Legislature(2011 - 2012)HOUSE FINANCE 519
04/14/2012 09:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB182 | |
| SB23 | |
| SB160 | |
| SB66 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 182 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 23 | TELECONFERENCED | |
| += | SB 160 | TELECONFERENCED | |
| += | SB 66 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 66(L&C)
"An Act creating a new markets tax credit assistance
guarantee and loan program within the Alaska
Industrial Development and Export Authority and
relating to the program; and providing for an
effective date."
Representative Wilson MOVED to ADOPT CS CSSB 66(FIN), Work
Draft 27-GS1747\I (4/14/12, Martin).
Representative Doogan OBJECTED for the purpose of
discussion.
4:34:24 PM
MARK DAVIS, DEPUTY DIRECTOR, ALASKA INDUSTRIAL DEVELOPMENT
AND EXPORT AUTHORITY, (AIDEA), DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, spoke to the
legislation. He explained that SB 66 provided loan
guarantees in conjunction with the federal New Markets Tax
Credit Program (NMTC). Investors making qualified equity
investments would receive a federal tax credit totaling 39
percent of the cost of the investment. The program required
that the remaining portion of the funding come from a loan
through a financial institution. He noted that the NMTC
programs, intended to foster economic development in
economically challenged areas was successful in Alaska. He
cited the fish processing plant [Goodnews Bay Salmon
Processing Plant] in Platinum and the long term care
facility in Kotzebue as examples.
Mr. Davis reported that banks were reluctant to lend since
the economic downturn in 2008. The program imposed two
restrictions on lending: The leveraged lender is limited to
interest only payments for the seven years of the tax
credit period and a bank cannot foreclose during the seven
year period. The Alaska Industrial Development and Export
Authority (AIDEA) contacted the lending institutions and
inquired how it could support the loan process in order to
revitalize the program in Alaska. The banks responded that
if AIDEA guaranteed the loan the banks will finance NMTC
loans again. He added that often the equity investor
purchased the tax credit at a discount and subsequently
left money in the project to use as equity after seven
years. The project can then refinance with a conventional
loan. The program worked well with local banks. He assured
the committee that the AIDEA loan guarantees do not affect
the state. The loan guarantee was held against AIDEA's
reserves. He cited Page 2, lines 22 - 23:
Sec. 44.88.710. Effect of guarantee. (a) A guarantee
under AS 44.88.700 -23 44.88.799 does not create a
debt or liability of the state.
Mr. Davis furthered that if the applicant can demonstrate
that they have been unable to obtain a loan from two
financial institutions then AIDEA may make a direct
leveraged loan to the project.
4:37:09 PM
JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained
the changes in the Committee Substitute (CS). He identified
that on Page 5, Section 3 was added to the legislation:
Sec. 3. The uncodified law of the State of Alaska is
amended by adding a new section to read:
LEGISLATIVE APPROVAL OF LOAN FROM THE POWER PROJECT
FUND.
Provided the Alaska Energy Authority approves a loan
for the Metlakatla Power and Light, Triangle Lake
hydroelectric project, the legislature authorizes the
Alaska Energy Authority to loan an amount not to
exceed $26,000,000 from the power project fund (AS
42.45.010) for the Metlakatla Power and Light,
Triangle Lake hydroelectric project. This section
constitutes legislative approval under AS 42.45.010(j)
for a loan from the fund that exceeds $5,000,000.
Mr. Michel explained that the section provided legislative
approval to obtain a loan from the Power Project Fund for
Metlakatla Power and Light. He noted that on Page 6,
Sections 4 and 5 were also added to the bill:
Sec. 4. Section 8, ch. 10, SLA 2010, is amended to
read:
Sec. 8. Section 2, ch. 10, SLA 2010, [OF THIS ACT]
takes effect November 30, 2017 [2012].
Sec. 5. Section 10, ch. 71, SLA 2010, is amended to
read:
Sec. 10. Section 2, ch. 71, SLA 2010, [OF THIS ACT]
takes effect 10 November 30, 2017 [2012].
Mr. Michel reported that the sections extended the sunset
date of the property tax exemptions for the Delong Mountain
Transportation System from 2012 until 2017.
Representative Guttenberg requested confirmation that the
loans were guaranteed by AIDEAS reserves. Mr. Davis
confirmed the statement.
Representative Guttenberg wondered how much was held in
AIDEA reserves. Mr. Davis replied that AIDEA had $300
million in liquid assets.
Representative Doogan WITHDREW his OBJECTION.
There being NO further OBJECTION, the committee substitute
was ADOPTED.
Representative Gara requested a summary of AIDEA programs
that focused on economic development in lower income areas
of the state. Mr. Davis agreed to provide the update.
4:40:22 PM
Vice-chair Fairclough OPENED public testimony.
Vice-chair Fairclough CLOSED public testimony.
Vice-chair Fairclough reviewed the fiscal notes. She noted
the new zero (CED) fiscal note. She spoke to a fiscal note
that would be attached to the bill when reported out of
committee. The fiscal note affected Fund Transfers and was
allocated to Savings Public Education Fund. The Red Dog
Mine benefited from the Delong Mountain Road tax exemption.
The current valuation of the road was $155,934,200. In lieu
of the property taxes the Red Dog Mine contributed a
payment to the borough for education. The borough was
required to pay the 4 mil rate increase under the proposed
educational funding legislation; an additional $623,736.
Representative Joule explained that the borough would be
responsible for the additional approximately $650,000 in
taxes without being able to collect because of the
exemption.
Vice-chair Fairclough furthered that the total assessed
property value was $190,000,000 and could impact the state
education funding by $380,000 each year until a solution to
fill the district's local contribution gap was found. She
alerted the committee that an amount as large as $380,000
could appear on the fiscal note.
Representative Wilson MOVED to report HCS CSSB 66 (FIN) out
of committee with individual recommendations and the
accompanying fiscal notes.
HCS CSSB 66(FIN) was REPORTED out of committee with a "do
pass" recommendation and with two new zero fiscal notes
from Department of Commerce, Community and Economic
Development, and Department of Education and Early
Development.
4:45:38 PM
RECESSED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB182 CS WORKDRAFT 27-LS1283-O.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB160 CS WORKDRAFT 27-GS2600-T.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB182CS(FIN)-EED-TLS-4-13-12.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB182CS(FIN)-EED-PEF-4-10-12.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB182CS(FIN)-EED-K12-4-13-12.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB182CS(FIN)-EED-ESS-4-13-12.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB182CS(FIN)-EED-ESS-4-10-12(MillRate).pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB182CS(FIN)-EED-PEF-4-13-12-Corrected.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 182 |
| SB160 House District Summary.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB160 CS WORKDRAFT O version.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB160 Amendment 1- Stoltze-Thomas.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB 160 AMENDMENT 2- THOMAS.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB160 Amendment 3 -Wilson.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |
| SB160 Support.pdf |
HFIN 4/14/2012 9:30:00 AM |
SB 160 |