Legislature(2011 - 2012)SENATE FINANCE 532
01/25/2012 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB39 | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 39 | TELECONFERENCED | |
| + | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 121(RLS)
"An Act establishing the commercial charter fisheries
revolving loan fund, the Mariculture revolving loan
fund, and the Alaska microloan revolving loan fund and
relating to those funds and loans from those funds;
and providing for an effective date."
10:02:26 AM
SUSAN K. BELL, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, referred the CSHB 121
Revolving Loan Funds Summary (copy on file). She stated
that there were three proposed revolving loan funds:
Commercial Charter Fisheries, Mariculture, and Microloans.
She referred to page 2, which displayed the capitalization
amounts: Commercial Charter Fisheries, $9 million;
Mariculture, $2.5 million; and Microloans, $3 million. She
looked at the loan limits for each fund: Commercial Charter
Fisheries, $100,000; Mariculture, $100,000; and Microloans,
$35,000 for a single individual and $70,000 for a two or
more. She noted that the loan terms, interest rates, and
floor/ceiling were also displayed.
Commissioner Bell pointed out that many were interested in
pursuing revolving loan avenues for economic development.
She stated that there were discussions with local financial
institutions that expressed support. She stressed that the
Charter Culture Fisheries and Mariculture funds had
important implications for coastal and rural Alaska.
Commissioner Bell looked at page 3: "Commercial Charter
Fisheries Revolving Loan Fund." This fund would-
• Provide access to capital for Alaskan-Owned
Charters.
• Repatriate permits to Alaska.
• Increase economic benefits from this sector.
Commissioner Bell pointed out the fund's current activity:
NOAA took 1,088 applications, issuing 90 percent permanent
and only 10 percent as interim (Alaska residents received
92 out of 111). She explained that for the first four
months of 2011, average permit prices for Area 2C permits
were nearly $35,000 and Area 3A permits were nearly
$59,000.
Commissioner Bell looked at page 4, "Mariculture Revolving
Loan Fund":
• Mariculture industry has significant potential
for year-round job creation in rural and coastal
areas of the state.
• Relatively new industry and require 5-7 years to
see return on investment.
• Wild harvest exceeds cultivated harvest. Based on
current levels, with greater investment, farmed
shellfish will exceed the market value of wild
caught shellfish (excluding crab) within 10-15
years.
• Industry could generate $20-$30 million in annual
product sales.
Commissioner Bell discussed page 5, "Alaska Microloan
Revolving Loan Fund":
• Improves economic development to seed start-up
businesses.
• Provides access to working capital, inventory
expansion, etc.
• Provides financing for expansion.
• Modeled after SBA program.
• Alaska one of few remaining states without a
microloan program.
Co-Chair Hoffman wondered how the split was determined on
the capitalization of each of the programs. Commissioner
Bell replied that the demand for Commercial Charter
Fisheries was increased, and was supported in the House.
She stated that there was an estimated of anticipated loan
limits, market demand, and history to determine the
capitalization.
Co-Chair Stedman queried the initial capitalization
submission. Commissioner Bell responded that the initial
proposed capitalizations were $5 million for Charter
Fisheries, $2.5 for Mariculture, and $3 million for
Microloan.
Co-Chair Hoffman stressed that he supported commercial
fishing. He added that his district was probably the
largest fishing district in the state. He wondered if his
district's programs were too healthy to assist.
Commissioner Bell replied that the vast majority of the
processed loans were for commercial fishing.
10:13:27 AM
Co-Chair Hoffman noted that many of his constituents were
interested in marketing their product, and felt that there
was not enough emphasis on that aspect of assistance.
Commissioner Bell replied there were too core areas of
economic development activity: financing and marketing. She
agreed to participate in discussions to improve individual
regional marketing entities.
Co-Chair Hoffman stressed that individuals wanted to
process their own fish, and send the fish to market. He
wondered if there was assistance in a revolving loan
program that could assist them. Commissioner Bell replied
that there was potential within the Microloan program or
the Rural Development Investment Fund (RDIF).
Senator Thomas queried how the determination of interest
rates and whether there would be an annual report of the
program. Commissioner Bell responded that the microloan
program would be available on a statewide basis, and the
RDIF program was specific to community populations that
were 5,000 or less if not connected by road or rail to
Anchorage or Fairbanks and 2,000 or less if connected. She
stressed that there was growth in the utilization of the
RDIF in the year prior.
CATHY JEANS, FINANCE OPERATIONS MANAGER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that
there were mandated reports that were supposed to be filed
by the end of January of each year for commercial fisheries
and fisheries enhancement. She agreed to add the
Mariculture and Microloan funds to the report.
10:18:37 AM
Senator McGuire requested data that determined the
principal amount. She stressed the loans should develop
revenue. She wondered if there was an anticipation of
profits coming back to the state. Commissioner Bell replied
that there was some anticipation that prices could be as
high as $100,000, and also as many as 100 Alaskans that
needed to purchase a permit. She stressed that there was
basis in determining the principal amount. She agreed to
provide further information.
Senator Egan would why the interest would be different on a
three-year area and Co-Chair Stedman also queried who would
authorize the loans. Commissioner Bell stated that DCCED
had worked with the Commercial Finance Industry to
determine the rates.
Co-Chair Stedman requested the default issues regarding
cross-correlation for the borrowers.
Co-Chair Stedman noted the four new fiscal notes from the
Department of Education and Early Development.
10:25:38 AM
RODGER PAINTER, PRESIDENT, ALASKAN SHELLFISH GROWERS
ASSOCIATION, testified in favor of HB 121. He pointed out
that there was a tremendous demand for financing. He
stressed that the loans were meant for operating capital.
He felt that there were many applicants who would utilize
the $25 million capitalization.
Senator McGuire queried the proper amount to capitalize the
fund. She wondered if Mr. Painter supported advocacy of the
committee to raise the $2.5 million principal in the
Mariculture Fund. Mr. Painter replied that he was going to
embark on a training program to apprentice farmers, and in
two years those people would be looking for financing. He
stressed that currently there were enough people who would
use up the entire fund.
RUSSELL DICK, PRESIDENT AND CEO, HAA AANI, LLC, testified
in support of HB 121. He stressed that there were financial
challenges and moving impediments on economic development
in rural communities. He felt that HB 121 would encourage
economic expansion in rural communities.
10:35:43 AM
PAUL FUHS, ALASKA SEA FARMS, spoke in support of HB 121.
Commissioner Bell thanked the committee, and stated that
she would follow-up with the default rate questions.
Co-Chair Stedman requested a classical calculation, and
queried how many loans had been restructured and defined as
default.
Senator McGuire requested information regarding the budget
for BSC funding.
CSHB 121(RLS) was HEARD and HELD in committee for further
consideration.
Co-Chair Stedman cancelled the following day's meeting.