Legislature(2013 - 2014)HOUSE FINANCE 519
03/28/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB134 | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 278 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 134 | TELECONFERENCED | |
| += | HB 121 | TELECONFERENCED | |
HOUSE BILL NO. 121
"An Act relating to the examinations, board, loans,
records, and lobbying contracts of the Alaska
Commercial Fishing and Agriculture Bank; and providing
for an effective date."
9:23:25 AM
Vice-Chair Neuman MOVED to ADOPT the proposed committee
substitute for HB 121, Work Draft 28-LS091\N, (Bannister,
3/26/14).
Co-Chair Stoltze OBJECTED for discussion.
DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE,
explained the changes in the CS. In Section 1, page 3,
lines 11, 18 and 21 a drafting error had been corrected;
"or (15) - (18)" had been inserted in place of (15) or
(16). The language referred to powers of the bank. Section
2 had been added to the bill. In Section 2, page 5, lines
10 - 16 amended the lending powers of the bank:
The bank may not make a loan on a limited entry
permitor other collateral to an individual,
corporation, partnership, or limited liability company
engages in commercial fishing, including a harvester,
processor, supplier, or marketer, if the collateral is
to be used in a mixed stock fishery with the potential
to affect any discrete stock or species that has been
declared a stock of concern by the Alaskan Board of
Fisheries within the last two life cycles of the stock
or species.
Mr. George continued. Section 9, page 7, line 29, reflected
the removal of the lobbying prohibition repeal.
9:25:49 AM
Vice-Chair Neuman asked if a sport fishing guide was a
commercial fisherman.
MICHAEL PASCHALL, STAFF, REPRESENTATIVE ERIC FEIGE, asked
for clarification on the question
Vice-Chair Neuman asked if a person who was a guide for
sport fishing, whose primary income was to take people out
sport fishing, identified as a commercial fisherman.
Mr. Paschall assumed that since the guide was not fishing
they would not be considered a commercial fisherman.
Vice-Chair Neuman asked if a sport fishing guide could
qualify for any of the programs in the legislation.
Mr. Paschall deferred the question to Lela Klingert, CEO,
CFAB.
9:28:17 AM
Representative Holmes understood that the rules of the bank
were unique. She asked for further clarification on Section
2.
Co-Chair Stoltze spoke to the intent of the change. He said
that the loans would be primarily out-of-state to non-
resident business people and commercial fisherman. He
thought that if the legislature was not going to prioritize
Alaskan fisherman then out-of-state business entities
should not be paid to enter the state to harvest, process
or market fish.
9:30:30 AM
Representative Gara asked if the section was returning
current law to prior law.
Co-Chair Stoltze said that there was an expansion for out-
of-state loans in the bill and Section 2 would put a limit
on where the out-of-state loans to be distributed.
9:31:19 AM
Representative Gara asked what the original amount of seed
money from the state had been to start the bank.
Mr. Paschall believed it was $32 million. He stated that
the money was repaid to the state. Once the debt was repaid
the state gave up stock ownership in the bank. He relayed
that the corporation had always been private, but the state
once had an ownership interest, which it no longer had.
9:32:22 AM
Representative Munoz spoke to the bank using permits as
collateral. She asked if the addition of the section
changed the ability to use permits as collateral. She asked
if the bank was truly private.
Mr. Paschall reiterated that the bank had always been
private. He said that question was whether the state had
additional controls over the bank. He said that the bill
would restrict collateral to any loan obtainer of using the
collateral of a limited entry permit in three different
fisheries.
Representative Munoz asked how the entity was exempt from
banking regulations in the state.
Mr. Paschall replied that statute specifically indicated
that the bank was not subject to the banking laws of
privately held or cooperative banks.
Representative Munoz asserted that the bank was quazi-
public and not a private bank.
Mr. Paschall thought that the question had been dealt with
by the courts in the past; the bank was an agent of the
state but was not an agency of the state.
9:34:40 AM
Co-Chair Austerman stated that he and Co-Chair Stoltze were
in constant discussions concerning sport fish and
commercial fish. He did not believe that the bill addressed
the out-of-state issue, but spoke to the allocation issue.
