Legislature(2009 - 2010)

04/13/2010 09:46 AM FIN


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                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 13, 2010                                                                                           
                         9:46 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:46:05 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  called the House Finance  Committee meeting                                                                   
to order at 9:46 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Rob  Rule,  Staff, Representative  Herron;  Erin  Harrington,                                                                   
Staff,  Representative Austerman;  Dan Fauske,  CEO/Executive                                                                   
Director, Alaska  Housing Finance Corporation,  Department of                                                                   
Revenue);  Bryan Butcher,  Director,  Government Affairs  and                                                                   
Public   Relations,  Alaska   Housing  Finance   Corporation,                                                                   
Department   Of  Revenue,   AHFC;   Ted  Leonard,   Executive                                                                   
Director, AIDEA;  Greg Winegar, Director, Alaska  Division of                                                                   
Investments, Department  of Commerce, Community  and Economic                                                                   
Development,  Division  Director,;   Jim  Benintendi,  Staff,                                                                   
Senator  Olson;  Pat Davidson,  Legislative  Audit;  Jennifer                                                                   
Strickler,   Division   Operations   Manager,   Division   of                                                                   
Corporations,    Business,   and   Professional    Licensing,                                                                   
Department of  Commerce, Community and Economic  Development;                                                                   
Sarah  Fisher-Goad,  Deputy Director  of  Operations,  Alaska                                                                   
Energy  Authority,  Department  of  Commerce,  Community  and                                                                   
Economic Development;  Steven Haagenson, Executive  Director,                                                                   
Alaska Energy  Authority, Department  of Commerce,  Community                                                                   
and Economic  Development; Ted  Leonard, Executive  Director,                                                                   
Alaska   Industrial   Development   and   Export   Authority,                                                                   
Department of  Commerce, Community and Economic  Development;                                                                   
Joseph Masters,  Commissioner,  Department of Public  Safety;                                                                   
Orin  Dym,   Manager,  Forensic  Laboratory,   Department  of                                                                   
Public  Safety; Deven  Mitchell,  Executive Director,  Alaska                                                                   
Municipal Bond  Bank Authority,  Department of Revenue;  Matt                                                                   
Tanaka,   Crime   Lab   Project    Manager,   Department   of                                                                   
Transportation and Public Facilities                                                                                            
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
John   Torgerson,    Senator,   Kenai   Peninsula    Economic                                                                   
Development  District; Kathryn  Dodge,  Fairbanks North  Star                                                                   
Borough;  Laurie   Holte,  Office  Of  Residential   Lending,                                                                   
Alaska Housing Finance Corporation, Department Of Revenue                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 426         CRIME LAB                                                                                                        
                                                                                                                                
               HB 426 was REPORTED out of Committee with a                                                                      
               "do pass" recommendation and with a new                                                                          
               fiscal note from the Department of Revenue.                                                                      
                                                                                                                                
                                                                                                                                
HCR 21         ECONOMIC DEVELOPMENT PLANNING COMMISSION                                                                         
                                                                                                                                
               CS HCR 21(FIN) was REPORTED out of                                                                               
               Committee with a "do pass" recommendation                                                                        
               and with                                                                                                         
                                                                                                                                
SB 217         AHFC: VET. BONDS/BLDG; SUBPORT BLDG BOND                                                                         
                                                                                                                                
               CS SB 217(FIN) was REPORTED out of Committee                                                                     
               with a "do pass" recommendation and with                                                                         
               previously published fiscal note: FN3 (REV)                                                                      
                                                                                                                                
SB 300         AIDEA LOANS                                                                                                      
                                                                                                                                
               CS SB 300(FIN) was REPORTED out of Committee                                                                     
               with a "do pass" recommendation and with                                                                         
               previously published zero fiscal notes: FN1                                                                      
               (DCED), FN2 (REV), FN3 (DOT)                                                                                     
                                                                                                                                
SB 301         POWER PROJECT FUND                                                                                               
                                                                                                                                
               SB 301 was REPORTED out of Committee with a                                                                      
               "do pass" recommendation with previously                                                                         
               published fiscal notes: FN1 (DOT), FN2                                                                           
               (REV), FN3 (CED), FN4 (CED)                                                                                      
                                                                                                                                
SB 247         EXTENDING BOARD OF PHARMACY                                                                                      
                                                                                                                                
               CS SB 247(L&G) was REPORTED out of Committee                                                                     
               with a "do pass" recommendation and with                                                                         
               previously published fiscal note: FN2 (DCED)                                                                     
                                                                                                                                
SB 248         EXTEND BD OF MARITAL & FAMILY THERAPY                                                                            
                                                                                                                                
               CS SB 248(L&G) was REPORTED out of Committee                                                                     
               with a "do pass' recommendation and with                                                                         
               previously published fiscal note: FN2 (DCED)                                                                     
                                                                                                                                
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 21                                                                                              
                                                                                                                                
     Creating and relating to the Economic Development                                                                          
     Planning Commission.                                                                                                       
                                                                                                                                
9:46:48 AM                                                                                                                    
                                                                                                                                
ROB RULE,  STAFF, REPRESENTATIVE  HERRON, stated that  HCR 21                                                                   
is  sponsored by  the House  Community  and Regional  Affairs                                                                   
Committee.  He explained  that the  legislation would  create                                                                   
an  eleven member  task  force from  the  public and  private                                                                   
sectors to make  recommendations to the state  in its efforts                                                                   
to support economic  development. The commission  would serve                                                                   
as  a  filter  and  a bridge  to  assist  the  state  through                                                                   
economic development  processes. He  referred to  the handout                                                                   
"HCR  21   -  Creating   an  Economic  Development   Planning                                                                   
Commission"(copy   on   file).  He   noted   that  page   two                                                                   
summarizes   the  current   statewide  economic   development                                                                   
processes  as the Alaska  Forward Project  led by the  Alaska                                                                   
Partnership  for  Economic Development  (APED).  He  reported                                                                   
that APED  completed phase  1 of  the project; a  situational                                                                   
analysis   of  the   economic  development   in  Alaska.   In                                                                   
addition,   the    governor's   Legacy   Plan    created   by                                                                   
administrative  order under  Governor Palin  is also  part of                                                                   
the  economic development  process. The  Legacy Plan  created                                                                   
working  groups to  study  Alaska industries,  e.g.  tourism,                                                                   
mining,  etc. He  indicated  the  Alaska Forward  and  Legacy                                                                   
projects will merge in the future.                                                                                              
                                                                                                                                
He referred to  page 3 that defines the  Economic Development                                                                   
Planning Commission  eleven member structure  and appointment                                                                   
authority.                                                                                                                      
                                                                                                                                
     · One State Representative appointed by House Speaker                                                                      
     · One State Senator appointed by Senate President                                                                          
     · Two Public Members appointed by House Finance Chairs                                                                     
     · Two Public Members appointed by Senate Finance                                                                           
        Chairs                                                                                                                  
     · One Public Member appointed by House Minority Leader                                                                     
     · One Public Member appointed by Senate Minority                                                                           
        Leader                                                                                                                  
     · DCCED Commissioner appointed by Resolution                                                                               
     · DLWD Commissioner appointed by Resolution                                                                                
     · President of APED appointed by Resolution                                                                                
                                                                                                                                
Mr.  Rule  cited  page 4;  possible  recommendations  to  the                                                                   
legislature by the  commission. He noted that  the commission                                                                   
could identify  financial  tools such as  loan programs,  tax                                                                   
incentives  and   other  policies  to  nurture   industry  in                                                                   
Alaska.                                                                                                                         
                                                                                                                                
He relayed the commissions Timelines listed on page 5.                                                                          
     · April 30,2010: Commission Begins Work                                                                                    
     · Spring 2010: Alaska Forward Phase II Launches                                                                            
     · January 30, 2011: First Legislative Report Deadline                                                                      
     · December 15, 2011: Second Report Deadline                                                                                
     · June 30, 2012: Sunset                                                                                                    
                                                                                                                                
He concluded  that page  6 identifies  the need for  cohesion                                                                   
for economic planning and development in Alaska.                                                                                
                                                                                                                                
9:51:39 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  wondered if the  commission is it  too large                                                                   
to be efficient.                                                                                                                
                                                                                                                                
