HOUSE BILL NO. 121 "An Act relating to the examinations, board, loans, records, and lobbying contracts of the Alaska Commercial Fishing and Agriculture Bank; and providing for an effective date." 8:38:09 AM Co-Chair Stoltze discussed the CS before the committee. He reported one minor change replacing language regarding loan qualifications. The language was much softer than the earlier version and mirrored language from the Alaska State Constitution regarding sustainability. Vice-Chair Neuman MOVED to ADOPT the proposed committee substitute for HB 121(FIN), Work Draft (28-LS0491\O). There being NO OBJECTION, it was so ordered. Representative Gara MOVED to ADOPT Amendment 1. Page 5, following line 10: Insert a new bill section to read: "* Sec. 2. AS 44.81.215 is amended by adding a new subsection to read: (b) Before making a loan under this section, the board must find that the loan will not result in the displacement of an existing or planned Alaskan-owned business." Renumber the following bill sections accordingly. Page 7, line 26: Delete "sec. 7" Insert "sec. 8" Page 7, line 28: Delete "sec. 7" Insert "sec. 8" Representative Wilson OBJECTED for discussion. Representative Gara explained that HB 121 expanded Commercial Fishing and Agricultural Bank's (CFAB) ability to loan to businesses owned by persons and corporations outside of Alaska. Much of CFAB's activity was related to Alaskan-owned businesses. He stressed the importance of Amendment 1 which would require the CFAB board to determine whether or not a loan would displace an existing or planned Alaskan-owned businesses prior to making a loan. 8:42:08 AM LELA KLINGERT, COMMERCIAL FISHING AND AGRICULTURE BANK (CFAB), ANCHORAGE (via teleconference), asked for clarification about the amendment. Representative Gara read his amendment and indicated that it addressed the new sections on non-Alaskan businesses. Ms. Klingert replied that the board was not typically involved in the credit process. She expressed logistic concerns reporting that the board only met about five times a year. She also stated her uncertainty about how the board would make appropriate determinations. 8:43:57 AM Representative Holmes commented that although she liked the intent of the amendment she did not think it set forth a feasible standard from which a bank could make a determination. She opposed the amendment. Vice-Chair Neuman stated that many lodges up and down the Susitna River were owned by out-of-state and out-of-country owners. He liked the amendment and believed CFAB was supported under Alaska Statute as the original intent. Representative Thompson liked the intent of the amendment, but did not understand how to define "planned" and apply it in the loan approval process. 8:45:40 AM Representative Gara MOVED to AMEND Amendment 1. He wanted to remove the words "or planned" from line 5. There being NO OBJECTION, it was so ordered. A roll call vote was taken on the motion to adopt Amendment 1 as amended. IN FAVOR: Wilson, Costello, Edgmon, Gara, Guttenberg, Neuman, Thompson, Austerman, Stoltze OPPOSED: Holmes, Munoz The MOTION PASSED (9/2). Amendment 1 as AMENDED was ADOPTED. 8:47:44 AM Representative Gara MOVED to ADOPT Amendment 2. Page 1, following line 4: Insert a new bill section to read: "* Section 1. AS 44.81.020(a) is amended to read: (a) The bank shall be governed by a board of directors consisting of seven to nine natural persons. The number is determined by the bank's bylaws. Two board members shall be appointed by the governor of the state. The other board members shall be elected by the members of the bank as provided in the bank's bylaws, except that at least one of the elected board members must be a resident farmer. The board members appointed under this section must be residents of the state and meet the requirements of AS 39.05.100." Page 1, line 5: Delete "Section 1" Insert "Sec. 2" Renumber the following bill sections accordingly. Page 7, line 26: Delete "sec. 7" Insert "sec. 8" Page 7, line 28: Delete "sec. 7" Insert "sec. 8" Representative Wilson OBJECTED. Representative Gara reported that there was a statute on the books that required board members on state boards to be Alaska residents. He furthered that there was ambiguity whether or not CFAB was a state bank. He explained that the purpose of the amendment was to clarify that CFAB board members were required to be residents of Alaska. 8:48:39 AM Ms. Klingert stated that she did not see an issue with the amendment. She reported that when CFAB made a loan it adhered to the statutes by lending only to Alaska residents. She indicated that members who moved out of the state after the fact maintained their membership. Given that CFAB was a cooperative she suggested that it was appropriate for members to be able to elect who they wanted to represent them and that they would potentially be impaired to do so by having less of a selection to choose from with the amendment. Co-Chair Austerman suggested that if the amendment was incorporated into the Alaska Statutes it would be clear that only Alaska residents would be eligible for election to CFAB's board of directors. He asserted that the issue was not complicated. Co-Chair Stoltze remarked that fishermen who had moved to Seattle rationalized the expansion in the bill by expressing that they were still Alaskans in their hearts. He noted approval from other committee members. He asked Ms. Klingert whether or not she was advocating moving out of state. 8:51:32 AM Ms. Klingert replied that other permit holders resided outside of Alaska. She agreed with the statement. Representative Guttenberg clarified that a board member had to be an Alaska resident at the time of their appointment. He remarked that it was pretty clear and simple. Co-Chair Stoltze stated that he initially thought he was going to vote against the bill but after talking with commercial fishermen he did not see it as deleterious. Co-Chair Austerman interjected that the bill did not just apply to commercial fishermen. He stressed that it pertained to all people making applications with CFAB. Co-Chair Stoltze acknowledged Representative Austerman's point. 8:53:21 AM Vice-Chair Neuman asked if the intent was for board members to be Alaska residents. He further inquired whether or not members who moved out of state would remain eligible for reappointment. Ms. Klingert replied that the terms were three years for both the board members elected by the membership and two governor-appointed delegates. 8:54:16 AM Vice-Chair Neuman asked whether or not board members were subject to legislative approval. Ms. Klingert replied in the negative. Vice-Chair Neuman assumed that board members who moved out of state would not be eligible for reappointment. Representative Munoz asked about the current requirements for board membership and about how many were Alaska residents. Ms. Klingert replied that aside from the governor-appointed seats, one board seat had to be filled by a farmer, the other two seats had to be filled with bank members who were not involved in litigation with the bank. Representative Munoz asked whether or not there were any non-residents on the board currently. Ms. Klingert stated that to her knowledge the board only consisted of Alaska residents. 8:55:56 AM Representative Gara remarked that the law would not be interpreted any differently from the law that already existed for all other boards. He believed that the current law was interpreted to mean that board members had to be Alaska residents and if their status changed they would lose their eligibility. He reiterated that the amendment guaranteed clarity that the law applied to CFAB board members. Representative Wilson WITHDREW her OBJECTION. There being NO further OBJECTION, Amendment 2 was ADOPTED. Representative Costello pointed to the fiscal impact note from Department of Commerce, Community and Economic Development including $5.7 thousand in FY 16 and FY 19 for travel and a change in revenue of $23.5 thousand in FY 15 and FY 19. 8:57:59 AM Vice-Chair Neuman MOVED to REPORT CSHB 121(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 121(FIN) was REPORTED out of committee with "no recommendation" and with one new fiscal impact note from the Department of Commerce, Community and Economic Development. 8:58:29 AM AT EASE 8:59:10 AM RECONVENED