Legislature(2011 - 2012)CAPITOL 120

02/08/2011 05:00 PM FISHERIES

Download Mp3. <- Right click and save file as

Audio Topic
05:01:31 PM Start
05:01:43 PM Overview(s): Division of Subsistence, Alaska Department of Fish and Game
05:21:54 PM Overview(s): Division of Habitat, Alaska Department of Fish and Game
05:35:25 PM HB121
06:25:29 PM HB59
06:34:53 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overviews by Dept. of Fish & Game: TELECONFERENCED
- Habitat Division
- Subsistence Division
Heard & Held
Heard & Held
        HB 121-LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                    
5:35:25 PM                                                                                                                    
CHAIR THOMPSON  announced that the  next order of  business would                                                               
be  HOUSE  BILL NO.  121,  "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."                                                                                               
5:35:46 PM                                                                                                                    
CURTIS  THAYER,  Deputy  Commissioner,  Department  of  Commerce,                                                               
Community and  Economic Development  (DCCED), paraphrased  from a                                                               
prepared statement,  which read as follows  [original punctuation                                                               
     The  Department  of  commerce, Community  and  Economic                                                                    
     Development  (DCCED)  is  on  a  mission  to  foster  a                                                                    
     business  climate in  this state  that is  conducive to                                                                    
     job  creation  and  economic  growth.    We  have  been                                                                    
     actively and  introspectively engaged in  examining how                                                                    
     we operate, in  an effort to be more  responsive to the                                                                    
     needs of  the business  community and  deliver services                                                                    
     that  are relevant  and useful  to the  private sector.                                                                    
     Recent  realignment of  resources  and services  within                                                                    
     the  department  has  bolstered  the  state's  economic                                                                    
     development  toolbox  and  is helping  us  aggressively                                                                    
     reassert  the  state's  role in  creating  a  business-                                                                    
     friendly environment in Alaska.                                                                                            
     We have  spent a lot  of time listening to  the private                                                                    
     sector.    The   governor's  recently  formed  Economic                                                                    
     Advisory  Council, comprised  of industry  leaders from                                                                    
     around  the state,  has  been  instrumental in  helping                                                                    
     this  administration   plot  a  productive   course  to                                                                    
     economic  development.     Additionally,  we  solicited                                                                    
     input  from  NGOs   and  trade  associations,  regional                                                                    
     development   organizations   (ARDORs),   CDQs,   ANSCA                                                                    
     corporations and  legislators.  A commonly  heard theme                                                                    
     has  been  to  increase  financing  options  for  small                                                                    
     businesses.   Access to  critically needed  capital can                                                                    
     be  the  difference  between   simply  getting  by  and                                                                    
     House Bill 121  is a step in the right  direction.  The                                                                    
     proposed legislation would create  a suite of three new                                                                    
     revolving loan  funds:   to incentivize  development of                                                                    
     the  shellfish mariculture  industry; to  assist Alaska                                                                    
     charter  operators  in  acquiring  halibut  permits  to                                                                    
     transition to the new  regulatory and management regime                                                                    
     instituted  by   NOAA;  and  to   seed  microenterprise                                                                    
     development across the state.                                                                                              
     The  Commercial Fisheries  Revolving  Loan Fund  would:                                                                    
     provide access  to capital for  Alaskan-owned charters;                                                                    
     repatriate   permits  to   Alaska;  increase   economic                                                                    
     benefits to Alaska from  this sector from recirculation                                                                    
     of earnings.                                                                                                               
     The Mariculture  Revolving Loan Fund would:   provide a                                                                    
     spark  to the  growing industry  with great  year-round                                                                    
     potential   for   coastal    Alaska   communities   and                                                                    
     entrepreneurs.    (Currently,  there are  67  permitted                                                                    
     farms in  the state, but  only 25 producing farms  - 10                                                                    
     in Southeast, 15 in Southcentral.)                                                                                         
     The Microloan  Revolving Loan Fund  would:   Help small                                                                    
     businesses grow by providing  loans for start-up costs,                                                                    
     working capital,  inventory expansion, or a  variety of                                                                    
     other   commercial  purposes;   -Alaska   one  of   few                                                                    
     remaining states  without a microloan  program, -Proven                                                                    
     track record in other states and through SBA.                                                                              
     These  programs  would  complement two  existing  small                                                                    
     business loan programs administered  by DED - the Small                                                                    