ERIN  HARRINGTON,  STAFF,  REPRESENTATIVE  AUSTERMAN,  stated                                                                   
that  the size  of the  commission represents  an attempt  to                                                                   
draw members from all sectors of industry.                                                                                      
                                                                                                                                
                                                                                                                                
Co-Chair   Hawker  opined   that  it  is   a  well   balanced                                                                   
commission.                                                                                                                     
                                                                                                                                
Co-Chair  Stoltze asked  what  would happen  with a  minority                                                                   
appointment  if   one  legislative   body  did  not   have  a                                                                   
recognized minority.                                                                                                            
                                                                                                                                
Mr. Rule  did not  know the answer.  He stated that  scenario                                                                   
was not anticipated.                                                                                                            
                                                                                                                                
9:53:10 AM                                                                                                                    
                                                                                                                                
Ms. Harrington  offered that  the minority appointments  were                                                                   
added by the Labor and Commerce Committee.                                                                                      
                                                                                                                                
Co-Chair Stoltze  stated that  he asked the question  because                                                                   
the uniform rule describes what a minority is.                                                                                  
                                                                                                                                
9:53:58 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas  asked  where   the  commission's  efforts                                                                   
would  be  concentrated.  He  expressed  concern  that  rural                                                                   
Alaska might  be overlooked. Ms.  Harrington related  that in                                                                   
reviewing  the   work  done  previously  by   Alaska  Forward                                                                   
considerable  attention  was  paid  to  the  needs  of  rural                                                                   
Alaska. She  expected continued  attention to rural  Alaska's                                                                   
needs   because  APEC   is  comprised   of  Alaska   Regional                                                                   
Development  Organizations  (ARDOR).  ARDOR's  membership  is                                                                   
regionally  distributed throughout  the  state that  includes                                                                   
representation in rural Alaska.                                                                                                 
                                                                                                                                
Vice-Chair Thomas reiterated his concerns.                                                                                      
                                                                                                                                
9:56:18 AM                                                                                                                    
                                                                                                                                
Representative  Foster wondered  what efforts the  commission                                                                   
would make  to ensure  that rural Alaska  is included  in the                                                                   
commission's  process.  Ms.  Harrington   reported  that  the                                                                   
actual workings  of the commission  would be determined  when                                                                   
it  convenes  for the  first  time  to  make those  types  of                                                                   
decisions.   The  fiscal   note  provides   for  travel   and                                                                   
teleconferences.                                                                                                                
                                                                                                                                
9:57:51 AM                                                                                                                    
                                                                                                                                
Representative   Austerman  stated   that  "nowhere   in  the                                                                   
resolution does it  talk about rural versus  urban". He noted                                                                   
that on Page 3,  line 1, the resolution speaks  to the entire                                                                   
state.  He  reiterated that  Alaska  Forward  is made  up  of                                                                   
ARDORS based  all over the state.  He felt that if  HCR 21 is                                                                   
given a  chance it should work  for the entire state  and not                                                                   
only urban areas.                                                                                                               
                                                                                                                                
9:59:02 AM                                                                                                                    
                                                                                                                                
Vice-Chair   Thomas  related   concerns   about  the   timber                                                                   
industry   in  Southeast   Alaska.   He   worried  that   the                                                                   
commission  could  recommend  policies  that do  not  support                                                                   
economic  activity   in  rural  communities.   Representative                                                                   
Austerman pointed  out that the purpose of  the commission is                                                                   
only  to make  recommendations  to  the legislature  and  not                                                                   
create   policy   statements.    He   also   suggested   that                                                                   
Representative   Thomas   try  to   get   appointed  to   the                                                                   
commission  by the Speaker  of the  House. Vice-Chair  Thomas                                                                   
reiterated   his   concerns   about   lost   jobs,   economic                                                                   
hardships,  and  crime  in  his   district  due  to  lack  of                                                                   
economic opportunity.                                                                                                           
                                                                                                                                
10:02:46 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
JOHN   TORGERSON,    SENATOR,   KENAI   PENINSULA    ECONOMIC                                                                   
DEVELOPMENT   DISTRICT,  ALASKA   PARTNERSHIP  FOR   ECONOMIC                                                                   
DEVELOPMENT   EXECUTIVE   COMMITTEE   (via   teleconference),                                                                   
supported  the legislation.  He  believed that  an effort  to                                                                   
focus all  of the different  economic development  strategies                                                                   
in the state is  a good idea. The presence  of legislators on                                                                   
the commission would  be especially helpful to  move the task                                                                   
force's recommendations forward.                                                                                                
                                                                                                                                
KATHRYN  DODGE, FAIRBANKS  NORTH STAR  BOROUGH ARDOR,  ALASKA                                                                   
PARTNERSHIP  FOR ECONOMIC  DEVELOPMENT,  VICE PRESIDENT  (via                                                                   
teleconference),  supported   the  bill.  She   welcomed  the                                                                   
heightened  level of  engagement between  the private  sector                                                                   
and the  legislature. She  believed it  would strengthen  the                                                                   
strategic    planning    development    effort    and    spur                                                                   
implementation of  the plans and policies resulting  from the                                                                   
effort.                                                                                                                         
                                                                                                                                
10:05:48 AM                                                                                                                   
                                                                                                                                
Representative  Foster wondered  how active  the ARDOR's  are                                                                   
in the  state. Ms.  Dodge answered  that the Borough's  ARDOR                                                                   
board  meets ten  times  a year.  The  ARDOR regularly  meets                                                                   
with other economic  development organizations at  least once                                                                   
a month.                                                                                                                        
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Co-Chair Hawker  referenced the new fiscal note  that creates                                                                   
one  full time  position  for the  Legislature,  appropriated                                                                   
from  the  Legislative  Council   budget,  to  implement  and                                                                   
manage  the  commission.  He   felt  that  the  increase  was                                                                   
unnecessary if the  legislation passed and the  commission is                                                                   
established. He  suggested that there is adequate  fiscal and                                                                   
human  resources existing  within  the legislature's  budget.                                                                   
He requested  that the committee  prepare a zero  fiscal note                                                                   
with  the  caveat  that  the   funds  for  the  position  are                                                                   
appropriated  out of  the Legislature's  existing budget  and                                                                   
not  limit  that the  funds  are  allocated from  a  specific                                                                   
committee.                                                                                                                      
                                                                                                                                
Representative  Austerman raised  the  question whether  page                                                                   
1; line 16 of the resolution must be corrected.                                                                                 
                                                                                                                                
Co-Chair   Hawker   offered  conceptual   Amendment   1.   He                                                                   
requested  that  on  page 1,  line  16,  delete  "Legislative                                                                   
Council" from  "(Alaska Legislative Council)" and  replace it                                                                   
with "Alaska  legislature". The  change would read;  "Further                                                                   
Resolved   that  the  (Alaska   Legislature)  shall   provide                                                                   
adequate…"                                                                                                                      
                                                                                                                                
There  being   no  objection   conceptual  Amendment   1  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative  Kelly  commented  that  there  are  too  many                                                                   
organizations in  the state working on  economic development.                                                                   
He suggested  that the commission's  first task should  be to                                                                   
eliminate  half  of  them.  Representative  Austerman  stated                                                                   
that the  commission's main task  would be to  coordinate all                                                                   
of   the  economic   development   efforts   in  the   state.                                                                   
Representative  Kelly  felt  that  economic  development  was                                                                   
important  but recommended  to determine  the most  effective                                                                   
entities and eliminate the rest.                                                                                                
                                                                                                                                
10:11:50 AM                                                                                                                   
                                                                                                                                
Representative Austerman  MOVED to Report CS HCR  21(FIN) out                                                                   
of  Committee   with  individual   recommendations   and  the                                                                   
accompanying revised  fiscal note. There being  NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
CS HCR  21 (FIN)  was REPORTED  out of  Committee with  a "do                                                                   
pass" recommendation and with the revised fiscal note.                                                                          
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 217                                                                                                             
                                                                                                                                
     "An  Act relating  to the  issuance of  state-guaranteed                                                                   
     revenue   bonds   by   the    Alaska   Housing   Finance                                                                   
     Corporation   to   finance  mortgages   for   qualifying                                                                   
     veterans; and providing for an effective date."                                                                            
                                                                                                                                
