Legislature(2009 - 2010)BELTZ 211
02/24/2009 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB1 | |
| SB84 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 1 | TELECONFERENCED | |
| += | SB 84 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 84-AIDEA: BONDING LIMITS; CONFIDENTIALITY
2:35:10 PM
CHAIR PASKVAN called the meeting back to order at 2:32 and
announced SB 84 to be up for consideration.
TED LEONARD, Executive Director, Alaska Industrial Development
and Export Authority (AIDEA) said AIDEA's mission is to provide
various means of financing to promote economic growth and
diversification in Alaska. An important way that AIDEA fulfills
its mission is by providing Alaska businesses and non profit
agencies with access to long-term capital at reasonable cost
through its conduit revenue and loan participation programs.
AIDEA requested this bill in order to amend its statutes to
allow the Authority flexibility in how and when it issues bonds
to insure that it obtains the most favorable terms and interest
rates it can in order to reduce the overall cost of financing
for AIDEA and Alaskan business and non profits that use its
financing program. This is in Sections 1 and 2
He said the bill would also assist the mission of the Authority
by clarifying and assuring borrowers and development project
applicants that certain records and information provided to it
will be kept confidential, and also set up a process to do that.
That is in Sections 3-6.
2:37:24 PM
Section 1 would amend their annual bonding limitation to exclude
refunding and conduit revenue bonds from the $400 million/12-
month bond limitation (a rolling 12 months, not an annual 12
months). The main types of bonds issued by AIDEA are general
obligation (GO) bonds, revenue bonds, conduit revenue bonds and
refunding bonds.
The refunding bonds are used to refinance and replace existing
bond debt; a good analogy of that is when mortgage rates go down
it's a good time to refinance your mortgage. Refunding bonds can
be done on GO bonds, revenue bonds and conduit revenue bonds.
2:39:11 PM
They are also asking conduit revenue bonds to be excluded from
the $400 million limit. These bonds are provided to businesses
and non profits where AIDEA acts as a conduit for the issuance
of taxable and tax exempt bonds. AIDEA has financed over $1.1
billion in conduit revenue bonds for 309 projects through this
program. These bonds are payable solely by the project developer
primarily from the revenue generated by the project. The
Authority has no financial obligation for the bond debt; neither
are the assets nor the credit of AIDEA at risk.
MR. LEONARD said one of the prime benefits of this program is
that AIDEA can pass its tax exempt status to a project developer
who meets certain criteria. Only states and municipalities have
the ability to do that. So for businesses and non profits that
meet certain IRS regulations, the only way to do this is through
a state organization or a municipality.
2:40:32 PM
Tax exempt bonds for each state have a $260 million annual cap,
and the Alaska Bond Committee has to approve those. In essence
refunding and conduit bonds help promote the Authority's
economic development mission without substantially increasing
the amount of its outstanding bond debt. Enactment of this
amendment would ensure that the 12-month bond limit would not
preclude the Authority from issuing debt that would provide the
Authority, Alaska businesses and non profits with more favorable
terms and lower capital costs or limit AIDEA's conduit revenue
bond program.
2:41:56 PM
SENATOR THOMAS asked if refinancing bonds has a standard fee or
is the fee negotiated.
MR. LEONARD answered that it is a negotiated process. Part of
Section 2 clarifies that the proceeds from the refunding debt
can be used to pay those new issuant fees.
2:42:32 PM
Section 2 begins on page 1, line 8, and amends AS 44.99.095 to
provide for two recommendations. It would reinstate the
Authority's ability to issue bonds that existed before the July
1, 2007 statutory sunset and it clarifies in statute that the
Authority can use proceeds from the refunding bonds to finance
certain costs and expenses associated with the issuance of the
refunding bonds.
Due to the statutory sunset, AIDEA currently requires
legislative approval to issue any bonds except refunding and
conduit revenue bonds. Section 2 would eliminate the sunset and
enable the Authority to again issue most types of bonds without
legislative approval, but it would still require legislative
approval to issue GO and revenue bonds in excess of $10 million
to assist in financing AIDEA-owned development projects. One
example of that would be the Red Dog Mine.
2:45:09 PM
MR. LEONARD said the second change in Section 2 will allow
proceeds from the refunding bonds to retire the outstanding
bonds, the cost of refinancing and other costs related to the
issuance of the refunding bonds. In the past they had to come
back to the legislature for approval to do that.
