HOUSE BILL NO. 121 "An Act establishing the commercial charter fisheries revolving loan fund, the mariculture revolving loan fund, and the Alaska microloan revolving loan fund and relating to those funds and loans from those funds; and providing for an effective date." 3:08:50 PM Co-Chair Stoltze MOVED to ADOPT CSHB 121(FIN) Work Draft 27-GH1728\X (Kane, 4/1/11). Representative Doogan OBJECTED for purpose of discussion. Vice-chair Fairclough asked for an explanation of the CS. CURTIS THAYER, DEPUTY COMMISSIONER, COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, discussed the changes that appeared in the CS. He relayed that there was a title change that deleted the language "relating to loans made to commercial fisherman under the commercial fishing loan act for product quality, improvements, and energy efficiency upgrades." Section 1 on Page 1 had been deleted from the previous version that would have allowed the Department of Commerce, Community, and Economic Development (DCCED) to give an interest rate reduction to commercial fishing loan borrowers if 50 percent of the loan was spent on product produced or manufactured in Alaska. Language was inserted on Page 3, Line 17 that required an applicant to provide a document to the department from a state financial institution that showed the applicant had been denied a loan or that the loan was contingent upon the applicant receiving a loan from the Alaska Microloan Revolving Loan Fund. Page 3, Line 19 included new language related to the "turndown" provision that an applicant had been denied a loan for the same purpose or a loan from a financial institution was contingent on an applicant receiving a loan from the fund. He explained that there was a turndown provision for the microloan that was mirrored by the charter boat fisheries loan. The floor of the interest rate had been increased from 3 percent to 6 percent for the charter boat fishery program (Page 6, Lines 4 and 14). The total balance of the outstanding charter fisheries loan had been reduced from $300,000 to $200,000 (Page 4, Line 16). Changes to the legislation had been made in consultation with the industry to ensure that the program was not competitive with other financial institutions. The goal was to provide bridge funding between what the private sector was and was not able to finance and to produce economic development for the State of Alaska. There being NO OBJECTION the CS was ADOPTED. SUSAN K. BELL, COMMISSIONER, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, underscored that the legislation had resulted from extensive outreach to the economic advisory council, trade organizations, Alaska Native Claims Settlement Act (ANCSA) corporations, community leaders, the financing community, and other. She relayed that the goal was to help diversify the economy and to facilitate job creation. The department had been made aware of the need for increased access to capital in select areas and industry sectors. The first of three major components included the facilitation of year-round mariculture industry development in coastal communities. She discussed that out of 67 farms that only 25 were currently producing (10 in Southeast and 15 in Southcentral Alaska). The second component was to help commercial charter operators in Southcentral and Southeast Alaska to acquire charter halibut permits that were needed to comply with new federal regulation. She emphasized that the department anticipated over 500 permitees with over 800 applications. The department's objective was to encourage Alaska ownership and to increase the economic benefits of the communities where permit holders resided through a recirculation of the earnings. The third component was to spur small business development through the creation of a microloan program. Alaska was one of the few states without a microloan program and funds could be used for startup business costs, working capital, inventory expansion, etc. She communicated that the programs complimented the state's small business loan programs and provided additional tools to diversify the economy and to sustain economic growth. Representative Costello wondered whether the legislation would compete with the Alaska Commercial Fishing and Agriculture Bank (CFAB). WANETTA AYERS, DIVISION DIRECTOR, ECONOMIC DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, responded that the CFAB lending practices were similar to other private banking institutions and that there had been turndowns for commercial fishing loans in some circumstances. She detailed that borrowers that did not qualify for a CFAB loan would be considered under the loans in the legislation. 3:16:31 PM Representative Wilson asked how many of the states with microloan programs used private banks compared to state financing. Ms. Ayers responded that the legislation was modeled after the Small Business Administration (SBA) Microloan Program and the loans were typically provided by non-governmental organizations such as economic development districts or non-profit community development corporations. Representative Wilson asked whether the loans in the legislation would be operated and funded by the State of Alaska. Ms. Ayers replied in the affirmative. Representative Doogan wondered where commercial charter fishermen had previously obtained loans. Ms. Ayers replied that the loan fund had been proposed to help fishermen due to new federal requirements on limited entry permits. The new requirement presented a barrier to entry that most of the businesses had not faced in the past. She relayed that although a business may qualify for an asset loan that it was unlikely a business would qualify for private financing on a permit because it was a new requirement. Representative Doogan wondered how much a loan would cost. Ms. Ayers replied that the department had heard that the charter halibut permit for a "six pack" license would cost up to $80,000. Representative Guttenberg wondered where the interest of the state would be met and whether the loan was specifically intended to provide funding to people who had been denied by another financial institution. 