Legislature(2011 - 2012)SENATE FINANCE 532

01/25/2012 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 39 U.S. PRESIDENTIAL ELECTION COMPACT TELECONFERENCED
Heard & Held
+ HB 121 LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled 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.                                                                         
                                                                                                                                

Document Name Date/Time Subjects
SB 39 - Alaska Poll Results.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
SB 39 - Changes To Bill.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
SB 39 - One Page Summary.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
SB 39 - Sectional.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
SB 39 - Sponsor Statement.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
SB 39 - Editorials.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
HB 121 - Alaskan Shellfish Grower's Association - Support.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - Letter of support - ABA.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - Letter of support - Oceans Alaska.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - CCED - Letter of support - SWAMC.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - Letter of Support - Kathryn Dodge.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - Treasures of the Tidelands - WA.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 Sectional Analysis Version T.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121-CCED-Letter of Support-Taco Loco.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
House Bill 121 Explanation of Changes SFIN.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
SB 39 Ruth Danner Letter.doc SFIN 1/25/2012 9:00:00 AM
SB 39
HB 121 ASGA Suooprt Letter.doc SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 ASGA Support Document.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 ASGA Support Economic Statistic Document.docx SFIN 1/25/2012 9:00:00 AM
HB 121
2012 CSHB 121 (RLS) - Senate Finance.pptx SFIN 1/25/2012 9:00:00 AM
HB 121
CSHB 121 - Letter of support - SWAMC.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
SB 39 One Page Summary update.pdf SFIN 1/25/2012 9:00:00 AM
SB 39
HB 121 Written Testimony.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
HB 121 - Senate Finance Committee Questions.pdf SFIN 1/25/2012 9:00:00 AM
HB 121
FEDC LOS for HB 121.pdf SFIN 1/25/2012 9:00:00 AM
HB 121