He shared that the legislature had decided that the
allocation for fisheries across the state would be handled
by the Department of Fish and Game through the board of
fish. He explained that if a commercial fishery was
intercepting any fish going to a discreet stock management
area, the bill said that CFAB could not loan the fisherman
fishing in that fishery. He expressed concern for the
Section having been added.
Co-Chair Stoltze rebutted that it was not an allocation
issue. He said that the legislature was not making any
decisions on allocation issues. He stated that he was not
going to enable out-of-state agencies to use Alaska based
money to move in on Alaskans opportunity for fish.
Representative Gara agreed with Co-Chair Stoltze about
stocks of concern. He said that he did not see how the
section would limit Alaskans.
Co-Chair Stoltze said that it had been the testimony both
public and private that the most folks that would take
advantage of the program were from out-of-state. He said
that the intent of the bill was to bring in more out-of-
state participants through Alaskan loans.
9:39:38 AM
Vice-Chair Neuman appreciated the effect of Section 2. He
felt that it was prudent not to affect the impact to
certain fisheries through expansion. He said that out-of-
state companied could receive up to $1 million in loans to
fish Alaska's waters.
9:41:22 AM
Mr. Paschall replied that part of the intent of the bill
was to lift some of the loan restriction amounts. He said
that there were already provisions for certain out-of-state
companies. He relayed that the bill listed different
provisions for different types of loans.
Vice-Chair Neuman returned to Section 2. He asked if the
section allowed up to $1 million in loans to commercial
fishermen, processors, suppliers or marketers.
9:42:54 AM
Mr. Paschall understood that Section 2 would prohibit the
use of collateral for individuals applying for loans it
would not change the amount. He said that numbers 4, 5, 6
and 7 on Page 2 changed the limits on those particular
loans.
Co-Chair Stoltze asked for the sponsor's position on
Section 2.
Mr. Paschall replied that the concern was that Section 2
put the bank in a precarious situation and would be
difficult to enforce.
9:44:51 AM
Vice-Chair Neuman felt that the online application asked
specific questions to applicants about their business
practices; he imagined that it was well understood who was
doing what, and where.
Mr. Paschall agreed. He suggested that if an individual
were to qualify for a loan on a fishing vessel to fish
outside of Juneau, and next year they decided to fish in
Norton Sound (an area of stock concern), there would be
nothing that the bank could do about it. The restrictions
would only apply when initially qualifying for the loan.
9:46:02 AM
Representative Gara asked about Page 6, line 1 of the bill.
He asked whether Section 5 was meant to govern out-of-state
companies. He wondered if the percentage of total capital
of the loan would be lifted from 8 to 25 percent solely for
foreign owned businesses.
Mr. Paschall replied that Section 5 referred only to loans
that were made to non-members of the bank. The amount of
the loan was lifted $25,000 to $50,000, and was primarily
intended for agriculture. He believed that there was a
residency restriction.
Representative Gara asked where the $50,000 figure derived
from.
Mr. Paschall replied that it was the cumulative amount of
the loans to non-members of the bank.
Co-Chair Stoltze noted that Section 2 was important to some
committee members. He wondered whether people would still
feel that they could support the bill if the section were
removed.
Mr. Paschall though that the bank president could better
speak to the impacts of the section. He said that there was
concern with the broadness of the language in the section.
Co-Chair Stoltze said that non-commercial fishermen had
reacted positively to the section.
9:49:39 AM
Co-Chair Austerman could not support the bill if Section 2
remained. He believed that the language gave the bank the
burden of making the determination as to whether the area
in question was an area of concern for fish stocks. He felt
that Section 2 warped the original intent of the
legislation. He suggested that if the legislature did not
want the Board of Fisheries to allocate the fisheries then
their authority should be revoked, and the issue brought
back under the per view of the legislature.
Co-Chair Stoltze felt that the "broken political structure"
had limited substantive conversations on the topic to
commercial fishing only.
9:52:04 AM
Representative Gara felt that Section 2 stated that the
stock in question had to be a stock of concern over the
last two lifecycles. He related that he had fished all over
the state. He opined that King Salmon were not returning to
the streams in the Mat-Su Valley or the Yukon. He lamented
that when he first moved to Alaska fishermen were catching
the "biggest kings in the world."
Co-Chair Austerman interjected that it was not only
commercial fishermen that were catching those kings.
Representative Gara agreed.
Co-Chair Stoltze argued that those large kings were caught
in nets and were not recorded because they were not caught
by sport fishermen.
