Legislature(2025 - 2026)ADAMS 519
02/28/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| Presentation: Alaska Industrial Development and Export Authority |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 28, 2025
1:36 p.m.
1:36:46 PM
CALL TO ORDER
Co-Chair Josephson called the House Finance Committee
meeting to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Andy Josephson, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Will Stapp
Representative Jeremy Bynum
Representative Jamie Allard
ALSO PRESENT
Randy Ruaro, Executive Director, Alaska Industrial
Development and Export Authority.
SUMMARY
PRESENTATION: ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY
Co-Chair Josephson reviewed the meeting agenda.
^PRESENTATION: ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY
1:38:19 PM
RANDY RUARO, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY, introduced the PowerPoint
presentation "2025 Annual Update" dated February 28, 2025
(copy on file). He began on slide 2. He emphasized that the
Alaska Industrial Development and Export Authority (AIDEA)
had the simple mission of jobs and economic development. He
quickly advanced to slide 3. He explained that AIDEA was
formed in 1953. He thought Alaskan citizens knew that the
new state would have to support itself through economic and
resource development and financial assistance would be
available.
Mr. Ruaro continued to slide 4. In 1967, AIDEA's statutes
were revised. A bill was passed and the legislature focused
AIDEA on development and reducing unemployment in the
state. He recounted that jobs in areas of high unemployment
were a focus of the legislature. He continued to slide 5
and read the statute governing AIDEA:
AS 44.88.010 states that:
"The legislature finds, determines, and declares that
there exist areas of the state in which seasonal and
nonseasonal unemployment exists this unemployment is a
serious menace to the health, safety, and general
welfare, not only to the people in those areas, but
also to the people of the entire state."
Mr. Ruaro continued to slide 6, but due to the current
internet outage, the video could not be played.
Co-Chair Josephson suggested that the video be summarized.
Mr. Ruaro explained that Chief Fred Sun, the Tribal
President of the Alaska Native village of Shugnak, provided
comments about the importance of jobs in his community. He
had discussed the importance of jobs allowing for a
subsistence lifestyle, and jobs being important for mental
health.
1:41:53 PM
Mr. Ruaro continued to slide 7, which discussed social and
health benefits of jobs and community access. He mentioned
that the slide shared quotes from studies related to social
and health benefits, including suicide prevention.
Representative Jimmie asked about slide 7. She asked him to
explain why jobs would help with suicide prevention.
Mr. Ruaro responded that the study included quotes from
residents. The comments of rural Alaskans were summarized
in the study and indicated that jobs in rural Alaska helped
the mental health of the people in the communities. He
offered to provide the study.
Representative Jimmie responded that she did not see why
jobs would help prevent people from killing themselves. She
emphasized that her people had been present for 10,000
years without jobs and without suicides.
Mr. Ruaro responded that current suicide rates of Alaska
Native males between 18 and 27 was roughly 34 times the
national average. He thought suicide was a state problem
and a problem in rural areas. He summarized that the study
had sent researchers to talk to residents of rural
communities and ask if jobs and access to healthcare would
help with suicide rates.
Representative Jimmie asked about the quotes from rural
communities. She asked why the names were not included. She
did not think the slide made sense and questioned the
logic.
Mr. Ruaro responded that he was not stating it directly.
Representative Jimmie asked for more explanation.
Mr. Ruaro responded that the findings of the study were
that when people could support their families and afford a
subsistence lifestyle, suicide tended to be mitigated. He
mentioned the price of gas.
Representative Jimmie asked Mr. Ruaro to help her
understand.
Mr. Ruaro explained that there had been some health impact
assessments done. He used the example of the expansion of
the Red Dog Mine. The findings of professional researchers
talking to rural Alaskans was that having a job, being able
to support a subsistence lifestyle, support a family, and
own a home all tended to be positive health factors.
1:46:51 PM
Representative Jimmie thought the slide should say that
people deserve jobs.
Mr. Ruaro believed that Alaskans should have the
opportunity to have jobs.
Co-Chair Josephson understood that the quotes looked like
they were from targets of the study or from the scholars
doing to the study rather than directly from folks living
in rural Alaska. He thought Representative Jimmie had found
that the quotes did not resonate in the same way.
Co-Chair Foster appreciated Representative Jimmie's
comments and directed attention to slide 18 which showed
200 villages on the map of the state. He was glad to see
places like Nome and Bethel on the map; but did not see
Toksook Bay, Wales, Shishmaref, Diomede, Shaktoolik, Koyuk,
Savoonga, Gamble, Nightmute, Quinhagak, or Cold Bay. He
thought it was a good statement that jobs helped, but in
many of the areas where jobs were needed, the AIDEA
projects were not present. He affirmed that AIDEA had done
a lot, but he wanted to point out the nuance.