3:19:53 PM Ms. Ayers responded that the state's interest in providing a loan to a qualified borrower was satisfied by the creation of a greater public good. She relayed that the objective was to concentrate Alaskan ownership to ensure that the economic benefits accrued from the activity would remain in Alaska. She noted that there had been a significant level of non-resident charter operations ownership in Southcentral and Southeast Alaska in the past. Representative Guttenberg wondered about the surety that the debt would be repaid to the state and how the loan requirements differed between the state loan and a private institution loan. Ms. Ayers replied that a private lender would generally have a lower risk tolerance; however, the state would still require the loan to be sufficiently collateralized to secure the loan value. She added that the state typically had a higher risk tolerance and was able to exercise more patience regarding repayment terms in order to meet the public purpose objectives of the fund. Representative Guttenberg was supportive of the goals. He wondered about the history of repayment and default on loans provided by the state. Ms. Ayers replied that the default rate was very low and it was less than one percent in the past fiscal year. Representative Gara supported the legislation. He wondered whether the standards in the loan program were similar those in other loan programs. Ms. Ayers replied that the same best practices that were used on other loans would be used. Representative Gara asked whether overall the state did not lose money on the loan funds as a result of the low default rate. Ms. Ayers replied in the affirmative. She explained that in the past the state had offered extremely patient terms under certain loan funds, such as the Fisheries Enhancement Revolving Loan Fund, and tended to make loans in the commercial fishing industry because historically there had been a lack of private sector financing in the area. The state had helped the fishing industry through some very challenging times and had been able to make modifications and work with borrowers to help them get right-side up on their loans. 3:24:07 PM Representative Gara reiterated his support for the bill. He discussed that another revolving loan fund had been passed the prior year to help small businesses become more energy efficient; however, it was currently unfunded. He hoped that legislators would consider funding the program because private businesses in rural areas did not qualify for Power Cost Equalization (PCE). Co-Chair Stoltze mentioned the Agriculture Revolving Loan Fund. Vice-chair Fairclough discussed the fiscal notes. Co-Chair Thomas thought the DCCED fiscal note related to charter fisheries should be increased to $9 million. He believed the permit for a license was between $80,000 and $100,000 and in order to be in a position to provide loans to those in need that it would be better to increase the available funds. Commissioner Bell replied that the department had looked to make sure the funds were viable at different commercialization levels and explained that the increase to $9 million would expand opportunities to more people in need of financing. Representative Doogan asked for an explanation on the fiscal note notation that specified the capitalization had been reduced from $5 million to $3 million based on clarification of funding source. Ms. Ayers replied that a new source of federal funding that the department had hoped for was not available; therefore a lower capitalization had been recommended. She added that the department would take Co-Chair Thomas's recommendation into account regarding the potential demand for the loan. Representative Doogan asked whether the department had decreased the amount from $5 million to $3 million because they thought the amount was too high. Ms. Ayers replied that the amount had been reduced because the federal funding had not come through. Representative Doogan asked about the reduction to $3 million. Vice-chair Fairclough believed that the department had not wanted to bring forward a fiscal note that was too large. She clarified that Co-Chair Thomas had suggested raising the amount to $9 million to increase access to more people. Representative Doogan wanted to understand the methodology in the number decrease that was reflected on the fiscal note. Representative Wilson asked whether the three fiscal notes from DCCED totaled $8.5 million. Ms. Ayers replied in the affirmative. Representative Wilson asked whether there would be three additional positions created. Ms. Ayers responded that the department had requested one new position. 