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