Representative Gara believed that commercial, subsistence,
and sport fishermen wanted to see a return of the
disappearing stocks of fish. He though it was responsible
to no lend out state money to anyone that wanted to harvest
a fishery that had just barely come back from being a stock
of concern. He stated that the out-of-state aspect of the
bill did not sit well with him.
9:54:33 AM
Vice-Chair Neuman appreciated the point of allowing two
life cycles.
9:55:25 AM
Representative Wilson expressed concern with businesses
that were located out of state.
Mr. Paschall replied that the different components of the
bill offered different loan opportunities. He stated that
the residency requirement was being excluded so that the
individual would not have to physically reside in the state
long enough to claim residency. Under the same facility,
the business had to be located in the state and the
majority interest in the processor, or harvester, had to be
held by a resident of the United States. He said that the
tie to the state was that outside money would be invested
through borrowing in operations in the state.
Representative Wilson understood that the change would mean
that a business could conduct business in another state as
long as the principal portion of their business was in-
state, and that they hired Alaskan.
Mr. Paschall replied that ownership, residency and
percentage of in-state business would all be taken into
consideration. He said that the additions to the bill
adjusted the provisions to make the requirements for the
loans less restrictive.
Representative Wilson said that making the loans less
restrictive was the problem. She stressed that she did not
want to give people a reason to move out of state. She
understood that currently a person could only qualify if
they resided in-state. She believed that businesses moving
out-of-state would be an unintended consequence of the
change.
10:00:26 AM
Representative Guttenberg spoke to the collateral aspect of
Section 2. He wondered what would happen to the banks
evaluation of the loan if the collateral was unstable or in
flux and was somehow devalued.
10:02:10 AM
Mr. Paschall understood that the question was whether the
value of the collateral would be devalued during the loan
application process if the person owned a limited entry
permit that allowed them to fish with the permit in a stock
of concern.
Representative Guttenberg though a better definition of
stock of concern could offer clarity.
Mr. Paschall thought that the value of the collateral would
be influenced as well as the ability to get a loan. He said
that having a limited entry permit in that particular
fishery would probably be worth less a collateral than a
limited entry permit in a different fishery.
Co-Chair Stoltze said that commercial fishing had received
a lot of protections that were not offered to other
fishermen.
Representative Costello asked whether the Board of Fish was
unable to manage fisheries on behalf of the state.
10:03:58 AM
Mr. Paschall deferred the question to the Board of
Fisheries.
10:04:15 AM
Co-Chair Austerman did not have a problem with change in
general and the desire to get things done that were not
getting done through the normal process. He asserted that
fishermen in his areas were affected because fish traveled
all over the ocean in a life-cycle. He said if a Kodiak
fisherman catches a fish in Kodiak while the fish is headed
to the Mat-Su into a fishery of concern there was the
potential that fisheries in his area could be closed down.
Co-Chair Stoltze said that the bill was about out-of-state
loans.
Co-Chair Austerman disagreed. He contested that the bill
did not speak to out-of-state loans. He asserted that if
the sponsor wanted to deny loans to out-of-state commercial
fishermen then that language should be written into the
bill. He said that the bill was about fisheries management
in the state. He wondered how the bank's loan portfolio
would fare under the proposed legislation.
Co-Chair Stoltze interjected that the bank was also an
agricultural loan bank.
Co-Chair Austerman stated that if the committee was going
to "be biologists", and make a determination about what was
going on with the fisheries in the state, then it should
discuss the agriculture industry in the Mat-Su Valley that
put salt into rivers that may be killing salmon in the
stocks of concern. He argued that the bill should say that
no loans could be given for agriculture projects if there
was the potential of destroying a stock of concern.
10:07:28 AM
Co-Chair Stoltze asked if the department felt that the
issue was allocated.
BEN MULLIGAN, DEPARTMENT OF FISH AND GAME, JUNEAU (via
teleconference), felt that he should research the boards
process
Mr. Mulligan replied that he would appreciate further
information from board members.
Co-Chair Stoltze asked
Mr. Mulligan replied that the section discussed the
issuance of loans. No knowing how many loans.
10:08:58 AM
LELA KLINGERT, CEO, CFAB (via teleconference),
Co-Chair Stoltze requested her opinion.
