04/14/2011 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 119(EDT)                                                                                                
                                                                                                                                
     "An  Act  relating  to  the  procurement  of  supplies,                                                                    
     services, professional  services, and  construction for                                                                    
     the   Alaska   Industrial    Development   and   Export                                                                    
     Authority; relating to the definition  of 'own' for the                                                                    
     economic   development   account;   relating   to   the                                                                    
     definitions   of    'development   project',   'plant',                                                                    
     'facility',  and 'project'  for  the Alaska  Industrial                                                                    
     Development  and  Export  Authority;  relating  to  the                                                                    
     Alaska  Industrial  Development  and  Export  Authority                                                                    
     creating   subsidiaries  regarding   projects  financed                                                                    
     under  AS 44.88.172;  and  providing  for an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:54:12 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  proposed committee substitute,  work draft                                                                    
#27-GH1745/E, Kirsch, 4/12/11.                                                                                                  
                                                                                                                                
Co-Chair Stedman OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
DARWIN PETERSON, SENATE FINANCE  COMMITTEE, detailed the CS.                                                                    
He noted  changes in Section  6 and  7, which were  added to                                                                    
allow a  regional housing  authority eligibility  for grants                                                                    
under  the municipal  harbor grant  program. He  stated that                                                                    
while most harbors  are owned by municipalities,  it was not                                                                    
the   case  in   Chenega  and   Tatitlek  where   the  state                                                                    
transferred ownership  of the local harbors  to the regional                                                                    
housing authorities.   The housing authorities  were used as                                                                    
a  political  subdivision   because  neither  community  was                                                                    
incorporated. The  communities were thus ineligible  for the                                                                    
harbor matching grant program without the statutory change.                                                                     
                                                                                                                                
Mr.  Peterson mentioned  new language  on Page  4, Lines  17                                                                    
through 20, which  allowed the community to  use cruise ship                                                                    
head  tax money  and  harbor transfer  payments as  matching                                                                    
funds  for the  municipal  harbor grant  program. Section  8                                                                    
added  a definition  for the  regional housing  authority in                                                                    
Alaska  Statutes   2960,  which  is  the   municipal  harbor                                                                    
matching  grants  program.  The  next change  was  found  in                                                                    
Section 10, where "Alaska  Industrial Development and Export                                                                    
Authority  (AIDEA)"  was  removed  from  the  definition  of                                                                    
agency, to  exempt it from  the state procurement  code. The                                                                    
conforming   amendment  was   brought  to   the  committee's                                                                    
attention  by  legislative  legal  services.  The  amendment                                                                    
conforms with Section 9 of the  bill which adds AIDEA to the                                                                    
list  of   state  entities  allowed   to  adopt   their  own                                                                    
procurement  code.  Without  the  amendment,  the  authority                                                                    
could  have been  subject to  their procurement  regulations                                                                    
and the state procurement code.                                                                                                 
                                                                                                                                
Mr.  Peterson highlighted  changes  in Section  16, Page  9,                                                                    
where AIDEA  was given legislative  approval to bond  for up                                                                    
to $65 million for improvement  and expansion at the Skagway                                                                    
Ore   Terminal.  The   expansion  was   necessary  to   meet                                                                    
environmental   standards   and  prepare   for   substantial                                                                    
increases in the use of the  terminal by new Yukon mines. He                                                                    
noted that Section 17 makes  the addition of harbor transfer                                                                    
payments  as  eligible  matching  funds  for  the  municipal                                                                    
harbor grant program retroactive to January 1, 1993.                                                                            
                                                                                                                                
Co-Chair Stedman WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
9:58:48 AM                                                                                                                    
                                                                                                                                
TED   LEONARD,  EXECUTIVE   DIRECTOR,   AIDEA  thanked   the                                                                    
committee for the opportunity to testify.                                                                                       
                                                                                                                                