Mr. Ruaro responded that slide 18 was a representative
sample. There were 600-700 other loans all over, but they
could not all fit on the map. He offered to look into
AIDEA's presence in rural Alaska.
Representative Hannan noted that she looked forward to the
day when slide 7 said that AIDEA was putting $1 million in
financing clinics or mental health facilities in rural
communities that lacked access.
Mr. Ruaro responded that AIDEA had financed a number of
health facilities, including the Tanana Chiefs Hospital in
Fairbanks. He offered to look into what other health
facilities that AIDEA had worked on.
1:50:09 PM
Mr. Ruaro continued to slide 8 which addressed the measure
of unemployment rates. He proposed that the measure could
be misleading because the official statistics did not
include people who had given up looking for work. The
official Bureau of Labor Statistics did not include what
was called the labor participation rate. He cited that
roughly four out of ten Americans had given up hope of
finding a job. He thought the measure was a more accurate
message of the importance of creating jobs.
Representative Galvin mentioned the changing demographics
of Alaskans. She did not think the group of 65-year-olds
and older should be included in Alaska's population of
potential employees.
Mr. Ruaro offered to check the labor participation rate and
check the age.
Mr. Ruaro continued on slide 9, which discussed the labor
participation rate for Alaska, which was doing a little
better than the national average at 65 percent. The state
had areas with higher numbers as well as areas with lower
numbers. Roughly four in ten Alaskans were unable to work.
Representative Jimmie explained that she was a freshman
legislator and had never heard of AIDEA before. She asked
what AIDEA was doing for outreach to communities.
Representative Josephson suggested that Mr. Ruaro focus his
answer on the Yukon-Kuskokwim (YK) Delta.
Mr. Ruaro explained that AIDEA had a special rural loan
program administered by the Department of Commerce,
Community and Economic Development (DCCED) and focused on
rural Alaska. He continued that AIDEA was trying to see if
there were some improvements and additional capitalizations
that could be done to step up AIDEA's presence in rural
Alaska.
Representative Jimmie asked what AIDEA was doing to bring
about jobs.
Mr. Ruaro responded that jobs came with AIDEA's loan and
financing programs. When AIDEA was actively providing loans
in rural Alaska, it created jobs.
1:54:18 PM
Mr. Ruaro continued on slide 11 discussing financial
highlights of AIDEA's FY 24 and noted that it had a roughly
$1.49 billion net position. He explained that the statistic
was positive in sense of value but thought it should be
noted that almost half of the position was account
receivables rather than cash. He noted that staff had
worked hard to produce the highest statutory net income in
AIDEA history in FY 24. He noted that with the dividend for
FY 26, the total provided back to the legislature since
1997 would reach nearly half a billion dollars. The AIDEA
dividend approved for payment in FY 26 was $20 million.
Representative Galvin appreciated slide 11 because it
provided a good spread of what was happening with AIDEA
funds. She mentioned a fiscal cliff that the state was
approaching. She wondered if he could explain what the
board members were thinking in coming up with the $20
million dividend. She wondered if the board contemplated
the state's needs or the structural deficit, or rather
considered how to protect the fund and maintain the laws
governing AIDEA. She asked for some context.
Mr. Ruaro responded that the board was statutorily limited
to declare a dividend between 25 percent and 50 percent of
statutory net income. When the board was deciding on the
level of the dividend, each board member had a significant
amount of information to consider, including near future
demands of AIDEA funds. He mentioned the Ambler Road
Project, the Alaska National Wildlife Refuge (ANWR), and
the West Susitna Road. The Amber Road could require
possibly hundreds of millions of dollars to do the bonding
alone.
Mr. Ruaro thought board members were taking into account
the state's fiscal position as well as the near future
demands on AIDEA funds, particularly after the board
committed roughly $200 million to a number of projects. He
continued that AIDEA cash balances were down at lower
levels. He mentioned that AIDEA had financed the Alyeschem
methanol plant, which would bring a new industry to the
North Slope. The plant would produce dividends and revenue
for the treasury going forward for decades. He mentioned
the Cook Inlet revolving loan for $50 million and other
projects. He approximated that there had been roughly eight
times average output of funds from AIDEA onto the street.
1:58:50 PM
Representative Galvin hoped the committee would hear about
projected revenue from projects. She believed that there
were some good things ahead. She thought she had heard that
AIDEA was permitted to award a dividend between 25 and 50
percent of the yearly net. She asked what the board chose.
Mr. Ruaro answered roughly 32 percent.
Representative Hannan asked if there was any significance
to the pattern of even years having substantially higher
dividends than the odd years. She mentioned her background
in fisheries.
Mr. Ruaro responded that the pattern was a coincidence. He
relayed that in one of the odd years the Mustang Project on
the north slope had driven the dividend down after a
substantial amount had to be written off.
