Legislature(2013 - 2014)BELTZ 105 (TSBldg)
02/18/2014 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB159 | |
| SB99 | |
| SB140 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 159 | TELECONFERENCED | |
| *+ | SB 99 | TELECONFERENCED | |
| *+ | SB 140 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 140-AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
2:32:48 PM
CO-CHAIR DUNLEAVY reconvened the meeting and announced the
consideration of SB 140."An Act creating the Arctic
infrastructure development program and fund in the Alaska
Industrial Development and Export Authority." This was the first
hearing.
2:33:04 PM
SENATOR MCGUIRE, sponsor of SB 140, introduced the legislation
speaking to the following sponsor statement:
Globally, all eyes are on the Arctic. The World
Economic Forum has recently identified Arctic
Infrastructure development as one of the top Four (4)
challenges facing the regions. Alaska's future is in
the Arctic, and in order for Alaskans to capitalize on
the incredible opportunities and overcome the
significant challenges that this region presents, we
must begin to build infrastructure now.
Aside from a few areas in Norway and the Russian
Federation the Arctic as a whole remains vastly
underserved by transportation, ports, communication,
emergency response, defense and other critical
infrastructure. For further development to occur,
which Alaskans deserve, both public and private
interests must come together to boost the investment
in the Arctic.
For these reasons I have introduced Senate Bill 140,
Arctic Infrastructure Development Fund ("AIDF"). SB
140 expands AIDEA's tool bag by extending the same
authority for loans, loan guarantees, bonds and bond
guarantees that it currently utilizes in the energy
sector via the SETS fund (AS 44.88.650- 690) in order
to develop Infrastructure in the Arctic. AIDEA used
SETS to facilitate the financing of the Interior
Energy Project. This tool helps to create the public-
private partnerships that are needed to encourage
large investment in capital intensive infrastructure.
Senate Bill 140 extends AIDEA's existing power to
finance, or facilitate the financing of projects to
the realm of Arctic Infrastructure by granting the
Authority the ability to:
1. Insure project obligations and guarantee loans or
bonds for projects.
2. Defer principle payments and capitalize interest.
3. Offer financing terms of up to 30 years.
4. Enter into lease agreements, sales-lease-back
agreements, build-operate-transfer agreements and
other agreements to finance Arctic infrastructure
projects.
These powers already provide flexible terms that can
reduce the ultimate cost of energy (via the SETS
program) to consumers, and if it can work in the
energy realm, it can work for infrastructure. However,
SB 140 also requires legislative approval for
investments that are more than one-third of a
project's capital costs or if a loan guarantee exceeds
$20 Million. By subjecting certain investments to
legislative approval, SB 140 maintains an appropriate
level of due diligence for projects.
By making financing available we can empower
communities and attract a global pool of investment
that is an alternative to the traditional grant model
that too often underfunds projects and leads to
delays. Relying on credit also ensures that sponsors
have some skin in the game and a stake in the
project's success. Most importantly, we expand the
arena of where Alaskan assets are working in order to
grow our own economy. Currently, many of Alaska's
savings accounts are invested in stocks and bonds that
drive economic activity outside of Alaska. SB 140
suggests instead that some of those savings be
invested here in Alaska through AIDEA, not as blank
checks for development, but as investments for our
future in Arctic Infrastructure.
For the purposes of this Act, I propose that this
program and fund focus infrastructure development in
the geographical definition of the Arctic as laid out
in Arctic Research and Policy Act (amended 1990). That
definition includes the area of the State of Alaska
north of the Arctic Circle, north and west of the
boundary formed by the Porcupine, Yukon, and Kuskokwim
Rivers, all contiguous seas, including the Arctic
Ocean, and the Beaufort, Bering, and Chukchi Seas, and
the Aleutian chain.
With AIDF I am proposing that the State expand AIDEA's
existing authority to finance, or facilitate the
financing of, Arctic Infrastructure.
2:43:30 PM
SENATOR STEDMAN agreed with the bill sponsor that Alaska has to
get aggressive in developing infrastructure in the Arctic
because the federal government is lagging.
JESSE LOGAN, Staff, Senator Lesil McGuire, stated that after the
bill was introduced the sponsor worked with AIDEA, the Arctic
Policy Commission, and other stakeholders to identify ways to
strengthen the bill and help the development of Arctic
infrastructure. He noted the packets contain a sectional of the
suggested changes.
SENATOR STEDMAN asked if the process will be to introduce
potential changes and return with a committee substitute.