3:29:38 PM Vice-chair Fairclough wondered whether the fiscal note dated 2/8/2011 that included funding for two full-time positions in the amount of $169,000 had been replaced by a fiscal note dated 3/29/2011 that included funding for one full-time position in the amount of $78,000. Commissioner Bell replied in the affirmative. Vice-chair Fairclough informed the committee that there should be a total of four fiscal notes. Three notes included capital for different funds and one note included funding for one full-time position. Funding for the full- time position was $78,000 in FY 12 and $71,900 in FY 13 through FY 17. Representative Wilson wondered how many fishing loans currently existed. Ms. Ayers replied that currently there was the Commercial Fishing Revolving Loan Fund under which a number of eligible purposes existed and the Fisheries Enhancement Revolving Loan Fund that paid for the Aquaculture Association hatchery Fisheries Enhancement Program. Representative Wilson asked whether there would be a total of five separate funds that included the current funds and those encompassed in the legislation. Ms. Ayers clarified that there were three separate loan funds in the bill that included the mariculture fund, the commercial charter fund, and the microloan fund. She noted that the microloan fund was not specific to fisheries. Representative Wilson asked for verification that DCCED currently administered other loan funds. Ms. Ayers replied in the affirmative. She reiterated that other loans included the Fisheries Enhancement Loan Fund and the Commercial Fishing Revolving Loan Fund that helped users with vessel financing, refinancing, limited entry permits, quota share purchasing, commercial purposes, etc. Representative Wilson surmised that there was currently no federal funding available to help with the programs. Ms. Ayers responded in the affirmative. Co-Chair Stoltze supported the legislation. He stressed that the loan fund helped fisherman in Southeast and Southcentral Alaska that were faced with financial difficulty as a result of an external federal government action. 3:34:26 PM Representative Doogan wondered whether it was a reaction to the "two fish, one fish change". Co-Chair Thomas replied that a permit system had been created in Alaska that displaced a significant number of charter fishermen. He explained that in some circumstances lodges held permits for fishermen that they employed; however, the fishermen were now required to hold an individual permit. He opined that an increase to the base $3 million in the fiscal note was important and that the loan would help bring fishermen back. He discussed that the state loan program had been in existence for a long time and that the default percentage was very low. He relayed that the state was able to sell a permit to another fisherman if the current owner defaulted. Vice-chair Fairclough discussed the proposed revision by Co-Chair Thomas that would change the base amount on the fiscal note related to the Charter Fisheries Revolving Loan Fund from $3 million to $9 million. Representative Wilson wondered why funding could not be met through existing loans. Co-Chair Thomas explained that the loan fund was a new program. Representative Gara communicated that the state's revolving loan funds were well run and that they added jobs, improved the economy, and dealt with distress in the state. He thought that the increase was smart and did not cost the state anything and in the event that the state faced a worse fiscal situation the legislature could consider reducing the amount at that time. Representative Doogan wondered whether the increase would be from $3 million to $9 million on the fiscal note labeled "Allocation: Com Charter Fisheries (RLF)." Vice-chair Fairclough responded in the affirmative. The committee agreed on a revised fiscal note that would increase the Charter Fisheries Revolving Loan Fund to $9 million. Vice-chair Fairclough discussed the fiscal note that capitalized the microloan fund at $2.5 million. Representative Gara wondered whether the fiscal note was sufficient to make a real impact on the community. Ms. Ayers replied that the department believed it was sufficient. 3:38:51 PM Representative Gara remarked that the number seemed small. Vice-chair Fairclough pointed to the fiscal note that capitalized shellfish mariculture at $3 million. Representative Wilson asked how long the money would be allocated for the mariculture loan before the department would reassess whether other non-financial needs were more prevalent. Ms. Ayers replied that DCCED monitored new loan funds to determine how quickly the fund was subscribed and would then make determinations. She highlighted that proper outreach to potential users was important when a new fund was available. There was at least one new loan fund that the department was currently monitoring. New funds were typically given several years before a serious determination was made. Representative Wilson wondered whether DCCED would provide a report to the legislature and potentially recommend the transfer of money from one program to another if the department had determined that a loan was not working. She noted that sometimes businesses were not successful for non-financial reasons. She asked whether the department had ever turned any loans back in. Ms. Ayers replied that she would need to do research on turning back capital. She believed that it was more likely that in cases such as commercial fisheries that the fund had given back through the successful funding of other activities. Vice-chair Fairclough discussed the fiscal note that included funding for one full-time position. Representative Doogan asked for an explanation of the $2,400 capital outlay item listed in FY 12. Ms. Ayers responded that the allocation was related to office equipment, furniture, and other items associated with the creation of a new position. Representative Doogan asked for information regarding the microloan funding source that began with $5,300 in FY 12 and was reduced to $3,500 in FY 13 through FY 17. Ms. Ayers replied that the incremental costs were allocated between the two funds [Micro-Loan Fund and the Commercial Charter Fisheries Fund] in the first year and was carried forward in future years. Representative Doogan wondered whether the full-time position would be allocated to two different functions. Ms. Ayers responded that he was essentially correct, but that many individuals would be involved in the entire lending