Representative Hannan asked about the 32 percent dividend
in FY 26. She asked what percentage dividend was chosen for
the other 5 years.
Mr. Ruaro responded that in some years the dividend was
close to 50 percent and others it was lower. He thought the
dividend in 2022 had been close to 50 percent. He did not
think the dividend had never gone below 30 percent. He
offered to follow up with more information.
Mr. Ruaro continued on slide 12, which showed AIDEA's asset
balance depicted in a pie chart. He noted that the left-
hand side of the pie chart showed roughly half the assets
that were not cash. He pointed out the Enterprise Fund at
$345 million. There was a note on the far right that showed
$200 million in approved projects including Alyeschem
Methanol Plant, Cook Inlet, and the Alaska Gasline
Development Corporation (AGDC). He reiterated that the cash
balance was lower than it had been in a while from pending
commitments. He drew attention to the purple investment
fund section that was invested on a six- year window time
horizon, largely in fixed income. The board had recently
made adjustments to invest some funds in equities and
improve returns for the state and AIDEA.
2:03:18 PM
Co-Chair Josephson asked about the navy-blue section of the
pie chart depicting the Enterprise Fund, which was a robust
fund. He recounted that about 10 days ago in the Senate
Finance Committee, the same piece was called "cash on
hand." He asked why it had changed.
Mr. Ruaro responded that he did not know why the title
changed, but it was cash on hand and was AIDEA's operating
and savings account that was used to fund projects.
Mr. Ruaro continued to slide 13, which broke down AIDEA
approved funding and commitments by industry. Most projects
in the pipeline were in resource development. There were
also projects in technology. Power and energy equated to
roughly $131 million in applications.
Mr. Ruaro continued to slide 14, which referenced the
operations component of the AIDEA budget. He relayed that
there was no general fund part of the budget, and it was
all AIDEA receipts. Personal services for roughly $8.7
million was for 32 to 33 positions, which was the number of
people at AIDEA. He mentioned 10 shared positions with the
Alaska Energy Authority (AEA). He mentioned a bill that
passed the previous year that separated AEA's finances from
AIDEA and noted that the budget would be down significantly
from prior years.
Mr. Ruaro advanced to slide 15, which addressed the
facilities and maintenance budget. He mentioned a building
that AIDEA shared with AEA and noted that the numbers
reflected the cost of upkeep.
Mr. Ruaro moved to slide 16, which spoke to capital
appropriations in the FY 26 AIDEA budget. There had been a
$50 million request for AGDC in the FY 25 fast-track
supplemental budget, but the request was withdrawn because
it was not needed. The was another request for $2.5 million
for the West Susitna Access Project.
Co-Chair Josephson asked if AIDEA had entered into an
agreement with Glenfarne Group that stipulated if Glenfarne
did not get to Final Investment Decision (FID), then AIDEA
would backstop $50 million of AIDEA funds.
Mr. Ruaro responded that negotiations were still underway,
and the numbers were not final yet. He agreed that AIDEA
would be funding any call on the backstop through only
AIDEA receipts.
Mr. Ruaro moved to slide 17 which was an outline of all of
AIDEA's programs. He mentioned the Loan Participation
Program which made up the bulk of AIDEA's assets, with
roughly 360 million in outstanding loans, mostly for small
businesses. He described that the banks would come to AIDEA
if a small business owner wanted to open a business which
did not meet the bank standards. He explained that AIDEA
had an ability to share the risk or participate with the
local bank. He discussed project finance for projects such
as Red Dog Mine. Conduit revenue bonds were used for
funding things such as for Alaska Native hospitals (such as
Tanana Chiefs in Fairbanks) and the Snettisham
Hydroelectric Project.
Mr. Ruaro continued on slide 17 and discussed energy and
resource development and noted that the legislature had
given AIDEA some individual funds that were set out in
statute for specific areas. He listed the Sustainable
Energy Transmission Fund, the Arctic Infrastructure
Development Fund (AIDF), and the Cook Inlet Reserve-Based
Lending Program. He highlighted asset ownership such as the
Fed Ex hanger and Ketchikan Shipyard. He explained that
AIDEA had the ability to issue tax-exempt bonds, which was
a significant benefit to projects.
2:08:52 PM
Representative Tomaszewski shared that he had a railroad
related bill in 2024 and AIDEA had put in an amendment to
increase its authorization from $25 million to $300
million. Ultimately it did not pass. He asked if AIDEA
normally did such things or was it more common to speak to
the sponsor before attempting to change legislation.
Mr. Ruaro was not aware of the situation. He thought
protocol was to discuss items with the sponsor.
Representative Tomaszewski relayed that ultimately the
amendment had prolonged the bill, which had not passed. He
asked if anything else would be added.
Mr. Ruaro responded that AIDEA did not have the ability to
offer amendments. He was not aware of any desire or effort
to add amendments to a bill.