     Business Economic  Development Revolving Loan  Fund and                                                                    
     the Rural  Development Initiative  Fund, both  of which                                                                    
     are   geared  toward   long-term   financing.     Small                                                                    
     businesses  are the  No.  1  creator of  private-sector                                                                    
     jobs.  So  this legislation, which will help  us in our                                                                    
     efforts to spur sustainable  economic growth in Alaska,                                                                    
     will be good for our economy and for Alaska families.                                                                      
5:39:02 PM                                                                                                                    
MR. THAYER pointed  out that the microloan bill  passed the house                                                               
in 2010,  but failed to win  approval in the waning  hours of the                                                               
5:39:41 PM                                                                                                                    
WANETTA   AYERS,  Manager,   Office   of  Economic   Development,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED),  said  that  the  role of  economic  development  is  to                                                               
address  the  underserved  sectors  of  the  state,  where  local                                                               
banking facilities  may not exist,  as well as support  high risk                                                               
professions, such as commercial fishing.   The loan funds in this                                                               
bill  are  geared towards  these  types  of opportunities.    The                                                               
capitalization  levels, loan  limits,  repayment terms,  interest                                                               
rates, and special features of  the various funds, were developed                                                               
in  consultation  with   stakeholders  including  nongovernmental                                                               
organizations  (NGOs),  government   agencies,  and  the  private                                                               
sector.   She explained  that HB  121 proposes  a suite  of three                                                               
loan   funds  for   commercial  charter   fisheries,  mariculture                                                               
development,  and microloans.   The  loan commonalities  include:                                                               
set up  as revolving loans;  earnings, loan repayments,  and fees                                                               
to  be retained  by  the  fund for  future  loans; and  operating                                                               
expenses are also to be paid from earnings of the fund.                                                                         
5:42:44 PM                                                                                                                    
MS.  AYERS  explained  that  each fund  has  key  functions,  and                                                               
described  the current  situation  faced by  the halibut  charter                                                               
industry;  paraphrasing from  a  prepared  statement, which  read                                                               
[original punctuation provided]:                                                                                                
     Effective  February 1,  2011, all  vessel operators  in                                                                    
     Areas 2C  and 3A with charter  anglers onboard catching                                                                    
     and retaining  Pacific halibut  must have  an original,                                                                    
     valid  Charter  Halibut Permit  (CHP).    Based on  log                                                                    
     books NOAA  estimates 532 Eligible Permitees;  some 800                                                                    
     applications were  received.   Permit prices  are still                                                                    
     being established  in the marketplace.   Current asking                                                                    
     prices range  from $40,000  to over  $100,000 depending                                                                    
     on the number of fishermen the permit allows.                                                                              
     Commercial  Charter   Fisheries  Revolving   Loan  Fund                                                                    
     -Provide access to capital for Alaskanowned Charters                                                                       
     -Repatriate permits to Alaska                                                                                              
     -Increase economic benefits from this sector                                                                               
     By  offering  a  loan   program  to  Alaska  residents,                                                                    
     business  owners will  have greater  access to  capital                                                                    
     when purchasing permits over nonresidents.                                                                                 
     This  in turn  should allow  Alaska business  owners to                                                                    
     repatriate   more   permits    than   otherwise   using                                                                    
     traditional  financing.   Additionally,  with  Alaska's                                                                    
     yearround  residents  owning permits,  Alaska's economy                                                                    
     will realize  more of the benefits  associated with the                                                                    
     sport/charter  industry.   Resident's  contribution  to                                                                    
     the  local economy  will  be  greater than  nonresident                                                                    
     permit holders  as they circulate funds  in the economy                                                                    
     year round.                                                                                                                
     Loan Fund Features:                                                                                                        
     Capitalization $5 million                                                                                                  
     Loan Limit $100 thousand                                                                                                   
     Term 15 years                                                                                                              
     Interest may not exceed prime + 2                                                                                          
     Floor/Ceiling 3-10.5 percent                                                                                               
5:44:36 PM                                                                                                                    
