00 CS FOR SENATE BILL NO. 23(L&C) 01 "An Act relating to development project financing by the Alaska Industrial 02 Development and Export Authority; relating to the dividends from the Alaska 03 Industrial and Export Authority; authorizing the Alaska Industrial Development and 04 Export Authority to provide financing and issue bonds for a liquefied natural gas 05 production system and natural gas distribution system; and providing for an effective 06 date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 44.88.010(a) is amended to read: 09 (a) The legislature finds, determines, and declares that 10 (1) there exist areas of the state in which seasonal and nonseasonal 11 unemployment exists; 12 (2) this unemployment is a serious menace to the health, safety, and 13 general welfare, not only to the people in those areas, but also to the people of the 01 entire state; 02 (3) the state lacks the basic manufacturing, industrial, energy, export, 03 small business, and business enterprises and the other facilities referred to in this 04 subsection necessary to permit adequate development of its natural resources and the 05 balanced growth of its economy; 06 (4) the establishment and expansion of industrial, manufacturing, 07 energy, export, small business, and business enterprises in the state and the other 08 facilities referred to in this subsection are essential to the development of the natural 09 resources and the long-term economic growth of the state, and will directly and 10 indirectly alleviate unemployment in the state; 11 (5) the expansion of export trade is vital to the health and growth of the 12 state's economy; 13 (6) many state businesses could benefit from additional financial and 14 technical assistance with respect to the exportation of their products and services; 15 (7) the Export-Import Bank of the United States has been mandated by 16 the Export-Import Bank Act Amendments of 1983 to provide technical assistance and 17 export financing support to small businesses in cooperation with state export finance 18 agencies; 19 (8) Alaska-based exporters can be effectively assisted through the 20 establishment, as part of the Alaska Industrial Development and Export Authority, of 21 an export financing program designed to work with the Export-Import Bank of the 22 United States and other federal, state, and private institutions; 23 (9) the achievement of the goal of full employment, and of 24 establishment and continuing operation and development of industrial, manufacturing, 25 energy, export, small business, and business enterprises in the state will be accelerated 26 and facilitated by the creation of an instrumentality of the state with powers to incur 27 debt, to own and operate facilities, to make and insure loans to finance and to assist 28 private lenders to make loans to finance the establishment, operation, and development 29 of industrial, manufacturing, energy, export, small business, and business enterprises; 30 (10) it is in the public interest to promote the prosperity and general 31 welfare of all citizens of the state by 01 (A) stimulating commercial and industrial growth and 02 expansion by encouraging an increase of private investment by banks, 03 investment houses, insurance companies, and other financial institutions, 04 including pension and retirement funds, to help satisfy the need for economic 05 expansion; 06 (B) encouraging the production of raw materials and goods for 07 export, the expansion of exports and raw materials and goods, and the 08 rendering of services abroad by residents of the state through the establishment 09 of a program that provides financial assistance in cooperation with federal, 10 state, and private institutions for these purposes in the form provided in this 11 chapter; 12 (C) creating the Alaska Industrial Development and Export 13 Authority with the powers necessary to accomplish the objectives stated in this 14 paragraph, including the power to issue taxable and tax-exempt bonds, [AND 15 TO] acquire ownership interests in projects, and provide development 16 project financing as provided in this chapter; 17 (11) it is in the state's interest to import private capital to create new 18 economic activity which would not otherwise take place in the state. 