10:14:08 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
BRYAN  BUTCHER,  DIRECTOR,  GOVERNMENT   AFFAIRS  AND  PUBLIC                                                                   
RELATIONS,  ALASKA  HOUSING FINANCE  CORPORATION,  DEPARTMENT                                                                   
OF REVENUE,  stated that  the house version  of the  bill (HB
291) was  heard before  the committee  earlier this  session.                                                                   
He explained  that SB  217 would  request the voters  approve                                                                   
$600,000,000 in  state guaranteed  bonds in the  2010 general                                                                   
election,  to  be  issued  by   the  Alaska  Housing  Finance                                                                   
Corporation  for  the  purchase  of mortgage  loans  made  to                                                                   
qualifying  veterans.  He  added that  federal  law  requires                                                                   
that general  obligation bonds  must be  issued by  the state                                                                   
for  this loan  program. The  veteran's loan  program is  the                                                                   
highest performing  loan program in the state.  Alaska is one                                                                   
of five states that qualify for the program.                                                                                    
                                                                                                                                
Mr. Butcher  furthered that the  Senate added  two provisions                                                                   
to  SB 217  that were  not  included in  HB  291. The  Senate                                                                   
authorized  the  purchase  of  the  building  that  the  AHFC                                                                   
currently  inhabits at  4300 Boniface  parkway in  Anchorage.                                                                   
The corporation  would realize long-term savings  to purchase                                                                   
instead  of leasing  the building.  In  addition, the  Senate                                                                   
authorized  the  corporation   to  purchase  or  construct  a                                                                   
Public Housing Intake  Center. The current center  located on                                                                   
International  Boulevard  in  Anchorage  is  an  aging,  ill-                                                                   
equipped  building with  insufficient  parking. The  building                                                                   
is not  located on  a bus  route which  makes it a  difficult                                                                   
location for  public housing clients.  The cost to  bring the                                                                   
building up to code far exceeds the value of the building.                                                                      
                                                                                                                                
Mr. Butcher  reported that  AHFC currently  has $3.5  million                                                                   
in federal  and corporate funds  to pay for the  building; no                                                                   
additional   funding  is   required  from   the  state.   The                                                                   
corporation  would  relocate  the  center  to  the  centrally                                                                   
located neighborhood of Mountain View.                                                                                          
                                                                                                                                
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  DEPARTMENT OF REVENUE),  interjected  that AHFC                                                                   
had been  fully authorized to  proceed with the  $3.5 million                                                                   
funding for the  project for several years.  He believed that                                                                   
it was the right project to expend the funds.                                                                                   
                                                                                                                                
Co-Chair Hawker  reported that the same project  was proposed                                                                   
last  year.  He  asked  for  assurance   that  there  was  no                                                                   
increase  in costs  that  occurred over  a  year. Mr.  Fauske                                                                   
replied  that no  increase has  occurred. He  added that  the                                                                   
project represents an economic gain for the corporation.                                                                        
                                                                                                                                
                                                                                                                                
10:17:16 AM                                                                                                                   
                                                                                                                                
Representative  Doogan inquired about  the fiscal note,  FN 3                                                                   
(REV),  analysis that  estimates  the 4300  Boniface  Parkway                                                                   
purchase  in  the   amount  of  $14.5  million.   Mr.  Fauske                                                                   
elaborated  that AHFC presently  owns land  at 34th  Ave. and                                                                   
Denali  St.; the  previous  home to  the  AHFC. The  Tatitlek                                                                   
Corporation owns  the building  at 4300 Boniface  Parkway and                                                                   
wants  to  acquire the  land  at  34th  Ave. and  Denali  St.                                                                   
Therefore,  $5 million  will represent  a land exchange  with                                                                   
the  Tatitlek  Corporation  and the  remaining  $9.5  million                                                                   
will be from the  sale of AHFC 25 year bonds  to complete the                                                                   
purchase and rehabilitate the building.                                                                                         
                                                                                                                                
10:18:45 AM                                                                                                                   
                                                                                                                                
Representative  Joule  referred   to  the  sponsor  statement                                                                   
(copy on file)  that explained that a veteran  must apply for                                                                   
the loan  within 25  years of discharge  from active  duty to                                                                   
qualify for  the program.  He wondered  what impact  that had                                                                   
on the  exclusion of veterans  from the program.  Mr. Butcher                                                                   
explained  that  the program  was  established  in the  early                                                                   
1980's  by  congress.  The  initial  requirements  were  that                                                                   
veterans  had to  have served  prior to  1977 and  discharged                                                                   
from  service for  no  longer  than 30  years.  As the  years                                                                   
passed  the  requirements  reduced  the  number  of  veterans                                                                   
eligible  for  the  program  and did  not  include  Gulf  War                                                                   
veterans. AHFC lobbied  to change the requirements  over a 15                                                                   
year  period.  The   effort  met  with  some   resistance  in                                                                   
Congress but  resulted in  the removal  of the service  prior                                                                   
to  1977 requirement  and  replaced  that  with the  25  year                                                                   
provision.  Congress also  limited the  corporation or  state                                                                   
to issue  only $10  million in  bonds which was  subsequently                                                                   
increased  to $100  million.  He noted  that  AHFC was  still                                                                   
working to get the 25 year qualification removed.                                                                               
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
10:23:14 AM                                                                                                                   
                                                                                                                                
Representative  Foster cited  the definition  of active  duty                                                                   
from  the  sponsor  statement,  that service  in  a  military                                                                   
academy  may meet the  qualifications to  participate  in the                                                                   
program.  He asked  what  the military  academy  requirements                                                                   
were.                                                                                                                           
                                                                                                                                
LAURIE HOLTE,  OFFICE OF RESIDENTIAL LENDING,  ALASKA HOUSING                                                                   
FINANCE    CORPORATION,     DEPARTMENT    OF     REVENUE,(via                                                                   
teleconference), explained  that AHFC requests a  copy of the                                                                   
veterans   DD214    release   document   as    evidence   for                                                                   
qualification   for  the  veterans   mortgage  program.   The                                                                   
document  indicates whether  the veteran  has been  honorably                                                                   
discharged.  She did  not  know  if a  cadet  that leaves  an                                                                   
academy before they graduate receives a DD214.                                                                                  
                                                                                                                                
10:25:50 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Thomas MOVED  to  report CS  SB  217(FIN) out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS  SB 217(FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation and  with  previously published  fiscal                                                                   
note: FN3 (REV)                                                                                                                 
                                                                                                                                
                                                                                                                                
10:26:41 AM    RECESSED                                                                                                       
10:29:57 AM    RECONVENED                                                                                                     
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 300                                                                                                             
                                                                                                                                
     "An   Act   relating   to    loan   participations   and                                                                   
     development  finance projects  of the Alaska  Industrial                                                                   
     Development  and  Export   Authority;  and  relating  to                                                                   
     loans from the rural development initiative fund."                                                                         
                                                                                                                                
10:30:35 AM                                                                                                                   
                                                                                                                                
TED   LEONARD,   EXECUTIVE   DIRECTOR,    ALASKA   INDUSTRIAL                                                                   
DEVELOPMENT  AND EXPORT AUTHORITY,  explained the  difference                                                                   
between  SB 300  and the  companion  bill HB  410. He  stated                                                                   
that an amendment  was added to SB 300 in the  Senate Finance                                                                   
Committee  that adds  a new  power  under AS  44.0880 to  the                                                                   
Alaska Industrial  Development and Export  Authority (AIDEA).                                                                   
The  law allows  AIDEA  to  consider  the interest  of  local                                                                   
governments  and the  impact of  financed  projects on  local                                                                   
governments  and to  ensure local  governments  share in  the                                                                   
benefits  of  AIDEA's  activities   when  exercising  AIDEA's                                                                   
financial  authority.  The  interest of  AIDEA to preserve  a                                                                   
healthy   financial  position   and  bond   rating  and   the                                                                   
project's  economic  benefits   as  well  as  impact  on  the                                                                   
community will all be considered.                                                                                               
                                                                                                                                