MS. AYERS said the mariculture  revolving loan fund will serve 67                                                               
permitted farms, and  25 producing farms, that are  governed by a                                                               
number  of  agencies  including:     ADF&G  Commercial  Fisheries                                                               
Division/Mariculture  Program;  Department of  Natural  Resources                                                               
(DNR)  Aquatic Farm  Lease Program;  Department of  Environmental                                                               
Conservation (DEC)  Food Safety and  Sanitation Program/Shellfish                                                               
Section; and  the Alaska  Coastal Management  Program.   The 2009                                                               
performance  report,  from  the  existing  mariculture  activity,                                                               
indicates a value of approximately $473,000.                                                                                    
5:45:46 PM                                                                                                                    
MS.  AYERS  pointed  out  that  the  bill  contains  an  industry                                                               
specific  training requirement.    Training  resources that  have                                                               
been funded  in recent  years include:   Alaska  Sea Grant/Marine                                                               
Advisory program  - mariculture research education  and extension                                                               
and  the  NOAA  mariculture initiative;  collaborative  research;                                                               
Alaska  Shellfish  Growers  Association  - grant  to  write  best                                                               
management practices for the industry.                                                                                          
5:46:20 PM                                                                                                                    
MS. AYERS reviewed the suggested  mariculture loan fund features,                                                               
which are:                                                                                                                      
     Capitalization $3 million                                                                                                  
     Loan Limit $100 thousand                                                                                                   
     Term 20 years                                                                                                              
     Interest may not exceed prime + 1                                                                                          
     Floor/Ceiling 5-9 percent                                                                                                  
     Delayed repayment and accrual                                                                                              
MS.  AYERS  explained  that the  delayed  repayment  and  accrual                                                               
feature  is unique  to  the program  to allow  for  the six  year                                                               
product growing time.                                                                                                           
5:47:20 PM                                                                                                                    
MS.  AYERS proceeded  to describe  the  microloan revolving  loan                                                               
fund,  stating that  the  2010  bill, HB  412,  passed the  house                                                               
unanimously; however, it failed to  pass the senate.  Many states                                                               
offer  microloans as  a means  to  seed new  businesses, and  she                                                               
stressed the  important to  have this available  in Alaska.   The                                                               
suggested loan features are:                                                                                                    
     Capitalization $3.5 million                                                                                                
     Loan Limit $35/$70 thousand                                                                                                
     Term 6 years                                                                                                               
     Interest prime + 1                                                                                                         
     Floor/Ceiling 6-8 percent                                                                                                  
5:49:23 PM                                                                                                                    
REPRESENTATIVE AUSTERMAN  directed attention to the  bill page 3,                                                               
[line 13], noting that it states  funds may be used to purchase a                                                               
charter halibut fishing vessel.                                                                                                 
MS. AYERS said yes, that would be an eligible use of the funds.                                                                 
REPRESENTATIVE AUSTERMAN  expressed disagreement for  this aspect                                                               
of  the bill,  stating that  it should  support existing  halibut                                                               
charter operations,  not assist  someone to  purchase a  boat and                                                               
begin a halibut  fishing venture.  Moving to page  6, line 16, he                                                               
read "have  experience or training in  the mariculture industry,"                                                               
and   suggested   the   language    include   a   definition   of                                                               
experience/training; it is a vague statement.                                                                                   
MS.   AYERS  said   that  the   requirement   for  training   was                                                               
specifically  requested by  existing operators  in the  industry,                                                               
who are willing  to provide training and  mentorship to entrants;                                                               
it is  not meant  to be  an onerous  requirement.   She indicated                                                               
that the regulation process might provide further details                                                                       
5:53:45 PM                                                                                                                    
REPRESENTATIVE AUSTERMAN  referred to page  9, line 26,  to state                                                               
that a definition for "reasonable amount" would be helpful.                                                                     
MS.  AYERS  suggested  that  specifics  would  be  set  forth  in                                                               
regulation rather than statute.                                                                                                 
5:55:41 PM                                                                                                                    