19 * Sec. 2. AS 44.88.070 is amended to read: 20 Sec. 44.88.070. Purpose of the authority. The purpose of the authority is to 21 promote, develop, and advance the general prosperity and economic welfare of the 22 people of the state [ALASKA], to relieve problems of unemployment, and to create 23 additional employment by 24 (1) providing various means of financing and means of facilitating the 25 financing, in cooperation with federal, state, and private institutions, of industrial, 26 manufacturing, export, small business, and business enterprises and the other facilities 27 referred to in AS 44.88.010(a) in the state; 28 (2) owning and operating or providing development project 29 financing for the enterprises and other facilities described in AS 44.88.172; 30 (3) fostering the expansion of exports of [ALASKA] goods, services, 31 and raw materials of the state; 01 (4) cooperating and acting in conjunction with other organizations, 02 public and private, the objects of which are the promotion and advancement of export 03 trade activities in the state; 04 (5) establishing a source of funding credit guarantees and insurance, 05 not otherwise available, to support export development; 06 (6) providing and cooperating or participating with federal, state, and 07 private institutions to provide actual and potential state [ALASKA] exporters, 08 particularly small- and medium-sized exporters, with financial assistance in support of 09 export transactions. 10 * Sec. 3. AS 44.88.080 is amended to read: 11 Sec. 44.88.080. Powers of the authority. In furtherance of its corporate 12 purposes, the authority has the following powers in addition to its other powers: 13 (1) to sue and be sued; 14 (2) to have a seal and alter it at pleasure; 15 (3) to make and alter bylaws for its organization and internal 16 management; 17 (4) to adopt regulations governing the exercise of its corporate powers; 18 (5) to acquire an interest in a project as necessary or appropriate to 19 provide financing for the project, whether by purchase, gift, or lease; 20 (6) to lease to others a project acquired by it for the rentals and upon 21 the terms and conditions the authority may consider advisable, including, without 22 limitation, provisions for options to purchase or renew; 23 (7) to issue bonds and otherwise to incur indebtedness, in accordance 24 with AS 44.88.090, in order to pay the cost of a project or development projects or in 25 order to provide money for the authority's purposes under this chapter; the authority 26 may also secure payment of the bonds or other indebtedness as provided in this 27 chapter; 28 (8) to sell, by installment sale or otherwise, exchange, donate, convey, 29 or encumber in any manner by mortgage or by creation of any other security interest, 30 real or personal property owned by it, or in which it has an interest, including a 31 project, when, in the judgment of the authority, the action is in furtherance of its 01 corporate purposes; 02 (9) to accept gifts, grants, or loans from, and enter into contracts or 03 other transactions regarding them, with a federal agency or an agency or 04 instrumentality of the state, a municipality, private organization, or other source; 05 (10) to deposit or invest its funds, subject to agreements with 06 bondholders; 07 (11) to enter into contracts or agreements with respect to the exercise 08 of any of its powers, and do all things necessary or convenient to carry out its 09 corporate purposes and exercise the powers granted in this chapter; 10 (12) to purchase or insure loans to finance the costs of manufacturing, 11 industrial, and business enterprise projects; 12 (13) to enter into loan agreements with respect to one or more projects 13 upon the terms and conditions the authority considers advisable; 14 (14) to acquire, manage, and operate projects as the authority considers 15 necessary or appropriate to serve a public purpose; 16 (15) to assist private lenders to make loans to finance the costs of 17 projects through loan commitments, short-term financing, or otherwise; 18 (16) to accept gifts, grants, or loans from a federal agency, from an 19 agency or instrumentality of the state or of a municipality, or from any other source; 20 (17) to enter into contracts or other transactions with a federal agency, 21 with an agency or instrumentality of the state or of a municipality, or with a private 22 organization or other entity consistent with the exercise of any power under this 23 chapter; 24 (18) to facilitate the expansion of a secondary market for the resale of 25 federally or commercially insured loans made to finance the costs of projects in the 26 state [ALASKA] held by federal and state chartered financial institutions or by the 27 Alaska Commercial Fishing and Agriculture Bank; 28 (19) to charge fees or other forms of remuneration for the use or 29 possession of the projects described in (14) of this section