02/17/2011 10:15 AM House ECON. DEV., TRADE & TOURISM

          HB 120-AIDEA: NEW MARKETS TAX CREDIT PROGRAM                                                                      
                                                                                                                                
10:22:02 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON announced  that the first order of  business would be                                                              
HOUSE BILL  NO. 120,  "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."                                                                                                             
                                                                                                                                
10:22:15 AM                                                                                                                   
                                                                                                                                
MARK  DAVIS,  Economic  Development   Officer,  Alaska  Industrial                                                              
Development &  Export Authority  (AIDEA), Department  of Commerce,                                                              
Community & Economic  Development (DCCED), informed  the committee                                                              
HB  120 would  enable AIDEA  to work  with a  federal tax  program                                                              
called  the New  Markets  Tax  Credit Assistance  (NMTC)  program.                                                              
House  Bill 120  is a companion  bill  to HB 119,  and both  bills                                                              
provide  AIDEA  with  new  tools for  economic  development.    He                                                              
explained  that the  NMTC program  will allow  AIDEA to  cooperate                                                              
with  qualified equity  investors  who, working  with a  community                                                              
development  entity  such  as Alaska  Growth  Capital  (AGC),  put                                                              
money in  projects and receive  a tax credit  up to 39  percent on                                                              
their federal  taxes.   However,  Mr. Davis warned that  a problem                                                              
with the  program is that banks  on the lending side  are required                                                              
to take  interest-only payments for  seven years and  cannot place                                                              
a lien, thus  banks have been unwilling  to make these  loans.  In                                                              
search  of a  solution, AIDEA  consulted with  other states,  NMTC                                                              
funds, AGC,  and its  legal counsel.   With their suggestions,  HB
 was drafted  to allow AIDEA to offer a guarantee  to the bank,                                                              
thereby  encouraging  the  availability  of  private  capital  for                                                              
projects  in   targeted  low-income  communities,   which  is  the                                                              
purpose of the NMTC program.                                                                                                    
                                                                                                                                
CHAIR HERRON  directed that additional  written testimony  be made                                                              
part  of  the  record.  [The  additional   written  testimony  was                                                              
submitted to  the library with  other documents for  the permanent                                                              
record.]                                                                                                                        
                                                                                                                                
10:24:48 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON closed public testimony.                                                                                           
                                                                                                                                
10:25:06 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  OLSON moved  to  report HB  120  out of  committee                                                              
with  individual  recommendations   and  the  accompanying  fiscal                                                              
note.  There  being no objection,  HB 120 was reported  out of the                                                              
House  Special Committee  on Economic  Development,  International                                                              
Trade and Tourism.                                                                                                              
                                                                                                                                
10:25:42 AM