Mr. Leonard  furthered that the  new authority  is consistent                                                                   
with  existing  legislative directives  embedded  in  AIDEA's                                                                   
development  program.  He  explained   that  any  development                                                                   
projects  AIDEA engages  in  and issues  over  $6 million  in                                                                   
bonds   requires  scrutiny   by  a   regional  committee   to                                                                   
determine  local impact.  The  same statute  also requires  a                                                                   
consultation  with  local communities  affected  by  existing                                                                   
development   projects.  He  summarized   that  the   statute                                                                   
directs   AIDEA's   board   to  consider   the   impacts   of                                                                   
development projects  on the local community when  engaged in                                                                   
any  of  AIDEA's  broad  range  of  economic  activities  and                                                                   
programs.                                                                                                                       
                                                                                                                                
10:33:51 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze  questioned the  language  in  the bill  on                                                                   
page 4, line 6, that reads;                                                                                                     
                                                                                                                                
     "Connected by road" does not include a connection by                                                                       
     the Alaska marine highway system.                                                                                          
                                                                                                                                
He presumed that  the marine highway is not part  of the road                                                                   
system and wondered why the language was necessary.                                                                             
                                                                                                                                
GREG  WINEGAR,  DIRECTOR,  ALASKA  DIVISION  OF  INVESTMENTS,                                                                   
DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC  DEVELOPMENT,                                                                   
DIVISION  DIRECTOR, stated  that the language  been in  place                                                                   
since the  inception of  the Rural  Development loan  program                                                                   
in  FY 2000.                                                                                                                    
                                                                                                                                
Representative  Doogan asked  if  the Senate  changes to  the                                                                   
legislation are found  in Section 1 of the  bill. Mr. Winegar                                                                   
affirmed.                                                                                                                       
                                                                                                                                
Representative Gara  noted that the [Rural  Development loan]                                                                   
program does  include communities  of fewer than  2000 people                                                                   
connected by road systems to Anchorage or Fairbanks.                                                                            
                                                                                                                                
10:36:34 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Co-Chair  Stoltze  noted that  there  are three  zero  fiscal                                                                   
notes [FN1  (EED), FN2  (REV), FN3  (DOT)], accompanying  the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Mr.  Leonard  made  final  comments   in  support  of  moving                                                                   
forward with the legislation.                                                                                                   
                                                                                                                                
Vice-Chair  Thomas MOVED  to  report CS  SB  300(FIN) out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  notes. There being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS  SB 300(FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with  previously  published  zero                                                                   
fiscal notes: FN1 (CED), FN2 (REV), FN3 (DOT)                                                                                   
                                                                                                                                
10:38:46 AM         RECESSED                                                                                                  
10:52:28 AM         RECONVENED                                                                                                
                                                                                                                                
SENATE BILL NO. 247                                                                                                             
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Pharmacy; and providing for an effective date."                                                                            
                                                                                                                                
10:52:56 AM                                                                                                                   
                                                                                                                                
JIM BENINTENDI,  STAFF, SENATOR OLSON, explained  that SB 247                                                                   
extends the Board  of Pharmacy until June, 2018.  He reported                                                                   
that  the original  version of  the bill  extended the  board                                                                   
through  June,   2015.  The  2018  extension  was   the  date                                                                   
recommended  by legislative  audit.  The change  was made  in                                                                   
the Senate  Labor and Commerce  Committee. He  furthered that                                                                   
the board is  composed of 7 members. The  accompanying fiscal                                                                   
note  (FN2 (CED)  accommodates  travel  for members  and  two                                                                   
staff for three meetings per year.                                                                                              
                                                                                                                                
Mr.  Benintendi noted  that the  legislative audit  expressed                                                                   
concern that  the department was not sufficiently  supportive                                                                   
of the  board and  that the Governor  place more  emphasis on                                                                   
board recruitment.                                                                                                              
                                                                                                                                
PAT DAVIDSON,  LEGISLATIVE AUDIT,  reiterated that  the board                                                                   
needs  increased  administrative  support from  the  division                                                                   
and more timely  appointments to the board by  the Governor's                                                                   
office.  She  noted   that  the  board  had   an  issue  with                                                                   
collaborative  protocols.  She explained  that  collaborative                                                                   
protocols   are  agreements   between  a   physician  and   a                                                                   
pharmacist  that allow  a pharmacist  to  take on  activities                                                                   
not  usually allowed  by the  pharmacist, i.e.,  a flu  shot.                                                                   
The board  was allowing the  activity to continue  for longer                                                                   
than  stipulated  in  the  agreement.  The  board  agreed  to                                                                   
correct the  problem. She added  that the board is  running a                                                                   
surplus and suggested to reduce the board's fees.                                                                               
                                                                                                                                
10:57:46 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stoltze asked  if the  department  is committed  to                                                                   
improving their support to professional boards.                                                                                 
                                                                                                                                
JENNIFER  STRICKLER,  DIVISION OPERATIONS  MANAGER,  DIVISION                                                                   
OF  CORPORATIONS,   BUSINESS,  AND  PROFESSIONAL   LICENSING,                                                                   
DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC  DEVELOPMENT,                                                                   
stated   that  the   division   has  begun   to  make   major                                                                   
improvements to all of their licensing programs.                                                                                
                                                                                                                                
Co-Chair   Stoltze  stressed   his   concern  for   continued                                                                   
sufficient  support for  the important  work of  professional                                                                   
boards.                                                                                                                         
                                                                                                                                
Representative   Doogan  also   expressed  his  concern   for                                                                   
increased  support of  professional boards  by the  executive                                                                   
branch.                                                                                                                         
                                                                                                                                
10:59:00 AM                                                                                                                   
                                                                                                                                
Representative Foster  asked what kind of  major improvements                                                                   
are being  made by  the department.  Ms. Strickler  explained                                                                   
that   the  division's   cost  accounting   system  for   all                                                                   
licensing  boards was controlled  by one  individual  who was                                                                   
not qualified.  That individual  left state government  and a                                                                   
qualified  employee   was  hired.  The  problems   are  being                                                                   
resolved and board support has increased.                                                                                       
                                                                                                                                
11:00:33 AM                                                                                                                   
                                                                                                                                
11:00:59 AM                                                                                                                   
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Vice-Chair  Thomas MOVED  to report  CS SB  247 (L&G) out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS  SB 247(L&G)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation and  with  previously published  fiscal                                                                   
note: FN2 (DCED)                                                                                                                
                                                                                                                                
11:02:19 AM                                                                                                                   
                                                                                                                                
SENATE BILL NO. 248                                                                                                             
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Marital and Family Therapy; and providing for an                                                                           
     effective date."                                                                                                           
                                                                                                                                
JIM  BENINTENDI,  STAFF,  SENATOR OLSON  explained  that  the                                                                   
bill  would   extend  the   Board  of   Marital  and   Family                                                                   
Therapists  until June  30, 2014.  The board  is composed  of                                                                   
three  therapists and  two public  members. The  cost of  the                                                                   
license  is   $775.00  and  there   are  84  licensees.   The                                                                   
legislative  audit  found  that  regulations  were  not  kept                                                                   
current and  that the board was  running a deficit.  He noted                                                                   
the board  has made  significant progress  in reducing  their                                                                   
deficit down to $2000 from $75,000 in FY 2005.                                                                                  
He added that  the audit pointed out that the  department did                                                                   
not  provide  enough  administrative  support  and  that  the                                                                   
governor  needed to  improve  candidate  recruitment for  the                                                                   
board.                                                                                                                          
                                                                                                                                
PAT DAVIDSON,  LEGISLATIVE AUDIT explained that  the division                                                                   
made  a  four  year extension  for  the  board  because  they                                                                   
discovered that  the board  was delaying regulation  projects                                                                   
and  that the  board was  carrying a  deficit. She  explained                                                                   
that the  reason for  a professional  board  is to assist  in                                                                   
keeping  the regulations  and statutes  of the profession  up                                                                   
to professional  standards. The  shorter four year  extension                                                                   
was recommended  by the  division to  see if regulations  and                                                                   
fiscal  improvements can  be made  by the board  in a  timely                                                                   
manner.                                                                                                                         
                                                                                                                                
Co-Chair Stoltze closed testimony.                                                                                              
                                                                                                                                
Vice-Chair  Thomas MOVED  to report  CS SB  248 (L&G) out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note. There  being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS  SB 248(L&G)  was REPORTED  out  of Committee  with a  "do                                                                   
pass'  recommendation and  with  previously published  fiscal                                                                   
note: FN2 (DCED)                                                                                                                
                                                                                                                                