Representative Tomaszewski understood that AIDEA could not
add amendments to legislation and would use a legislator.
He reiterated that in the future it would be better to
approach the sponsor, even if working through another
legislator.
Mr. Ruaro did not disagree.
Representative Hannan asked if AIDEA perceived that it
needed expanded bonding capacity up to $300 million.
Mr. Ruaro believed that AIDEA had sufficient bonding
capacity for the projects it had in the pipeline.
Representative Hannan asked if AIDF was capitalized and for
how much.
Mr. Ruaro responded that AIDF was capitalized at a level
that was approved by resolution. There were several related
to ANWR and possibly Ambler. He offered to follow up with
the numbers of the resolutions.
Representative Hannan asked if it meant that the money
could only be used for that specific item.
Mr. Ruaro responded that AIDEA needed to follow the
outlines of the resolutions approved by the board.
Co-Chair Josephson mentioned AIDF and asked about A-STAR.
He asked for clarification. He thoguht A-STAR was Southweat
of Utqiagvik, and AIDF was Southeast of Utquiagvik.
Mr. Ruaro responded that AIDF boundaries reached to both
regions described by Co-Chair Josephson and further south.
He commented that it was a broad area and the A-STAR
project was housed within the Department of Natural
Resources (DNR).
2:13:30 PM
Mr. Ruaro continued on slide 18, which included a map
depicting a snapshot of AIDEA's projects.
Co-Chair Josephson asked about BlueCrest Energy Drill Rig
and HEX LLC projects. He asked if there was worry about the
undermining of the projects because of importation and the
development of AGDC in the long run.
Mr. Ruaro responded that Enstar Natural Gas had stated to
the Regulatory Commission of Alaska (RCA) that as long as
gas was being produced locally from Cook Inlet, they would
buy the gas. The price would probably go up to match the
import price. He believed that HEX had secured a recent
secure commitment to have its gas purchased. He was not
aware of BlueCrest currently operating.
Representative Galvin appreciated that the slide did a good
job of depicting money out through bonds or loans. She
inquired about the number of jobs each of the projects had
brought to the communities. She asked about expected
revenues per project, as well as returns on revenue.
Mr. Ruaro explained that AIDEA staff were currently working
on isolating job and revenue numbers. There were two
elements of revenue including revenue from the royalties
and production tax from projects. Alyeschem North Slope
project was slated to get a 22 percent rate of return for
AIDEA and the state together. He offered to follow up with
more information.
Representative Hannan asked about Artillery Park in Eagle
River and asked if it was the name of a commercial
building.
Mr. Ruaro responded in the affirmative.
2:18:04 PM
Mr. Ruaro advanced to slide 19 and slide 20 and discussed
specific projects. Alyeschem was a project with 80
construction jobs and 15 permanent jobs. The project would
produce methanol and ultra-low-sulfur diesel locally on the
North Slope. He thought it would meet demand on the North
Slope. The products were previously shipped in from
Trinidad and trucked up the Dalton Highway.
Mr. Ruaro continued to slide 21 and discussed Railbelt
Energy Solutions and Hex Cook Inlet. He shared that AIDEA
had been active in financing and working with Hex Furie,
loaning the funds that were needed to acquire the Kitchen
Lights Unit. He mentioned that the loan was paid off early,
and the company was a good borrower. He continued that AIDA
had partnered with them again on a $50 million revolving
line of credit to allow them to drill and produce more gas.
Representative Johnson complimented AIDEA. She thought the
work it had done on the price of gas was outstanding. She
thought there was economic benefit but also benefit for the
whole state.
Mr. Ruaro continued to slide 22 and discussed the Interior
Energy Project. He explained that the Interior Alaska
Natural Gas Utility (IGU) was close to being able to switch
from taking gas out of the Cook Inlet to just taking gas
from the North Slope. The project had purchased 15 large-
capacity LNG trailers. He thought by June of 2025 IGU would
not be taking gas from Cook Inlet.
Mr. Ruaro continued on slide 23 and 24 and discussed the
AGDC backstop, which was actually a corporate guarantee by
AIDEA and a contract. The guarantee was limited in amount
(up to $50 million of work performed) and conditional on
whether FID was taken or not. The maximum amount of AIDEA's
exposure was the amount for Front End Engineering Design
(FEED) work actually performed. The exposure was also
limited by the guarantee. It was "conditional" because the
obligation to make a payment only comes into effect if
there was a decision by Glenfarne not to go forward on the
FID.
2:22:49 PM
Mr. Ruaro continued on slide 25, which addressed the
authority of AIDEA to commit assets. He mentioned articles
of the Alaska Constitution, which gave the legislature the
authority to create corporations. The ability of the
corporations to exist and use state funds was challenged
early in statehood. The ability of the corps to exist and
use funds was challenged in DeArmond v. Alaska State
Development Corporation, which was AIDEA's predecessor. The
court said that it was up to the legislature to create the
corporations, and delegate authorities to the board to
manage assets and other steps to achieve the goal to
finance projects.
