Legislature(2011 - 2012)BARNES 124

03/16/2011 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:15 pm Today --
+ HB 121 LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN TELECONFERENCED
Moved CSHB 121(FSH) Out of Committee
+= HB 106 COASTAL MANAGEMENT PROGRAM TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HJR 8 OPPOSE GENETICALLY ENGINEERED SALMON TELECONFERENCED
Moved CSHJR 8(RES) Out of Committee
        HB 121-LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                    
                                                                                                                                
1:23:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON announced  that the  next order  of business  is                                                               
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."  [Before the committee was CSHB 121(FSH).]                                                                     
                                                                                                                                
1:23:43 PM                                                                                                                    
                                                                                                                                
CURTIS THAYER,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), said HB 121 would create  a suite of three new revolving                                                               
loan  funds  that would  help  Alaska  entrepreneurs build  their                                                               
businesses  and contribute  to the  state's  economy.   Revolving                                                               
loan  funds have  a  proven track  record in  the  state and  are                                                               
administered within  the department's  financing section.   These                                                               
new revolving loan  funds would make it  easier for entrepreneurs                                                               
to invest  in business expansion, which  would stimulate economic                                                               
activity.   The  bill would  incentivize the  development of  the                                                               
shellfish mariculture  industry, assist Alaska  charter operators                                                               
in acquiring halibut permits to  transition to the new regulatory                                                               
and  management regime  instituted  by the  National Oceanic  and                                                               
Atmospheric    Administration    (NOAA);     and    would    seed                                                               
microenterprise development across the state.                                                                                   
                                                                                                                                
MR.  THAYER  explained  that  the  Commercial  Charter  Fisheries                                                               
Revolving Loan Fund would provide  access to capital for Alaskan-                                                               
owned  charters.   It would  repatriate permits  to Alaskans  and                                                               
would  increase economic  benefits  to  Alaska by  re-circulating                                                               
earnings from this sector into  Alaska.  He informed members that                                                               
an  interest rate  change  in a  previous  committee of  referral                                                               
could  conflict with  the  private sector  loan  program and  the                                                               
department  is  working  with  that  committee  to  rectify  this                                                               
conflict as the bill moves forward.                                                                                             
                                                                                                                                
1:25:22 PM                                                                                                                    
                                                                                                                                
MR.  THAYER  said  the  Mariculture  Revolving  Loan  Fund  would                                                               
provide  a spark  to  a growing  industry  with great  year-round                                                               
potential  for  coastal  Alaska  communities  and  entrepreneurs.                                                               
Currently, 67  farms are permitted in  the state, but only  25 of                                                               
them are producing  farms - 10 in Southeast,  15 in Southcentral.                                                               
Twenty years ago in British  Columbia, mariculture was a $500,000                                                               
industry;  today  it  is  a  $30  million  industry  because  the                                                               
province seeded  these mariculture  forms.   Alaska's mariculture                                                               
economy is  currently at  $473,000 and  this revolving  loan fund                                                               
would act to seed this industry.                                                                                                
                                                                                                                                
MR. THAYER stated  that the Alaska Microloan  Revolving Loan Fund                                                               
would help small businesses grow  by providing loans for start-up                                                               
costs,   working   capital,   inventory  expansion,   and   other                                                               
commercial purposes.   Alaska  is one of  a few  remaining states                                                               
without a microloan  program, which has a proven  track record in                                                               
other  states  and  through  the  Small  Business  Administration                                                               
(SBA).   He reminded members that  last year this very  same bill                                                               
passed the  House 40-0, and  said that  this year it  is packaged                                                               
with some other revolving loan funds.                                                                                           
                                                                                                                                
1:26:28 PM                                                                                                                    
                                                                                                                                
MR.  THAYER  noted  that  these  programs  would  complement  two                                                               
existing  small  business  loan   programs  administered  by  the                                                               
Division of  Economic Development  - 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  number one  creator  of                                                               
private-sector  jobs,  so  HB  121 would  be  good  for  Alaska's                                                               
economy and  families because it would  spur sustainable economic                                                               
growth in the state.  The department  is on a mission to foster a                                                               
business climate in Alaska that  is conducive to job creation and                                                               
economic growth.  The department  is examining how it operates 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 reasserting the state's role                                                               
in creating a business-friendly environment in Alaska.                                                                          
                                                                                                                                
