CSHB 386(FIN): "An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; and providing for an effective date."
00CS FOR HOUSE BILL NO. 386(FIN) 01 "An Act relating to the financing authority, programs, operations, and projects 02 of the Alaska Industrial Development and Export Authority; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 44.88.090(e) is amended to read: 06 (e) Before issuing bonds, the authority shall provide for consideration at least 07 sufficient, in the judgment of the authority, to pay the principal of and interest on the 08 bonds as they become due and to create and maintain the reserves for the payments 09 that the authority considers necessary or desirable, and to meet all obligations in 10 connection with the lease or agreement and all costs necessary to service the bonds, 11 unless the lease or agreement provides that the obligations are to be met or costs are 12 to be paid by a party other than the authority. If the bonds are being issued to finance 13 a project or projects under AS 44.88.155 - 44.88.159, then the consideration shall be 14 provided by lease or other agreement regarding the project or projects. If the bonds
01 are being issued to finance a development project or development projects under 02 AS 44.88.172 - 44.88.177, then the consideration shall be provided by lease or other 03 agreement regarding the development project or development projects. [IF THE 04 BONDS ARE BEING ISSUED TO PROVIDE MONEY TO FINANCE, 05 GUARANTEE, OR INSURE AN EXPORTING TRANSACTION UNDER 06 AS 44.88.300 - 44.88.390, THEN THE CONSIDERATION SHALL BE PROVIDED 07 BY AGREEMENT WITH THE EXPORTER.] 08 * Sec. 2. AS 44.88.090(h) is amended to read: 09 (h) The authority may combine, for the purposes of a single offering, bonds 10 financing more than one project or development project under AS 44.88.155 - 11 44.88.159 or 44.88.172 - 44.88.177 [, AND BONDS ISSUED TO PROVIDE MONEY 12 TO FINANCE, GUARANTEE, OR INSURE AN EXPORTING TRANSACTION 13 UNDER AS 44.88.300 - 44.88.390]. 14 * Sec. 3. AS 44.88.095(g) is amended to read: 15 (g) Before July 1, 2003 [1998], the authority may issue bonds in an amount 16 greater than $10,000,000 to assist in the financing of a development project under 17 AS 44.88.172 - 44.88.177 only with legislative approval. Beginning July 1, 2003 18 [1998], and thereafter, without prior legislative approval, the authority may not issue 19 bonds, except refunding bonds. 20 * Sec. 4. AS 44.88.100 is amended to read: 21 Sec. 44.88.100. Trust indentures and trust agreements. In the discretion of 22 the authority, an issue of bonds may be secured by a trust indenture or trust agreement 23 between the authority and a corporate trustee (which may be a trust company, bank, 24 or national banking association, with corporate trust powers, located inside or outside 25 the state) or by a secured loan agreement or other instrument or under a resolution 26 giving powers to a corporate trustee (hereinafter in this section referred to as "trust 27 agreement") by means of which the authority may 28 (1) make and enter into any and all the covenants and agreements with 29 the trustee or the holders of the bonds which the authority may determine to be 30 necessary or desirable, including, without limitation, covenants, provisions, limitations, 31 and agreements as to
01 (A) the application, investment, deposit, use, and disposition of 02 the proceeds of bonds of the authority or of money or other property of the 03 authority or in which it has an interest; 04 (B) the fixing and collection of rents or other consideration for 05 [,] and the other terms to be incorporated in a lease or contract of sale of a 06 project or development project financed under AS 44.88.155 - 44.88.159 or 07 44.88.172 - 44.88.177 [, OR OF A FACILITY THAT IS PART OF AN 08 EXPORTING TRANSACTION FINANCED, GUARANTEED, OR INSURED 09 UNDER AS 44.88.300 - 44.88.390]; 10 (C) the assignment by the authority of its rights in the lease or 11 contract of sale of a project or development project financed under 12 AS 44.88.155 - 44.88.159 or 44.88.172 - 44.88.177 [, OR OF A FACILITY 13 THAT IS PART OF AN EXPORTING TRANSACTION FINANCED, 14 GUARANTEED, OR INSURED UNDER AS 44.88.300 - 44.88.390] or in a 15 mortgage or other security interest created with respect to a project or 16 development project financed under AS 44.88.155 - 44.88.159 or 44.88.172 - 17 