Co-Chair Josephson shared that he was in receipt of a legal
opinion that was pertinent. He referenced a 2000 decision
that said public corporations must meet constitutional
mandates. Legislative attorneys had indicated that
unobligated AIDEA dollars were in the discretion of the
state legislature entirely. He thought that there was
legislative prerogative to do so if they chose. He relayed
that there were other decisions that echoed the same
concept and noted that the power of appropriation was not
wholly surrendered. The other concern noted in the opinion
was that if the dollars were wholly in the control of
AIDEA, the funds would be dedicated and there could not be
dedicated funds (which were unpermissable). He thought
there was a dual reason that there was a potential
constitutional infirmity, in particular in AS 44.88.190(b),
which seemed to suggest (he thought erroneously) that the
state could not interfere with the dollars. He presumed Mr.
Ruaro disagreed and asked for his thoughts.
Mr. Ruaro agreed to disagree. He thought it was clear that
the legislature had the ability to control statute and
action through a bill which assets were assets of the
treasury or of the state. There were some current statutes
that said receipts/assets of AIDEA were not assets of the
state or subject to the Executive Budget Act. He continued
that AIDEA believed that case laws would hold up to a
challenge. There were three areas in which the legislature
had retained control of AIDEA assets: allocating the
dividend, the operating budget of AIDEA, and 20 to 30
limitations on AIDEA's ability to finance things. He
continued that he did not disagree that AIDEA was subject
to some legislature control, but prior legislatures had set
up a system to segregate AIDEA from state funds. He thought
the segregation was good in terms of bonding and financing
in order to have the state treasury isolated from the
financing and investment decisions AIDEA was making.
2:28:10 PM
Co-Chair Josephson asked if AIDEA's board had taken a
position in FY 20 when the governor had sought to
appropriate a substantial amount of AIDEA receipts.
Mr. Ruaro asked him to repeat the question.
Co-Chair Josephson repeated that the Dunleavy
administration, early in its tenure in FY20, sought to
appropriate some of AIDEA's receipts. He asked if the board
had acquiesced or objected.
Mr. Ruaro was not familiar with the activity in 2020, as he
started at AIDEA in 2022.
Representative Galvin asked about slide 24, regarding 8
Star and AGDC. She asked if the terms were interchangeable.
Mr. Ruaro explained that 8 Star was a subsidiary or
corporate limited liability company (LLC) formed by AGDC to
hold all of the permits for the gas pipeline project.
Representative Galvin understood that it was good that the
state and AIDEA's fiscal pieces were separate because it
would isolate the state of Alaska from fiscal issues that
could come up with bonding. She questioned the statement.
She pondered that if the legislature could change laws
could change the way the inner workings of AIDEA, if the
state would not be liable. She asked if AIDEA had sought
legal advice on the matter.
Mr. Ruaro responded that there were at least two statutes
that expressly stated that the commitments of AIDEA were
not to be considered state funds. The promises or covenants
would be part of any bond documents, and those people
buying the bonds would understand the structure.
Representative Johnson asked about slide 25 and the statute
removing AIDEA's funds from the Executive Budget Act. She
wanted to hear what Mr. Ruaro thought it signified.
Mr. Ruaro responded that previous legislatures had
intentionally tried to create a distinction between AIDEA
receipts and earnings and the state treasury and
appropriation powers. He thought the parties had tried to
isolate the treasury from liability from things AIDEA may
finance, and at the same time, tried to give AIDEA the
ability to finance projects and only use its receipts based
on the discretion of the board.
2:32:38 PM
Mr. Ruaro continued on slide 26 and discussed items related
to the AGDC gas pipeline project as AIDEA worked on
negotiations. He knew some things were very different than
prior year's efforts. He mentioned the Wood Mackenzie
Report, which showed a positive economic value for Phase I
even thought it was a low volume. He noted that the AIDEA
board was still spending time on due diligence and
negotiation. He thought it was important for legislatures
to know that AIDEA was working on it as an "arm's length"
transaction. He cited another major difference as President
Trump's approach to international trade, which he described
as completely transactional. He mentioned meetings between
the president and leaders from countries in Asia.
Mr. Ruaro advanced to slide 27. He described that Alaska
was in a shortage situation, and thought steps needed to be
taken. He discussed imported gas. He mentioned the phase
one pipeline as a way to de-risk phase 2 larger LNG export,
which would get down to lower prices for Alaskans. There
was a gas sales purchases agreement with Great Bear, with
prices 300 to 400 percent lower than previous agreements.
The large gap created an opportunity to give Alaskans low
priced gas. Great Bear and others were willing to supply
gas without a fiscal certainty constitutional amendment,
which he thought was always required by Exxon and other
large producers. He explicated that the gas supply was not
coming from Prudhoe Bay.