11:07:46 AM         RECESSED                                                                                                  
1:41:29 PM     RECONVENED                                                                                                     
                                                                                                                                
SENATE BILL NO. 301                                                                                                             
                                                                                                                                
     "An   Act   relating   to  the   power   project   fund;                                                                   
     authorizing  the Alaska Energy  Authority to  charge and                                                                   
     collect  fees  relating   to  the  power  project  fund;                                                                   
     authorizing  the  Alaska Energy  Authority  to sell  and                                                                   
     authorizing   the  Alaska  Industrial   Development  and                                                                   
     Export  Authority   to  purchase  loans  of   the  power                                                                   
     project  fund; providing  legislative  approval for  the                                                                   
     sale  and purchase of  loans of  the power project  fund                                                                   
     under  the memorandum  of  understanding dated  February                                                                   
     17, 2010; and providing for an effective date."                                                                            
                                                                                                                                
1:42:41 PM                                                                                                                    
                                                                                                                                
SARAH  FISHER-GOAD,  DEPUTY DIRECTOR  OF  OPERATIONS,  ALASKA                                                                   
ENERGY  AUTHORITY,  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND                                                                   
ECONOMIC   DEVELOPMENT,  introduced   the  legislation.   She                                                                   
explained  that  SB  201  is an  act  related  to  the  power                                                                   
project fund  that allows the  Alaska Energy Authority  (AEA)                                                                   
to  sell loans  from the  power  project fund  to the  Alaska                                                                   
Industrial Development and Export  Authority, (AIDEA).It also                                                                   
authorizes  AEA to charge  and collect  fees relating  to the                                                                   
power   project  fund.   Currently,  AEA   does  not   charge                                                                   
application   or  origination   fees.  AEA   would  like   to                                                                   
establish  an appropriate  fee  schedule through  regulations                                                                   
and a public process.                                                                                                           
                                                                                                                                
Ms. Fisher-Goad expounded  that the power project  fund is an                                                                   
AEA  revolving  fund  that  is   primarily  used  by  smaller                                                                   
utilities  for  energy  projects.  The  fund  has  diminished                                                                   
recently  because of  increased  demand  to fund  alternative                                                                   
energy  projects. The  AIDEA purchase  of  the power  project                                                                   
fund  loan portfolio  would re-capitalize  the power  project                                                                   
fund with additional funds of approximately $21.6 million.                                                                      
                                                                                                                                
Ms. Fisher-Goad  concluded that  the loan  purchase is  a way                                                                   
to re-capitalize  the power project  fund without the  use of                                                                   
general funds.                                                                                                                  
                                                                                                                                
1:45:53 PM                                                                                                                    
                                                                                                                                
Representative Doogan  queried what the interest  rate was on                                                                   
the loans.  Ms. Fisher-Goad replied  that the  statutory rate                                                                   
was  the municipal  tax  exempt  rate  that varies  based  on                                                                   
revenue  bonds that  are currently  5.23  percent. She  noted                                                                   
that AEA has  the statutory authority to make  adjustments to                                                                   
the  rate  and decrease  the  interest  rate lower  that  the                                                                   
revenue bond rate.                                                                                                              
                                                                                                                                
Representative  Austerman asked how  much money is  currently                                                                   
in the  revolving loan  fund. Ms.  Fisher-Goad answered  that                                                                   
the  cash value  was slightly  above $5  million on  February                                                                   
28, 2010.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze opened public testimony.                                                                                       
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Vice-Chair   Thomas  MOVED   to  ADOPT   Amendment  1,   (26-                                                                   
GS2974\A.1, Kane, 4/12/10):                                                                                                     
                                                                                                                                
     Page 1, line 6, following "2010;":                                                                                         
          Insert "providing legislative approval for a loan                                                                     
     from the power project fund for the Reynolds Creek                                                                         
     hydroelectric project;"                                                                                                    
     Page 3, following line 11:                                                                                                 
          Insert a new bill section to read:                                                                                    
          "*Sec. 6. The uncodified law of the State of                                                                          
     Alaska is amended by adding a new section to read:                                                                         
                                                                                                                                
          LESISLATIVE APPROVAL OF LOAN FROM THE POWER                                                                           
     PROJECT  FUND.  Provided  the  Alaska  Energy  Authority                                                                   
     approves  a loan  for the  Reynolds Creek  hydroelectric                                                                   
     project,  the legislature  authorizes the Alaska  Energy                                                                   
     Authority  to loan  $9,000,000  from  the power  project                                                                   
     fund   (AS    42.45.010)   for   the    Reynolds   Creek                                                                   
     hydroelectric   project.    This   section   constitutes                                                                   
     legislative  approval under AS  42.45.010(j) for  a loan                                                                   
     from the fund that exceeds $5,000,000."                                                                                    
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
Ms.   Fisher-Goad  explained   that   amendment  number   one                                                                   
provides  for   project  approval  for  the   Reynolds  Creek                                                                   
hydroelectric project.  A loan exceeding $5,000,000  from the                                                                   
fund requires legislative approval.                                                                                             
                                                                                                                                
Representative  Doogan asked if  the $5 million  approval was                                                                   
exclusively  for loan  funds  or a  combination  of loan  and                                                                   
grant  funds.  Ms.  Fisher-Goad  answered  that  whether  the                                                                   
funding is comprised  of all loans or a combination  of loans                                                                   
and grants  legislative approval is  needed for a  project if                                                                   
the funds exceed $5 million.                                                                                                    
                                                                                                                                
1:50:56 PM                                                                                                                    
                                                                                                                                
Representative Kelly  asked if the approval for  the Reynolds                                                                   
Creek Hydroelectric  project interferes  in any way  with the                                                                   
credit  approval  process  for   the  loan.  Ms.  Fisher-Goad                                                                   
replied  that  it  does  not.  The  project  is  pending  AEA                                                                   
approval.                                                                                                                       
                                                                                                                                
Representative Kelly asked where the project is located.                                                                        
                                                                                                                                
Vice-Chair  Thomas answered  that the project  is located  in                                                                   
Hydaburg  on Prince  of Wales  Island. He  noted that  Alaska                                                                   
Power and  Telephone and Haida  Corporation has  been working                                                                   
on the project together for several years.                                                                                      
                                                                                                                                
Representative  Kelly wondered how  close the project  was to                                                                   
being ready  or were other  projects being displaced  by this                                                                   
approval.  Ms. Fisher-Goad  replied that  there is one  other                                                                   
pending application  located in St George. She  believed that                                                                   
there will  be enough money in  the fund for these  and other                                                                   
potential projects.                                                                                                             
                                                                                                                                
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  NO                                                                   
further OBJECTION, Amendment 1 was ADOPTED.                                                                                     
                                                                                                                                
1:54:00 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  asked  for  clarification  of  the                                                                   
approximately  $20.6  million  loan  purchase  by  AIDEA  for                                                                   
AEA's  [outstanding] power  project fund  loans as  described                                                                   
in  the fiscal  notes  [FN3 CED,  FN3  CED]. Ms.  Fisher-Goad                                                                   
responded  that  the  estimated $20.6  million  represents  a                                                                   
discounted  amount based  upon the  future cash  flow of  the                                                                   
loan payments. The  discount rate was established  based upon                                                                   
AIDEA's investment  rate [return  on investments for  a three                                                                   
year period  ending September 30,  2009]. She noted  that the                                                                   
list  of   loans  is   included  with   the  "Memorandum   of                                                                   
Understanding"    ["Exhibit    A"]    (copies    on    file).                                                                   
Representative  Austerman reiterated  that the proceeds  from                                                                   
the  loan sale  will replenish  the  power project  revolving                                                                   
loan  fund. Ms.  Fisher-Goad  affirmed.  She added  that  AEA                                                                   
anticipates increased  demand for the power project  fund and                                                                   
might   need   additional   loan   funds   in   the   future.                                                                   
Representative  Austerman  wondered  what  the value  of  the                                                                   
revolving loan is.  Ms. Fisher-Goad responded that  the value                                                                   
of the  loan fund is approximately  $34 million  comprised of                                                                   
available   cash   and  outstanding   loans.   Representative                                                                   
Austerman   asked   what   the    amount   of   the   initial                                                                   
capitalization  of   the  loan  fund  was.   Ms.  Fisher-Goad                                                                   
replied that she did not know.                                                                                                  
                                                                                                                                
