Legislature(2017 - 2018)SENATE FINANCE 532
04/17/2017 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB37 | |
| HB56 | |
| SB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 37 | TELECONFERENCED | |
| += | HB 56 | TELECONFERENCED | |
| += | SB 4 | TELECONFERENCED | |
HOUSE BILL NO. 56
"An Act relating to limitations on certain commercial
fishing loans made by the Department of Commerce,
Community, and Economic Development."
10:15:22 AM
REPRESENTATIVE DAN ORTIZ, SPONSOR, discussed HB 56. He
detailed that the bill addressed the Fisherman's Revolving
Loan Fund; and would allow borrowers of Section D of the
fund to apply for the same loan amount as the borrowers of
all other sections of the fund. He informed that the fund
was created in 1972 to promote predominantly resident
fisheries, and support continued maintenance of gear and
vessels.
Representative Ortiz continued discussing the bill. He
elaborated that borrowers must be Alaska residents for two
years prior to the loan application date. To be eligible,
Alaskans must document that they had attempted to find
private sector financing, and produce a letter of rejection
from a private lender. He pointed out that many harvesters
did not meet typical private sector financing because they
are from rural cash economies, or were young and had no
credit history. Over the life of the program, there had
been 8,400 loans. The fund was completely self-sufficient.
There had been over $125 million appropriated out of the
fund to other state programs or to the GF. At the end of
FY16, the program had 1,728 loans. The interest rate was
5.5 percent. The delinquency rate of 2.2 percent, which was
well below the industry standard of 5 percent. He informed
that the bill had a zero fiscal note, as the proposed
legislation did not affect the solvency of the fund.
10:17:52 AM
Senator von Imhof asked the sponsor to repeat the
statistics related to the loan fund.
Representative Ortiz reiterated that at the end of FY 16,
the program had 1,728 loans. The interest rate on the loans
was 5.5 percent. The delinquency rate on the loans was 2.2
percent, which was well below the industry standard of 5
percent.
Senator von Imhof asked about the total amount of the
outstanding 1,728 loans.
Representative Ortiz thought that the Division of Economic
Development staff would have the figures available.
Senator Micciche asked why the increase from $300,000 to
$400,000 was important, and what was meant by his statement
that the bill did not raise the aggregate amount a borrower
may hold unpaid.
Representative specified that the bill would not raise the
total loan limit of the program. The borrowers limit was
set at $400,000, and the limit would not be changed by the
bill. Rather, within Section D the bill would raise the
amount a person could borrow (from $200,000 to $300,000)
from a specific category.
10:20:40 AM
AT EASE
10:20:54 AM
RECONVENED
Representative Ortiz clarified that the bill would raise
the amount from $100,000 to $200,000 within the Section D
loan category. The bill expanded the categories from which
a fisherman could borrow money to improve gear, or to
finance the boat. He referred to increased costs for boats
and gear. He noted that the borrowing category limits had
not changed since the fund was established in 1972. If the
bill were to change the total amount that a person could
borrow, it would have to be close to $700,000 to adjust to
inflation. He restated that the bill did not propose to
raise the total loan limit per borrower.
Senator Olson asked about the default rate and delinquency
rate on the loans.
Representative Ortiz was not sure of the distinction
between default and delinquency rates.
Senator Olson asked about residency requirements.
Representative Ortiz specified that the program was for in-
state fisherman with at least two years of residency.
10:23:03 AM
BRITTENY CIONI-HAYWOOD, DIRECTOR, DIVISION OF ECONOMIC
DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, stated that the outstanding principle on the
loans was just over $95 million at the end of FY 16. She
relayed that as of the beginning of April 2017, the
interest rate changed from 5.5 percent to 5.75 percent.
Ms. Cioni-Haywood informed that the delinquency rate was
2.2 percent, and the default rate was approximately 1.1
percent.
Senator von Imhof referred to the loan requirement of a
letter of rejection from a bank.
Ms. Cioni-Haywood stated that the requirement was not
necessary for permits, because there were only two entities
in the state that could lien on permits.
Senator von Imhof considered that an individual that did
not qualify for traditional bank financing would generally
be a higher risk. She considered various loan rates as
compared to the rate offered by the fund. She thought a
higher-risk borrower would receive a rate of prime plus 3
or 4 percent; whereas the current fund rate was prime plus
2 percent.
Ms. Cioni-Haywood stated that the fund loan rates were not
risk-based like a private sector lender, but rather were
set in statute to be prime plus one or two percent.
10:26:17 AM
AT EASE
10:27:01 AM
RECONVENED
Ms. Cioni-Haywood stated that the interest rate was prime
plus two percent.
Co-Chair MacKinnon asked if loan default disqualified
borrowers for further loans.
Ms. Cioni-Haywood answered in the affirmative.
Co-Chair MacKinnon OPENED public testimony.
10:28:18 AM
BENJAMIN BROWN, COMMERCIAL FISHERIES ENTRY COMMISSION,
JUNEAU, testified in support of the bill. He relayed that
the Commercial Fisheries Entry Commission (CFEC) issued
permits and oversaw transfer of limited entry permits that
were often the objects that were purchased with the loans.
Additionally, permit holders were often the borrowers that
used the loans for other purposes such as new vessels, or
vessel and gear maintenance. He had observed over his 6
years on the commission that the program had been an
excellent partner that strove to ensure resources were
available, so Alaskans could have successful careers as
commercial fisherman. He recalled communicating with
fishers that called with concerns about loan applications,
and testified to the praiseworthy response of the loan fund
staff.
Mr. Brown continued his testimony, stating that the
"graying of the fleet" had been a source of concern to many
Alaskans and members of the legislature. He thought that
the loan fund was making things as good as possible for
commercial fishers in Alaska. He thought the legislation
would achieve its stated objectives.
10:30:06 AM
Co-Chair MacKinnon CLOSED public testimony.
Vice-Chair Bishop discussed the zero fiscal note from the
Department of Commerce, Community and Economic Development
(FN1).
Co-Chair MacKinnon informed that any proposed amendments
were due by noon the following day. She set the bill aside.
HB 56 was HEARD and HELD in committee for further
consideration.
10:31:02 AM
AT EASE
10:33:43 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSSB 37 (FIN) Sectional Analysis version R 4-14-17.pdf |
SFIN 4/17/2017 9:00:00 AM |
SB 37 |
| SB 37 Work Draft Version R.pdf |
SFIN 4/17/2017 9:00:00 AM |
SB 37 |
| CS SB 37 (FIN) vsn R Sponsor Statement.pdf |
SFIN 4/17/2017 9:00:00 AM |
SB 37 |
| SB 37 CSSB 37(SFIN) Responses to Questions 4-17-17 cg.pdf |
SFIN 4/17/2017 9:00:00 AM |
SB 37 |