Representative Hannan asked about slide 24. She understood
that the 50 million backstop was if Glenfarne decided not
to go forward. She asked if the company would have any
intellectual property rights and if the state would need to
buy them out.
Mr. Ruaro responded that the work was paid for through the
funds of 8 star and Glenfarne and AGDC. No dollars would
leave AIDEA's accounts until FID was not taken, at which
time AIDEA would retain the FEED work.
Representative Hannan wanted to make sure that the state
had the ability to make its decision independent of
Glenfarne.
2:37:23 PM
Mr. Ruaro continued on slide 29 and mentioned the AIDEA
small business loans program. He mentioned the Rural
Development Initiative Fund (RDIF) and the Small Business
Economic Development (SBED). The programs were a priority
area of Commissioner Sandee. The board was looking at ways
to improve and get more loans out.
Mr. Ruaro continued on slide 30 and discussed the Loan
Participation Program, which was AIDEA's foundational loan
program that was used the most for Alaskan small businesses
and others. He thought the program would be over the
average number of loans in the current year. The program
was very popular with Alaskan banks.
Mr. Ruaro moved to slide 31. He discussed the Alaska
Wildbirch Hotel, and AIDEA project that had been recently
funded, committed, and approved. The hotel was in downtown
Anchorage. He noted that former United States Senator Mark
Begich was a member of the business. He thought the hotel
was going to help rejuvenate part of downtown Anchorage.
Mr. Ruaro moved to slide 32 and the Sun Mountain
Development in Wasilla. The project was a successful
condominium/mall project with lots of small businesses
inside. He advanced to slide 33 and discussed Golden Heart
Waste Management, a Fairbanks project that was recently
approved. He mentioned growing the business and adding and
expanding.
Mr. Ruaro continued through slide 34 and to slide 35, and
discussed AIDEA's most successful project of the Red Dog
Mine. He was glad the extension road was approved, and
thought the mine might be able to access new ore deposits
to keep operating for decades and continue AIDEA's
investment.
Representative Jimmie asked about slide 30, which mentioned
regional diversity. She noted that Southwest Alaska got .54
percent of AIDEA funding. She asked if asked if Mr. Ruaro
considered that to be "diversity."
Mr. Ruaro explained that AIDEA tried to participate in all
regions. He relayed that AIDEA was looking at ways to be
more active in other areas. He mentioned significant loans
in the pipeline that were in the Bethel area.
Representative Jimmie asked him to name one.
Mr. Ruaro could not share the names but thought he could
perhaps share with Representative Jimmie privately. He
thought he would need permission from the businesses as the
loans were not yet complete.
Co-Chair Foster asked about slide 30. He asked if another
column could be added to show the number of loans in
different regions to give a sense of participation.
Mr. Ruaro agreed to provide the information.
2:41:49 PM
Mr. Ruaro continued to slide 36 and ANWR leases. He thought
most members were aware that AIDEA bid on and won seven
leases in the Canning River 1002 area. The leases were
cancelled by the Department of the Interior and were
ordered to be reinstated. He shared that AIDEA was working
with the department to get the leases back. He specified
that ADIEA had done some geologic updating work that was
showing the presence of billions of barrels of oil in
formations similar to Pikka and Willow. He stated that
AIDEA would continue to develop seismic data and
information on the leases. Revenue at complete buildout of
1002 leases was estimated by the federal government to be
almost $2 billion per year to the state and significant
other funds to the local borough.
Representative Galvin was confused because she expected
there to be a company that had been requesting loans to get
to the leases, but AIDEA seemed to have decided to purchase
the leases. She asked if AIDEA had a plan to move forward.
Mr. Ruaro responded that AIDEA had been retaining
professional geologists to update all the information,
including the old 2-D seismic information that was shot of
ANWR in 1987 as well as adjacent well state logs from the
Alaska Oil and Gas Conservation Commission (AOGCC). He
continued that AIDEA hoped to perform 3-D seismic studies
on the areas that showed the most likely productivity,
after which it could market leases. He relayed that AIDEA
did not want to become an oil operator.
Representative Galvin noted that no other companies had put
in a bid for the lease sale when it opened up, and AIDEA
seemed to be the only company that had hoped that it would
come to fruition. She was surprised to see it because she
thought that other companies like Conoco would have also
been involved if there was an opportunity.
Mr. Ruaro responded that two private companies that bid on
ANWR leases were awarded, and then returned the leases. At
least one of the companies owned a state lease on the
boundary, which was highly prospective. He affirmed that
there were no large bids on ANWR.
Representative Tomaszewski commented "no risk no reward."
He asked if the current administration would allow for more
access for something to happen in the 1002 area.