1:57:07 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas asked  if there is  a pre-payment  penalty                                                                   
if the borrower  has the ability  to pay the loan  off early.                                                                   
Ms.  Fisher-Goad  answered  that  no,  there is  not  a  pre-                                                                   
payment penalty.                                                                                                                
                                                                                                                                
Representative  Austerman asked  if  AIDEA previously  bought                                                                   
down the loan to revitalize the revolving loan. Ms. Fisher-                                                                     
Goad  negated.  Representative   Austerman  wondered  if  the                                                                   
revolving  loan fund  would be  able to  continue to  provide                                                                   
loans  if  AIDEA  did not  buy  the  loans.  Ms.  Fisher-Goad                                                                   
reported  that there  is a  capital  budget appropriation  in                                                                   
the Senate  version of SB 230  that provides for  $10 million                                                                   
capitalization  of the  program that would  provide funds  if                                                                   
appropriated.  That would  allow the  Reynolds Creek  project                                                                   
and the  project in  St. George  to proceed  but would  limit                                                                   
future requests.                                                                                                                
                                                                                                                                
Representative   Austerman   questioned   re-capitalizing   a                                                                   
revolving loan fund.                                                                                                            
                                                                                                                                
2:00:42 PM                                                                                                                    
                                                                                                                                
Representative  Salmon  queried  the size  of  the  [Reynolds                                                                   
Creek] project and how many people would be served.                                                                             
                                                                                                                                
STEVEN   HAAGENSON,   EXECUTIVE   DIRECTOR,   ALASKA   ENERGY                                                                   
AUTHORITY,  DEPARTMENT OF  COMMERCE,  COMMUNITY AND  ECONOMIC                                                                   
DEVELOPMENT,  explained that  the Haida  Energy Company  will                                                                   
sell the power  to the local utility, AP&T  and will generate                                                                   
approximately 25  million kilowatt hours  of energy and  is a                                                                   
10 megawatt project. It will provide  power for the people of                                                                   
Hydaburg.                                                                                                                       
                                                                                                                                
Vice-Chair Thomas  added that the project will  intertie with                                                                   
two existing  hydropower projects  and provide power  for the                                                                   
entire  Prince of  Wales Island  population of  approximately                                                                   
3,000 and several mines.                                                                                                        
                                                                                                                                
Representative   Doogan  asked   what  the   effect  of   the                                                                   
legislation will have on AIDEA's finances.                                                                                      
                                                                                                                                
TED   LEONARD,   EXECUTIVE   DIRECTOR,    ALASKA   INDUSTRIAL                                                                   
DEVELOPMENT  AND EXPORT  AUTHORITY,  DEPARTMENT OF  COMMERCE,                                                                   
COMMUNITY AND ECONOMIC DEVELOPMENT,  explained that the $20.6                                                                   
million purchase price represents  $24.7 million worth of the                                                                   
actual value of the loans at the  discounted interest rate of                                                                   
6.02 percent  which is  equivalent to the  rate of  return on                                                                   
AIDEA's investments  for the last  three years. He  felt that                                                                   
this  was  a  risk  free  investment.   He  believed  it  was                                                                   
consistent   with   AIDEA's   mission   and   increases   the                                                                   
opportunity to  develop more  alternative energy  projects in                                                                   
the rural areas.                                                                                                                
                                                                                                                                
                                                                                                                                
Representative   Doogan   asked   if  AIDEA   performed   and                                                                   
independent  assessment of  the loan  portfolio. Mr.  Leonard                                                                   
replied that AIDEA assed the loans and the risks.                                                                               
                                                                                                                                
2:07:33 PM                                                                                                                    
                                                                                                                                
Representative Austerman  asked what the default  rate on the                                                                   
revolving loan was.                                                                                                             
                                                                                                                                
Mr. Haagenson  answered that  only one  loan was possibly  in                                                                   
default.                                                                                                                        
                                                                                                                                
Representative  Austerman  queried  the need  for  additional                                                                   
funding for  a revolving loan  fund. Mr. Haagenson  responded                                                                   
that the  funds are  fully deployed  because the program  has                                                                   
been popular.  AEA anticipates  increased use of  the program                                                                   
in  the future.  He stated  that HB  306 [page  1, lines  12-                                                                   
13],["An  Act declaring  a  state energy  policy."] [(4)  The                                                                   
power project  fund (AS 42.45.010)  serve as the  main source                                                                   
of state assistance  for energy projects;] stipulates  use of                                                                   
the  energy  fund  as  a  vehicle  to  move  energy  projects                                                                   
forward.  He  stated  that  SB   301  is  an  effort  to  re-                                                                   
capitalize the fund in order to have more funds available.                                                                      
                                                                                                                                
Representative Kelly  asked whether construction  of Reynolds                                                                   
Creek would  affect the Power  Cost Equalization  (PCE) rate.                                                                   
Ms. Fisher-Goad  responded that she  was not sure if  the PCE                                                                   
rate will be impacted.                                                                                                          
                                                                                                                                
Vice-Chair Thomas  interjected that Gustavus, a  community in                                                                   
his  district, lowered  their  energy costs  when  hydropower                                                                   
became available which lowered their PCE needs.                                                                                 
                                                                                                                                
Representative  Kelly requested  annual reports  to track  if                                                                   
hydropower is less expensive that diesel.                                                                                       
                                                                                                                                
2:11:41 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough asked if  AEA has other  revolving                                                                   
loan  funds. Ms.  Fisher-Goad  reported that  the only  other                                                                   
revolving  loan   fund  is  the  bulk  fuel   revolving  loan                                                                   
program.   The   program   offers  nine   month   loans   for                                                                   
communities that  must purchase  their annual supply  of fuel                                                                   
in bulk.                                                                                                                        
                                                                                                                                
Representative Fairclough  asked if AEA adopted  regulations,                                                                   
standards and procedures  to make the loans.  Ms. Fisher-Goad                                                                   
replied  that  yes, there  are  underwriting  procedures  for                                                                   
both loan programs.                                                                                                             
                                                                                                                                
Representative    Fairclough     reiterated    Representative                                                                   
Austerman's  concerns   about  why  a  revolving   loan  fund                                                                   
requires more  capitalization. She  wondered if the  loan and                                                                   
investment  procedures  were   properly  paced  in  order  to                                                                   
recharge the fund.                                                                                                              
                                                                                                                                
Mr.  Haagenson  restated  that  the requests  for  loans  are                                                                   
outstripping the amount of revenue returning to the fund.                                                                       
                                                                                                                                
Ms. Fisher-Goad  added there are  two types of assets  in the                                                                   
power  project fund;  loans receivable  and  cash. There  are                                                                   
presently  more assets  in loans  receivable  than cash.  The                                                                   
plan is  to sell the  loans receivable  to AIDEA  to increase                                                                   
the cash assets to meet increased loan demand.                                                                                  
                                                                                                                                
Representative  Fairclough questioned  the management  intent                                                                   
of  the revolving  loan funds.  Ms.  Fisher-Goad pointed  out                                                                   
that the  bulk fuel  revolving loan  fund was  re-capitalized                                                                   
by  the  legislature  during the  special  session  in  2008.                                                                   
Representative  Fairclough  reiterated   that  she  does  not                                                                   
understand how a  revolving loan fund can be  spent down. She                                                                   
asked if  AIDEA had  regulations that  would manage  the fund                                                                   
so that the cash assets would not be depleted.                                                                                  
                                                                                                                                
2:16:16 PM                                                                                                                    
                                                                                                                                
Mr. Haagenson replied  the bulk fuel loan funds  are based on                                                                   
short-term  loans and  easier  to manage.  The power  project                                                                   
fund has much longer loan periods, up to 20 years.                                                                              
                                                                                                                                
Representative  Kelly asked  if  AEA is  meeting the  reserve                                                                   
requirements  for the revolving  loan funds. Ms.  Fisher-Goad                                                                   
answered that currently there are no delinquencies.                                                                             
                                                                                                                                
Representative  Kelly acknowledged  that the  fund "has  been                                                                   
overtaken by  success". He questioned  the overall  health of                                                                   
the fund. Ms. Fisher-Goad believed the fund was healthy.                                                                        
                                                                                                                                
