Legislature(2013 - 2014)
04/09/2014 03:10 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| SB119 | |
| SB218 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 218
"An Act relating to the Alaska Municipal Bond Bank
Authority; and providing for an effective date."
3:52:49 PM
Co-Chair Kelly MOVED to ADOPT the proposed committee
substitute for CSSB 218(FIN), Work Draft 28-LS1567\N
(Wallace, 4/9/14). Co-Chair Meyer OBJECTED for discussion.
Ms. Armstrong stated that there were two sections that were
added to the legislation. She looked at page 5, lines 10
through 24, Section 8, which was legislative approval for
bond authorization for the UAF heat and power plant. The
section authorized UA to issue revenue bonds, and use the
proceeds of the bonds to pay for the design, construction,
acquisition, and equipping for the heat and power plant
facility at UAF. The legislative approval and authorization
was required by statute. She pointed to page 5, lines 25
through 31, and page 6, lines 1 through 7, which was
Section 9. The section was the loan authorization for UA to
borrow an amount not to exceed $150 million by issuing
revenue bonds or entering into a loan agreement with the
Alaska Municipal Bond Bank Authority. She stated that it
provided the statutory legislative approval and
authorization for the bonds that were discussed under SB
119.
Co-Chair Meyer wondered if the municipal loan bond would
allow for bonding of additional $87.5 million. Ms.
Armstrong replied in the affirmative.
Co-Chair Kelly wondered if $70 million was a revenue bond.
Ms. Armstrong responded in the affirmative.
Vice-Chair Fairclough looked at the fiscal note, and noted
the addition of $7 million annually from the general fund,
and wondered if that should be considered university
receipts. Co-Chair Kelly replied that it did not include
the revenue bond, but rather was sourced from the bond
bank.
Vice-Chair Fairclough remarked that the fiscal reflected $7
million of new general fund money. Ms. Armstrong deferred
to Ms. Rizk to discuss the fiscal note.
Co-Chair Meyer wondered if there was an amendment to the
bill. Ms. Armstrong stated that there would be clarifying
language to the bill.
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING
AND BUDGET, UNIVERSITY OF ALASKA, looked at the fiscal
impact note from UA, and explained that the amount
represented the debt service associated with $87.5 million
that UA intended to borrow from the Alaska Municipal Bond
Bank. In addition to the amount, UA would issue $70 million
of UA revenue bonds, so UA would be responsible for the
debt service with the majority of the funding sources from
utility savings.
Co-Chair Kelly surmised that the savings would not occur
until 2018 or 2019. Ms. Rizk agreed with that summation.
Vice-Chair Fairclough wondered if the state was embarking
on its own debt service from its own loan. Ms. Rizk
responded that the operating budget reflected a significant
reduction to the UA budget of approximately $16 million.
The current fiscal climate did not allow for UA to find an
additional $7 million in addition to the contribution of
the UA revenue bonds.
3:58:42 PM
AT EASE
4:03:09 PM
RECONVENED
Vice-Chair Fairclough remarked that she was discussing the
overall bond debt for Alaska, and stressed that the Port of
Anchorage would also be requesting money.
Co-Chair Meyer asked for a summary of the financing for the
heat and power plant at UAF. Ms. Armstrong replied that SB
119 had a reappropriation of $50 million; an FY 15
appropriation of $37.5 million; and SB 218 had two
authorizations: an authorization for UA to issue revenue
bonds in the amount of $70 million and authorization for
UAF to utilize the Alaska Municipal Bond Bank Authority in
the amount of $87.5 million. The total would be $245
million.
Co-Chair Meyer stressed that the different fund sources
were the reason for the higher summary sheets.
Co-Chair Meyer REMOVED his OBJECTION. There being NO
OBJECTION, the proposed committee substitute for CSSB
218(FIN) was adopted.
Ms. Armstrong stated that there would be a conceptual
amendment.
Co-Chair Kelly MOVED the conceptual amendment:
Page 5, Line 29
After the word, "by",
insert the phrase, "issuing revenue bonds and"
Co-Chair Meyer OBJECTED for discussion.
4:08:42 PM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, explained that the
conceptual amendment was required because the bond bank
program worked by purchasing the securities of local
jurisdictions on a private placement basis. The other
amendment provided a definition that allowed UA to
participate in the Alaska Municipal Bond Bank program that
uses the revenue bonds. He stated that the conceptual
amendment would provide two separate terminologies to match
to ensure that the Alaska Municipal Bond Bank could carry
out the legislative intent of the bill.
Co-Chair Meyer REMOVED his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Co-Chair Kelly MOVED to REPORT CSSB 218(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
CSSB 218(FIN) was REPORTED out of committee with individual
recommendations and with two new fiscal impact notes from
Department of Revenue and one new fiscal impact note from
the University of Alaska.
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