MR. THAYER  added that  the department  has spent  a lot  of time                                                               
listening  to  the private  sector.    The commissioner  recently                                                               
formed  an economic  advisory task  force  comprised of  industry                                                               
leaders  that  has  been  instrumental in  reaching  out  to  the                                                               
private  sector.     This   was  done   through  non-governmental                                                               
organizations,  trade associations,  helping this  administration                                                               
plot a  productive course to economic  development. Additionally,                                                               
the    department   solicited    input   from    non-governmental                                                               
organizations,  trade associations,  Alaska Regional  Development                                                               
Organizations  (ARDORs),  Alaska  Native  Claims  Settlement  Act                                                               
(ANCSA) corporations,  and legislators.   A commonly  heard theme                                                               
has  been  to increase  financing  options  for small  businesses                                                               
because  access   to  critically   needed  capital  can   be  the                                                               
difference between simply  getting by, and thriving.   He said HB                                                               
121 is a step in the right direction and urged its passage.                                                                     
                                                                                                                                
1:28:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  requested an explanation about  the relationship                                                               
of microloans in terms of HB 121 and ARDORS.                                                                                    
                                                                                                                                
MR. THAYER replied  that, currently, one of the  twelve ARDORS in                                                               
the state has a very successful  microloan program that is in the                                                               
Kenai  Borough.   In the  past  the department  and borough  have                                                               
discussed  working together  and having  the department  possibly                                                               
operate the  borough's fund.   The  department would  continue to                                                               
work  with  the ARDORS  individually  and  actually prefers  that                                                               
people work  with the  ARDORS first before  coming to  the state.                                                               
Since only this  one ARDOR is providing a  microloan program, the                                                               
majority of the state does not  have one.  In further response to                                                               
Co-Chair  Seaton,   Mr.  Thayer  confirmed  that   the  microloan                                                               
provision of HB  121 would not override or  necessarily replace a                                                               
microloan program from  an ARDOR, but if an ARDOR  wanted to work                                                               
with the department  in doing a microloan  program this provision                                                               
would enable it.                                                                                                                
                                                                                                                                
1:29:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  whether a  person  who  has  a                                                               
microloan from  an ARDOR would  also be  able to get  a microloan                                                               
from the state.                                                                                                                 
                                                                                                                                
MR. THAYER deferred  to the director of the  Division of Economic                                                               
Development for an answer.                                                                                                      
                                                                                                                                
WANETTA  JO  AYERS,  Division   Director,  Division  of  Economic                                                               
Development,  Department   of  Commerce,  Community   &  Economic                                                               
Development,  replied  it  is conceivable  that  there  could  be                                                               
circumstances  where that  would happen,  but the  borrower would                                                               
have to have the collateral in  place to make that possible.  The                                                               
circumstances of  that individual borrower, the  project, and the                                                               
kind  of collateral  that the  borrower can  bring forward  would                                                               
have to be looked at.                                                                                                           
                                                                                                                                
REPRESENTATIVE  P.   WILSON  observed  that  two   of  the  three                                                               
revolving loan  funds are water  related.  She presumed  that the                                                               
microloan  fund  would  be  available   for  any  other  kind  of                                                               
business.                                                                                                                       
                                                                                                                                
MS. AYERS responded that is correct.                                                                                            
                                                                                                                                
1:30:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  understood  that   a  microloan  is  what                                                               
financial institutions call pre-bankable.                                                                                       
                                                                                                                                
MS. AYERS answered that in  terms of that specific definition she                                                               
would say that most of these  borrowers would have issues in that                                                               
by definition  they would  have been turned  down by  an existing                                                               
private lender, but  may be able to achieve  the circumstances of                                                               
the microloan fund in order to get to a credit decision.                                                                        
                                                                                                                                
REPRESENTATIVE HERRON  agreed, saying  his understanding  of this                                                               
proposed legislation  is that microloans are  for individuals who                                                               
have lack of collateral.   He asked whether a person's employment                                                               
and credit history are considered.                                                                                              
                                                                                                                                
MS. AYERS replied  that all of those factors  would be considered                                                               
by  a loan  officer prior  to being  taken to  a committee  for a                                                               
decision.                                                                                                                       
                                                                                                                                