MARK DAVIS,  AIDEA, stated  that the  bill allowed  AIDEA to                                                                    
advance economic development across  a broad spectrum of the                                                                    
economy.  He  pointed  out the  proposed  amendment  to  the                                                                    
Alaska Procurement Code, which  would allow AIDEA to develop                                                                    
regulations  for   state  procurement.  The   Department  of                                                                    
Transportation   and   Public    Facilities   (DOT/PF)   and                                                                    
Department   of  Administration   (DOA)  supported   AIDEA's                                                                    
ability to  issue regulations  in a  method similar  to that                                                                    
used by the Alaska Housing Finance Corporation (AHFC).                                                                          
                                                                                                                                
Mr.  Davis spoke  to  the  change allowing  AIDEA  to own  a                                                                    
percentage  or  all  of  a  development  project  through  a                                                                    
Limited Liability Corporation  (LLC) or corporation. Another                                                                    
change allowed  AIDEA to create a  subsidiary corporation by                                                                    
the board  which could  issue bonds  or undertake  debt. The                                                                    
funds would  be used  to create projects  to be  sold later.                                                                    
The  AIDEA  board  expressed   interested  in  creating  the                                                                    
divestiture to  bring assets back  into the  private sector.                                                                    
The  bill  also  expanded  the  definition  of  "development                                                                    
project."   Since   1993,   the  Alaska   economy   expanded                                                                    
dramatically  and the  new definition  would allow  AIDEA to                                                                    
invest in communications and work  on community projects and                                                                    
federal facilities.  The bill would  allow AIDEA to  work on                                                                    
prototype or new technology.                                                                                                    
                                                                                                                                
10:03:51 AM                                                                                                                   
                                                                                                                                
TOM  SMITH, SKAGWAY  BOROUGH  MANAGER (via  teleconference),                                                                    
testified in  favor of the  legislation. He stated  that the                                                                    
borough strongly  supported the bonding authority  for AIDEA                                                                    
to proceed  with improvements at  the Skagway  ore facility.                                                                    
He  claimed that  the funding  would  increase capacity  and                                                                    
improve environmental standards.                                                                                                
                                                                                                                                
10:05:46 AM                                                                                                                   
                                                                                                                                
TOM COCHRAN,  MAYOR OF SKAGWAY (via  teleconference), echoed                                                                    
the  testimony of  Tim  Smith. He  stated  that the  bonding                                                                    
package  for  the  ore terminal  would  provide  substantial                                                                    
economic development.                                                                                                           
                                                                                                                                
10:06:27 AM                                                                                                                   
                                                                                                                                
GENERAL TOM KATKUS, COMMISSIONER  DEPARTMENT OF MILITARY AND                                                                    
VETERANS AFFAIRS,  testified in support of  the legislation.                                                                    
He mentioned the  portion of the bill  allowing the military                                                                    
to  have  options  regarding   development  of  projects  or                                                                    
facilities. He  pointed out  that the  military construction                                                                    
process  was  long  and tenuous.  The  legislation  provides                                                                    
another  option to  support the  military  by financing  and                                                                    
developing lease agreements with  the National Guard and the                                                                    
Coast Guard for the development of facilities.                                                                                  
                                                                                                                                
10:08:12 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  mentioned two zero fiscal  notes, one from                                                                    
Department  of   Revenue  the   other  from   Department  of                                                                    
Commerce, Community and Economic Development.                                                                                   
                                                                                                                                
Mr.  Leonard  added  that   the  legislation  provide  AIDEA                                                                    
flexibility  and tools  to encourage  greater investment  in                                                                    
Alaska's economy and resource development.                                                                                      
                                                                                                                                
Co-Chair Hoffman asked about the new board.                                                                                     
                                                                                                                                
Mr.  Leonard responded  that the  new board  provided better                                                                    
perspective  from   the  private  sector  and   allowed  for                                                                    
improved analysis of projects.                                                                                                  
                                                                                                                                
10:09:29 AM                                                                                                                   
                                                                                                                                
SCSCSHB  119 was  HEARD and  HELD in  Committee for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:09:53 AM                                                                                                                   
                                                                                                                                
RECESSED