-Chair Stoltze CLOSED public testimony, but noted that he
would reopen it in a future meeting if necessary.
HB 141 was HEARD and HELD in committee for further
consideration.