MR. LOGAN said yes.
CHAIR DUNLEAVY asked Mr. Davis if he had anything to add.
MARK DAVIS, Deputy Director, Alaska Industrial Development and
Export Authority, (AIDEA), agreed with Mr. Logan that AIDEA is
working with the sponsor's office on a possible committee
substitute.
2:45:30 PM
STEPHEN TRIMBLE, President, Trimble Strategies, LLC and public
member of the Alaska Arctic Policy Commission, stated support
for SB 140, which would create an Arctic infrastructure program
and fund within AIDEA. He described the Arctic as the future of
Alaska and emphasized the importance of investing in
infrastructure now in order to have a meaningful place in this
new global frontier. Industry has responded to the call for
public investment and now is the time to further public/private
investment within Alaska. Enabling AIDEA with the powers
provided by SB 140 is an investment in the future of Alaska.
2:47:11 PM
STEPHEN KLINE, Managing Principle, First Infrastructure Inc., a
consulting firm based in New Jersey, said he is testifying as a
professional in the financial field. He reported that he advises
AIDEA on a number of matters, the regulations and procedures
relating to the SETS fund in particular.
He related that he is a strong proponent of guarantee structures
to stretch relatively scarce public sector dollars for the
benefit of what are deemed to be worthwhile projects. Utilizing
such a structure in support of Arctic infrastructure projects
would be a wise use of the state's scarce public resources, he
said.
2:49:24 PM
CHRIS HLADICK, Manager, City of Unalaska, Unalaska, Alaska,
reported that he served on both the Northern Waters Task Force
and the Arctic Policy Commission and is testifying in support of
SB 140. He said that Unalaska is seeing explosive needs to
accommodate the anticipated arrival of the oil companies.
Infrastructure needs have been identified that will require
public/private partnership and SB 140 provides another tool. He
acknowledged that a lot of places need additional
infrastructure, and pointed out that all the infrastructure
development in places like Kotzebue, Nome or Port Clarence will
have to pass through Unalaska/Dutch Harbor.
CO-CHAIR DUNLEAVY commented that he was impressed when he
visited Unalaska.
SENATOR MICCICHE asked if the changes in Section 8 would include
the ability for LNG storage and infrastructure needs.
MR. HLADICK said he didn't know.
SENATOR MICCICHE asked to hear from the sponsor after public
testimony so she could answer the question.
2:52:10 PM
RON LONG, Assistant City Manager, City of Seward, stated that if
the state is to succeed in the development of the Arctic,
whether it's in fisheries, resource development, tourism, or
response and monitoring capacity for foreign flagged vessels
transiting the Bering Straits, it is critical to have a deep
water port or ports to support the effort. SB 140 helps advance
those goals. AIDEA's track record with Red Dog transportation
infrastructure and Alaska Ship and Dry Dock speaks well of their
ability to help move these projects forward.
He expressed hope that as the bill moves forward it would be
amended to include provisions that will build on existing
capacity within the state to support the staging and logistics
necessary to make a number of port developments successful. He
noted that when he attended an Institute of the North
presentation in Seattle on Arctic opportunities and challenges,
a representative from a Washington state port declared that
Bellingham would be the gateway to the Arctic. He warned that
just as other nations are moving into the Arctic with active
plans and resource commitments while the U.S. is trying to form
an action plan, other states are looking for opportunities that
should remain in Alaska.
SENATOR MICCICHE expressed appreciation for the recent tour of
Seward's breakwater expansion. He observed that there are
communities that are ready to support the Arctic, although all
need a bit of infrastructure boost to ensure the safety of the
services.
2:55:33 PM
CHAIR DUNLEAVY asked Senator Micciche to restate his question
for the sponsor.
SENATOR MICCICHE expressed interest in helping with an amendment
to ensure that the bill will consider energy infrastructure and
projects in western and northwest Alaska.
SENATOR MCGUIRE said that has already been addressed both in SB
140 and the changes to SETS in SB 99. She described where these
changes are found. Section 11, paragraphs (18) and (19) of SB
140 change the way "Arctic" and "Arctic infrastructure
development" is defined so that all of Alaska can benefit from
the new fund. On page 3, lines 1-4, of SB 99 it states that
liquefaction, regasification storage, and natural gas are
included in the definition of "qualified energy development."
2:59:14 PM
CO-CHAIR DUNLEAVY announced he would hold SB 140 in committee
for further consideration. Public testimony would be opened at
the next hearing.