2:46:06 PM
Sections 3-6 amend the confidentiality of information provision
and adds clarification to the definition that certain records
and information provided to the Authority are confidential and
establishes a process for the Authority to determine that
confidentiality.
He explained that the Authority has heard several complaints
from several borrowers who are project developers that AS
44.85.215 does not clearly establish that the Authority can
retain the confidentiality of certain records or information
that is essential and proprietary to their businesses. So,
Section 3 clarifies and identifies the specific type of trade
secrets that are kept confidential.
Section 6 further clarifies existing language by defining "trade
secrets" using the Alaska Uniform Trade Secrets Act in AS
45.50.940(3). Section 5 establishes a process for AIDEA to
determine which records and information will be kept
confidential. Under sections 3 and 5 the applicant must request
confidentiality and make an adequate showing to the executive
director that the records and information should be kept
confidential. Based on that request, the executive director
would make a determination and this process would provide
greater assurance to the applicants that certain information and
records will be kept confidential. The important thing is that
it does that at the start of the process.
2:48:41 PM
CHAIR PASKVAN wanted to hear more about the template that
determines confidentiality.
BRIAN BJORKQUIST, Senior Assistant Attorney General, Department
of Law (DOL), said the standard applied under AS 44.88.215(a)
wouldn't change from existing law. Certain specific types of
information are confidential and not public records. These are
listed in items 1-8 - like income tax returns, financial
statements, and profit and loss statements. The showing the
applicant would have to make is that the document in question
fits within what is listed.
CHAIR PASKVAN asked if a document is submitted with a request
that it be confidential, and the executive director determines
it's not confidential, does the business owner or project owner
get to withdraw it before it becomes public.
MR. BJORKQUIST answered yes.
2:50:45 PM
SENATOR BUNDE asked assuming someone in the public felt that
things labeled confidential didn't meet the statutory
requirements, would there be recourse for them through the
Freedom of Information Act or would it require a court lawsuit.
MR. BJORKQUIST answered that under this statute the executive
director would make a determination of confidentiality at the
time the document is submitted by the applicant. However, in the
process of public records request there would be an opportunity
for a challenge, but because the determination had already been
made by the executive director, there would be a heavier burden
to overcome.
2:52:31 PM
MR. LEONARD continued saying that Section 8 makes the effective
date July 1, 2009.
2:52:55 PM
SENATOR THOMAS asked why he wanted to revisit this issue.
MR. LEONARD said a few years back they almost had to stop a
bonding project based on the $400 million limitation and AIDEA
would like to reissue some variable rate bonds they have now.
They are actually also looking forward to the time when the bond
market starts to smooth out.
2:54:20 PM
SENATOR MEYER asked what the state is paying for a bond now.
MR. LEONARD answered that AIDEA does not have the moral
obligation of the state; so for taxable bonds it's about 8
percent. It hasn't issued a non-taxable bond for a while. The
last he heard the state did a AA bond for was the prison at 5.99
percent.
2:55:57 PM
SENATOR MEYER said he liked the sunset clause. Why remove it?
MR. LEONARD answered the possibility of losing one of AIDEA's
major tools every three years is why they are against the
sunset. It is one of their main tools to perform their mission.
SENATOR MEYER said the AIDEA dividend the state has received the
last few years has helped fund the general budget, so the
legislature would probably want to continue some oversight into
its business, and he wanted the sunset clause to stay.
2:57:34 PM
MR. LEONARD said AIDEA believes the budget process provides that
oversight to the state.
2:58:22 PM
CHAIR PASKVAN closed public testimony on SB 84, and held it for
further hearing.
SENATOR DAVIS thanked Mr. Leonard for his testimony.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB01 - Alaska Minimum Wage - Bill Packet.pdf |
SL&C 2/5/2009 1:30:00 PM SL&C 2/12/2009 1:30:00 PM SL&C 2/17/2009 1:30:00 PM SL&C 2/24/2009 1:30:00 PM |
SB 1 |
| SB84 - AIDEA Bonding Limits.pdf |
SL&C 2/17/2009 1:30:00 PM SL&C 2/24/2009 1:30:00 PM SL&C 2/26/2009 1:30:00 PM |
SB 84 |