1:32:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE asked whether these  loans would be made to people                                                               
who previously had not qualified for commercial loans.                                                                          
                                                                                                                                
MR. THAYER  responded yes,  there is a  turn-down provision  by a                                                               
commercial institution before a person goes to the state.                                                                       
                                                                                                                                
CO-CHAIR  FEIGE presumed  these loans  are inherently  more risky                                                               
than standard commercial loans.                                                                                                 
                                                                                                                                
MR. THAYER answered yes.                                                                                                        
                                                                                                                                
CO-CHAIR  FEIGE inquired  whether  the interest  rates should  be                                                               
higher than what  has been indicated in order to  account for the                                                               
risk.                                                                                                                           
                                                                                                                                
MS. AYERS replied  that characterizing these as  riskier loans is                                                               
correct; however,  that risk would  be mitigated  largely through                                                               
collateral requirements.   The interest  rates are what  would be                                                               
common with other comparable microloan  programs offered in other                                                               
states.                                                                                                                         
                                                                                                                                
CO-CHAIR FEIGE asked  what collateral would be  acceptable to the                                                               
commissioner.                                                                                                                   
                                                                                                                                
MS. AYERS  responded that  in the  past, collateral  has included                                                               
real property, fishing  vessels, gear and equipment,  and in some                                                               
cases inventory is considered.   Based on the risk and assessment                                                               
of the loan officer, a determination  will be made about how much                                                               
collateral  is required  for achieving  the loan.   The  national                                                               
average  microloan  value is  about  $12,000  to $13,000.    [The                                                               
division] is  requiring anything above  $35,000 to have  the turn                                                               
down and  expects it  will be  close to  or slightly  higher than                                                               
that number.                                                                                                                    
                                                                                                                                
1:34:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER said she is  very glad to see that someone                                                               
with past-due  child support obligations  cannot receive  a loan.                                                               
She inquired  how the department  would track whether  a borrower                                                               
had fulfilled  the requirements in  Section 1  of the bill.   She                                                               
further  inquired  whether  the  sponsor would  be  receptive  to                                                               
requiring a report to the legislature regarding repayments.                                                                     
                                                                                                                                
MS.  AYERS, regarding  Section 1,  explained that  the department                                                               
has  several  objective measurements  as  to  whether things  are                                                               
manufactured  in  the  state  of  Alaska,  including  the  Alaska                                                               
product  preference  statute and  the  Made  in Alaska  standard.                                                               
There  would  be  ways  for  borrowers  to  determine  whether  a                                                               
particular vendor  had achieved  those standards.   Additionally,                                                               
that is guidance for the loan officers as well.                                                                                 
                                                                                                                                
MR. THAYER pointed  out that both of  the aforementioned programs                                                               
are run by DCCED.                                                                                                               
                                                                                                                                
MS.  AYERS,  regarding the  reporting  standard,  noted that  the                                                               
department  does provide  an annual  report  that indicates  loan                                                               
origination  and servicing  activities,  as  well as  performance                                                               
standards such as defaults and delinquencies.                                                                                   
                                                                                                                                
1:37:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked  what the prediction is  for the rate                                                               
of successful microloan repayment.                                                                                              
                                                                                                                                
MS. AYERS answered  that [the department] believes it  will be in                                                               
the range of 90-95 percent.   While there is no definitive source                                                               
that  provides  a  national  average,  the  MicroCapital  Monitor                                                               
estimates  that the  average  default rate  is  about 5  percent,                                                               
which  tracks fairly  well with  the department's  Small Business                                                               
Economic Development Revolving Loan Fund.                                                                                       
                                                                                                                                
1:37:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON inquired as  to what the default rate is                                                               
for the Commercial Fishing Revolving Loan Fund.                                                                                 
                                                                                                                                
MS. AYERS replied that she does  not have that specific number on                                                               
the top  of her head,  but in general  for last year  the default                                                               
rate was less than 1 percent for the entire portfolio.                                                                          
                                                                                                                                
1:38:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON opened public testimony.                                                                                        
                                                                                                                                
