Legislature(2015 - 2016)SENATE FINANCE 532
04/12/2016 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB100 | |
| HB77 | |
| HB155 | |
| HB143 | |
| HB41 | |
| HB137 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 100 | TELECONFERENCED | |
| + | HB 77 | TELECONFERENCED | |
| HB 155 | |||
| + | HB 143 | TELECONFERENCED | |
| += | HB 41 | TELECONFERENCED | |
| += | HB 137 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE BILL NO. 143(FIN)
"An Act authorizing the Alaska Industrial Development
and Export Authority to issue bonds to finance the
infrastructure and construction costs of the
Sweetheart Lake hydroelectric project."
10:02:15 AM
REPRESENTATIVE CATHY MUNOZ, SPONSOR, discussed the bill:
House Bill 143 authorizes the Alaska Industrial
Development and Export Authority to issue up to $120
million in conduit issuance bonds to finance a
hydroelectric project at Sweetheart Lake,
approximately 43 miles south of Juneau. Conduit
issuances do not impact AIDEA bonding capacity and
would solely be based on the merits of the project.
AIDEA would act as a facilitator by vetting and
performing due diligence on the project to determine
whether it qualifies for such financing.
Hydroelectric power is a clean, effective, and
affordable source of energy in coastal, rainforest
Alaska - a region that can use it to offset high costs
of industries such as mining, processing fish, and
forest products. Mining, tourism, and fish processing
are vital to the area's economy.
Affordable energy is a keystone of a healthy and
sustainable economy. It ensures Alaska families,
businesses, and job-creating industries may grow and
thrive. HB 143 would help a region take steps toward
unlocking its great energy and resource potential and
move toward having a stronger and more diversified
economy.
10:05:07 AM
TERRY HARVEY, STAFF, REPRESENTATIVE CATHY MUNOZ, discussed
the sectional analysis (copy on file):
Section 1 (a) Provides legislative approval for the
Alaska Industrial Development and Export Authority to
issue bonds for the Sweetheart Lake hydroelectric
project in an amount not to exceed $120,000,000
payable exclusively from the revenue derived from the
project.
(b) Provides that the bond authorization in this
section does not constitute a general obligation
of the state or authority.
(c) Provides that the bonds authorized by this
section may not be considered in calculating the
authority's 12-month bonding limitation under AS
44.88.095(a).
Section 2 Repeals sec. 1 on June 30, 2020.
10:06:25 AM
Senator Dunleavy wondered whether the bill had any cost to
the state.
Representative Munoz reiterated that the bill had no cost
to the state.
10:06:46 AM
Senator Olson wondered what would occur if the mine shut
down.
Representative Munoz related that Kensington had invested
in an 8,000 foot tunnel, and there were reserves that were
available for low cost power.
Senator Olson asked about the potential ramifications if
Kensington were to shut down.
Representative Munoz replied that the other large customer
was the downtown district heating project.
Vice-Chair Micciche wondered why the bond authorization did
not constitute a general obligation to the state.
10:09:19 AM
JOHN SPRINGSTEEN, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (AIDEA) (via
teleconference), explained that the clause was included so
the project would not be against the 12-month rolling limit
of $400 million.
Co-Chair MacKinnon announced that the bond debt report had
zero cash available for future bond under the legislature's
debt calculation. She wondered if the limit would be
exceeded by $120 million.
Mr. Springsteen replied that it was a conduit issuance and
relied solely on the revenue of the project.
Co-Chair MacKinnon wondered whether other projects were
counted against the debt limit of the rolling average with
backed revenue bonds.
Mr. Springsteen stated that current statute dictated that
the only bond issuances that were not counted toward the
$400 million 12-month rolling cap were refunding bonds.
Co-Chair MacKinnon wondered if the legislation was raising
the cap by $120 million.
Mr. Springsteen replied that the legislation was a one-time
approval.
Co-Chair MacKinnon asked how long it would take to fund the
project.
Mr. Springsteen stated that the project had not yet come
forward with a feasibility study.
Co-Chair MacKinnon asked if such projects were typically 10
years, 20 years, 30 years, or 50 years.
Mr. Springsteen thought that hydroelectric projects were
typically 50 years, and the project could be up to 100
years.
Vice-Chair Micciche surmised that the bill was not against
AIDEA's bonding limitation because the securities were
based upon the financial backing of another entity.
Mr. Springsteen iterated that the assets and revenue of the
project provided a security for the bond issuance.
Co-Chair MacKinnon asked if there was a moral obligation
with the revenue bond.
Mr. Springsteen stated that in the instance there was not a
moral obligation.
Co-Chair MacKinnon opened public testimony.
Co-Chair MacKinnon CLOSED public testimony.
10:15:27 AM
AT EASE
10:15:37 AM
RECONVENED
10:16:19 AM
Vice-Chair Micciche wanted to support the Kensington mine.
He stated that the heat pump technology was fascinating. He
hoped to expand heat pump technology.
Co-Chair MacKinnon commented that she would like to discuss
the reason for the language.
HB 143 was HEARD and HELD in committee for further
consideration.