SB 222: "An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; providing an exemption from the procurement code for certain projects of the authority; and providing for an effective date."
00SENATE BILL NO. 222 01 "An Act relating to the financing authority, programs, operations, and projects 02 of the Alaska Industrial Development and Export Authority; providing an 03 exemption from the procurement code for certain projects of the authority; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 36.30.850(b) is amended by adding a new paragraph to read: 07 (34) contracts of the Alaska Industrial Development and Export 08 Authority related to integrated transportation and port facilities owned by the authority. 09 * Sec. 2. AS 44.88.095(g) is amended to read: 10 (g) Without prior legislative approval, the authority may not issue bonds in an 11 amount greater than $10,000,000 to assist in the financing of a development 12 project under AS 44.88.172 - 44.88.177 [, EXCEPT REFUNDING BONDS]. 13 * Sec. 3. AS 44.88.159(a) is amended to read: 14 (a) The interest rate on a loan participation purchased [FINANCED] from the
01 proceeds of tax-exempt bonds or expected by the authority to be purchased 02 [FINANCED] from the proceeds of tax-exempt bonds is equal to the cost of funds to 03 the authority. In this subsection "cost of funds" means the true interest cost expressed 04 as a rate on tax-exempt bonds of the authority plus an additional percentage as 05 determined by the authority to represent the allocable expenses of operation, costs of 06 issuance, and loan servicing. 07 * Sec. 4. AS 44.88.159(b) is amended to read: 08 (b) The interest rate on a loan participation purchased [FINANCED] from the 09 proceeds of taxable bonds or expected by the authority to be purchased [FINANCED] 10 from the proceeds of taxable bonds is equal to the cost of funds to the authority. In 11 this subsection "cost of funds" means the true interest cost expressed as a rate on 12 taxable bonds, plus an additional percentage as determined by the authority to 13 represent the allocable expenses of operation, costs of issuance, and loan servicing 14 costs. 15 * Sec. 5. AS 44.88.159(e) is amended to read: 16 (e) The interest rate on a loan participation purchased [FINANCED] directly 17 from the assets of the authority shall be determined under the regulations adopted by 18 the authority under AS 44.88.085(g)(2)(C). 19 * Sec. 6. AS 44.88.205(b) is amended to read: 20 (b) To further ensure effective budgetary decision making by the legislature, 21 the authority shall 22 (1) annually review the authority's assets to determine whether assets 23 of the authority exceed an amount required to fulfill the purposes of the authority as 24 defined in this chapter; in making its review, [THE MEMBERS OF] the authority shall 25 determine whether, and to what extent, assets in excess of the amount required to 26 fulfill the purposes of the authority during at least the next fiscal year are available 27 without 28 (A) breaching any agreement entered into by the authority; 29 (B) materially impairing the operations or financial integrity of 30 the authority; or 31 (C) materially affecting the ability of the authority to fulfill the
01 authority's purposes set out in AS 44.88.070; and 02 (2) present to the legislature by January 10 of each year a complete 03 accounting of all assets of the authority and a report of the review and determination 04 made under (1) of this subsection; the accounting shall be audited by the auditor who 05 conducts the audit required by AS 44.88.200 and must include a full description of all 06 loan interest and principal payments and program receipts, including 07 (A) loan commitment fees received by or accrued to the 08 authority during the preceding fiscal year, and 09 (B) all income earned on assets of the authority during that 10 period. 11 * Sec. 7. AS 44.88.500(a) is amended to read: 12 (a) [THE BUSINESS ASSISTANCE FUND IS ESTABLISHED IN THE 13 AUTHORITY FROM MONEY IN THE AUTHORITY'S RESERVES DESIGNATED 14 BY THE AUTHORITY FOR THE PURPOSE.] Subject to the requirements of 15 AS 44.88.500 - 44.88.599, the authority may [USE MONEY IN THE FUND] 16 (1) [TO] guarantee new business assistance loans; and 17 (2) [TO] guarantee new business assistance loans made to refinance 18 existing loans. 