Ms. Klingert replied that the previous bill allowed the
lending powers with regard to commercial fishing. Tourism
and resource base industry. Support fishery. Enabling a
loan for sport fishers to house residents. Expand into non-
resident commercial fishing.
Co-Chair Stoltze
Ms. Klingert did not read the section to discuss non-
residents.
Co-Chair Stoltze discussion for commercial fishermen. Not
the type of people.
10:12:01 AM
Representative Costello clarified that
Ms. Klingert yes. She stated that the impact of section 2
addressed restrictions on any loans for Alaska residents.
Co-Chair Stoltze serious conservation concern.
Ms. Klingert replied that loans made were assessed by the
individuals ability to pay.
Co-Chair Stoltze discussed section 2 and the project in the
bill.
10:13:59 AM
Ms. Klingert replied that the bill tied the banks' hands.
Co-Chair Stoltze
Ms. Klingert
10:14:27 AM
Representative Gara understood the goal of protecting
rebounding fisheries. He understood that the loans were not
denied to fishermen that would accidentally catch the fish.
He wished to ensure that fish would rebound.
Representative Munoz asked about loans for non-residents
for permits as collateral.
Ms. Klingert
Representative Munoz
Ms. Klingert
Representative Munoz asked Ms. Klingert if she considered
the institution CFAB a quasi-public or a private bank.
Ms. Klingert replied that the institution was a private
tax-paying entity functioning as an agent of the state and
governed by a statute under the state law. She was unsure
of the legal definition as she was not an attorney.
Representative Munoz noted that the institution could use
permits as collateral whereas a private bank could not.
Ms. Klingert agreed that CFAB enjoyed the special privilege
as an agent of the state.
10:17:07 AM
Ms. Klingert agent of the state. Not an attorney.
Representative Munoz use permits as collateral.
10:18:07 AM
Co-Chair Austerman asked about other banking institutions.
He wondered about other banks loaning to fisherman.
Ms. Klingert replied yes.
Co-Chair Austerman add all of the banks.
Co-Chair Stoltze
10:19:10 AM
Vice-Chair Neuman asked about the limits on maximum loans.
Ms. Klingert
Vice-Chair Neuman loans for CFAB maximum amount of loans.
How much for individual appropriations.
Ms. Klingert.
Vice-Chair Neuman banking institutions stated that CFAB
undercut. Because the interest rates charged was less. He
wondered about eh theme.
10:21:20 AM
Ms. Klingert stated that the Department of Commerce,
Community and Economic Development.
Vice-Chair Neuman
Co-Chair Austerman
10:22:15 AM
Representative Costello asked about reinsert portions of
the bill.
Co-Chair Stoltze voting
Representative Holmes agreed with portions of the CS. She
agreed with the intent of section 2.
Co-Chair Stoltze
Representative Holmes would like to vote to work on the
section.
Representative Munoz agreed that minor changes adding non-
resident to the language would better capture the intent.
Representative Wilson
Co-Chair Stoltze
10:24:22 AM
Representative Gara did not wish for interpretation. He
commented on section 2 and instate folks to target
fisheries of concern.
10:25:08 AM
Representative Costello asked does the board of fish have
the tools necessary to. She wanted to know from the banking
industry, would the bank loan to the individuals.
Co-Chair Stoltze 6 votes to get out of committee. He was
committed to work with the members.
Co-Chair Austerman maintained his objection to the adoption
of the CS.
A roll call vote was taken on the motion.
IN FAVOR: Holmes, Munoz, Neuman, Thompson, Gara,
Guttenberg, Stoltze
OPPOSED: Wilson, Costello, Austerman
The MOTION PASSED (7/3). There being NO further OBJECTION,
CSHB 121 (FIN) was ADOPTED.
10:29:14 AM
Representative Gara requested Black and Veatch. He wondered
how the state ranked worldwide.
Co-Chair Austerman
CSHB 121 (FIN) was HEARD and HELD in committee for further
consideration.
10:30:04 AM
RECESSED TO THE CALL OF THE CHAIR
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 121 CS FIN Amendments 1-2 Gara.pdf |
HFIN 3/28/2014 8:30:00 AM |
HB 121 |
| HB 121 CS WORKDRAFT FIN version N.pdf |
HFIN 3/28/2014 8:30:00 AM |
HB 121 |