2011-01-24                     Senate Journal                      Page 0080
SB 66                                                                                                                         
SENATE BILL NO. 66 BY THE SENATE RULES COMMITTEE                                                                                
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
                                                                                                                                
          "An Act creating a new markets tax credit assistance                                                                  
          guarantee and loan program within the Alaska                                                                          
          Industrial Development and Export Authority; and                                                                      
          providing for an effective date."                                                                                     

2011-01-24                     Senate Journal                      Page 0081
was read the first time and referred to the Labor and Commerce and                                                              
Finance Committees.                                                                                                             
                                                                                                                                
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, zero, Department of Commerce, Community                                                                     
      and Economic Development                                                                                                  
                                                                                                                                
Governor's transmittal letter dated January 21:                                                                                 
                                                                                                                                
Dear President Stevens:                                                                                                         
                                                                                                                                
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill creating a new markets tax credit                                                        
assistance guarantee and loan program within the Alaska Industrial                                                              
Development and Export Authority (AIDEA).                                                                                       
                                                                                                                                
This legislation will enable AIDEA to foster more economic                                                                      
development in Alaska, especially in areas with great need for new                                                              
investment. Under this legislation, AIDEA could issue guarantees and                                                            
make loans to help finance projects funded through a federal new                                                                
markets tax credit program. This federal program offers a competitive                                                           
process by which federal new markets tax credits are allocated to                                                               
support the nationwide financing of projects located in low income                                                              
areas or otherwise serving low income populations. The federal                                                                  
program arises under Section 45D of the Internal Revenue Code, and                                                              
provides for the allocation of new markets tax credits equal to                                                                 
39 percent of total qualifying investments, payable over seven years.                                                           
The tax credits provide a present value investment return of                                                                    
approximately 30 percent of the amount of the qualifying investment,                                                            
and can substantially reduce the financing costs for a project.                                                                 
                                                                                                                                
Investments made under the federal new markets tax credit program                                                               
generally would fund only a portion of total project costs. The balance                                                         
of the funding must come from other loans or financing. There is a                                                              
scarcity of capital available and this legislation would enable AIDEA                                                           
to issue guarantees and make loans to assist in funding amounts not                                                             
covered by investments made under the federal program.                                                                          
                                                                                                                                
The proposed legislation requires AIDEA to evaluate the commercial                                                              
reasonableness of the underlying loan AIDEA would guarantee to                                                                  
determine that the project will promote economic development and                                                                
requires the financial institution to service the guaranteed loan.                                                              

2011-01-24                     Senate Journal                      Page 0082
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Sean Parnell                                                                                                                    
Governor