44.88.177 [, OR WITH RESPECT TO A FACILITY THAT IS PART OF AN 18 EXPORTING TRANSACTION FINANCED, GUARANTEED, OR INSURED 19 UNDER AS 44.88.300 - 44.88.390] to a trustee for the benefit of bondholders; 20 (D) the terms and conditions upon which additional bonds of 21 the authority may be issued; 22 (E) the vesting in a trustee of rights, powers, duties, funds, or 23 property in trust for the benefit of bondholders, including, without limitation, 24 the right to enforce payment, performance, and all other rights of the authority 25 or of the bondholders under a lease, contract of sale, mortgage, security 26 agreement, or trust agreement with respect to a project or development project 27 financed under AS 44.88.155 - 44.88.159 or 44.88.172 - 44.88.177 [, OR 28 WITH RESPECT TO A FACILITY THAT IS A PART OF AN EXPORTING 29 TRANSACTION FINANCED, GUARANTEED, OR INSURED UNDER 30 AS 44.88.300 - 44.88.390] by mandamus or other proceeding or by taking 31 possession of by agent or otherwise and operating a project or facility and
01 collecting rents or other consideration and applying the same in accordance 02 with the trust agreement; 03 (2) pledge, mortgage, or assign money, leases, agreements, property, 04 or other assets of the authority either presently in hand or to be received in the future, 05 or both; and 06 (3) provide for any other matters of like or different character which 07 in any way affect the security or protection of the bonds. 08 * Sec. 5. AS 44.88.130 is amended to read: 09 Sec. 44.88.130. Pledge of the state. The state pledges to and agrees with the 10 holders of bonds issued under this chapter and with the federal agency that lends or 11 contributes funds in respect to a project or development project financed under 12 AS 44.88.155 - 44.88.159 or 44.88.172 - 44.88.177 [, OR IN RESPECT TO AN 13 EXPORTING TRANSACTION FINANCED, GUARANTEED, OR INSURED 14 UNDER AS 44.88.300 - 44.88.390] that the state will not limit or alter the rights and 15 powers vested in the authority by this chapter to fulfill the terms of a contract made 16 by the authority with the holders or federal agency and that the state will not in any 17 way impair the rights and remedies of the holders until the bonds, together with the 18 interest on them with interest on unpaid installments of interest, and all costs and 19 expenses in connection with an action or proceeding by or on behalf of the holders are 20 fully met and discharged. The authority is authorized to include this pledge and 21 agreement of the state, insofar as it refers to holders of bonds of the authority, in a 22 contract with the holders and, insofar as it relates to a federal agency, in a contract 23 with the federal agency. 24 * Sec. 6. AS 44.88.155(d) is amended to read: 25 (d) A loan participation purchased by the authority with assets of the enterprise 26 development account or with proceeds of bonds secured by assets of the enterprise 27 development account 28 (1) may not exceed $10,000,000; however, in the case of a loan 29 participation for a power transmission intertie, the loan participation may exceed 30 $10,000,000 with legislative approval; 31 (2) may not be purchased unless
01 (A) the project applicant is not, or, if the applicant is not a 02 single proprietorship, all members of the business enterprise or enterprises 03 constituting the project applicant are not, in default on another loan made by 04 the state or by a public corporation of the state; and 05 (B) at least 20 percent of the principal amount of the loan is 06 retained by the loan originator; 07 (3) may not be purchased if the loan to be purchased exceeds [THE 08 COST OF THE PROJECT OR] 75 percent of the appraised value of the collateral 09 offered as security for the loan [PROJECT, WHICHEVER IS LESS,] unless the 10 amount of the loan in excess of this limit is federally insured or guaranteed or is 11 insured by a qualified mortgage insurance company , except that in no event may the 12 loan to be purchased under this paragraph exceed the total of loan proceeds used 13 to refinance an existing debt plus the cost of new construction, expansion, or 14 acquisition ; 15 (4) may not be purchased if the participation in the loan to be 16 purchased is for a term longer than three-quarters of the authority's estimate of the life 17 of the collateral offered as security for the loan [PROJECT] or 25 years