PAUL FUHS, Pack Alaska Sea Farms,  said he first went to work for                                                               
Pack Alaska  Sea Farms  to help  untangle some  extremely complex                                                               
regulatory  issues,  but he  came  to  believe  so much  in  this                                                               
industry and its potential that he  became a part-owner of one of                                                               
these farms,  primarily focusing  on geoducks.   The  farms began                                                               
putting in  seed about eight  years ago and the  first successful                                                               
harvest of geoducks  was just this last month.   An adult geoduck                                                               
ideal for the Chinese and  Japanese markets weighs about one-and-                                                               
a-half to two pounds.                                                                                                           
                                                                                                                                
MR. FUHS  said the timing  of this  loan program is  good because                                                               
the  technology has  now  been proven.    People mortgaged  their                                                               
houses and drained their bank accounts  to get to this point.  It                                                               
takes six to  seven years for a geoduck to  reach market size, so                                                               
the fairly  long loan  repayment terms in  the bill  are balanced                                                               
with  the lifecycle  of  these animals.    Justification for  the                                                               
state to establish this program is that  it is hard for a bank to                                                               
give a  loan when the  person cannot  show any revenue  coming in                                                               
for six or  seven years.  Additionally, there  are lease expenses                                                               
to the  Department of Natural  Resources (DNR); for  example, his                                                               
farm pays an annual lease to DNR of about $10,000.                                                                              
                                                                                                                                
1:40:33 PM                                                                                                                    
                                                                                                                                
MR. FUHS  said economic development  is another reason  for doing                                                               
this.   In  addition to  the farmer,  there is  quite a  chain of                                                               
people involved  in the product.   Behind the numbers  of overall                                                               
harvest is  the boat  that is hired  for planting,  the mechanics                                                               
who work on the boat, the  people the fuel is purchased from, the                                                               
processing  of  the geoducks  which  is  done during  the  salmon                                                               
offseason thereby  allowing processing staff to  work longer, the                                                               
purchase of seed from the  Seward hatchery, the transportation of                                                               
the seed,  and the shipping of  the product.  During  his time as                                                               
the  commissioner  of the  Department  of  Commerce, Community  &                                                               
Economic Development  quite a few  years back, the  loan programs                                                               
for fisheries were  very successful with a very  low default rate                                                               
and therefore he expects the same with this.                                                                                    
                                                                                                                                
1:41:52 PM                                                                                                                    
                                                                                                                                
SEAN RUDDY stated that he has  an oyster farm in Kachemak Bay and                                                               
is  part of  the Kachemak  Shellfish Mariculture  Association and                                                               
the  Kachemak  Shellfish Growers  Co-op.    He has  been  farming                                                               
oysters  for  about  eight  years   and  this  would  be  a  very                                                               
beneficial fund,  especially for new  farmers.  In  this business                                                               
it  takes a  long time  to  become profitable.   Furthermore,  it                                                               
takes many  resources, including  money, to make  it happen.   He                                                               
had to buy his own boat,  build his own boat, customize gear, get                                                               
gear to hold  the oysters on the  farm, pay his DNR  fees as well                                                               
as  Department of  Environmental Conservation  (DEC) fees,  along                                                               
with the  labor of working on  the farm.  He  urged the committee                                                               
to approve the loan fund.                                                                                                       
                                                                                                                                
1:43:26 PM                                                                                                                    
                                                                                                                                
GERRY ANDREWS  offered his  agreement with  all of  the testimony                                                               
provided by  Mr. Thayer.   He  said he has  owned Icy  Bay Oyster                                                               
Company  since 2005  as a  startup.   He  has yet  to produce  an                                                               
oyster, but  that is not because  he didn't try.   One big hurdle                                                               
for an  individual like himself  coming into the industry  is the                                                               
financing and not having that  legacy of production, and this has                                                               
slowed down getting into production.   As a result he has changed                                                               
his business  plan and  is now  looking at  purchasing a  farm in                                                               
Kachemak Bay and becoming a  member of the Kachemak Bay Shellfish                                                               
Mariculture  Association and  also the  greater community  of the                                                               
[Alaska Shellfish  Growers Association].  He  urged the committee                                                               
to move HB 121 forward.                                                                                                         
                                                                                                                                