process. She added that DCCED had allocated the costs within the confines of the fiscal note. 3:43:46 PM Representative Doogan wondered why the new position had not been allocated to Mariculture Revolving Loan Fund as well. Ms. Ayers responded that based on the potential volume of loans DCCED believed it could accommodate the fund with current staff. Representative Edgmon wondered what interest rate each program would offer if the programs took effect that day. Commissioner Bell replied that the Commercial Charter Fisheries Revolving Loan Fund would have a floor of 6 percent and a ceiling of 10.5 percent. The Shellfish Mariculture Revolving Loan Fund would have a floor of 5 percent and a ceiling of 9 percent. The Microloan Revolving Loan Fund would have a floor of 6 percent and a ceiling of 8 percent. She referred to the language "prime plus two" in the bill that would currently have been 5.25 percent and was close to market rates. The department had tried to create programs that filled public purpose, that recognized communication with the industry interested in utilizing the loans, and to find an appropriate comfort level within the banking community. KEN L. LARSON, PRINCE WILLIAM SOUND CHARTER BOAT ASSOCIATION, FAIRBANKS (via teleconference), opposed the bill in its present form. He had operated a charter boat in Valdez beginning in 1984. He discussed that economic development in Alaska was on a downhill slide and the implementation of GHLs [Guideline Harvest Limit] and charter halibut permits [CHP] had wiped out 35 percent to 40 percent of operators. He believed that the one fish 37 inch rule in Southeast was the "death knell" for charters in the area. Operators in Southcentral had been told that they would be limited to the one fish rule under the catch- sharing plan the following summer. He discussed that Alaska Department of Fish and Game figures indicated that non- resident licenses had dropped 18 percent from 2006 to 2010 and the money generated from the area had dropped close to 12 percent. He stressed that the state had lost several hundred million dollars since 2006 and that the decline had continued to the Alaska tourism industry. He believed that the state was establishing a double standard. He discussed the CFAB loan program had been instituted when the IFQ's for halibut long liners were put in place in 1995 and were currently at a 3 percent to 4 percent loan rate. The fisherman had been forced into a mold in a fishery where they made up 10 percent to 15 percent of the total catch. He wondered why the fisherman that wanted to purchase CHPs could not be included in the CFAB program. He relayed that it was difficult to obtain loans and that the state should tap into the existing CFAB program instead of setting up a new program. 3:50:32 PM Representative Wilson asked whether Mr. Larson believed that his recommendations would open up the bill for utilization by a broader group of operators. Mr. Larson responded that he thought it would help. He explained that the problem was that many fishermen were looking for a boat and a permit and that $100,000 would not come close to the costs needed. Representative Wilson remarked that the bill had been changed to $200,000. Vice-chair Fairclough explained that a CS had been adopted and that one of the changes the Commercial Charter Fisheries Revolving Loan Fund was an increase to $200,000. Mr. Larson believed that the increase would help significantly. Vice-chair Fairclough asked Mr. Larson whether he maintained his opposition to the bill. Mr. Larson opined that the new program was unnecessary because it would duplicate the current CFAB program. Representative Doogan referenced Page 4, Lines 15-16 that included the increase to $200,000. Vice-chair Fairclough read from Page 4, Lines 15-16: "The total balances outstanding on loans made to a borrower under AS 16.10.805 may not exceed $200,000." Mr. Larson asked about Page 3, Line 31 that included language that a loan would not exceed $100,000. Vice-chair Fairclough replied that the language was referring to a different section of the code. Mr. Larson queried whether the available amount was $200,000 on a charter halibut permit, boat, or engine upgrade. Vice-chair Fairclough responded that the administration would provide clarity at the end of the public hearing. 3:54:22 PM PATRICK BOOKEY, SR., LUCK OF THE IRISH CHARTERS, NORTH POLE (via teleconference), was opposed to the current form of the legislation. He was a longtime Alaskan and worked as a charter operator. He expressed that 35 percent of the charter operators had been lost under the current charter halibut permit and that operators were the smallest user group. He was concerned that private boaters would still be allowed two fish and that the implementation of the one fish rule would put charter operators out of business. He thought the language in the bill related to the amount available under the loan was confusing. He was troubled by the requirement that an operator must have a physical license or residence in the state for 24 months in order to qualify for the program. He thought the CFAB program was better because the interest rates under the bill were no better for new fishermen. He explained that his boat and 12-pack permit amounted to over $300,000 and that a buyer would not receive enough funding under the proposed loan. Vice-chair Fairclough noted that Mr. Bookey had been referring Page 3, Lines 22-25. MARK STEARNS, ALASKAN WOOD MOULDING, ANCHORAGE (via teleconference), spoke in support of the legislation. He believed that the microloan program was broadly based and would help a variety of business owners. He had known small businesses that had been turned down for loans despite good credit. He believed that the small program would help to bridge the gap during challenging times. He thought the bill was necessary and would be extremely helpful to small businesses that created jobs and were the backbone of Alaskan communities. 