05/01/2006 03:30 PM Senate RESOURCES

        CSHB 304(FIN) am-COMMERCIAL FISHING LOAN PROGRAM                                                                    
                                                                                                                              
CHAIR  THOMAS WAGONER  announced  CSHB 304(FIN)  am to  be up  for                                                              
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  COGHILL,  sponsor,  explained  that HB  304  stems                                                              
from  his philosophical  belief  that  a government  loan  program                                                              
should  be a  source of  last resort.  The  bill establishes  that                                                              
anyone  who applies  for  a loan  through  the Commercial  Fishing                                                              
Revolving  Loan  Fund (CFRLF)  must  be ineligible  for  financing                                                              
from   a  federally   recognized   lending   institution  or   the                                                              
Commercial Fishing and Agricultural Bank.                                                                                       
                                                                                                                                
HB  304  reduces the  upper  limit  for  refinancing a  debt  from                                                              
$300,000 to $200,000  and caps the interest rate  at 10.5 percent.                                                              
It  reduces loan  collateral from  90  percent to  80 percent  and                                                              
increases the total  balance of federal tax loans  from $30,000 to                                                              
$35,000. Finally,  the total aggregated  loan amount for  a single                                                              
borrower  may not  exceed $400,000,  which is  adjusted down  from                                                              
the current $930,000 total.                                                                                                     
                                                                                                                                
3:43:56 PM                                                                                                                    
SENATOR BERT  STEDMAN asked  for the  reasoning behind  Section 4,                                                              
which  repeals   small  loans   for  repairing  and   refurbishing                                                              
existing vessels.                                                                                                               
                                                                                                                                
REPRESENTATIVE  COGHILL  replied   it  allows  the  department  to                                                              
reallocate the money,  but the funds could still be  used for that                                                              
purpose.                                                                                                                        
                                                                                                                                
3:44:50 PM                                                                                                                    
GREG  WINEGAR, Director,  Division of  Investments, Department  of                                                              
Commerce,  Community &  Economic  Development  (DCCED), said  this                                                              
fund has  been around since the  early 70s and about  6,000 people                                                              
have received loans.  The fund is self-sustaining  and hasn't used                                                              
general funds  since the  mid 80s. He  cautioned the  committee to                                                              
carefully review  any proposed changes  because at this  point the                                                              
fund works so well  that it provides money for  other programs. He                                                              
reported that  DCCED supports the  committee substitute  (CS) that                                                              
passed  the  House because  neither  the  borrowers nor  the  fund                                                              
appear to be adversely impacted.                                                                                                
                                                                                                                                
3:46:16 PM                                                                                                                    
MR.  WINEGAR   explained   that  the  repealer   relates   to  the                                                              
requirement that  10 percent of the  funds are held to  ensure the                                                              
availability of  funds for loans  amounting to $35,000  and under.                                                              
That has  never been an  issue with this  fund so the  unnecessary                                                              
requirement is removed.                                                                                                         
                                                                                                                                
3:46:53 PM                                                                                                                    
CHAIR WAGONER asked how many loans have gone into arrears.                                                                      
                                                                                                                                
MR.  WINEGAR  said  he  didn't  have  that  information,  but  the                                                              
current  delinquency  rate is  about  4.9 percent.  He  elaborated                                                              
that  fishing  permits  have  been taken  back,  but  because  the                                                              
division has some  flexibility to accommodate individuals  who are                                                              
going through  tough times, the  number of repossessions  has been                                                              
minimal.                                                                                                                        
                                                                                                                                
CHAIR WAGONER  requested a  report reflecting  the history  of the                                                              
program.                                                                                                                        
                                                                                                                                
3:47:57 PM                                                                                                                    
SENATOR STEDMAN  asked how the bill  would modify the  CDQ program                                                              
and how it might impact communities.                                                                                            
                                                                                                                                
MR.  WINEGAR  clarified that  HB  304  would  not cap  CDQ  loans.                                                              
Currently a  person could  combine different  loans and  borrow up                                                              
to  $930,000.  HB 304  would  reduce  that  limit to  $400,000  so                                                              
someone who  wants to borrow  up to $300,000  to buy  quota shares                                                              
wouldn't be impacted,  but someone who tries to  combine loans and                                                              
get above the $400,000 limit would be impacted.                                                                                 
                                                                                                                                
CHAIR WAGONER closed the public hearing and asked for a motion.                                                                 
                                                                                                                                
3:49:40 PM                                                                                                                    
SENATOR  KIM  ELTON   moved  to  report  CSHB   304(FIN)  am  from                                                              
committee  with  individual recommendations  and  attached  fiscal                                                              
note. There was no objection and it was so ordered.