00 SENATE BILL NO. 97 01 "An Act relating to pension obligation bonds." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03  * Section 1. AS 18.56.086 is amended to read: 04 Sec. 18.56.086. Creation of subsidiaries. The corporation may create 05 subsidiary corporations for the purpose of financing or facilitating the financing of 06 school construction, facilities for the University of Alaska, facilities for ports and 07 harbors, the acquisition, development, management, or operation of affordable 08 housing, prepayment of all or a portion of a governmental employer's share of 09 unfunded accrued actuarial liability of retirement systems, or other capital projects. A 10 subsidiary corporation created under this section may be incorporated under 11 AS 10.20.146 - 10.20.166. The corporation may transfer assets of the corporation to a 12 subsidiary created under this section. A subsidiary created under this section may 13 borrow money and issue bonds as evidence of that borrowing, and has all the powers 14 of the corporation that the corporation grants to it. However, a subsidiary created for 15 the purpose of financing or facilitating the financing of prepayment of a governmental 01 employer's share of unfunded accrued actuarial liability of retirement systems may 02 borrow money and issue bonds only after submitting a proposal to the Legislative  03 Budget and Audit Committee under (b) of this section, if the state bond rating is 04 the equivalent of AA- or better, and subject to AS 37.15.903. Unless otherwise 05 provided by the corporation, the debts, liabilities, and obligations of a subsidiary 06 corporation created under this section are not the debts, liabilities, or obligations of the 07 corporation. 08  * Sec. 2. AS 18.56.086 is amended by adding a new subsection to read: 09 (b) Before the issuance of bonds under this section, the subsidiary corporation 10 shall submit a proposal to the Legislative Budget and Audit Committee for review, 11 and 45 days shall elapse before bonds are issued, unless the Legislative Budget and 12 Audit Committee earlier recommends that the subsidiary corporation proceed with the 13 issuance. Should the Legislative Budget and Audit Committee recommend within the 14 45-day period that the subsidiary corporation not proceed with the issuance of bonds, 15 the subsidiary corporation shall again review the proposal and, if the subsidiary 16 corporation decides to issue the bonds, the subsidiary corporation shall provide the 17 Legislative Budget and Audit Committee with a statement of the subsidiary 18 corporation's reasons for doing so before issuance under this section. 19  * Sec. 3. AS 37.15.900(a) is amended to read: 20 (a) For purposes of financing prepayment of all or a portion of a governmental 21 employer's share of unfunded accrued actuarial liability of retirement systems, 22 including the costs of issuance and administration, the issuance and sale of bonds of 23 the state by the committee is authorized as provided in this section and AS 37.15.903 - 24 37.15.955, but only after submitting a proposal to the Legislative Budget and  25 Audit Committee under (e) of this section and if the state bond rating is the 26 equivalent of AA- or better. The net proceeds of the sale of the bonds remaining after 27 payment of costs of issuance and administration shall be transferred to the 28 commissioner of administration for the account of the governmental employer whose 29 share of unfunded accrued actuarial liability is to be prepaid for application to that 30 liability. Accrued interest paid on the bonds shall be paid into the pension obligation 31 bond redemption fund. 01  * Sec. 4. AS 37.15.900 is amended by adding a new subsection to read: 02 (e) Before the issuance and sale of bonds under this section, the committee 03 shall submit a proposal to the Legislative Budget and Audit Committee for review, 04 and 45 days shall elapse before bonds are issued and sold, unless the Legislative 05 Budget and Audit Committee earlier recommends that the committee proceed with the 06 issuance. Should the Legislative Budget and Audit Committee recommend within the 07 45-day period that the committee not proceed with the issuance and sale of bonds, the 08 committee shall again review the proposal and, if the committee decides to issue and 09 sell the bonds, the committee shall provide the Legislative Budget and Audit 10 Committee with a statement of the committee's reasons for doing so before issuance 11 under this section. 12  * Sec. 5. AS 37.15.903 is amended to read: 13 Sec. 37.15.903. Pension obligation bond limit. The total unpaid principal 14 amount of bonds, including refunding bonds, but excluding refunded bonds, issued by 15 all state entities added together, for the purposes of financing prepayment of all or a 16 portion of a governmental employer's share of unfunded accrued liability of retirement 17 systems, may not exceed $2,500,000,000 [$5,000,000,000]. 