SB 25: "An Act relating to participation by the Alaska Industrial Development and Export Authority in energy projects."
00 SENATE BILL NO. 25 01 "An Act relating to participation by the Alaska Industrial Development and Export 02 Authority in energy projects." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 SHORT TITLE. This Act may be known as the Alaska Sustainable Strategy for 07 Energy Transmission and Supply (ASSETS) Act. 08 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 LEGISLATIVE INTENT. The legislature intends to appropriate, during fiscal years 11 2013 and 2014, amounts that total $2,000,000,000 to carry out the purposes of this Act. 12 * Sec. 3. AS 44.88.010(a) is amended to read: 13 (a) The legislature finds, determines, and declares that 14 (1) there exist areas of the state in which seasonal and nonseasonal
01 unemployment exist; 02 (2) this unemployment is a serious menace to the health, safety, and 03 general welfare, not only to the people in those areas, but also to the people of the 04 entire state; 05 (3) the state lacks the basic manufacturing, industrial, energy, export, 06 small business, and business enterprises and the other facilities referred to in this 07 subsection necessary to permit adequate development of its natural resources and the 08 balanced growth of its economy; 09 (4) the establishment and expansion of industrial, manufacturing, 10 energy, export, small business, and business enterprises in the state [ALASKA] and 11 the other facilities referred to in this subsection are essential to the development of the 12 natural resources and the long-term economic growth of the state, and will directly and 13 indirectly alleviate unemployment in the state; 14 (5) the expansion of export trade is vital to the health and growth of the 15 state's economy; 16 (6) many state [ALASKA] businesses could benefit from additional 17 financial and technical assistance with respect to the exportation of their products and 18 services; 19 (7) the [UNITED STATES] Export-Import Bank of the United States 20 has been mandated by the Export-Import Bank Act Amendments of 1983 to provide 21 technical assistance and export financing support to small businesses in cooperation 22 with state export finance agencies; 23 (8) Alaska-based exporters can be effectively assisted through the 24 establishment, as part of the Alaska Industrial Development and Export Authority, of 25 an export financing program designed to work with the [U.S.] Export-Import Bank of 26 the United States and other federal, state, and private institutions; 27 (9) the achievement of the goal of full employment, and of 28 establishment and continuing operation and development of industrial, manufacturing, 29 energy, export, small business, and business enterprises in the state will be accelerated 30 and facilitated by the creation of an instrumentality of the state with powers to incur 31 debt, to own and operate facilities, to make and insure loans to finance and to assist
01 private lenders to make loans to finance the establishment, operation, and development 02 of industrial, manufacturing, energy, export, small business, and business enterprises; 03 (10) it is in the public interest to promote the prosperity and general 04 welfare of all citizens of the state by 05 (A) stimulating commercial and industrial growth and 06 expansion by encouraging an increase of private investment by banks, 07 investment houses, insurance companies, and other financial institutions, 08 including pension and retirement funds, to help satisfy the need for economic 09 expansion; 10 (B) encouraging the production of raw materials and goods for 11 export, the expansion of exports and raw materials and goods, and the 12 rendering of services abroad by residents of the state through the establishment 13 of a program that provides financial assistance in cooperation with federal, 14 state, and private institutions for these purposes in the form provided in this 15 chapter; 16 (C) creating the Alaska Industrial Development and Export 17 Authority with the powers necessary to accomplish the objectives stated in this 18 paragraph, including the power to issue taxable and tax-exempt bonds and to 19 acquire ownership interests in projects as provided in this chapter; 20 (11) it is in the state's interest to import private capital to create new 21 economic activity which would not otherwise take place in the state. 22 * Sec. 4. AS 44.88.010(b) is amended to read: 23 (b) It is declared to be the policy of the state, in the interests of promoting the 24 health, security, and general welfare of all the people of the state, and a public 25 purpose, to increase job opportunities and otherwise to encourage the economic 26 growth of the state, including the development of its natural resources, through the 27 establishment and expansion of manufacturing, industrial, energy, export, small 28 business, and business enterprises and the other facilities referred to in (a) of this 29 section by creating the Alaska Industrial Development and Export Authority with the 30 powers, duties, and functions as provided in this chapter. 31 * Sec. 5. AS 44.88.095(a) is amended to read:
01 (a) The authority may not issue bonds for energy projects in a total 02 amount for all energy projects that exceeds $2,000,000,000. The authority may not 03 issue bonds in a 12-month period in an amount that exceeds $400,000,000, excluding 04 refunding bonds and bonds for energy projects. 05 * Sec. 6. AS 44.88.155(d) is amended to read: 06 (d) A loan participation purchased by the authority with assets of the 07 enterprise development account or with proceeds of bonds secured by assets of the 08 enterprise development account 09 (1) may not exceed $20,000,000; however, in the case of a loan 10 participation for an energy project [A POWER TRANSMISSION INTERTIE], the 11 loan participation may exceed $20,000,000 [WITH LEGISLATIVE APPROVAL]; 12 (2) may not be purchased unless 13 (A) the project applicant is not, or, if the applicant is not a 14 single proprietorship, all members of the business enterprise or enterprises 15 constituting the project applicant are not, in default on another loan made by 16 the state or by a public corporation of the state; and 17 (B) at least 10 percent of the principal amount of the loan is 18 retained by the loan originator, or at least five percent of the principal 19 amount of the loan is retained by the loan originator if the loan is for an 20 energy project; 21 (3) may not be purchased if the loan to be purchased exceeds 75 22 percent of the appraised value of the collateral offered as security for the loan unless 23 the amount of the loan in excess of this limit is federally insured or guaranteed or is 24 insured by a qualified mortgage insurance company, except that the loan to be 25 purchased under this paragraph may not exceed the total of loan proceeds used to 26 refinance an existing debt plus the cost of new construction, expansion, or acquisition 27 unless the proceeds from the additional amounts of the loan to be purchased are 28 restricted to uses approved by the authority to finance commercial activity in the state 29 by a business enterprise; 30 (4) may not be purchased if the participation in the loan to be 31 purchased is for a term longer than the following, except that a loan under (A) or (C)
01 of this paragraph may not have a term longer than three-quarters of the authority's 02 estimate of the life of the collateral offered as security for the loan: 03 (A) 40 years from the date the loan is made in the case of a 04 loan participation for a project described in AS 44.88.900(9)(E); 05 (B) 50 years from the date the loan is made in the case of a loan 06 participation for a an energy project [POWER TRANSMISSION 07 INTERTIE]; 08 (C) 25 years from the date the loan is made in the case of a loan 09 participation for other projects; 10 (5) may be made only if the participation in the loan to be purchased 11 contains amortization provisions; the amortization provisions 12 (A) must be complete and satisfactory to the authority and 13 require periodic payments by the borrower; 14 (B) may allow the loan originator to amortize the portion of the 15 loan retained by the loan originator using a shorter amortization schedule than 16 the amortization schedule for the portion of the loan held by the authority if 17 (i) in the authority's opinion, the project financed can 18 support the increased debt service; and 19 (ii) the accelerated amortization schedule is required to 20 induce the originator to make the loan; 21 (6) may be made only if the participation in the loan to be purchased is 22 in the form and contains the terms and provisions with respect to insurance, repairs, 23 alterations, payment of taxes and assessments, default reserves, delinquency charges, 24 default remedies, acceleration of maturity, secondary liens, and other matters the 25 authority prescribes; and 26 (7) may be made only if the participation in the loan to be purchased is 27 secured as to repayment by a mortgage or other security instrument in the manner the 28 authority determines is feasible to assure timely repayment under the loan documents 29 entered into with the borrower. 30 * Sec. 7. AS 44.88.159(e) is amended to read: 31 (e) The interest rate on a loan participation purchased directly from the assets
01 of the authority shall be determined under the regulations adopted by the authority 02 under AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as 03 determined by the authority to represent the allocable expenses of operation and costs 04 of loan origination and servicing, plus the cost of funds. Notwithstanding the 05 foregoing, the authority may adopt regulations providing for less than the 06 minimum interest rate on a loan participation for an energy project purchased 07 directly from the assets of the authority. In this subsection, 08 (1) "comparable financial security" means a type or category of 09 financial security the authority identifies in the regulations adopted by the authority 10 under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to 11 the term and financial conditions of a loan participation and for which a regularly 12 published, nationally recognized market index is available; 13 (2) "cost of funds" means the earnings, expressed as an annual interest 14 rate, the authority would receive on a comparable financial security, and, for a loan 15 participation with a fixed interest rate, the cost of funds must equal or exceed the 16 minimum interest rate; 17 (3) "minimum interest rate" means the five-year return on investment 18 funds of the authority, expressed as an annual interest rate, achieved by all internal and 19 external investment managers of the authority combined. 20 * Sec. 8. AS 44.88.900 is amended by adding a new paragraph to read: 21 (15) "energy project" means a project that involves the transmission, 22 generation, or distribution of electricity or natural gas for use in the state.