from the 18 date the loan is made, whichever is earlier; however, in the case of a loan participation 19 for a power transmission intertie, the term may not be longer than 50 years from the 20 date the loan is made; 21 (5) may be made only if the participation in the loan to be purchased 22 contains amortization provisions; the amortization provisions 23 (A) must be complete and satisfactory to the authority and 24 require periodic payments by the borrower; 25 (B) may allow the loan originator to amortize the portion of the 26 loan retained by the loan originator using a shorter amortization schedule than 27 the amortization schedule for the portion of the loan held by the authority if 28 (i) in the authority's opinion, the project financed can 29 support the increased debt service; and 30 (ii) the accelerated amortization schedule is required to 31 induce the originator to make the loan;
01 (6) may be made only if the participation in the loan to be purchased 02 is in the form and contains the terms and provisions with respect to insurance, repairs, 03 alterations, payment of taxes and assessments, default reserves, delinquency charges, 04 default remedies, acceleration of maturity, secondary liens, and other matters the 05 authority prescribes; and 06 (7) may be made only if the participation in the loan to be purchased 07 is secured as to repayment by a mortgage or other security instrument in the manner 08 the authority determines is feasible to assure timely repayment under the [A] loan 09 documents [AGREEMENT] entered into with the borrower. 10 * Sec. 7. AS 44.88.190(c) is amended to read: 11 (c) A loan participation purchased or financed by the authority is exempt from 12 the provisions of AS 45.45.010. [A GUARANTEE EXTENDED UNDER 13 AS 44.88.300 OR INSURANCE PROVIDED UNDER AS 44.88.390 DOES NOT 14 CONSTITUTE INSURANCE FOR THE PURPOSES OF AS 21.03.010.] 15 * Sec. 8. AS 44.88 is amended by adding a new section to read: 16 Sec. 44.88.215. Confidentiality of information. (a) In order to promote the 17 purposes of AS 44.88, unless the records were a matter of public record before 18 submittal to the authority, the following records, files, and information shall be kept 19 confidential upon the request of the person supplying the information or upon the 20 request of the project, bond, loan, or guarantee applicant or borrower: 21 (1) income tax returns; 22 (2) financial statements, profit-and-loss statements, and cash flow 23 projections, except the information required by the authority to calculate debt service 24 coverage on the loan; 25 (3) financial business plans; 26 (4) credit reports from consumer reporting agencies and other credit 27 information obtained from banks, creditors, or other credit reporting entities; 28 (5) trade secrets; 29 (6) appraisals, except the name of the appraiser, the date of the 30 appraisal, and the fair market value determined for the property appraised; 31 (7) market surveys and marketing strategy information; and
01 (8) any information required to be kept confidential by a federal law 02 or regulation or by state law. 03 (b) Information compiled by the authority from information described in (a) 04 of this section shall be kept confidential unless disclosure is authorized by the person 05 supplying the information and by the project, bond, loan, or guarantee applicant or 06 borrower. 07 (c) The information that is determined to be confidential under (a) or (b) of 08 this section is not a public record under AS 09.25.110 - 09.25.220. 09 * Sec. 9. AS 44.88.500 is repealed and reenacted to read: 10 Sec. 44.88.500. Business and export assistance guarantees. Subject to the 11 requirements of AS 44.88.500 - 44.88.599, the authority may 12 (1) guarantee new business and export assistance loans; and 13 (2) guarantee new business and export assistance loans made to 14 refinance existing loans. 15 * Sec. 10. AS 44.88 is amended by adding a new section to read: 16 Sec. 44.88.502. Effect of guarantee. (a) A guarantee under AS 44.88.500 - 17 44.88.599 does not create a debt or liability of the state. 18 (b) A guarantee under AS 44.88.500 may not be terminated, canceled, or 19 revoked except under its terms. A guarantee held by a participating financial 20 institution is presumed to be valid. 