4:00:40 PM RODGER PAINTER, PRESIDENT, ALASKA SHELLFISH GROWERS ASSOCIATION, JUNEAU, spoke in favor of the bill. He thanked the governor for introducing the legislation. He appreciated a loan fund specifically for small businesses because there was a tendency to focus on large scale economic development. The mariculture loan addressed the association's revenue lag from three to eight years. The bill was structured recognize the problem and would encourage the development of new shellfish farms in rural Alaska. RICK HARRIS, EXECUTIVE VICE PRESIDENT, SEALASKA CORPORATION, JUNEAU, referred to written testimony that had been provided (copy on file). The corporation was in support of the legislation and was specifically interested in the mariculture loan. He discussed that Southeast Alaska had been experiencing large outmigration and high unemployment. SEALASKA had reviewed Department of Labor statistics from 1996-2034 that showed that Ketchikan would lose 36 percent of its population, Prince of Wales would lose 62 percent, Skagway would lose 56 percent, and Wrangell would lose 56 percent. The corporation board of directors had decided that they would begin rebuilding jobs in rural communities one person at a time. He discussed the corporation's subsidiary called Haa Aani that was focused on economic development in Southeast. Southeast offered a range of resources that were necessary for the mariculture; however, there was no capital available for new businesses. He discussed other items that were necessary for oyster farmers. He believed that the bill would remove oyster farmers' lack of financing, which represented their number one obstacle. He hoped that the $3 million would be available quickly in order to help put people to work. 4:07:31 PM PAUL FUHS, PAC ALASKA, JUNEAU, supported the legislation. He expressed that the bill provided good mid-level economic development in necessary areas that represented substantial revenue and supported numerous jobs throughout the year. He shared a gooey duck with the committee and explained that it took approximately six to seven years for the shellfish to reach maturity: during the time businesses did not bring in revenue and experienced costs such as leases on the tidelands. Private banks would not provide financing; therefore, a state loan program was necessary. He explained that the reason for a new loan program was that existing programs were fully subscribed. He noted that default rates on state loans were historically very low. The farms needed start-up capital and would then become self-sustaining. Representative Gara wondered why gooey ducks were not for sale in the supermarket. Mr. Fuhs replied that the primary market was overseas and that most people in America did not know how to cook them. 4:11:56 PM Vice-chair Fairclough CLOSED public testimony. Representative Doogan asked for verification of the two financial limits on the loan. The first was that the loan could not exceed over $100,000 per year. The second limit was that the loan could not total more than $200,000 per year. Ms. Ayers responded in the affirmative. Representative Gara asked whether the department would reevaluate the amount designated to the microloan program. He thought that the allocation of $2.5 million was too low. Commissioner Bell responded that DCCED had initially thought that the program could have been supplemented with federal funding. The department wanted to make sure it was bringing forward loans that were viable and functional. The loan was mirrored after the SBA program which designated $35,000 per individual or $70,000 for two or more parties. The department's research had indicated that the loan activity was less than the amounts in many circumstances. She explained that loans may be in the range of $15,000 to $20,000 and that not all recipients would reach the cap. Representative Wilson wondered why the interest rate for the charter fisheries loan was 6 percent and why the state could not use the other program that currently existed [CFAB]. Ms. Ayers replied that CFAB could currently lend in the categories addressed under the legislation. She explained that an individual would not need to take advantage of the loan under the bill if they were successful in obtaining financing through CFAB. Representative Wilson wondered why a person would not utilize the CFAB program instead of the loan program proposed under the legislation. Ms. Ayers responded that she was not versed in the CFAB lending program; however, she would have been surprised to find that CFAB was lending below the current prime rate. She would need to verify the information from the charter operators that testified earlier in the meeting. 