Legislature(2013 - 2014)BELTZ 105 (TSBldg)
02/04/2014 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB61 | |
| SB58 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 61 | TELECONFERENCED | |
| += | SB 58 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 61-COMMERCIAL FISHING & AGRICULTURE BANK
1:33:37 PM
CHAIR DUNLEAVY announced the consideration of SB 61. "An Act
relating to the board, loans, records, and lobbying contracts of
the Alaska Commercial Fishing and Agriculture Bank; and
providing for an effective date." He noted this was the first
hearing.
1:34:47 PM
JORDAN SHILLING, Staff, Senator John Coghill, sponsor of SB 61,
paraphrased the following sponsor statement to introduce the
bill:
Senate Bill 61 will strengthen the Alaska Commercial
Fishing and Agriculture Bank's (CFAB) ability to serve
its member-owners.
CFAB was created by the legislature in 1980 with $32
million in seed money to fulfill a need for financing
the commercial agricultural and fishing industries.
For a variety of reasons, one of which was the state's
financial investment in CFAB, certain restrictions
were put in place, such as limits on the size of
loans, and the prohibition of their hiring a lobbyist.
CFAB has since paid back the state's investment and is
now 100% privately owned. CFAB is financially healthy
and has been operating independently for several
years. Therefore, it is appropriate that these
restrictions be removed from statute.
SB 61 seeks to provide equivalent loan options to the
commercial tourism and natural resource industries
currently available to other industries CFAB serves.
It does this by removing dollar restrictions for loans
made to individuals or businesses seeking these types
of loans while also providing options for non-resident
owned businesses whose facilities are located in
Alaska and who employ Alaskans and provide economic
development within Alaska.
SB 61 expands the eligibility of the small loan
program to include loans made for commercial
agriculture. The bill increases the maximum size of
these small loans and increases the amount of total
capital CFAB can allocate to the program. SB 61 also
deletes the provision relating to board compensation,
which will instead be addressed like other private
companies in their bylaws.
1:35:19 PM
SENATOR OLSON joined the committee.
1:37:06 PM
MR. SHILLING provided the following sectional analysis of SB 61:
Section 1:
Paragraph (4) removes dollar limitations for loans being used by
individuals for tourism within the state.
Paragraph (5) removes dollar limitations for loans being used by
corporations, partnerships, or limited liability companies for
tourism within the state.
Paragraph (6) removes dollar limitations for loans being used by
individuals for natural resource development.
Paragraph (7) removes dollar limitations for loans being used by
corporations, partnerships, or limited liability companies for
natural resource development.
Paragraph (8) clarifies that a person receiving a loan for
capital investment or operating capital to a shore-based fish
processor, a timber processor, or an agricultural processor or
harvester must meet all requirements except for residency and
resident ownership requirements.
Paragraph (10) adds new loans to nonresidents for a tourism-
related operation under paragraphs (15)-(16), and development
and exploitation of natural resources under paragraphs (17)-
(18), to loans secured by liens subordinate to valid first liens
and security agreements granted to another creditor.
Paragraph (12) adds new loans to non-residents for a tourism-
related operation and development or exploitation of natural
resources, to provisions for CFAB to participate with another
bank without the obligor being a member of CFAB.
Paragraph (13) allows CFAB to purchase or participate in loans
made under paragraphs (15)-(18) from other lenders for loans to
nonresidents whether or not an obligor is a member of the bank.
Paragraph (15) adds a new subsection that allows for
nonresidents to receive loans for a tourism-related operation,
provided a facility of the operation is located in the state and
the loan proceeds are used to commercially engage in the state.
Paragraph (16) adds a new subsection that allows for a
corporation with nonresident majority ownership to receive loans
for tourism-related activities, provided a facility of the
operation is located in the state, the loan is used to
commercially engage in the state, and the corporation is
beneficially owned by residents of the United States.
Paragraph (17) adds a new subsection that allows for
nonresidents to receive loans dedicated to the development or
exploitation of natural resources, provided a facility of the
operation is located in the state and the loan proceeds are used
to commercially engage in the state.
Paragraph (18) adds a new subsection that allows for a
corporation with nonresident majority ownership to receive loans
dedicated to the development or exploitation of natural
resources, provided a facility of the operation is located in
the state, the loan is used to commercially engage in the state,
and the corporation is beneficially owned by residents of the
United States.
