Legislature(2001 - 2002)
05/03/2001 06:25 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 236-AIDEA BONDS FOR GAS PUBLIC UTILITIES
CHAIRMAN TORGERSON announced HB 236 to be up for consideration. He
said he wanted to see due diligence done on the report before he
could support this bill, but he won't block it, if the committee
wanted to move it forward.
COMMISSIONER BOB POE, Executive Director, Alaska Industrial
Development and Export Authority (AIDEA), said that they have done
development projects under both scenarios, where the legislature
has approved bonding authorization (not an appropriation) before
due diligence is done and after due diligence was done. In fact, we
have $328 million of bonding authorizations on the books today that
have not gone to projects."
He thought it was interesting that HB 244 repeals provisions
relating to a grant of right-of-way of land for a railroad utility
corridor to AIDEA. There was $28 million in bonding authority for
that project, but it didn't prove to be financially feasible, so
AIDEA did not move ahead with the project. He explained:
In this case, Alaska Interstate Gas came to us mid
session in a particularly busy time for us with a few
large projects we are trying to get wrapped up and said,
"We think we have equity investors. We think we have a
good project for gas to southeast Alaska. We have been
monitoring the project over the last several months or
maybe a year. They said our equity [indisc.] will be
ready to move in the short term in the summer or fall, if
you go forward with it. But the equity partner, from our
understanding, didn't want to dive into the project and
didn't know there was a good chance of getting the
bonding authority. So, we agreed that we would work with
Interstate Gas, but that they would try and move the
bonding authority through. We don't know if this project
makes financial sense. I'm sure you and I could sit down
and identify six or seven weaknesses right off the bat
that would need to be proven true. It doesn't mean they
can't. It doesn't mean that we don't see a good
opportunity here, but we can't attest to the financial
feasibility of this. What we can attest to is that AIDEA
does do its job and the faith that the legislature has
frequently given AIDEA, which is to say, "We trust you to
do your job," is proven out in those $328 million worth
of projects that we haven't done, because they didn't
prove to be financially feasible.
I'll wrap up by saying there are seven different
qualifications that a development project needs to have
before AIDEA goes to the step of making a development
project. I can swear to you that AIDEA will do all of
those and only when this project is financially feasible
and has the support of the communities involved would we
do the project.
CHAIRMAN TORGERSON asked, "Why don't you lend them $10 million to
get them started?"
MR. POE answered, "We don't do a project that way. Typically, the
way we do it…"
CHAIRMAN TORGERSON said, "I know about typically, but that doesn't
stop you from doing it."
MR. POE answered, "Fiscal prudence would. There is no reason to put
$10 million into a project that you don't know is fiscally
feasible. The way we tend to do it is to enter into a reimbursable
agreement with the sponsors of a project where they reimburse AIDEA
for the cost of doing the due diligence…"
Number 340
SENATOR TAYLOR asked how long it would take.
MR. POE answered that it could take several months. It depends on
the proponents of the project and how well they have done their
work.
SENATOR ELTON asked if it would take another act of the legislature
to approve the final issuance of the bonds.
MR. POE answered that's not correct. "Once you give us bonding
authority, you leave it up to the AIDEA Board to decide." He said
he would be happy to keep the legislature apprised of the
situation.
MR. RANDY RUARO, Staff to Representative Williams, said, "It's the
sponsor's position that the original version of the bill be
passed."
SENATOR TAYLOR moved to adopt the Cook 5/3/01 committee substitute
to HB 236.
SENATOR ELTON objected for an explanation of the changes.
CHAIRMAN TORGERSON explained that it says that the applicant bears
the cost.
SENATOR ELTON asked if there would be the additional step of coming
back to the legislature for the authority to issue bonds if the due
diligence got done.
CHAIRMAN TORGERSON said that was correct.
SENATOR ELTON said one of his concerns was that, "If we take this
out from under the wing of AIDEA, what we're going to do is
complicating passage this session…" The House would have to concur
and they voted unanimously for their version. He continued to
prefer the original version.
CHAIRMAN TORGERSON called for the roll. SENATORS TAYLOR, PEARCE,
TORGERSON voted yeah; SENATORS LINCOLN AND ELTON voted nay; and the
committee substitute was adopted by 3 to 2.
SENATOR TAYLOR moved to pass SCS HB 236 (RES) from committee with
individual recommendations. There were no objections and it was so
ordered.
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