21 (c) A guarantee or portion of a guarantee under AS 44.88.500 that relates to 22 an export transaction must guarantee against commercial and political loss, in whole 23 or in part, of principal and interest. The authority may require the borrower to obtain 24 insurance against some or all of the loss guaranteed under AS 44.88.500. In this 25 subsection, "political loss" means a loss incurred as a result of 26 (1) a political risk that would be insurable under an export credit 27 insurance policy issued by the Export-Import Bank of the United States; or 28 (2) any other political risk that is actually insured under insurance the 29 authority requires the borrower to obtain. 30 * Sec. 11. AS 44.88.505(a) is amended to read: 31 (a) A business enterprise may apply for a new loan guarantee under
01 AS 44.88.500(1) [AS 44.88.500(a)(1)]. 02 * Sec. 12. AS 44.88.515 is amended to read: 03 Sec. 44.88.515. Qualifications of applicant for debt refinancing guarantee. 04 A business enterprise may apply under AS 44.88.500(2) [AS 44.88.500(a)(2)] to 05 guarantee the refinancing of existing debt. 06 * Sec. 13. AS 44.88.525 is amended to read: 07 Sec. 44.88.525. Conditions of debt refinancing guarantee. The authority 08 may not guarantee refinanced debt 09 (1) unless the refinancing 10 (A) is necessary to extend substantial debt payments over a 11 longer period of time, thereby improving the applicant's net cash flow and 12 working capital position consistent with the useful life of the assets being 13 refinanced; 14 (B) assists with short-term debt or cash expenditures when 15 lenders will not extend reasonable longer terms to the applicant; and 16 (C) creates additional economic opportunity or improves the 17 viability of the borrower rather than just reducing the liability of the lender; or 18 (2) unless the refinancing is necessary to place a permanent loan 19 subsequent to an interim loan for financing [CONSTRUCTION] of the project. 20 * Sec. 14. AS 44.88.535(a) is amended to read: 21 (a) The authority may guarantee a loan under AS 44.88.500 - 44.88.599 if the 22 (1) loan 23 (A) is commercially reasonable; 24 (B) contains payment [AMORTIZATION] provisions 25 satisfactory to the authority; 26 (C) is secured by adequate collateral; however, the authority 27 may waive on a case-by-case basis the requirement of collateral for a loan 28 guarantee of $100,000 or less for which the proposed loan term 29 [AMORTIZATION PERIOD] does not exceed five years, but the ability to 30 waive the requirement of this subparagraph or the grant of a waiver does not 31 prevent the financial institution that holds the loan guaranteed by the authority
01 from requiring reasonable collateral for the loan; 02 (2) borrower demonstrates the ability to repay the loan from either 03 or both of the following: 04 (A) net cash flow from the borrower [PROVIDES ADEQUATE 05 COVERAGE FOR THE DEBT SERVICE ON THE LOAN]; and 06 (B) proceeds from the sale of current assets that are 07 collateral for the loan if the sale, or receipt of proceeds from the sale, is an 08 event that creates a payment obligation; in this subparagraph, "current 09 asset" means property that will be or could be converted into cash in the 10 normal operation of a business within one year; 11 (3) term of the loan does not exceed 20 years; 12 (4) loan is originated with and serviced by a state chartered or federally 13 chartered financial institution; 14 (5) portion of the loan not guaranteed by the authority is held by the 15 originating financial institution or another institution approved by the authority; 16 (6) loan is made to a business with a majority interest held by state 17 residents; and 18 (7) loan guarantee provides a benefit to the borrower. 19 * Sec. 15. AS 44.88.535(c) is amended to read: 20 (c) The authority may guarantee the payment of interest on the guaranteed 21 portion of a loan 22 (1) in the manner established by the authority by regulation ; and 23 (2) for a period of time not to exceed 24 (A) 90 days for loans or parts of loans not made to support 25 an export transaction; 26 (B) 180 days for loans or parts of loans made for a post- 27 shipment loan guarantee to support an export transaction; in this subparagraph, "post-shipment loan guarantee" means 28 a guarantee, or portion of a guarantee, that becomes 29 effective after the export contract date that shipment of the related goods or raw 30 materials or provision of the related services begins; or 31 (C) 270 days for loans or parts of loans made for a pre-
