03/13/2012 04:00 PM Senate COMMUNITY & REGIONAL AFFAIRS

        SB 204-LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS                                                                    
                                                                                                                                
4:06:01 PM                                                                                                                    
CHAIR OLSON announced the consideration  of SB 204 and noted that                                                               
the committee heard it once before.                                                                                             
                                                                                                                                
4:06:12 PM                                                                                                                    
DAVID  SCOTT, Staff,  Senator Donald  Olson and  Aide to  the CRA                                                               
committee,  sponsor of  the legislation,  reminded the  committee                                                               
that during the previous hearing  he described how the bill would                                                               
change  current  law. He  noted  that  Wanetta Ayers  and  Duncan                                                               
Fields  were available  for questions.  Responding to  a question                                                               
from the Chair, he confirmed that  there had been no phone calls,                                                               
in support or opposition to the bill.                                                                                           
                                                                                                                                
SENATOR  WAGONER  referenced  the side-by-side  document  in  the                                                               
packets that  compared current law  to the provisions in  SB 204.                                                               
He asked if there was a  specific reason for reducing the maximum                                                               
loan   amount  from   $2  million   to  $1   million.  It   seems                                                               
counterintuitive.                                                                                                               
                                                                                                                                
4:08:54 PM                                                                                                                    
WANETTA  AYERS,  Director,   Division  of  Economic  Development,                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED), asked  if he  was referring to  the comparison  with the                                                               
quota financing currently available for commercial fisheries.                                                                   
                                                                                                                                
CHAIR OLSON said  the current law has a loan  limit of $2 million                                                               
and SB 204 reduces the maximum to $1 million.                                                                                   
                                                                                                                                
MS. AYERS  explained that under the  commercial fishing revolving                                                               
loan fund, which is for  individuals operating in the open access                                                               
halibut fishery  for quota share,  the loan limit is  $2 million.                                                               
She acknowledged that proponents of  the bill were concerned that                                                               
the  $1 million  loan limit  may preclude  some of  the nonprofit                                                               
organizations that  would be financed  under the  Community Quota                                                               
Entity  (CQE)  revolving loan  fund  from  achieving that  50,000                                                               
pound  limit,  but  the  decision when  the  bill  was  initially                                                               
drafted was that a $1 million loan limit would be sufficient.                                                                   
                                                                                                                                
SENATOR WAGONER  asked if each entity  has the ability to  buy up                                                               
to 50,000 pounds.                                                                                                               
                                                                                                                                
4:09:32 PM                                                                                                                    
SENATOR MENARD joined the committee.                                                                                            
                                                                                                                                
MS.  AYERS  answered  that  was correct.  She  added  that  DCCED                                                               
believes  that   the  structure  of  the   fisheries  enhancement                                                               
revolving  loan fund  was more  appropriate  for these  nonprofit                                                               
CQEs.                                                                                                                           
                                                                                                                                
4:12:53 PM                                                                                                                    
DUNCAN FIELDS,  Council Member, North Pacific  Fishery Management                                                               
Council,   reviewed  the   comparative  relationship   between  a                                                               
nonprofit  community organization  like a  CQE and  an individual                                                               
that  has an  individual load  limit. He  then explained  that 45                                                               
communities were  qualified to  form a  nonprofit CQE  to acquire                                                               
IFQ shares and the thinking was  that with a $1 million limit the                                                               
program could  be funded with  $45 million.  If the limit  was $2                                                               
million,  it  would be  a  substantially  larger amount.  In  the                                                               
balance  was funding  a  program that  all  45 communities  could                                                               
participate   in  versus   the  $2   million  limit   offered  to                                                               
individuals in the commercial loan program.                                                                                     
                                                                                                                                
SENATOR MENARD commented  that this would help  commerce in those                                                               
Gulf of Alaska communities.                                                                                                     
                                                                                                                                
MR. SCOTT echoed the comments of Senator Menard.                                                                                
                                                                                                                                
SENATOR WAGONER asked where the quota came from.                                                                                
                                                                                                                                
4:15:43 PM                                                                                                                    
MR. SCOTT said  his understanding was that  the communities would                                                               
purchase IFQ shares from the current bank.                                                                                      
                                                                                                                                
SENATOR  WAGONER  asked if  the  communities  could purchase  his                                                               
IFQs.                                                                                                                           
                                                                                                                                
MR. SCOTT said yes.                                                                                                             
                                                                                                                                
SENATOR WAGONER said the math does  not work; his IFQ shares were                                                               
worth $37.50 per  pound so either he'd get just  $20 per pound or                                                               
the $1 million would buy approximately half the quota.                                                                          
                                                                                                                                
SENATOR  KOOKESH pointed  out that  the lower  limit provides  an                                                               
opportunity for more communities to get a foot in the door.                                                                     
                                                                                                                                
MS. AYERS  confirmed that  was correct. She  added that  as funds                                                               
revolve through  the loan fund and  entities are able to  go back                                                               
and  obtain  subsequent  loans,  DCCED  believes  it  will  be  a                                                               
successful program.                                                                                                             
                                                                                                                                
CHAIR OLSON thanked Ms. Ayers and Mr. Fields.                                                                                   
                                                                                                                                
4:18:22 PM                                                                                                                    
SENATOR  WAGONER  moved to  report  SB  204 from  committee  with                                                               
individual recommendations and attached fiscal note(s).                                                                         
                                                                                                                                
CHAIR OLSON announced  that without objection, SB  204 moved from                                                               
the Senate Community and Regional Affairs Standing Committee.