4:17:28 PM Commissioner Bell notified the committee that DCCED had consulted with CFAB and other private institutions and there had been no objection to the introduction of the new programs. Representative Wilson requested verification on the current CFAB interest rate. She communicated that she had no objection to the loans, but wanted to make certain that the loan money would be accessible. Ms. Ayers replied that she would provide the information to the committee. She added that Richard Yamada with the Alaska Charter Association had been unable to stay to testify; however, he had testified on the association's support of the bill in the past. Representative Wilson expressed her concern that the 6 percent interest rate may have been too high for cash strapped businesses. She agreed that the capital was important. Ms. Ayers answered that the 6 percent floor had been reached in consultation with the Alaska Banking Association. She elaborated that the state did not want to offer a rate that was significantly below market that would disadvantage the private lenders. Representative Wilson ascertained that the reason for the loan program was to fill a niche that was not there; however, the niche was only filled at an interest rate of 6 percent or above. Ms. Ayers answered the state was operating as a lender of last resort and that private banking institutions would not approve of such low interest rates in a category that they would be likely to lend in. The terms of the loan fund had been discussed and vetted with the charter association, National Oceanic and Atmospheric Association (NOAA), and with banking organizations. The department was always on the lookout for gaps that it could fill to ensure access to capital, to facilitate new business entrants, and to increase resident participation. 4:21:22 PM Representative Costello wondered why there was a 24-month residency requirement in order to qualify for the program. Commissioner Bell responded that the residency requirement was identical to those in existing revolving loan funds. Co-Chair Thomas told a personal story about his son who had received a boat and permit loan from the state after being turned down by a bank. Representative Gara wondered what harm there was in offering lower interest rates to people who had been denied a loan by a private bank. He found it troublesome that the opinion of the private banks mattered. Ms. Ayers replied that the department did not want a rate that was unsupported by other market dynamics. The department thought that a 6 percent loan was viable for applicants that could meet the eligibility requirements. She highlighted halibut charters in particular where the state was dealing with a changing federal fisheries management regime and a new barrier to entry. New entrants would often be eligible for private financing on a boat, but may need a state loan for the permit. The department felt that there would be a good balance between the private lenders and the state loan programs and that it was not a situation in which the banking industry was dictating the loan limits. All of the interest floors and ceilings listed in the legislation were within the historical norms. Representative Gara wondered why the state would impose a 6 percent floor if the program could be solvent at a lower rate such as 4 percent. He believed that a bank's choice to not offer a loan should not impact the interest rate that the state offered. Representative Doogan noted that the phrase "lender of last resort" bothered him considerably. He relayed that the presumption in the statement was that an applicant did not qualify for a loan through any normal commercial standard which put the state in a position of providing loans to substandard borrowers. He thought the expectation that the default number would be low was questionable. He opined that the items in combination with the argument for a relatively high interest floor did not sound like items that would lead to a successful banking operation. Commissioner Bell replied that the term sounded dramatic, but it was a term that was commonly used in commercial and public financing. She reminded the committee that the less than 1 percent default rate was very low. The department was had financing staff that reviewed loan applications and collateral and were in contact with the borrowers regarding their payments. She emphasized the professionalism of the organization and that DCCED had looked for the need and terms it could offer and prided itself on its increased outreach and vetting. She stressed there were many reasons a bank may not loan to a borrower that were not based on borrower risk, including the makeup and weighting of a bank's portfolio and lending limits. 4:28:42 PM Co-Chair Thomas discussed that he had paid as high as 17 percent on a commercial fisheries related loan. He had seen gillnet permits that had been bought at $150,000 to $180,000 drop to $30,000. He explained that some had defaulted but that the state rewrote the loans when possible. He had seen people get into trouble through no fault of their own and that people had bought permits that were priced too high. He relayed that permits for sale were popular and would be bought. He supported the loans under the bill and did not think that 6 percent was unfair. He told a personal story about fishing. Representative Doogan was impressed by the testimony regarding the default rates. He was interested to see how the unique aspects of the bill would work out. Representative Edgmon supported the legislation. He provided perspective that the committee had passed a bill that gave Alaska Industrial Development and Economic Association (AIDEA) the authority to work with a public sector partnership and allowed them to bond up to $400 million per year. He emphasized that the funding to AIDEA had been large and that comparatively speaking the current bill represented "small potatoes." He stressed that the state had provided assistance to larger industry and that the state's ability to provide small businesses better terms than those offered by banks would help to provide them with incentives. Co-Chair Stoltze MOVED to report CS HB 121(FIN) out of committee with individual recommendations and the accompanying fiscal notes. CSHB 121(FIN) was REPORTED out of committee with a "do pass" recommendation and with three new fiscal notes by the Department of Commerce, Community, and Economic Development and one new fiscal note by the House Finance Committee for the Department of Commerce, Community, and Economic Development. 4:34:41 PM AT EASE 4:42:41 PM RECONVENED