Legislature(2011 - 2012)CAPITOL 120
02/22/2011 05:00 PM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Industry Overview: Seafood Processing Sector | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 121-LOAN FUNDS: CHARTERS/MARICULTURE/MICROLOAN
5:57:22 PM
CHAIR THOMPSON announced that the final order of business would
be HOUSE BILL NO. 121, "An Act establishing the commercial
charter fisheries revolving loan fund, the mariculture revolving
loan fund, and the Alaska microloan revolving loan fund and
relating to those funds and loans from those funds; and
providing for an effective date."
5:57:58 PM
REPRESENTATIVE JOHNSON moved to adopt the committee substitute
(CS) for HB 121, 27-GH1728\I, Kane, 2/16/11, as the working
draft. Without objection Version I was before the committee.
5:59:19 PM
CURTIS THAYER, Deputy Commissioner, Department of Commerce,
Community & Economic Development (DCCED), paraphrased from the
newly added subsection of the CS, page 1, line 8, which read:
(l) For a new loan under AS 16.10.300 - 16.10.370,
made on or after the effective date of this Act, the
department may provide a reduction of the interest
rate of not more than two percent if at least 50
percent of the loan proceeds are used by the borrower
for product quality improvements or energy efficiency
upgrades if the improvements or upgrades use products
manufactured or produced in the state. When the
department offers a reduction under this subsection,
the department shall provide the reduction to all loan
applicants who meet the criterion described in this
subsection. In this subsection, "manufactured or
produced" means processing, developing, or making an
item into a new item with a distinct character and
use.
MR.THAYER indicated that the word "grant" was also added to all
references in the bill which read:
... money appropriated to, transferred to, or received
by gift, grant, devise, bequest, or donation to the
fund;
MR. THAYER continued on to page 8, line 4 and read the added
language:
(c) A loan under AS 16.10.910 may be made for the
purchase of boats or vessels determined to be integral
to the operation of the farm.
MR. THAYER paraphrased language revised on request by the
bankers association, revising page 10, line 21, which read:
(3) if the requested loan amount is $35,000 or more,
provide to the department a document from a state
financial institution stating that
(A) the applicant has been denied a loan for the
same purpose;
or
(B) a loan from the financial institution is
contingent on the applicant also receiving a loan from
the fund.
MR. THAYER pointed out that transition language was deemed
unnecessary and removed, from the final page of the bill; only
one effective date was required.
6:01:16 PM
WANETTA AYERS, Director, Economic Development Section,
Department of Commerce, Community & Economic Development
(DCCED), concurred with the changes.
6:01:40 PM
REPRESENTATIVE JOHNSON turned to page 8, line 16, to note the
language which reads: "Interest on the principal of a loan made
under AS 16.10.910 does not accrue during the first six years of
the loan," and asked whether the stipulation is consistent with
the governor's bill.
MR. THAYER replied yes, and reminded the committee that some
mariculture species require six years of growing time to be
marketable.
REPRESENTATIVE JOHNSON pointed out that participants in the
charter fishing industry would have revenue receipts in the
first year, and asked if the six year waiver still applies.
Further, he questioned if the governor's original bill is
reflected in the CS.
MR. THAYER clarified that mariculture is waived for the first
year, but not the charter fishing aspect. He reiterated that it
does follow the intent of the governor's bill.
MS. AYERS affirmed that the governor's original bill proposed a
six year deferment for mariculture only, and that is what is
held in the CS, also.
6:03:15 PM
REPRESENTATIVE AUSTERMAN cited the applicable sections, AS
16.10.920, and AS 16.10.910.
6:03:38 PM
REPRESENTATIVE MILLER paraphrased from the bill and asked:
'The department may not require repayment of the loan
for six years'; could that apply to a boat.
MS. AYERS responded that the loan officer would be authorized to
make repayment determinations.
REPRESENTATIVE MILLER asked whether it is difficult to repossess
a boat.
MS. AYERS assured the committee that the financing section has
historically been successful recovering boat loan assets.
6:05:25 PM
REPRESENTATIVE JOHNSON pondered the possibility of allowing the
interest to accrue with deferred payment beginning in, perhaps,
year 15.