Representative  Fairclough  believed that  the  fund was  not                                                                   
healthy   or  managed   properly  since   the  fund  is   not                                                                   
revolving.  She felt  the  management authority  should  have                                                                   
acted  more proactively  and  requested  more funding  before                                                                   
the cash  assets were  drawn down.  She asked  if AIDEA  will                                                                   
keep the loan fund revolving.                                                                                                   
                                                                                                                                
Mr. Leonard answered  that AIDEA is strictly  buying the loan                                                                   
portfolio as an  investment, and not taking over  any role in                                                                   
management of the fund.                                                                                                         
                                                                                                                                
2:20:33 PM                                                                                                                    
                                                                                                                                
Representative  Austerman  wondered  why  AEA is  willing  to                                                                   
give  up  $4  million worth  of  loan  portfolio  instead  of                                                                   
recapitalizing  through  the  direct  appropriation  via  the                                                                   
capital  budget  (SB  230). Mr.  Haagenson  shared  that  the                                                                   
current  route  seemed  more available  than  obtaining  that                                                                   
amount of general fund money.                                                                                                   
                                                                                                                                
Co-Chair  Hawker noted  that  all of  the  fiscal notes  (FN1                                                                   
(DOT), FN2 (REV), FN3 (CED), and FN4 (CED)) were zero.                                                                          
                                                                                                                                
Vice-Chair  Thomas MOVED to  report SB  301 out of  Committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
SB  301  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  with previously  published fiscal notes:  FN1                                                                   
(DOT), FN2 (REV), FN3 (CED), FN4 (CED)                                                                                          
                                                                                                                                
HOUSE BILL NO. 426                                                                                                            
                                                                                                                                
     "An Act providing for, relating to, and approving the                                                                      
     issuance of certificates of participation for the                                                                          
     construction, acquisition, and equipping of the Alaska                                                                     
     Scientific Crime Detection Laboratory in Anchorage;                                                                        
     providing notice of and authorizing the commissioner                                                                       
     of the Department of Administration to enter into a                                                                        
     lease-purchase agreement with the Department of Public                                                                     
     Safety for the Alaska Scientific Crime Detection                                                                           
     Laboratory; and providing for an effective date."                                                                          
                                                                                                                                
2:24:27 PM                                                                                                                    
                                                                                                                                
JOSEPH MASTERS,  COMMISSIONER,  DEPARTMENT OF PUBLIC  SAFETY,                                                                   
explained what  the crime lab  does and urged passage  of the                                                                   
legislation. He  elaborated that HB 426  provides $75,750,000                                                                   
in funding  for a  new state  crime lab.  The existing  crime                                                                   
lab  is outdated  and inefficient.  A  crime lab  replacement                                                                   
would provide  state of  the art  scientific analysis  of the                                                                   
evidence in  a timelier manner  that could result  in swifter                                                                   
arrests and  convictions; enhancing protection  for Alaskans.                                                                   
He added  that  a new crime  lab is  a key  component in  the                                                                   
Governor's sexual  assault and domestic violence  initiative.                                                                   
Sexual  assault and  domestic  violence  cases contribute  to                                                                   
half of the workload  of the crime lab. The new  lab is vital                                                                   
to  the initiative's  goals;  to prosecute  perpetrators  and                                                                   
prevention.  He furthered  that a  new lab  will protect  the                                                                   
innocent  from false  accusations with  timely processing  of                                                                   
evidence and exonerates the wrongly convicted.                                                                                  
Commissioner Masters  stated that the  new crime lab  has the                                                                   
capacity  and technology  to  meet  the existing  and  future                                                                   
crime analysis  needs of  the state.  The current  inadequate                                                                   
crime lab is  the main reason crime evidence  analysis cannot                                                                   
be processed  in a  timely manner or  cannot be processed  at                                                                   
the facility  at all which  creates backlogs and  delays. The                                                                   
crime  lab has  become "reactive"  to major  crimes only.  He                                                                   
reported  that a  new crime  lab would  enable a  "proactive"                                                                   
and preventive approach  to combating all types  of crime. He                                                                   
pointed  out   that  an  expected   increase  in   the  state                                                                   
population  of 140,000  by 2013  will significantly  increase                                                                   
demand for the crime lab services.                                                                                              
                                                                                                                                
Commissioner  Masters  reported   that  previous  legislative                                                                   
approval   for  leasing   a  twelve   acre   site  from   the                                                                   
municipality  of Anchorage for  one dollar  per year  for the                                                                   
next  fifty  years  with  an   additional  twenty  five  year                                                                   
extension,  $8,000,000 for  design work,  and $8,800,000  for                                                                   
site preparation  demonstrates  past legislative support  for                                                                   
the  project.  He   added  that  the  project   team  trimmed                                                                   
$20,000,000  from the  initial  estimated cost.  Construction                                                                   
of the crime  lab is expected  to create 250 jobs  and employ                                                                   
fifteen subcontractors.                                                                                                         
                                                                                                                                
2:30:55 PM                                                                                                                    
                                                                                                                                
Commissioner Masters  emphasized the difficulty  of putting a                                                                   
price  tag on the  value of  public safety  and security  for                                                                   
Alaskans.                                                                                                                       
                                                                                                                                
Representative Austerman  asked if the total cost  of the lab                                                                   
is   approximately   $92.5  million.   Commissioner   Masters                                                                   
affirmed.  He  clarified  that HB  426  provides  $75,750,000                                                                   
along  with  the  previous  appropriations  invested  in  the                                                                   
replacement lab that totals $16.8 million.                                                                                      
                                                                                                                                
Representative  Foster   asked  whether  future   needs  were                                                                   
considered in  the design. Commissioner Masters  replied that                                                                   
the  lab design  meets  current  and future  needs  up to  20                                                                   
years.                                                                                                                          
                                                                                                                                
Representative  Kelly   referred  to  the   earlier  proposed                                                                   
project,  high cost of  the lab,  and legislative  directives                                                                   
to  scale back  the  project and  costs.  He  noted that  was                                                                   
successful and wondered  whether the facility would  still be                                                                   
adequate.  Commissioner Masters  noted that nineteen  percent                                                                   
of  the  footprint  is  shelved space  to  allow  for  future                                                                   
expansion  and with  the flexibility  to  add new  technology                                                                   
and techniques as they are developed.                                                                                           
                                                                                                                                
2:35:35 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  referred to  the high crime  statistics in                                                                   
Alaska and queried why the new lab would make a difference.                                                                     
                                                                                                                                
Commissioner  Masters  responded   that  there  would  be  an                                                                   
immediate   increase  in   efficiency   of  twenty   percent,                                                                   
directly related  to adequate use of space  and equipment for                                                                   
all types work processes and analysis in the lab.                                                                               
                                                                                                                                
ORIN  DYM,   MANAGER,  FORENSIC  LABORATORY,   DEPARTMENT  OF                                                                   
PUBLIC  SAFETY,  reported  that   sexual  assault  cases  are                                                                   
backed up  to 2007 and often  property crime evidence  is not                                                                   
submitted  in consideration  of  the backlog.  He  emphasized                                                                   
that the crime  analysis situation in the state  "is so bad".                                                                   
He stated that, "we are the clog in the pipes of justice."                                                                      
                                                                                                                                
Vice-Chair Thomas  asked if the lab would increase  cold case                                                                   
capabilities.  Commissioner Masters  informed  that the  cold                                                                   
case  homicide   unit  is  an   investigative  unit   in  the                                                                   
operations  department.  All  of  their  work  that  requires                                                                   
scientific analysis is sent to the state crime lab.                                                                             
                                                                                                                                
Representative Salmon  asked if autopsies would  be performed                                                                   
at the crime lab.                                                                                                               
                                                                                                                                
2:39:29 PM                                                                                                                    
                                                                                                                                
Commissioner  Masters reported  that autopsies are  performed                                                                   
at the  Department of Health  and Social Services  lab, which                                                                   
works closely  with the  Department of  Public Safety  lab as                                                                   
needed on criminal cases.                                                                                                       
                                                                                                                                
Representative Foster  asked if equipment is included  in the                                                                   
total cost of the lab.                                                                                                          
                                                                                                                                
Mr. Dym affirmed.                                                                                                               
                                                                                                                                
Co-Chair Hawker opened public testimony.                                                                                        
                                                                                                                                
Co-Chair Hawker Closed public testimony.                                                                                        
                                                                                                                                