1:45:19 PM                                                                                                                    
                                                                                                                                
MEGHAN CLARK, Crabby Sisters,  testified that her Anchorage-based                                                               
seafood company  brought its product  of gluten-free  Alaska king                                                               
crab cakes to market this past  January.  Over the last two years                                                               
her company  has developed a  strong relationship with  its local                                                               
small business  development center and  have taken over  40 hours                                                               
of  group trainings  and seminars.   Additionally,  she [and  her                                                               
business partner]  routinely meet  with their  business advisors,                                                               
specifically  focusing  on  the development  of  their  company's                                                               
current  financial   analysis  and   future  projections.     Her                                                               
company's market research and  development and current production                                                               
numbers  demonstrate a  high consumer  and commercial  demand for                                                               
its  product, and  this demand  means growth  and expansion.   To                                                               
achieve this growth her small,  local manufacturing business will                                                               
need a loan  to meet its cash flow needs.   Unfortunately, it has                                                               
been her experience that despite  her ability to demonstrate good                                                               
character, capacity  to repay,  favorable market  conditions, and                                                               
previous  small  business  experience,   her  company  is  simply                                                               
categorized as  a startup lacking  marketing history, which  is a                                                               
red flag for financial institutions.   This microloan legislation                                                               
would  assist  in breaking  down  this  barrier to  expansion  by                                                               
providing sufficient cash  flow to grow her Alaska  business at a                                                               
healthy and steady pace.                                                                                                        
                                                                                                                                
1:47:25 PM                                                                                                                    
                                                                                                                                
TIM DILLON,  City Manager, City of  Seldovia; Executive Director,                                                               
Seldovia  Holding Corporation,  said the  community of  Seldovia,                                                               
like  many  small  coastal  communities  in  Alaska,  has  had  a                                                               
struggling economy for years.   "Things are starting to come back                                                               
and this kind of an opportunity,  this kind of a loan fund, would                                                               
be a huge  shot in the arm for a  small community like Seldovia."                                                               
He encouraged the committee to move HB 121 forward.                                                                             
                                                                                                                                
1:48:29 PM                                                                                                                    
                                                                                                                                
ADAM  GALINDO, Taco  Loco, stated  that he  is representing  Taco                                                               
Loco products.   He is a strong  supporter of HB 121.   Taco Loco                                                               
is an established  business that is one of  Alaska's largest food                                                               
manufacturers, but it  is having a hard time  securing capital to                                                               
grow  its business  and  create  jobs without  having  to pay  12                                                               
percent interest  and put 35 percent  down to the banks  that the                                                               
business has dealt  with for many years.  The  current economy is                                                               
putting   a  crunch   on   a  lot   of   Alaska  businesses   and                                                               
manufacturers.  He urged that HB 121 be passed from committee.                                                                  
                                                                                                                                
CO-CHAIR  SEATON   closed  public  testimony  on   HB  121  after                                                               
ascertaining that no one else wished to testify.                                                                                
                                                                                                                                
1:50:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  inquired whether  the startup  funding                                                               
for  the provisions  of HB  121 would  come from  the "Commercial                                                               
Fishing Revolving Loan".                                                                                                        
                                                                                                                                
MS. AYERS replied  no, that is not part of  the proceeds from the                                                               
Commercial Fishing Revolving  Loan Fund.  In  response to further                                                               
questions  from  Representative  P. Wilson,  she  confirmed  that                                                               
under the  current fiscal  note the funding  would come  from the                                                               
general  fund.    Currently,  capitalization  for  the  Microloan                                                               
Revolving  Loan  Fund would  be  $3.5  million, for  the  halibut                                                               
commercial charters revolving  loan fund it would  be $5 million,                                                               
and for the [Alaska] Mariculture  Revolving Loan Fund it would be                                                               
$3 million.   She said there  would also be a  separate operating                                                               
cost but she does not have that amount in front of her.                                                                         
                                                                                                                                
CO-CHAIR  SEATON  interjected that  fiscal  note  number 1  would                                                               
provide $169,000 for  operating expenses in Fiscal  Year 2012 and                                                               
it would be approximately the same amount for subsequent years.                                                                 
                                                                                                                                
1:52:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked  whether   current  loan  funds  are                                                               
accessible  to business  people  involved in  mariculture or  the                                                               
commercial charter fisheries.                                                                                                   
                                                                                                                                