Mr. Ruaro responded that AIDEA did believe there would be
more access and noted that President Trump included ANWR as
a priority project in his executive orders. The Department
of Interior had been directed to prioritize getting AIDEA's
leases back and push forward with development of ANWR.
2:47:25 PM
Representative Josephson asked if Mr. Ruaro had further
comment on slide 37.
Mr. Ruaro commented that there was a significant number of
resources. He moved to slide 28 and the Ambler Access Road
project, which was also included as a priority in the
executive orders by the president. The road was an access
right that was set out in Section 2014 of the Alaska
National Interest Lands Conservation Act (ANILCA) from
1980. He recounted that it had been frustrating when the
department ignored the mandate from Congress.
Co-Chair Josephson thought the history had been simplified.
He thought there had been objections by Doyon and NANA had
expressed disinterest. He thought the issue was more
complicated than Mr. Ruaro described when considering
tribal consultation.
Mr. Ruaro agreed that there were many moving parts to the
Ambler Road project. He thought the project involved six
different land classifications. The largest access right
was on state land which was about 63 percent of the route.
There was private land at Doyon and NANA. A portion of the
land went to a mine on NANA land, and if NANA wanted to
develop the mine, AIDEA would leave the choice up to them.
There was an access agreement in place with Doyon, but not
for the long term.
Representative Hannan asked about access across the
national park. Although an access agreement was in ANILCA,
the boundaries of the park were created in the statute. She
understood that the boundaries could not be breached by an
executive order but would rather require a Congressional
amendment. She asked what Mr. Ruaro had intended when he
spoke of it.
Mr. Ruaro responded that the executive order alone did not
solve the access road issue with the Gates of the Arctic.
He thought the Secretary of the Interior would need to take
some action to reinstate access. He thought there was
support based on the statute.
Representative Hannan asked if Mr. Ruaro's interpretation
was that the executive branch could take action through the
Department of the Interior even though the boundaries were
set in statute by Congress.
Mr. Ruaro responded that even though the park boundaries
were set in statute, Section 201 provided an express right
of access to the Ambler Mining District through the
boundaries.
2:51:41 PM
Mr. Ruaro continued to slide 39, and indicated there was a
video that could not be played due to technical issues.
Mr. Ruaro continued to slide 40 and the West Susitna Access
Project. He noted that the road was different than the
Ambler Road in that it was intended to provide for
recreational access in addition to industrial access.
Co-Chair Josephson understood that there was opposition
from recreational interests.
Mr. Ruaro responded that there was opposition to the road
from lodge owners in the area. He relayed that from AIDEA's
surveys and puclic meetings, the average Alaskan had
supported getting into the area for recreational purposes.
He acknowledged that there was some opposition.
Mr. Ruaro continued to slide 41 and 42. AIDEA was working
in the tech sector and other new areas of investment. He
considered that data centers presented an opportunity for
investment AIDEA thought could provide a good return. The
board had not approved the project yet, but AIDEA was
looking for opportunities in Alaska. He mentioned Alyeschem
chemical production from natural gas. He described natural
gas as a "feedstock" product, which could produce Methanol,
Naptha, and ulta-low Sulfur diesel. He relayed that AIDEA
hoped that the project expanded. He mentioned critical
mineral focus on some Antimony and other projects in the
West Susitna area. He thought ideally AIDEA could develop a
site to develop raw minerals instead of shipping ore out.
2:54:07 PM
Co-Chair Foster thanked Mr. Ruaro for his testimony and
work. He asked about returns and understood that AIDEA was
more focused on getting economic development and jobs
throughout the state. He mentioned page 11, which talked
about AIDEA dividends. He recalled that 2024 was a banner
year for investments and mentioned Standard and Poor (S and
P) and NASDAQ market performance. He thought AIDEA had two
different investments through loans and direct investments.
He asked if the info was available on the performance of
the investments.
Mr. Ruaro responded that the loan portfolio was limited by
statute on what could be charged for interest, so there was
a limited ability to increase returns for a large portion
of AIDEA's investments. He relayed that on the investment
side, the board had recently taken action to revise AIDEA's
investment policy to allow for investing more in equities.
He noted that AIDEA's returns on fixed income had not
matched up with S and P. He hoped for significant
improvements.
Representative Hannan asked about data centers, which she
thought was intriguing. She did not think the state
generally had an excess of cheap energy, except in
Deadhorse. She asked if there was a particular area of the
state that data centers were thinking of developing, or if
energy was put in place after a location was chosen.
Mr. Ruaro responded that AIDEA's focus to date was on the
rural renewable projects rather than large-scale data
centers. He thought Angoon would be a good small-scale
place to locate some equipment to produce some revenue. He
noted that the Thayer Lake damn would have an excess of
hydro-power when it was completed. He continued that AIDEA
was looking at smaller communities with excess power like
Angoon and Cordova.