REPRESENTATIVE PRUITT interjected that some student loan
programs follow an interest deferment model.
MS. AYERS said the division uses the technique under certain
circumstances; however, the effect of the interest deferment
requires that in year seven, a higher repayment amount becomes
due.
6:08:33 PM
REPRESENTATIVE JOHNSON asked:
How are you amortizing the interest that you're not
charging, or aren't allowed to charge; so that
interest is gone...
MS. AYERS said yes, that money is not recouped.
6:08:50 PM
REPRESENTATIVE AUSTERMAN stated his understanding that there is
no interest accrued on the first six years of the loan.
MS. AYERS clarified that the interest is deferred.
REPRESENTATIVE AUSTERMAN said it must be earned before it can be
deferred.
6:09:22 PM
CHAIR THOMPSON interjected that the CS clearly states no
interest will accrue.
REPRESENTATIVE AUSTERMAN stated support for a six year deferment
but expressed concern for the interest not accruing.
MR. THAYER said the department would agree to have the interest
accrue, and be deferred for payment.
6:10:49 PM
REPRESENTATIVE JOHNSON suggested holding the bill, pending new
language from the department to reflect interest accrual and
deferment in order to allay the concerns expressed by the
committee.
6:11:16 PM
REPRESENTATIVE AUSTERMAN pondered whether removing the word
"not" from page 8, line 17, would be appropriate.
CHAIR THOMPSON agreed and said that other references would also
need to be addressed, however.
6:12:11 PM
REPRESENTATIVE HERRON speaking to the point of policy, asked if
the administration's intent is to help make mariculture a
successful industry, in which case, he opined, it would be
appropriate to have the interest accrue, but at a lower rate.
[The Chairman allowed a brief, informal discussion to ensue.]
6:14:04 PM
MR. THAYER offered to have language crafted and new fiscal
considerations brought to another hearing.
REPRESENTATIVE JOHNSON stated support for the bill, and said the
interest should not be prohibitive.
6:14:50 PM
REPRESENTATIVE MILLER referred to the CS, page 4, line [21], and
paraphrased from the language, which read:
(5) may not be made to a person who has a past due
child support obligation established by court order or
by the child support services agency under AS
25.27.160 - 25.27.220 at the time of application.
REPRESENTATIVE MILLER said that this type of program may
actually benefit someone who is behind in child support
obligations to become a productive citizen once again.
6:16:09 PM
REPRESENTATIVE AUSTERMAN referred to another area of the CS and
indicated that a person might not live in the state but still
maintain a domicile.
6:16:32 PM
CHAIR THOMPSON paraphrased the language being referred to by
Representative Austerman, page 4, line 4, which read:
(1) shall physically reside in this state and maintain
a domicile in this state during the 24 consecutive
months preceding the date of application for the
program;
REPRESENTATIVE AUSTERMAN asked what the definition is for
physically residing in the state.
MS. AYERS established that the CS specifies the consecutive 24
month period preceding the date of application for the program.
Anything that would disqualify a person from other residency
attached programs, would apply, such as the permanent fund
benefit. To a follow up, she said the residency standard used
for the permanent fund would be applied for the purpose of this
program.
6:18:14 PM
RODGER PAINTER, President, Alaska Shellfish Growers Association,
offered to work cooperatively with the department regarding
appropriate financial parameters for HB 121.
6:18:47 PM
PAUL FUHS, PacAlaska, explained that the terms of the loan will
be helpful to the mariculture industry and the front end money
is the key. It is now known how long it will take to produce a
geoduck for market; six to eight years. He said that deferring
the interest of the loan would be plausible, and reviewed the
cost of spat and other start up expenditures. He directed
attention to the committee handout titled "Pacific Shellfish
Growers Association Shellfish Production on the West Coast" to
indicate that of the total sales reported, are approximately
$117.4 million, of which Alaskan sales represent $599,232. He
opined that mariculture is a strong rural development program
and the bill will help to build the industry.
CHAIR THOMPSON closed public testimony and announced that the
bill would be held.