Section 2 includes commercial agriculture among industries where
non-members are eligible to receive small loans, with the intent
of facilitating development in geographical areas not conducive
to normal lending activities.
Section 3 increases the allowable size of small loans to non-
members for the purposes of commercial fisheries and
agriculture.
Section 4 increases the proportion of the bank's total capital
that can be allocated to small loans for fishing and
agriculture.
Section 5 establishes a new subsection allowing for a list of
voting members of the bank to be given to member candidates
seeking a position as director of the bank.
Section 6 repeals restrictions on board compensation and repeals
the prohibition of CFAB having a lobbyist.
Section 7 establishes an immediate effective date.
1:40:57 PM
SENATOR MICCICHE noted that subsection (c) in Section 4 says the
loans may not exceed 25 percent of the total capital of the bank
yet paragraph (14) in Section 1 limits the total assets to the
bank to cumulatively involving less than 20 percent of any
particular commercial fishery. He asked why Section 4 goes above
that established cap.
MR. SHILLING deferred the question to the president of CFAB.
1:41:57 PM
LEA KLINGER, President, Alaska Commercial Fishing and
Agriculture Bank (CFAB), introduced herself.
SENATOR MICCICHE restated the question, and noted that he spoke
with Ms. Klinger before the meeting.
MS. KLINGER explained that the loans in Section 4 would be under
the 20 percent cap because those small loans relate to the
individual fishery. The purpose of that part of the statute is
to allow CFAB to make loans to the smaller operators who find it
cost prohibitive to be a member of the bank. This affords CFAB
the ability to make these loans in a more cost effective
fashion.
SENATOR MICCICHE, noting that the bill increases the maximum
loan amount to $50,000 per individual, commented that it would
be extremely unlikely that CFAB would loan 25 percent of $32
million in $50,000 increments.
MS. KLINGER agreed.
CHAIR DUNLEAVY asked if opening the door to nonresidents would
create competition for residents to access capital.
MS. KLINGER said she didn't believe so because residents aren't
excluded from continuing to borrow.
CHAIR DUNLEAVY asked why CFAB made the decision to ask for the
ability to make loans to nonresidents.
MS. KLINGER explained that CFAB is unable to lend to an entity
that is not entirely domiciled and owned by Alaska residents.
This excludes entities such as family corporations that have
members who live in Alaska and operate the business, but also
have family members who live in another state.
1:45:50 PM
MR. SHILLING continued the sectional analysis.
Section 6 repeals restrictions on board compensation and repeals
the prohibition on CFAB having a lobbyist.
Section 7 establishes an immediate effective date.
SENATOR MICCICHE asked why CFAB hasn't been able to have a
lobbyist in the past.
MS. KLINGER said that state funds were used to create CFAB, but
those funds have since been paid back.
SENATOR MICCICHE questioned why the principal has grown so
little since the legislature invested $32 million in seed money
in 1980.
MS. KLINGER stated that CFAB's assets are about $34 million and
its capital is just under $20 million; each year the portfolio
grows and then shrinks as loan payments come in. She said that
CFAB doesn't have much opportunity to grow because its market is
defined, and it has both public and private competition.
1:49:02 PM
CHAIR DUNLEAVY opened public testimony.
SENATOR MICCICHE asked if there was any opposition to the bill.
MR. SHILLING said not to date.
CHAIR DUNLEAVY announced he would hold SB 61 in committee and
keep public testimony open.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB0058A.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB 58 Sponsor Statement.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB 58 State Farm Hand-out.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB 58 email supporting - Babcock 022013.PDF |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB 58 lttr supporting - Winters 022113.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB 58 NAMIC's written testimony 020114.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB58_Support_Letter- Brine 040413.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB058-DCCED-DOI-01-21-14.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 58 |
| SB61_bill_text.PDF |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |
| SB61_sponsor_statement.PDF |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |
| SB61_sectional_analysis.PDF |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |
| SB61_Support_letters_CFAB.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |
| SB61_Support_Letter_ATIA.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |
| SB061-DCCED-DBS-01-21-14.pdf |
SL&C 2/4/2014 1:30:00 PM |
SB 61 |