18  * Sec. 6. AS 37.16.030(a) is amended to read: 19 (a) For purposes of financing prepayment of all or a portion of a governmental 20 employer's share of unfunded accrued actuarial liability of retirement systems, 21 including the costs of issuance and administration, the issuance and sale of bonds by 22 the corporation is authorized as provided in this section and AS 37.16.040 - 37.16.900, 23 but only after submitting a proposal to the Legislative Budget and Audit  24 Committee under (e) of this section and if the state bond rating is the equivalent of 25 AA- or better. The net proceeds of the sale of the bonds remaining after payment of 26 costs of issuance and administration shall be transferred to the commissioner of 27 administration for the account of the governmental employer whose share of unfunded 28 accrued actuarial liability is to be prepaid for application to that liability. Accrued 29 interest paid on the bonds shall be paid into the reserve fund. 30  * Sec. 7. AS 37.16.030 is amended by adding a new subsection to read: 31 (e) Before the issuance and sale of bonds under this section, the corporation 01 shall submit a proposal to the Legislative Budget and Audit Committee for review, 02 and 45 days shall elapse before bonds are issued and sold, unless the Legislative 03 Budget and Audit Committee earlier recommends that the corporation proceed with 04 the issuance. Should the Legislative Budget and Audit Committee recommend within 05 the 45-day period that the corporation not proceed with the issuance and sale of bonds, 06 the corporation shall again review the proposal and, if the corporation decides to issue 07 and sell the bonds, the corporation shall provide the Legislative Budget and Audit 08 Committee with a statement of the corporation's reasons for doing so before issuance 09 under this section. 10  * Sec. 8. AS 44.85.010(a) is amended to read: 11 (a) It is the policy of the state to 12 (1) foster and promote by all reasonable means the provision of 13 adequate capital markets and facilities for borrowing money by municipalities in the 14 state to finance capital improvements or for other authorized purposes, to assist these 15 municipalities in fulfilling their capital needs and requirements by use of borrowed 16 money within statutory interest rate or cost of borrowing limitations, to the greatest 17 extent possible to reduce costs of borrowed money to taxpayers and residents of the 18 state, and equally to encourage continued investor interest in the purchase of bonds or 19 notes of municipalities as sound and preferred securities for investment; 20 (2) encourage municipalities to continue their independent 21 undertakings and financing of capital improvements and other authorized purposes 22 and to assist them by making capital funds available at reduced interest costs for 23 orderly financing of capital improvements and other purposes especially during 24 periods of restricted credit or money supply, particularly for those municipalities not 25 otherwise able to borrow for capital needs; 26 (3) assist municipalities to provide for adequate insurance coverage by 27 authorizing the Alaska Municipal Bond Bank Authority to issue negotiable or 28 nonnegotiable revenue bonds, notes, or certificates of participation either directly or 29 through an entity it may create for the purpose of providing a self-insurance program 30 for municipalities or municipal joint insurance arrangements organized under 31 AS 21.76; 01 (4) assist governmental employers to prepay all or a portion of their 02 share of unfunded accrued actuarial liabilities of retirement systems in an effort to 03 reduce their costs of satisfying their contractual obligations to provide retirement and 04 other benefits to public employees through the issuance of bonds, notes, commercial 05 paper, or other obligations by the bond bank authority or by a subsidiary corporation 06 created by the bond bank authority under AS 44.85.085, but only after submitting a  07 proposal to the Legislative Budget and Audit Committee and if the state bond 08 rating is the equivalent of AA- or better; this assistance is limited as provided in 09 AS 37.15.903; 10 (5) assist the University of Alaska to provide heating or energy 11 projects by providing capital funds through loans that minimize costs and the effects 12 on the debt capacity of the University of Alaska; 13 (6) assist regional health organizations to provide health care facilities 14 by providing capital funds through loans that minimize costs and the effects on the 15 debt capacity of regional health organizations when the commissioner of health and 16 social services anticipates a state financial benefit and an increase in regional quality 17 of care; 18 (7) assist joint action agencies in providing public utilities, including 19 hydroelectric power projects, through loans and bonds that minimize costs and the 20 effects on the debt capacity of public utilities and joint action agencies. 