in accordance with the 30 agreements described in (11) and (17) of this section, other agreements pertaining to 31 the projects, covenants, or representations made in bond documents pertaining to the 01 projects, or regulations of the authority pertaining to the projects; 02 (20) to participate with government or private industry in programs for 03 technical assistance, loans, technology, transfer, or other programs related to the 04 exportation of [ALASKA] goods, services, or raw materials of the state with respect 05 to its financing activities; 06 (21) to provide export finance training for office staff and other 07 individuals involved in export finance assistance, including the training sessions that 08 may be provided by the United States Export-Import Bank or other organizations; 09 (22) to coordinate to the maximum extent possible its efforts to 10 promote the export of [ALASKA] goods, services, and raw materials of the state with 11 programs and goals of the United States Export-Import Bank, the International Trade 12 Administration of the United States Department of Commerce, the Foreign Credit 13 Insurance Association, and other private and public programs designed to provide 14 export assistance and export-related financing; 15 (23) to guarantee loans related to qualified export transactions under 16 regulations adopted by the authority; 17 (24) to provide financing assistance, in cooperation with federal, state, 18 and private institutions, as provided in this chapter for small business enterprises; 19 (25) to make cooperative agreements with the Department of 20 Transportation and Public Facilities, acting on behalf of the international airports 21 revenue fund established under AS 37.15.430, to acquire, equip, operate, maintain, 22 construct, or install facilities that will enhance the competitiveness of the international 23 airports, including a cooperative agreement to lend amounts from the international 24 airport revenue fund to finance the development or improvement of utilities serving 25 the airports; 26 (26) to screen potential applicants for a new business incentive grant 27 and recommend the award of the grants under AS 45.81.020; 28 (27) to oversee the administration of outstanding grants awarded by the 29 Alaska Science and Technology Foundation under former AS 37.17.010 - 37.17.110; 30 (28) to oversee the administration of outstanding BIDCO assistance 31 grants and loans made by the Alaska Science and Technology Foundation under 01 former AS 37.17.200 - 37.17.390; 02 (29) to guarantee loans made to the Alaska Insurance Guaranty 03 Association (AS 21.80.040), with these guarantees limited to loans necessary to make 04 the association financially able to meet cash flow needs up to a maximum outstanding 05 principal balance at any time of $30,000,000; 06 (30) with legislative approval and notwithstanding AS 44.88.060, to 07 purchase from the Alaska Energy Authority as an investment of the revolving fund, 08 loans of the power project fund established under AS 42.45.010; 09 (31) to consider, when exercising the powers listed in this section, the 10 interests of local governments impacted by the authority's activities to share in the 11 benefits of these activities, with appropriate consideration of the authority's ability to 12 meet debt obligations, issue new debt, and fulfill the authority's purposes; 13 (32) to provide development project financing for all or a portion 14 of the cost of a development project as provided in AS 44.88.172. 15 * Sec. 4. AS 44.88.088(a) is amended to read: 16 (a) The authority shall adopt a policy for payment of dividends [A 17 DIVIDEND] to the state each fiscal year from the revolving fund and from the 18 sustainable energy transmission and supply development fund. [THE AMOUNT 19 OF THE DIVIDEND FOR A FISCAL YEAR MAY NOT BE LESS THAN 25 20 PERCENT NOR MORE THAN 50 PERCENT OF THE NET INCOME OF THE 21 AUTHORITY FOR THE BASE FISCAL YEAR. IN NO EVENT, HOWEVER, 22 SHALL THE DIVIDEND FOR A FISCAL YEAR EXCEED THE TOTAL 23 UNRESTRICTED NET INCOME OF THE AUTHORITY FOR THE BASE FISCAL 24 YEAR.] The dividends [DIVIDEND] for a fiscal year shall be made available by the 25 authority before the end of that fiscal year. The authority shall notify the 26 commissioner of revenue when the dividends [DIVIDEND] for a fiscal year are [IS] 27 available for appropriation. The amount of the dividend payable from the 28 (1) revolving fund of the authority for a fiscal year may not be less 29 than 25 percent nor more than 50 percent of the net income of the revolving fund 30 for the base fiscal