Legislature(2001 - 2002)
04/25/2002 02:14 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 266(RES)
"An Act authorizing the commissioner of community and
economic development to refinance and extend the term
of a fishery enhancement loan."
SENATOR BEN STEVENS, SPONSOR, explained that the legislation
authorizes the commissioner of the Department of Community
and Economic Development to refinance loans from the
Fisheries Enhancement Revolving Loan Fund. The Fund has been
in existence since 1974 and has about $112 million dollars
in loans. The legislation allows for refinancing of existing
loans but does not forgive interest or principle. The
director of the Division can allow the participants of the
loans to benefit from lower interest rates available in the
current markets. Loan terms can be extended at the
director's discretion. The director would report their
activities in relation to loan financing, refinancing or
extensions to the legislature.
Representative Hudson clarified that there are no scarcity
of funds for loans at the present time. Senator Stevens
noted that there is no shortage and that the balance of the
Fund would not jeopardized its ability to make new loans.
Representative Hudson spoke in support of the legislation.
Representative Harris questioned if there were a floor on
the legislation. Senator Stevens thought the floor was
6.25%.
GREG WINEGAR, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT
OF COMMUNITY AND ECONOMIC DEVELOPMENT, clarified that a
floor was not set. A ceiling was set that cannot exceed 9
and a half percent. The regulation ties into the prime rate
at prime plus one not to exceed 9.25 percent, adjusted on a
quarterly basis. He noted that the fund has done well and
they do not anticipate problems. The fund is revolving and
would not impact the general fund.
DAVE COBB, BUSINESS MANAGER, VALDEZ FISHERIES DEVELOPMENT
ASSOCIATION, VALDEZ, testified via teleconference. He noted
that loan refinancing is one of the tools needed for the
hatchery program to remain competitive in today's global
fisheries environment. Lower interest rates would allow
most hatcheries to reduce their annual loan payments and
costs of operations significantly.
Valdez Fisheries believes that while the legislation is very
important to the state hatchery program it is only one of
the many changes needed if the commercial fishing industry
in Alaska is to survive. The hatchery system created by the
legislature in 1974 has met or exceeds expectations. Harvest
of hatchery salmon exceeds one billion pounds, with a value
in excess of $340 million dollars over the last ten years.
The legislation would allow them to manage funds more
efficiently and effectively. He observed the level of global
competition. He asserted that the legislation makes good
business sense and would have no impact on General Fund
dollars.
JON CARTER, DIRECTOR, DOUGLAS ISLAND PINK AND CHUMS (DIPAC),
Juneau, testified in support of the legislation.
The private non-profit hatchery program was created by
the legislature to replace the hatchery program
operated by the state's Fish & Game FRED Division. The
FRED hatcheries operated through annual appropriations
to the State Department of Fish & Game. In effect, the
PNP hatchery program was created as a user pay entity
to reduce the draw on the state coffers. To get the
program started the State gifted some existing
hatcheries to Regional Corporations but primarily
created the "Fisheries Enhancement Revolving Loan
Fund". This fund, along with a tax on commercial
fishermen, was to provide construction and operational
funds as the enhancement programs developed.
Twenty-five plus years later, the PNP hatchery programs
are described, even by some of its detractors, as "some
of the best in North America." They have made dramatic
financial contributions to many areas of the State with
a total contribution of well over 1 Billion dollars.
The recent McDowell Report covering four of the State's
largest enhancement corporations certainly makes it
appear the program is an unqualified success.
That being said, we are still a business and are
responsible for budgets, payroll and of course debt
service. What we are asking for here is the ability to
refinance our debt at lower interest rates. This is
obviously going on in businesses all across the
country. Taking advantage of today's current low
interest environment just makes good business sense.
Simply put, refinancing will strengthen our financial
position, make us better able to pay our debt and more
able to continue doing our job of providing fish to the
commercial and sport fishers across the state. This
will mean principle and interest are paid into the fund
at a slower rate but loan demand on the fund has slowed
dramatically so the fund will remain financially sound.
CARL ROSIER, ALASKA OUTDOOR COUNCIL, JUNEAU, testified in
support of the legislation. He stressed that the hatchery
program in private hands has been a "real plus" for all user
groups and urged passage of the legislation.
In response to a question by Representative Hudson, Mr.
Rosier agreed that the program has been successful in
rebuilding and adding to natural stocks. He emphasized that
the marketing aspect was forgotten. The resources are in
good shape, but the right market needs to be found.
Representative Foster MOVED to report CSSB 266 (FIIN) out of
Committee with the accompanying fiscal note.
CSSB 266 (RES) was REPORTED out of Committee with a "do
pass" recommendation and with a previously published fiscal
note: CED #1.
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