21  * Sec. 9. AS 44.85.085(c) is amended to read: 22 (c) A subsidiary corporation created under (a) of this section may, after  23 submitting a proposal to the Legislative Budget and Audit Committee under (e)  24 of this section, if the state bond rating is the equivalent of AA- or better, and subject 25 to AS 37.15.903, borrow money and issue bonds, notes, commercial paper, or other 26 obligations as evidence of that borrowing and may have all the powers of the bond 27 bank authority that the bond bank authority grants to it. The provisions of 28 AS 44.85.130 - 44.85.170 and 44.85.270 - 44.85.390 apply to the subsidiary 29 corporation and to bonds, notes, commercial paper, or other obligations issued by the 30 subsidiary corporation. Unless otherwise provided by the bond bank authority, the 31 debts, liabilities, and obligations of the subsidiary corporation are not the debts, 01 liabilities, or obligations of the bond bank authority. 02  * Sec. 10. AS 44.85.085 is amended by adding a new subsection to read: 03 (e) Before the issuance of bonds under this section or under AS 44.85.086, the 04 subsidiary corporation shall submit a proposal to the Legislative Budget and Audit 05 Committee for review, and 45 days shall elapse before bonds are issued, unless the 06 Legislative Budget and Audit Committee earlier recommends that the subsidiary 07 corporation proceed with the issuance. Should the Legislative Budget and Audit 08 Committee recommend within the 45-day period that the subsidiary corporation not 09 proceed with the issuance of bonds, the subsidiary corporation shall again review the 10 proposal and, if the subsidiary corporation decides to issue the bonds, the subsidiary 11 corporation shall provide the Legislative Budget and Audit Committee with a 12 statement of the subsidiary corporation's reasons for doing so before issuance under 13 this section. 14  * Sec. 11. AS 44.85.086 is amended to read: 15 Sec. 44.85.086. Powers of subsidiary corporation. A subsidiary corporation 16 created under AS 44.85.085 has the following powers in addition those granted to it 17 under AS 44.85.085(c): 18 (1) to make loans to and enter into contracts with governmental 19 employers; 20 (2) to incur debt, subject to AS 37.15.903, in furtherance of its 21 purposes, in the form of bonds, notes, commercial paper, or other obligations as the 22 subsidiary corporation considers appropriate, but only after submitting a proposal to  23 the Legislative Budget and Audit Committee under AS 44.85.085(e) and if the 24 state bond rating is the equivalent of AA- or better; 25 (3) to secure its debt with a pledge of any assets that are available to 26 the subsidiary corporation for the purpose, including identified revenue and 27 contractual payments from participating governmental employers, and the general 28 assets and revenue of the subsidiary corporation; and 29 (4) to enter into contracts with underwriters, bond counsel, financial 30 advisors, accountants, actuaries, and other contractors to provide assistance as the 31 subsidiary corporation considers desirable to accomplish its purposes. 01  * Sec. 12. AS 44.85.180(a) is amended to read: 02 (a) Subject to AS 44.85.100(b), the bond bank authority may issue its bonds or 03 notes in principal amounts that it considers necessary to provide funds for any 04 purposes under this chapter, including 05 (1) the purchase of municipal bonds; 06 (2) the making of loans through the purchase of municipal bonds, 07 notes, or certificates of participation secured by an agreement between the bond bank 08 authority and a municipality or a municipal joint insurance arrangement organized 09 under AS 21.76; 10 (3) the payment, funding, or refunding of the principal of, or interest or 11 redemption premiums on, bonds or notes issued by it whether the bonds or notes or 12 interest to be funded or refunded have or have not become due; 13 (4) the establishment or increase of reserves to secure or to pay bonds 14 or notes or interest on bonds or notes and all other costs or expenses of the bond bank 15 authority incident to and necessary or convenient to carry out its corporate purposes 16 and powers; 17 (5) assisting governmental employers to prepay all or a portion of their 18 share of the unfunded accrued actuarial liabilities of retirement systems, with security 19 as the bond bank authority considers reasonable; however, to carry out this paragraph, 20 bonds and other obligations may only be issued after submitting a proposal to the  21 Legislative Budget and Audit Committee under (f) of this section and if the state 22 bond rating is the equivalent of AA- or better; bonds issued under this paragraph are 23 subject to AS 37.15.903. 24  * Sec. 13. AS 44.85.180 is amended by adding a new subsection to read: 25 (f) Before the issuance of bonds under this section, the bond bank authority 26 shall submit a proposal to the Legislative Budget and Audit Committee for review, 27 and 45 days shall elapse before bonds are issued, unless the Legislative Budget and 28 Audit Committee earlier recommends that the bond bank authority proceed with the 29 issuance. Should the Legislative Budget and Audit Committee recommend within the 30 45-day period that the bond bank authority not proceed with the issuance of bonds, the 31 bond bank authority shall again review the proposal and, if the bond bank authority 01 decides to issue the bonds, the bond bank authority shall provide the Legislative 02 Budget and Audit Committee with a statement of the bond bank authority's reasons for 03 doing so before issuance under this section.