Representative Hannan heard commitment to help get Thayer
Lake online. She thought Angoon was just a little short of
having the project completed and the most expensive power
in southeast. Angoon was completely diesel dependent with
no airport and limited ferry access. She hoped that AIDEA
would help Angoon with the $3 million needed to complete
with the Thayer Lake Project.
Mr. Ruaro thought it was an exciting project and relayed he
was happy to reach out to some friends in Angoon to see if
there was a way to assist. He relayed that he would also
reach out to AEA executive director Curtis Thayer.
2:59:37 PM
Representative Johnson relayed that she had done quite a
bit of work and communication with legislators in Alberta
regarding the potential for a transportation corridor from
Alberta to Alaska. She noted that the port at Point
McKenzie would make a huge difference. She mentioned the
A2A (Alaska to Alberta) Project [a proposed railway
connecting Alaska's ports to Alberta], which had not
happened. She mentioned other projects that had been
attempted. She mentioned a transboundary crossing that was
put in place after work was done during the first Trump
Administration. She did not know how long the crossing
would be in effect. She thought legislators in Alberta were
still very interested in having the alternate route to move
oil. She thought it would be a shame to lose what was
already in place. She asked if AIDEA would view the right-
of-way as an asset. She thought it seemed like an
opportunity.
Mr. Ruaro would need to follow up to determine the status
of the permits and rights of way. He thought it was
something to keep track of.
Representative Johnson thought right of way agreements
would be important to maintain.
Representative Jimmie shared that her staff member was
trained as a research psychologist at Yale University and
had looked at the study Mr. Ruaro had cited on slide 7
relating to suicide. She contended that the quotes on the
slide were from 25 Alaska Native students that had had
shared personal experiences with suicide in their
communities. The students had discussed why the suicides
were happening, which included difficulty asking for help,
loss of culture, feeling isolated, exposure to other
suicides, abuse of drugs and alcohol, and lack of
opportunity. She noted that suicides in her community were
known to come in fives. The study recommendation was to
increase social and cultural connections, teach about
mental health, and make it easier to find help when people
were feeling down. She considered that the presentation's
use of the study to purport that AIDEA would help prevent
suicide intellectually dishonest. She expressed
disappointment.
Mr. Ruaro did not think that was his position. He stressed
that he had meant to convey that jobs could be a positive
factor in whether or not a person committed suicide or felt
badly about their life. He was not saying that AIDEA
prevented suicide.
Representative Jimmie understood that the message in the
presentation was that AIDEA provided jobs and people would
not commit suicide.
Mr. Ruaro expressed that what he was trying to convey was
that there was a positive health benefit from jobs and
resource development jobs particularly. He was not saying
that AIDEA was preventing suicide or that the only factor
in a person's mind was a job. He believed that jobs and
having access to opportunities were important and were a
factor.
Representative Jimmie contended that the presentation was
not about jobs but cited the 400 percent higher suicide
rate for Alaska Native men.
Mr. Ruaro would try to correct the slide if there was a
misstatement or inaccuracy. His position was that people
with good paying jobs and having access to opportunities
were positive for mental health.
Representative Jimmie did not agree.
3:07:02 PM
Representative Tomaszewski understood that there was a cap
on the amount of interest AIDEA could charge on a loan.
Mr. Ruaro responded that in the statutes for the loan
participation program, the interest rate AIDEA could charge
was tied to some benchmarks with an upward adjustment
possible for internal costs. The interest rate was
difficult to move much at all. It was possible to make
minor adjustments when the cost of the funds changed from
year to year.
Representative Tomaszewski asked if the rate worked well or
if it would be helpful to change the interest rates.
Mr. Ruaro replied that the rates generally worked well. He
thought at times the rate could be a little higher to
reflect risk, but it had been a successful program. It did
limit what could be returned as a dividend but worked well
for borrowers and banks.
Representative Galvin appreciated the work of AIDEA. She
had been reading about the importance of graphite and
minerals. She asked if he could talk about anything that
was happening regarding minerals in Alaska or the world.
Mr. Ruaro responded that there were some dynamics at play
that made Alaska's minerals more and more important. He
mentioned China recently banned the export of Antimony to
the United States. Antimony was used to make ammunition. He
thought there was one producing Antimony mine in the
country, an older mine in Idaho. He explained that there
were some dynamics worldwide that would place more demand
on Alaska to produce critical minerals such as Germanium
and others. He noted there were obviously a lot of military
applications. He thought the demand would increase.
Co-Chair Josephson thanked the team from AIDEA.
Co-Chair Josephson reviewed the agenda for the following
meeting.
ADJOURNMENT
3:11:19 PM
The meeting was adjourned at 3:11 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AIDEA - HFIN 02-28-2025 Presentation FINAL.pdf |
HFIN 2/28/2025 1:30:00 PM |