19 * Sec. 8. AS 44.88.530 is amended to read: 20 Sec. 44.88.530. APPLICABILITY OF PROVISIONS. AS 44.88.535 - 21 44.88.560 apply to 22 [(1)] new loan guarantees and refinancing guarantees under 23 AS 44.88.500 [AS 44.88.500(a)(1); AND 24 (2) DEBT REFINANCING GUARANTEES UNDER 25 AS 44.88.500(a)(2)]. 26 * Sec. 9. AS 44.88.535 is amended to read: 27 Sec. 44.88.535. CONDITIONS OF LOAN GUARANTEE. (a) The authority 28 may guarantee a loan under AS 44.88.500 - 44.88.599 if the 29 (1) loan 30 (A) is commercially reasonable; 31 (B) contains amortization provisions satisfactory to the
01 authority; 02 (C) is secured by adequate collateral; however, the authority 03 may waive on a case-by-case basis the requirement of collateral in the manner 04 and under requirements established by the authority by regulation [FOR 05 A LOAN GUARANTEE OF $75,000 OR LESS FOR WHICH THE 06 PROPOSED LOAN AMORTIZATION PERIOD DOES NOT EXCEED FIVE 07 YEARS], but the ability to waive the requirement of this subparagraph or the 08 grant of a waiver does not prevent the financial institution that holds the loan 09 guaranteed by the authority from requiring reasonable collateral for the loan; 10 (2) net cash flow from the borrower provides adequate coverage for the 11 debt service on the loan; 12 (3) term of the loan does not exceed 20 years; 13 (4) loan is originated with and serviced by a state chartered or federally 14 chartered financial institution; 15 (5) portion of the loan not guaranteed by the authority is held by the 16 originating financial institution or another [FINANCIAL] institution approved by the 17 authority; 18 (6) proceeds of the loan will be used to benefit a business conducted 19 in the state [IS MADE TO A BUSINESS WITH A MAJORITY INTEREST HELD 20 BY STATE RESIDENTS]; and 21 (7) loan guarantee provides a benefit to the borrower. 22 (b) The authority may provide a guarantee [FROM THE FUND 23 (1)] of 80 percent of a loan [OF $50,000 OR LESS] that qualifies under 24 AS 44.88.500 - 44.88.599; 25 [(2) FOR UP TO 80 PERCENT OF A LOAN OF MORE THAN 26 $50,000 THAT QUALIFIES UNDER AS 44.88.500 - 44.88.599;] the ratio of the 27 guarantee to the outstanding principal of the loan may not increase over the term of 28 the loan. 29 (c) The authority may [NOT] guarantee the payment of interest on the 30 guaranteed portion of a loan for the time and in the manner established by the 31 authority by regulation.
01 * Sec. 10. AS 44.88.540 is amended to read: 02 Sec. 44.88.540. LIMITATIONS OF GUARANTEES [FROM THE FUND]. 03 The authority may not issue [GUARANTEE] 04 (1) a total of more than $50,000,000 of loan guarantees [LOANS]; 05 (2) a total of more than $25,000,000 of loan guarantees [LOANS] in 06 which the amount of the loan guarantee exceeds $500,000. 07 * Sec. 11. AS 44.88.550(a) is amended to read: 08 (a) The maximum interest rate that may be charged by a financial 09 institution on a loan guaranteed by the authority is two and three-quarters percentage 10 points above the prime rate. 11 * Sec. 12. AS 44.88.560 is amended to read: 12 Sec. 44.88.560. POWERS OF THE AUTHORITY. The authority may 13 (1) adopt regulations to implement AS 44.88.500 - 44.88.599; 14 (2) establish terms and conditions for loan guarantees and refinancing 15 agreements subject to the requirements of AS 44.88.500 - 44.88.599; 16 (3) make and execute contracts and other instruments to implement 17 AS 44.88.500 - 44.88.599; 18 (4) charge 19 (A) one percent of the amount guaranteed for the service it 20 provides under AS 44.88.500 - 44.88.599; and 21 (B) any other reasonable fee that the authority may establish by 22 regulation; 23 (5) acquire real or personal property by purchase, transfer, or 24 foreclosure when the acquisition is necessary to protect the authority's [AN] interest 25 [IN THE FUND]; 26 (6) exercise any other power necessary to implement AS 44.88.500 - 27 44.88.599; and 28 (7) to the extent the authority considers it to be in its best interest to 29 do so, use money [IN THE BUSINESS ASSISTANCE FUND] to pay expenses 30 relating to the liquidation of collateral securing loans guaranteed by the authority 31 [BUSINESS ASSISTANCE FUND].