year; however, in no event, shall the dividend payable from the 31 revolving fund for a fiscal year exceed the total unrestricted net income of the 01 revolving fund for the base year; 02 (2) sustainable energy transmission and supply development fund 03 of the authority for a fiscal year may not be less than 25 percent nor more than 04 50 percent of the net income of the sustainable energy transmission and supply 05 development fund for the base fiscal year; however, in no event, shall the 06 dividend payable from the sustainable energy transmission and supply 07 development fund for a fiscal year exceed the total unrestricted net income of the 08 sustainable energy transmission and supply development fund for the base year. 09 * Sec. 5. AS 44.88.088(b) is amended to read: 10 (b) In this section, 11 (1) "base fiscal year" means the fiscal year ending two years before the 12 end of the fiscal year in which the payment is made; 13 (2) "net income" means the [AUTHORITY'S] change in net position, 14 or the equivalent term under generally accepted accounting principles, of the 15 revolving fund or the change in net position of the sustainable energy 16 transmission and supply development fund [ASSETS] as set out in the audited 17 financial statements of the authority for the base fiscal year, excluding amounts 18 attributable to intergovernmental transfers, capital contributions, grants, or impairment 19 losses on development projects financed under AS 44.88.172; 20 (3) "unrestricted net income" means the [AUTHORITY'S] unrestricted 21 change in net position, or the equivalent term under generally accepted 22 accounting principles, of the revolving fund or the sustainable energy 23 transmission and supply development fund [ASSETS] as set out in the audited 24 financial statements of the authority for the base fiscal year, excluding amounts 25 attributable to intergovernmental transfers, capital contributions, grants, or impairment 26 losses on development projects financed under AS 44.88.172. 27 * Sec. 6. AS 44.88.105(d) is amended to read: 28 (d) The chairman of the authority shall annually, not [NO] later than 29 January 2, certify in writing to the governor and the legislature the amount, if any, 30 required to restore a capital reserve fund to the capital reserve fund requirement. The 31 legislature may appropriate to the authority the amount certified by the chairman of 01 the authority. The authority shall deposit the amounts appropriated under this 02 subsection during a fiscal year in the proper capital reserve fund. Nothing in this 03 section creates a debt or liability of the state. In this subsection, "capital reserve fund" 04 means a capital reserve fund that 05 (1) is created under this section on or before January 1, 1989; 06 (2) secures refunding bonds if the refunding bonds are issued to refund 07 bonds that are secured by a capital reserve fund created under this section on or before 08 January 1, 1989; [OR] 09 (3) secures bonds issued on or after August 11, 1993, for a power 10 transmission intertie; or 11 (4) secures bonds issued on or after July 1, 2013, for a qualified 12 energy development the authority finances under AS 44.88.650 - 44.88.690. 13 * Sec. 7. AS 44.88.172(a) is amended to read: 14 (a) The economic development account is established in the revolving fund. 15 The economic development account consists of money or assets appropriated, loaned, 16 or transferred to the authority for deposit in the account and other money or assets 17 deposited in the account by the authority. While money is on deposit in the economic 18 development account, the money may be used [ONLY] to finance, acquire, manage, 19 and operate development projects that the authority intends to own and operate or to 20 provide development project financing for development projects the authority 21 does not intend to own and operate. In this subsection, 22 (1) "operate" includes operation directly by the authority, by an agent 23 of the authority, or by a person as determined under an agreement between the 24 authority and other owners of the development project; 25 (2) "own" includes ownership by the authority of all or a percentage of 26 a development project or all or a percentage of the shares of a corporation or 27 membership in a limited liability company for which the development project is the 28 sole asset of the corporation or limited liability company. 