01 shipment loan guarantee to support an export transaction; in this subparagraph, "pre-shipment loan guarantee" means 02 a guarantee, or part of a guarantee, that becomes 03 effective before the export contract date that shipment of the related goods or raw 04 materials or provision of the related services begins . 05 * Sec. 16. AS 44.88.545 is amended to read: 06 Sec. 44.88.545. Limitations of guarantees with respect to borrowers. The 07 authority may not provide a guarantee 08 (1) of more than $1,000,000; 09 (2) to an individual borrower that cumulatively , with the outstanding 10 principal balance of other authority guaranteed indebtedness of that borrower, 11 exceeds $1,000,000 [OF GUARANTEED INDEBTEDNESS]. 12 * Sec. 17. AS 44.88.555(b) is amended to read: 13 (b) Amounts received toward satisfaction of a default on a loan guaranteed 14 under AS 44.88.500 - 44.88.599 shall be allocated between the lender and the fund 15 according to the guaranteed percentage of the loan until the principal balance and 16 accrued interest have [HAS] been repaid. 17 * Sec. 18. AS 44.88.560 is amended to read: 18 Sec. 44.88.560. Powers of the authority. The authority may 19 (1) adopt regulations to implement AS 44.88.500 - 44.88.599; 20 (2) establish terms and conditions for loan guarantees and refinancing 21 agreements subject to the requirements of AS 44.88.500 - 44.88.599; 22 (3) make and execute contracts and other instruments to implement 23 AS 44.88.500 - 44.88.599; 24 (4) charge reasonable fees that the authority may establish by 25 regulation 26 [(A) ONE PERCENT OF THE AMOUNT GUARANTEED] for 27 the service it provides under AS 44.88.500 - 44.88.599; [AND 28 (B) ANY OTHER REASONABLE FEE THAT THE 29 AUTHORITY MAY ESTABLISH BY REGULATION;] 30 (5) acquire real or personal property by purchase, transfer, or 31 foreclosure when the acquisition is necessary to protect the authority's interest in a loan
01 or a loan guarantee; 02 (6) exercise any other power necessary to implement AS 44.88.500 - 03 44.88.599; and 04 (7) to the extent the authority considers it to be in its best interest to 05 do so, use money to pay expenses relating to the liquidation of collateral securing 06 loans guaranteed by the authority. 07 * Sec. 19. AS 44.88.599 is amended by adding a new paragraph to read: 08 (3) "export transaction" means a contract for the sale of goods, services, 09 or raw materials that includes a term that requires the goods, services, or raw 10 materials, in whole or in part, to be shipped to or provided in a foreign country. 11 * Sec. 20. AS 44.88.085(h), 44.88.300, 44.88.310, 44.88.320, 44.88.330, 44.88.340, 12 44.88.350, 44.88.360, 44.88.370, and 44.88.390 are repealed. 13 * Sec. 21. Section 4, ch. 162, SLA 1988, as amended by sec. 4, ch. 25, SLA 1991, sec. 4, 14 ch. 27, SLA 1993, and sec. 20, ch. 111, SLA 1996, is repealed. 15 * Sec. 22. TRANSFER OF ASSETS. Assets of the export insurance account 16 (AS 44.88.390(a)) are transferred to the Alaska Industrial Development and Export Authority 17 revolving fund (AS 44.88.060) on July 1, 1998. 18 * Sec. 23. LEGISLATIVE APPROVALS. (a) The Alaska Industrial Development and 19 Export Authority may issue bonds to finance the expansion, improvement, and modification 20 of the existing port facilities owned by the authority with respect to the DeLong Mountain 21 transportation system and to finance the construction of new facilities to be owned by the 22 authority related to the DeLong Mountain transportation system or may finance these projects 23 by other means available to the authority. The principal amount of the bonds and other 24 financing provided by the authority may not exceed $80,000,000. 25 (b) The Alaska Industrial Development and Export Authority may issue bonds to 26 finance the improvement and expansion of the existing port facilities located at the City of 27 Nome, Alaska, to be owned by the authority, or may finance the project by other means 28 available to the authority. The principal amount of the bonds and other financing provided 29 by the authority may not exceed $30,000,000. 30 (c) Subsections (a) and (b) of this section constitute the legislative approvals required 31 by AS 44.88.095(g).
01 * Sec. 24. Section 21 of this Act takes effect June 30, 1998. 02 * Sec. 25. Except as provided in sec. 24 of this Act, this Act takes effect July 1, 1998.