MS. AYERS  responded that there  is not currently  something that                                                               
is  designated for  these specific  activities of  mariculture or                                                               
sport fish.  With regard to  microloans, there are two funds more                                                               
designed for  long-term financing:   the Small  Business Economic                                                               
Development  Loan  and  the Rural  Development  Initiative  Fund.                                                               
However,  both   of  those   funds  have   certain  restrictions,                                                               
geographic restrictions,  and other complications due  to federal                                                               
requirements  that  make it  difficult  to  lend on  a  statewide                                                               
basis.                                                                                                                          
                                                                                                                                
1:54:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  allowed that  it sounds  from the  testimony like                                                               
there  is  a  fair  amount  of  difficulty  in  getting  standard                                                               
financing  through normal  commercial channels.   However,  he is                                                               
loathe to put  the state in the position of  being a bank because                                                               
the  state would  then be  competing  with banking  institutions,                                                               
although he recognizes  that in this case it does  have a certain                                                               
degree of  merit.  He  inquired of  the committee and  Mr. Thayer                                                               
whether it  would be  wise to  put a sunset  on this,  keeping in                                                               
mind that while economic times  may be tough currently they could                                                               
be rosy in 10 years.                                                                                                            
                                                                                                                                
REPRESENTATIVE  P.  WILSON  commented that  for  the  "commercial                                                               
fishermen's  revolving loan"  the fisherman's  boat or  permit is                                                               
the  collateral so  that person  will do  everything possible  to                                                               
keep from  losing his or  her boat  because that is  the person's                                                               
only livelihood.   She asked what the collateral would  be in the                                                               
case  of a  shellfish farmer  who might  have another  livelihood                                                               
besides  the shellfish  farm or  is retired  and undertaking  the                                                               
farm as an investment.                                                                                                          
                                                                                                                                
1:56:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  pointed out that  many times the  collateral for                                                               
the loan also  includes the person's house or  other real estate,                                                               
not just  the boat.   Oftentimes a  boat does not  matter because                                                               
the borrower  needs to  have other collateral  for backup  on the                                                               
loan.  He  cautioned that since this is a  revolving loan fund, a                                                               
term on  it would create  uncertainty for  prospective borrowers.                                                               
People  would  be unable  to  make  business decisions  when  the                                                               
sunset date is approaching.   He pointed out that the legislature                                                               
does have  the ability to make  adjustments in the future  to the                                                               
revolving loan funds if it is found that they are necessary.                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON noted  that  Ms.  Ayers earlier  confirmed                                                               
that this is  a pre-bankable model.  Had Ms.  Ayers said that the                                                               
repayment rates might  fall below 90 percent, then  he would have                                                               
been concerned.   But  a 95-97 percent  repayment rate  should be                                                               
looked  at  in  a  positive  way and  not  be  looked  at  overly                                                               
critically because the  important part in this  repayment plan is                                                               
the borrowers.   He  said he  thinks it  is an  important finance                                                               
method that the state should deploy.                                                                                            
                                                                                                                                
1:59:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  questioned whether  DCCED would support  a sunset                                                               
provision in the bill.                                                                                                          
                                                                                                                                
MR. THAYER  answered that if it  is the will of  the legislature,                                                               
then  the department  would support  a sunset  provision for  the                                                               
success of  the loan program  moving forward.  However,  while HB                                                               
121 was being  drafted the department worked  with the Commercial                                                               
Fishing and  Agriculture Bank (C-FAB)  and the  banking community                                                               
to be very  careful not to compete with the  private sector.  The                                                               
department would like to see this bill pass.                                                                                    
                                                                                                                                
2:01:37 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:01 p.m. to 2:05 p.m.                                                                       
                                                                                                                                
2:05:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ said  she likes HB 121  because it addresses                                                               
the  funding problems  that certain  industries  in Alaska  have.                                                               
She understood  that the first  years for a new  shellfish grower                                                               
are very cost intensive and it  takes seven to eight years before                                                               
any income  is derived.   She  asked whether  the loans  that are                                                               
specifically  for  mariculture  farmers   would  take  that  into                                                               
account.                                                                                                                        
                                                                                                                                
MR. THAYER  replied that  it does  and a  borrower may  defer the                                                               
interest for up to six years,  subject to an arrangement with the                                                               
Division  of  Economic  Development   loan  officer.    This  was                                                               
addressed by the prior committee,  the House Special Committee on                                                               
Fisheries, he noted.                                                                                                            
                                                                                                                                