29 * Sec. 8. AS 44.88.172 is amended by adding a new subsection to read: 30 (d) The authority shall adopt regulations to implement this section. The 31 regulations may include provisions on the application process, application fees, 01 interest rates, other charges and fees, terms, conditions, security, and other 02 requirements for development projects the authority undertakes or development 03 project financing the authority provides. 04 * Sec. 9. AS 44.88.900 is amended by adding a new paragraph to read: 05 (17) "development project financing" means the authority making a 06 direct loan or issuing a guarantee of a loan, note, debt, or other financial obligation to 07 fund or assist in funding a development project the authority does not intend to own 08 and operate. 09 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 LEGISLATIVE APPROVAL; FINANCING OF LIQUIFIED NATURAL GAS 12 PRODUCTION AND DISTRIBUTION FACILITIES. (a) The Alaska Industrial 13 Development and Export Authority, through the sustainable energy transmission and supply 14 fund established in AS 44.88.660, may provide financing up to a maximum principal amount 15 of $275,000,000 for the development, construction, and installation of, and the start-up costs 16 of operation and maintenance for, a liquefied natural gas production plant, system, and 17 affiliated infrastructure on the North Slope and a natural gas distribution system and affiliated 18 infrastructure within Interior Alaska. 19 (b) As a part of the financing authorized in (a) of this section, the Alaska Industrial 20 Development and Export Authority may issue bonds under AS 44.88.090 that are secured by 21 a capital reserve fund established under AS 44.88.105. Notwithstanding AS 44.88.105, in 22 establishing a capital reserve fund for the bonds, the authority is not required to determine that 23 the capital reserve fund is necessary to enhance the marketability of the bonds. The capital 24 reserve fund shall be managed by the authority as provided in AS 44.88.105. The principal 25 amount of the bonds authorized in this section may not exceed $150,000,000 plus the cost of 26 capitalized interest, bond counsel fees, trustee fees, rating fees, financial advisor fees, escrow 27 costs, and other bond issuance costs that are deemed reasonable and appropriate by the 28 authority. 29 (c) Notwithstanding the interest rate requirements of AS 44.88.159, the interest rate 30 the authority may charge for any financing authorized in (a) of this section that is provided 31 from money of the sustainable energy transmission and supply fund may not exceed three 01 percent or the current market rate for commercial loans at time of issuance of the bonds, 02 whichever is less. Notwithstanding the interest rate requirements of AS 44.88.159, the interest 03 rate that the authority may charge for any financing authorized in (a) of this section that is 04 provided from the proceeds of bonds authorized under this section may not exceed the interest 05 rate to be paid on the bonds, plus an allowance that the authority shall establish for its 06 administrative expenses; however, the allowance for administrative expenses may not exceed 07 25 basis points. Notwithstanding any contrary provision of law, the interest rate limitations of 08 this subsection supersede and replace any other requirements of law regarding the interest 09 rates that the authority may charge for the financing authorized in (a) of this section. 10 (d) The authorization of (a) of this section constitutes legislative approval for the 11 authority exceeding the limitations of AS 44.88.690 in providing the financing approved in (a) 12 of this section. In providing the financing authorized under (a) of this section, the authority 13 may waive any limitations or requirements of its regulations that are otherwise applicable to 14 the sustainable energy transmission and supply fund. 15 (e) The bonds authorized by this section may not be considered in calculating the 16 authority's bonding limitation for a 12-month period under AS 44.88.095(a). 17 (f) The authorization to issue bonds this section grants expires as of June 30, 2018, if 18 not utilized by the issuance of bonds before that date. Expiration of the authorization to issue 19 bonds does not affect bonds that the authority issues under this section prior to July 1, 2018. 20 (g) In this section, 21 (1) "authority" means the Alaska Industrial Development and Export 22 Authority; 23 (2) "financing" means any method of providing funds for a qualified energy 24 development under AS 44.88.650 - 44.88.690 or any combination of the methods of providing 25 funds for a qualified energy development under AS 44.88.650 - 44.88.690. 26 * Sec. 11. This Act takes effect immediately under AS 01.10.070(c).