REPRESENTATIVE   HERRON  paraphrased   questions  that   will  be                                                               
provided  to   the  sponsor  for  written   comment,  which  read                                                               
[original punctuation provided]:                                                                                                
        Does the production from aquatic shellfish farms                                                                        
     contribute to common property fishery harvests?                                                                            
     There has  been controversy relative to  Geoduck farms,                                                                    
     having  been   a  "grab  of   the  resource"   in  some                                                                    
     locations.    Are  there similar  concerns  with  other                                                                    
     mariculture  activities  such   as  mussel  and  oyster                                                                    
     Salmon farms  have been  opposed in  this state  due to                                                                    
     the  conflicts  that  they  potentially  pose  to  wild                                                                    
     stocks and  the direct  competition they  represent for                                                                    
     existing historical  fisheries.  Along the  same lines,                                                                    
     have we been able to  demonstrate that the expansion of                                                                    
     shellfish farms does not present  similar risks such as                                                                    
     potentially  lending to  the  spread  of disease  among                                                                    
     existing wild stocks?                                                                                                      
5:56:52 PM                                                                                                                    
REPRESENTATIVE  JOHNSON directed  attention to  page 7,  line 17,                                                               
and read:                                                                                                                       
     The  department  may  not   require  the  repayment  of                                                                    
     principal on  a loan  made under  AS 16.10.910  for the                                                                    
     initial period of the loan.                                                                                                
REPRESENTATIVE JOHNSON asked, "Does this  mean they don't have to                                                               
pay anything, or any interest, for six years."                                                                                  
MS. AYERS  answered yes; the  intent is to allow  the mariculture                                                               
producer to have three to six years to produce a revenue stream.                                                                
5:58:13 PM                                                                                                                    
CHAIR  THOMPSON turned  to bill  page 7,  line 1,  and asked  for                                                               
clarification of having a loan  amount specified per year, versus                                                               
the other loans that specify a total loan limit.                                                                                
MS. AYERS  said that it is  a feature of the  mariculture loan to                                                               
allow a yearly amount of not more than $100,000 to be borrowed.                                                                 
5:59:12 PM                                                                                                                    
REPRESENTATIVE  MILLER  inquired  how the  mariculture  revolving                                                               
loan program  would have funds  replenished, given the  fact that                                                               
the  initial  borrowers would  not  be  making payments  for  six                                                               
years; how will the fund be recapitalized during the interim.                                                                   
MS. AYERS  confirmed that  the fund  may become  fully subscribed                                                               
and until repayment occurs, no more loans would be available.                                                                   
REPRESENTATIVE MILLER turned  to page 9, line 3,  and read, "make                                                               
loans to  eligible applicants under AS  44.33.950-44.33.990 to be                                                               
used  for  working  capital, equipment,  construction,  or  other                                                               
commercial  purposes by  a business  located in  the state,"  and                                                               
asked  whether this  applies to  any commercial  business in  the                                                               
MS. AYERS responded yes.                                                                                                        
REPRESENTATIVE MILLER asked, "Is that what is intended."                                                                        
MS. AYERS answered yes.                                                                                                         
REPRESENTATIVE  MILLER  inquired  how defaulted  loans  would  be                                                               
MS.  AYERS  indicated that  seizure  of  property and  resale  is                                                               
handled through the  financing office; measures are  in place for                                                               
inevitabilities of this kind.                                                                                                   
6:03:26 PM                                                                                                                    
CHAIR THOMPSON opened public testimony                                                                                          
6:03:45 PM                                                                                                                    
RUSSELL  DICK,  President  and   CEO,  Haa  Aani,  LLC,  Sealaska                                                               
Corporation,  stated  support  for  HB  121,  and  applauded  the                                                               
efforts  for removing  the barriers  of  entrepreneurs to  attain                                                               
affordable  capital.     Communities   are  being   targeted  for                                                               
mariculture development  and this  type of support  is essential,                                                               
he stressed,  and said that  apprentice oyster farmers  will also                                                               
benefit.   Pioneering  new  industry is  always  a challenge  and                                                               
gaining  experience and  training is  important, and  requires an                                                               
innovative approach, he said.                                                                                                   