2:07:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  inquired whether the $169,000  in operating                                                               
costs during the first years would  come from the general fund or                                                               
the revolving loan fund.                                                                                                        
                                                                                                                                
MR. THAYER  responded that  those costs  would be  funded through                                                               
the  fund  itself.    In  further  response,  he  confirmed  that                                                               
interest  payback/revenue generation  would  occur  in 2012,  the                                                               
first year of operation, and in 2013.                                                                                           
                                                                                                                                
2:08:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  moved  to  report  CSHB  121(FSH)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  121(FSH)  was                                                               
reported from the House Resources Standing Committee.                                                                           
                                                                                                                                

Document Name Date/Time Subjects
HRES 3.7.11 HB 106 Coastal Management Program.PDF HRES 3/7/2011 1:00:00 PM
HRES 3/16/2011 1:00:00 PM
HRES 3/18/2011 1:00:00 PM
HRES 3/28/2011 1:00:00 PM
HRES 3/30/2011 1:00:00 PM
HB 106
CSHB 121 Sectional Analysis.pdf HRES 3/16/2011 1:00:00 PM
HB 121
House Bill 121 Hearing Request RES.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB121 Version D.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 (FSH) Explanation of Changes.docx HRES 3/16/2011 1:00:00 PM
HB 121 - Treasures of the Tidelands - WA.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
NCSL Revolving Loan briefing paper.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - Alaskan Shellfish Grower's Association - Support.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - CCED - Letter of support - SWAMC.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - Shellfish Production Stats - West Coast.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
AEDC Letter of Support HB 121.pdf HRES 3/16/2011 1:00:00 PM
HB 121
ACMP Coastal District Comments I.pdf HRES 3/16/2011 1:00:00 PM
ACMP Coastal District Comment II.pdf HRES 3/16/2011 1:00:00 PM
Summary of ACMP Coastal District Concerns.pdf HRES 3/16/2011 1:00:00 PM
AMCP_Powerpoint_3-11 (2).pdf HRES 3/16/2011 1:00:00 PM
HJR8-TroutUnltd.pdf HRES 3/16/2011 1:00:00 PM
HJR8-ConstituantLtrs.pdf HRES 3/16/2011 1:00:00 PM
HJR8-Bill.Larry.GMO.LTR.PDF HRES 3/16/2011 1:00:00 PM
HJR8-Interior.Del.Ltr.PDF HRES 3/16/2011 1:00:00 PM
HJR8-FDA.Health&HumanSvc.response.PDF HRES 3/16/2011 1:00:00 PM
HJR8-NOAA opinion.PDF HRES 3/16/2011 1:00:00 PM
AKDISPATCH.ARTICLE.PDF HRES 3/16/2011 1:00:00 PM
Washington Post Article.PDF HRES 3/16/2011 1:00:00 PM
Bloomberg Article.PDF HRES 3/16/2011 1:00:00 PM
HJR8-Frankenfish.top50.PDF HRES 3/16/2011 1:00:00 PM
Begich-Time Response.PDF HRES 3/16/2011 1:00:00 PM
HJR8 Resources Request.doc HRES 3/16/2011 1:00:00 PM
Sponsor Statement HJR8.doc HRES 3/16/2011 1:00:00 PM
HJR 8 - Fiscal Note.pdf HRES 3/16/2011 1:00:00 PM
HJR 8 - Congressional Delegation Letter of Support - All Members.pdf HRES 3/16/2011 1:00:00 PM
HJR8-UFA Support.PDF HRES 3/16/2011 1:00:00 PM
HJR8-ATA.Ltr.pdf HRES 3/16/2011 1:00:00 PM
HJR8-SAFA.Ltr.pdf HRES 3/16/2011 1:00:00 PM
HJR8-CenterFoodSafety.pdf HRES 3/16/2011 1:00:00 PM
HB 121 Power Point Presentation.pptx HRES 3/16/2011 1:00:00 PM
CS HB 106 Workdraft Version B.pdf HRES 3/16/2011 1:00:00 PM
HRES 3/18/2011 1:00:00 PM
HRES 3/30/2011 1:00:00 PM
HB 106
Legislative Audit Memorandum and response.pdf HRES 3/16/2011 1:00:00 PM
ACMP Approved Coastal District Enforceable Policies.pdf HRES 3/16/2011 1:00:00 PM