Co-Chair  Hawker requested  discussion  of  the fiscal  notes                                                                   
and  the  proposed  funding  mechanism;  the  certificate  of                                                                   
participation concept.                                                                                                          
                                                                                                                                
DEVEN  MITCHELL, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  BOND                                                                   
BANK AUTHORITY,  DEPARTMENT OF REVENUE, stated  that the bill                                                                   
authorizes  issuance  of  $750,000,000   in  certificates  of                                                                   
participation to  fund the crime lab. The amount  of $750,000                                                                   
is  associated  with  costs  to  sell  the  certificates.  He                                                                   
explained   how  the   certificates   of  participation   are                                                                   
secured.  The state enters  into a  subject to  appropriation                                                                   
lease  with  a  trustee.  The  trustee  is  granted  a  title                                                                   
position in  the facility. The  lease is fractionalized  into                                                                   
$5,000 certificates  that  are similar  to bonds but  legally                                                                   
distinct from  them. The  certificates are  sold in  the same                                                                   
way as any  bond issue; by  a combination of serial  bonds or                                                                   
term bonds that  would follow a yield curve from  year one to                                                                   
twenty years  with various interest  rates for  the different                                                                   
maturities.   The  various   rates   would   blend  into   an                                                                   
aggregated  rate  estimated  at   4.2%.  He  added  that  the                                                                   
project  would participate  in the  federal stimulus  program                                                                   
[The American  Recovery and  Reinvestment Act](ARRA)  via the                                                                   
Build  America   Bond  Program  that  would   provide  direct                                                                   
subsidies  by reduction  in the  annual debt  service in  the                                                                   
amount of  $300,000 - $400,000  per annum. The  program would                                                                   
allow for  the sale of a  combination of tax exempt  bonds at                                                                   
the short  end of the  yield curve and  taxable bonds  at the                                                                   
long end  of the  yield curve  and receive  a direct  subsidy                                                                   
from the  federal government  of thirty  five percent  of the                                                                   
interest expense.                                                                                                               
                                                                                                                                
2:45:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked if  market conditions are  appropriate                                                                   
for the  state to  enter into this  type of transaction.  Mr.                                                                   
Mitchell  affirmed. He  believed that  the financial  markets                                                                   
have stabilized  and the  conditions are  favorable for  long                                                                   
term debt.                                                                                                                      
                                                                                                                                
Vice-Chair  Thomas if  there is  a cap on  how much  stimulus                                                                   
money  can be used.  Mr. Mitchell  replied  that there  is no                                                                   
limit on the ability to use the bond program.                                                                                   
                                                                                                                                
Representative   Fairclough  queried   if  the  building   is                                                                   
designed to energy efficient standards.                                                                                         
                                                                                                                                
MATT  TANAKA,  CRIME  LAB  PROJECT   MANAGER,  DEPARTMENT  OF                                                                   
TRANSPORTATION  AND  PUBLIC  FACILITIES,   offered  that  the                                                                   
building   design  is   complex  but   energy  efficient   as                                                                   
possible.  Representative Fairclough  stated  that she  heard                                                                   
the answer  as no. Mr. Tanaka  countered that the  answer was                                                                   
yes. Many design  elements employed energy  efficient systems                                                                   
but due  to the  complex nature  of the  design, it  does not                                                                   
meet  a specific  energy  efficiency standard.  Energy  costs                                                                   
were  modeled  in  during the  development  of  the  project.                                                                   
Representative  Fairclough  asked  if heated  sidewalks  were                                                                   
part of the design. Mr. Tanaka negated.                                                                                         
                                                                                                                                
2:51:19 PM                                                                                                                    
                                                                                                                                
Representative  Doogan asked  for clarification  of the  term                                                                   
of the certificate.                                                                                                             
                                                                                                                                
Mr. Mitchell explained  that the term is for 20  years with a                                                                   
level debt  service and interest  payment due in FY  2011. He                                                                   
furthered that  interest would be  paid within six  months of                                                                   
issuance  with  subsequent  interest paid  on  a  semi-annual                                                                   
basis. A principle payment would be paid in August, 2012.                                                                       
                                                                                                                                
Representative Doogan cited the legislation on page 2,                                                                          
lines 21-24,                                                                                                                    
                                                                                                                                
     "The estimated annual amount of rental obligations                                                                         
     under the lease-purchase agreement is $5,600,000. The                                                                      
     estimated total of lease payments for the full term of                                                                     
     the lease-purchase agreement is $112,000,000."                                                                             
                                                                                                                                
Representative   Doogan  asked   if   $112,000,000  was   the                                                                   
repayment amount  over twenty  years. Mr. Mitchell  affirmed.                                                                   
He clarified  that amount  is an  estimate. He restated  that                                                                   
with  participation   in  The  Build  America   Bond  Program                                                                   
reduction  in  the  annual  debt service  in  the  amount  of                                                                   
$300,000 - $400,000 per year below the $5.600, 000.                                                                             
                                                                                                                                
Representative  Doogan  asked   if  there  is  a  substantial                                                                   
market for  the certificates and if  it is a safe  course for                                                                   
the state  to take.  Mr. Mitchell  remarked  that this  is an                                                                   
extremely common  form of financing and is  called a "subject                                                                   
to appropriation  concept"  in financial  markets. The  state                                                                   
has  used  the   mechanism  successfully  in   the  past.  An                                                                   
investor is  compelled to  purchase the certificates  because                                                                   
non-payment   by   a   state  has   legal   negative   credit                                                                   
ramifications and  prohibitions to access capital  for future                                                                   
projects. Representative  Doogan wondered what  the advantage                                                                   
is of certificates  of participation over  general obligation                                                                   
bonds.   Mr.  Mitchell   reiterated   that  certificates   of                                                                   
participation are  a very common  means for public  financing                                                                   
for a  single project.  All of  the other  labs in  the state                                                                   
were financed  by this  mechanism. He  stated that  the state                                                                   
gets a  lower interest  rate with  general obligation  bonds.                                                                   
However,  general  obligation  bonds  are  usually  used  for                                                                   
funding  multiple  projects  and   the  project  cannot  move                                                                   
forward  until  an  election  is held.  He  added  that  ARRA                                                                   
expires at  the end of 2010.  AARA is expected to  extend but                                                                   
at a lower reimbursement  rate of 33% so the  risk in waiting                                                                   
is  that you  would give  up nearly  half  of your  advantage                                                                   
with general  obligation  bonds. Also,  the state would  take                                                                   
on interest  rate risk because  of waiting longer to  sell at                                                                   
the  end of  the  year instead  of  now in  favorable  market                                                                   
conditions.                                                                                                                     
                                                                                                                                
2:58:11 PM                                                                                                                    
                                                                                                                                
Representative  Doogan  asked if  there  is a  premium  being                                                                   
paid  to  use   certificates  of  participation   instead  of                                                                   
general  obligation  bonds.  Mr.  Mitchell  replied  that  it                                                                   
would be an  estimated $45,000 per year or  $900,000 over the                                                                   
life of the loan.                                                                                                               
                                                                                                                                
Representative  Foster  wondered what  the  rationale was  to                                                                   
use  certificates   of  participation   instead  of   general                                                                   
obligation   bonds.  Mr.   Mitchell  stated   he  would   not                                                                   
characterize  increased interest  payments as  a premium.  He                                                                   
felt   that   the   rationale    to   use   certificates   of                                                                   
participation  was  the time  sensitive  nature  of the  ARRA                                                                   
expiration.  Also, if  GEO bonds  are used  and time is  lost                                                                   
waiting for  voter approval  the risk  is that the  financial                                                                   
markets can  become supply heavy  at the end of  the calendar                                                                   
year  with  the result  of  paying  higher yields.  In  using                                                                   
certificates the  state might be  giving up the  potential to                                                                   
have  their best  credit  and lower  interest  rate with  geo                                                                   
bonds but  somewhat offset by  selling into a  more favorable                                                                   
market  now  with  certificates   and  the  ability  for  the                                                                   
project to move forward as soon as the bill becomes law.                                                                        
                                                                                                                                
3:02:19 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas MOVED to  report HB  426 out of  Committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
HB  426  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation   and  with  a   new  fiscal  note   from  the                                                                   
Department of Revenue.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:03 PM                                                                                            

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