6:08:18 PM                                                                                                                    
RODGER PAINTER, President,  Alaska Shellfish Growers Association,                                                               
said  that the  terms  of the  loans are  very  important, as  it                                                               
requires a minimum  of three years to generate income  from a new                                                               
mariculture farm; up to eight  years for certain species.  Annual                                                               
expenses will  need to be  met, in  the interim years,  which can                                                               
range from  $125,000 to  $150,000.   Many costs  accrue annually,                                                               
including  the purchase  of  seed,  state fees,  and  labor.   He                                                               
observed  that  the mariculture  loan  program  is based  on  the                                                               
successful  private  salmon  hatchery   non-profit  model.    The                                                               
mariculture  industry may  not match  the economic  gains of  the                                                               
salmon  hatcheries;   however,  he  reported,  Canada   has  seen                                                               
industry  growth  with  the  private  farms  that  have  received                                                               
government  support.   He  stated his  belief  that the  economic                                                               
demographics,  particularly in  the southeast  region of  Alaska,                                                               
require the  stimulus that  will be encouraged  by passage  of HB                                                               
121.  Regarding the industry  training that the bill requires, he                                                               
said that the association is in  favor of the stipulation, and is                                                               
working  with the  UA  to provide  the  appropriate course  work.                                                               
Shellfish  farms  do  not  contribute   to  the  common  property                                                               
resources with  the exception  of geoducks;  a minimal  amount of                                                               
spawn may  tend to drift.   In response to a  committee question,                                                               
he said that  the existing farms started up through  a state loan                                                               
guarantee program.   The newest farms are a  result of Sealaska's                                                               
efforts  to  promote  mariculture,  and grants  from  the  United                                                               
States Department of Agriculture.                                                                                               
6:19:12 PM                                                                                                                    
RICHARD  YAMADA,  Vice  President,  Alaska  Charter  Association,                                                               
stated  support for  HB 121,  saying that  it will  allow current                                                               
charter captains to  stay in business or to  purchase permits and                                                               
maintain  operation.   He predicted  that, in  the long  term, it                                                               
will allow new  entrance into the halibut charter  industry.  The                                                               
halibut  industry   has  been  an  economic   resource  for  many                                                               
communities,  and  increases access  for  the  public to  fishing                                                               
resources.  He  suggested a change to the name  of the loan fund,                                                               
removing the word "commercial" and inserting "sport".                                                                           
REPRESENTATIVE  AUSTERMAN  asked  whether  the  term  "commercial                                                               
sport charter" would be applicable.                                                                                             
MR.  YAMADA  said the  term  "sport"  defines the  business  more                                                               
accurately than "commercial."                                                                                                   
REPRESENTATIVE  AUSTERMAN   inquired  whether  a   sport  charter                                                               
operator is not technically considered a commercial business.                                                                   
MR. YAMADA responded, according to the business license, yes.                                                                   
6:23:23 PM                                                                                                                    
REPRESENTATIVE  AUSTERMAN   referred  to  the   loan  eligibility                                                               
allowances, and asked if the  loan program would not be primarily                                                               
for operators to purchase a permit, versus as boat.                                                                             
MR.  YAMADA stated  his belief  that  the cost  for entering  the                                                               
industry may  be prohibitive considering  the requirement  for an                                                               
expensive permit, along with the purchase of a boat.                                                                            
CHAIR THOMPSON announced that the bill would be held over.                                                                      

Document Name Date/Time Subjects
HB 121 - Version A.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 121 - Sponsor Statement.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 121 - Sectional Analysis Version A.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 121 - Alaskan Shellfish Grower’s Association - Support.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 59 - Sponsor Statment.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Version A.PDF HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Hearing Request.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Common Questions.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Commercial Fishing Loan Fund home page.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Loan Servicing Stats - 12-31-10.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Product Quality Improvement Loans - 12-31-2010.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
HB 59 - Fiscal Note - CCED - DED - 02-04-11.pdf HFSH 2/8/2011 5:00:00 PM
HB 59
ADF&G Overview - Habitat Division.pdf HFSH 2/8/2011 5:00:00 PM
ADF&G Overview - Subsistence Division - 2-8-11.pdf HFSH 2/8/2011 5:00:00 PM
HB 121 - Power Point Presentation - DCCED.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 121 - CCED - Letter of support - SWAMC.pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB121-CCED-DED-02-03-11(A).pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB121-CCED-DED-02-03-11(B).pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB121-CCED-DED-02-03-11(C).pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB121-CCED-DED-02-03-11(D).pdf HFSH 2/8/2011 5:00:00 PM
HB 121
HB 59 - RDC Support Ltr.pdf HFSH 2/8/2011 5:00:00 PM
HB 59