03/03/1998 01:45 PM House FIN

HOUSE BILL NO. 386                                                             
                                                                               
"An Act relating to the financing authority, programs,                         
operations, and projects of the Alaska Industrial                              
Development and Export Authority; and providing for an                         
effective date."                                                               
                                                                               
Co-Chair Therriault provided members with a proposed                           
committee substitute for HB 386, Work Draft 0-GH2023\E,                        
dated 3/3/98 (copy on file).                                                   
                                                                               
KEITH LAUFER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT                         
AUTHORITY (AIDEA), DEPARTMENT OF COMMERCE AND ECONOMIC                         
DEVELOPMENT reviewed the proposed committee substitute.  He                    
noted that the sunset date would be July 1, 2003.  Minor                       
wording changes occurred on page 5, line 11.  Section 8 was                    
replaced.  The original legislation would have set up a                        
procedure for AIDEA to create categories of confidential                       
documents.  Documents that could never be made confidential                    
were identified.  This provision was changed to set forth                      
the specific items that can be made confidential on page 6,                    
line 21 - page 7 line 2.  Subsection (b) addresses concerns                    
regarding information compiled by AIDEA that can also remain                   
confidential if the information fits within one of the                         
confidential categories.  The definition of "political loss"                   
was moved to section 10 by request of the drafter. "Shall"                     
was changed to "must" on page 7, line 22.  Other technical                     
changes were made to conform to drafting recommendations.                      
Section 23 is new.  Section 23 is the legislative                              
authorization to finance bonds for the DeLong Mountain                         
transportation project at Red Dog mine and for the Nome port                   
improvement project.  The effective date was changed to                        
clarify that only section 21 has a June 30, 1998 effective                     
date.                                                                          
                                                                               
Representative Davies asked if legislative approvals in                        
section 23 would follow the due diligence process.                             
                                                                               
RANDY SIMMONS, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL                           
DEVELOPMENT AND EXPORT AUTHORITY, DEPARTMENT OF COMMERCE AND                   
ECONOMIC DEVELOPMENT clarify that the due diligence process                    
would apply.  The process would start in the following week.                   
The Board of Directors must approve findings on the                            
projects.                                                                      
                                                                               
Representative Grussendorf pointed out that "political loss"                   
could refer to nationalization, confiscation, or destruction                   
by military activities.  Mr. Simmons agreed and noted that                     
AIDEA used to require insurance on every export transaction                    
regardless of the country of export.                                           
                                                                               
In response to a question by Representative Martin, Mr.                        
Simmons noted that AIDEA could authorize bonds up to $400                      
million dollars a year.  Bond covenants apply to certain                       
coverage.                                                                      
                                                                               
(Tape Change, HFC 98 -49, Side 2)                                              
                                                                               
Mr. Simmons noted that AIDEA has $322 million dollars in                       
loans outstanding.  He clarified that the state of Alaska is                   
not morally obligated on any of the bonds issued by AIDEA.                     
                                                                               
JOHN KEY, GENERAL MANAGER, COMINCO ALASKA read his written                     
testimony in support of HB 386 (copy on file).                                 
                                                                               
Mr. Simmons noted that there are 44 years left on the AIDEA                    
loan to Red Dog.  He explained that AIDEA owns the                             
facilities on development projects they finance.  The Alaska                   
Industrial Development and Export Authority may receive                        
payments to the State long after there are outstanding                         
bonds.  Red Dog would still be responsible for their                           
financial commitments if the bonds were paid off.                              
                                                                               
Representative Foster MOVED to ADOPT Work Draft 0-GH2023\E,                    
dated 3/3/98.  There being NO OBJECTION, it was so ordered.                    
                                                                               
Representative Foster MOVED to report CSHB 386 (FIN) out of                    
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
CSHB 386 (FIN) was REPORTED out of Committee with a "do                        
pass" recommendation and with a zero fiscal note by the                        
Department of Commerce and Economic Development.