Legislature(2003 - 2004)
05/05/2004 09:04 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 556(FIN)
"An Act relating to a port development project on Lynn Canal,
providing legislative approval for the Alaska Industrial
Development and Export Authority to issue bonds for the
project; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill "authorizes AIDEA to issue bonds
to finance the construction of the port and related facilities
located at Slate Creek Cove not to exceed $20 million. "
REPRESENTATIVE BRUCE WEYHRAUCH testified that this legislation
allows for the development of the Kensington mine. Specifically,
this bill would develop docks in the Berners Bay area to help
facilitate the development and construction of the mine. These
docks would also be available for public use. This bill would
further the development of the private sector economy and the
State's mineral resources while diversifying the local economy.
This legislation meets the Alaska Industrial Development and Export
Authority's (AIDEA) statutory project requirements for funding
using the Authority's bonding capacity.
JIM MCMILLAN, Deputy Director of Credit and Business Development,
Alaska Industrial Development and Export Authority, testified via
teleconference from an offnet site requesting authorization to
issue bonds not to exceed $20 million. Statute requires legislative
approval for AIDEA to finance projects under the Development
Finance Program that exceed $10 million. AIDEA would own the two
port facilities referenced in this legislation. Government
ownership and public use of the docks is required by the Internal
Revenue Service (IRS) code if the project is to receive tax-exempt
financing. Though AIDEA would own the dock facilities, it expects
to issue tax-exempt revenue bonds, which would not affect its
credit. The revenues of the Kensington mine project and any credit
enhancements offered by the project developer would be the sole
sources of repayment.
Mr. McMillan stated that the $20 million amount stated in this bill
exceeds the estimation of the costs of the docks. The $20 million
amount was chosen because the estimates are considered "soft", and
could increase. In addition, the IRS code allows for tax exempt
financing on "related upland improvements".
Mr. McMillan continued that if this legislation is adopted, the
statutory due diligence requirements would be considered, including
the project's financial feasibility, and the bonds would not be
issued until all the requirements were met. The Board would be
presented a resolution to enter into a cost reimbursement agreement
with Coeur Alaska, Inc (Coeur). The funds needed to complete the
statutory due diligence assessment would be considered part of the
financing, assuming the financing is approved. If the financing is
not approved, Coeur would be responsible any of the costs expended
by AIDEA.
Senator Bunde expressed concern relating to public access in
commercial areas because of safety and liability risks. He asked
how public access would be made compatible with industry use of the
docks.
TIM ARNOLD, Vice President and General Manager, Coeur Alaska Inc.,
testified that this legislation represents a mutually beneficial
agreement between Coeur and AIDEA. Coeur would have the opportunity
to access tax-exempt financing and pay for the dock over a period
of years. Further, the State of Alaska would come to own the docks
if the necessary permits are granted. He emphasized that this
legislation is the perfect example of a "win-win situation" for
Coeur.
Co-Chair Wilken asked Mr. Arnold to address Senator Bunde's public
access question.
Mr. Arnold explained that the end of the dock would be located on
private land. Coeur has not developed a plan for allowing public
access. The Cascade Point dock would be used primarily to shuttle
Coeur employees to and from Slate Creek Cove. The Slate Creek Cove
dock would be an industrial dock.
Representative Bruce Weyhrauch interjected that for Coeur to
receive tax-exempt financing, the needs of the Kensington mine must
be incorporated with public access to the satisfaction of the IRS
and the developer.
Senator Bunde stated that the two necessary usages of the docks
appear "diametrically opposed".
Senator Hoffman informed that the House of Representative's version
of this legislation allows dock projects anywhere within the Lynn
Canal. However, the House Finance Committee passed an amendment
which limited the dock projects to specific locations within the
Lynn Canal: Slate Creek Cove and Cascade Point. He asked if this
amendment would allow Coeur the flexibility needed to minimize the
impacts of development and acquire the necessary permits.
Representative Bruce Weyhrauch responded that the project locations
were made specific in response to concern that the developments
could be used too broadly. He qualified that he is not opposed to
the amendment because it does not threaten the primary goal of this
legislation, which is to construct docks for the Kensington gold
mine.
Mr. Arnold replied that Coeur is satisfied with the language of the
bill as amended.
Co-Chair Wilken asked whether both Slate Creek Cove and Cascade
Point are located within the City and Borough of Juneau.
Representative Bruce Weyhrauch replied, yes.
Mr. Arnold affirmed.
Co-Chair Wilken asked for Mr. Arnold's opinion on the Pogo mine
appeal and how it might affect this project.
Mr. Arnold responded that Coeur has spent $30 million permitting
the property for this project over the last 15 years. A
supplemental Environmental Impact Statement has gone through the
comment period, and Coeur is working toward receiving a National
Pollutant Discharge Elimination System (NPDES) permit. Coeur has
done the best job possible in listening and addressing comments
made by the public. However, the project is far from "getting off
the ground" in the current design and there is no question that the
Pogo mine appeal could happen again.
Co-Chair Wilken inquired if the appeal process has increased
Coeur's anxiety regarding the Kensington mine project.
Mr. Arnold replied that, yes, the appeal process has raised Coeur's
anxiety; however Coeur recognizes that the appeal process is an
aspect of the mining business.
Representative Bruce Weyhrauch added that the appeal process is a
statewide concern.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
There being no objection, CS HB 556 (FIN) MOVED from Committee with
zero fiscal note #1 from the Department of Community and Economic
Development.
AT EASE 11:01 AM / 4:54 PM
| Document Name | Date/Time | Subjects |
|---|