01 * Sec. 13. AS 44.88.900(3) is amended to read: 02 (3) "development project" has the meaning given to "project" in (9)(A), 03 (D), [AND] (E), and (F) of this section; 04 * Sec. 14. AS 44.88.900(7) is repealed and reenacted to read: 05 (7) "loan participation" means the purchase of a portion of a loan from 06 a financial institution if the financial institution has obtained a commitment from the 07 authority to purchase the portion of that loan before the financial institution has 08 disbursed money as part of the loan to the borrower; 09 *Sec. 15. AS 44.88.900(9) is amended to read: 10 (9) "project" means 11 (A) a plant or facility used or intended for use in connection 12 with making, processing, preparing, transporting, or producing in any manner, 13 goods, products, or substances of any kind or nature or in connection with 14 developing or utilizing a natural resource, or extracting, smelting, transporting, 15 converting, assembling, or producing in any manner, minerals, raw materials, 16 chemicals, compounds, alloys, fibers, commodities and materials, products, or 17 substances of any kind or nature; 18 (B) a plant or facility used or intended for use in connection 19 with a business enterprise; 20 (C) commercial activity by a business [SMALL] enterprise; 21 (D) a plant or facility demonstrating technological advances of 22 new methods and procedures and prototype commercial applications for the 23 exploration, development, production, transportation, conversion, and use of 24 energy resources; 25 (E) infrastructure for a new tourism destination facility or for 26 the expansion of a tourism destination facility; 27 (F) a plant or facility, other than a plant or facility described in 28 (D) of this paragraph, for the generation, transmission, development, 29 transportation, conversion, or use of energy resources; 30 * Sec. 16. AS 44.88.500(b), 44.88.542, 44.88.599(1), and 44.88.900(14) are repealed. 31 * Sec. 17. The following are repealed:
01 (1) Sections 1 and 2, ch. 27, SLA 1993; and 02 (2) Section 4, ch. 162, SLA 1988, as amended by sec. 4, ch. 25, SLA 1991, 03 as amended by sec. 4, ch. 27, SLA 1993. 04 * Sec. 18. (a) The Alaska Industrial Development and Export Authority (AIDEA) may 05 issue bonds to finance the expansion, improvement, and modification of the existing port 06 facilities owned by AIDEA with respect to the DeLong Mountain transportation system and 07 to finance the construction of new facilities to be owned by AIDEA related to the DeLong 08 Mountain transportation system, or may finance these projects by other means available to 09 AIDEA. The principal amount of the bonds and other financing provided by AIDEA may not 10 exceed $60,000,000. 11 (b) Subsection (a) of this section constitutes the legislative approval required by 12 AS 44.88.095(g). 13 * Sec. 19. (a) Upon approval of the Alaska Industrial Development and Export Authority 14 (AIDEA), AIDEA may acquire the Snettisham hydroelectric project and related assets from 15 the Alaska Power Administration. 16 (b) AIDEA may issue bonds to finance the acquisition of the Snettisham hydroelectric 17 project and related assets, or may finance the acquisition by other means available to AIDEA. 18 The principal amount of the bonds and other financing provided by AIDEA to finance the 19 acquisition of the Snettisham hydroelectric project may not exceed $100,000,000. 20 (c) To secure bonds issued under (b) of this section, AIDEA may establish a capital 21 reserve fund with respect to those bonds under AS 44.88.105. If AIDEA establishes a capital 22 reserve fund as provided in this subsection, the executive director of AIDEA shall annually, 23 no later than January 2 of each year, certify in writing to the governor and the legislature the 24 amount, if any, required to restore the capital reserve fund to the capital reserve fund 25 requirement as defined in AS 44.88.105(h). The legislature may appropriate to AIDEA the 26 amount so certified by the executive director of AIDEA. AIDEA shall deposit the amounts 27 appropriated under this subsection during a fiscal year in the capital reserve fund. Nothing 28 in this section creates a debt or liability of the state. 29 (d) Subsection (b) of this section grants the legislative approval required by 30 AS 44.88.095(g). 31 * Sec. 20. This Act takes effect immediately under AS 01.10.070(c).