04/08/1993 03:00 PM House L&C

  HB 252 REFINANCING COMMERCIAL FISHING LOANS                                  
                                                                               
  Number 049                                                                   
                                                                               
  REP. CARL MOSES, PRIME SPONSOR of HB 252, read the following                 
  sponsor statement:                                                           
                                                                               
  "I have introduced HB 252 to give the Department of Commerce                 
  the authority to refinance existing commercial fishing                       
  loans.  Most of the 1,200 commercial fisherman who now have                  
  state loans are paying 10.5% in interest rates.  Regulations                 
  provide for new fixed rate loans at 2% above the bank prime                  
  rate.  Since the current bank prime rate is 6%, current                      
  commercial fishing loans are now at 8% rates.  However, the                  
  Department of Commerce has no mechanism to allow for current                 
  loans to be refinanced to take advantage of the lower                        
  interest rates that are currently available.                                 
                                                                               
  "Commercial fishermen have been faced these past few years                   
  with low prices and unpredictable fish returns.  Following                   
  the disastrous 1991 salmon season, the Department of                         
  Commerce approved loan extensions for nearly half of the                     
  existing loans.  More than 3000 fishermen are reportedly in                  
  arrears this year to the Internal Revenue Service for back                   
  taxes.  The commercial fishing industry is obviously in bad                  
  shape.  Allowing fishermen to refinance their loans and                      
  reduce their monthly payments is one obvious way the                         
  legislature can help the industry out.  Although there is a                  
  cost for such a refinancing program, there is sufficient                     
  cash flow in the revolving loan fund to accommodate it.                      
  Additionally, fishermen would have an easier time making                     
  their payments if their loans were at lower interest rates."                 
                                                                               
  Number 100                                                                   
                                                                               
  MARTIN RICHARDS, DIRECTOR, DIVISION OF INVESTMENTS,                          
  DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified                   
  in support of HB 252.  Mr. Richard stated that current                       
  statutes do not allow for refinancing and went on to                         
  describe the mechanics of the loan program.  Mr. Richards                    
  pointed out that HB 252 would mean approximately $1.6                        
  million less each year in interest payments coming into the                  
  fund.                                                                        
                                                                               
  Number 286                                                                   
                                                                               
  BRUCE SCHACTLER, representing AREA K SEINERS ASSOCIATION,                    
  testified from Kodiak in support of HB 252.  Mr. Schactler                   
  stated that many fishermen borrowed money based on the                       
  steady markets of the 80's, and so much has changed since,                   
  that HB 252 would be paramount to fishermen's economic                       
  survival.                                                                    
                                                                               
  MR. SCHACTLER pointed out that the fund may gain less money                  
  in interest if HB 252 passes.  But without the ability to                    
  refinance, many fishermen may have to default, which would                   
  be very expensive to the state.                                              
                                                                               
  Number 360                                                                   
                                                                               
  JERRY MCCUNE, representing UNITED FISHERMEN OF ALASKA,                       
  testified in support of HB 252.  Mr. McCune echoed the above                 
  testimony with regards to the great need for this                            
  legislation.                                                                 
                                                                               
  REP. MACKIE moved for passage of HB 252 with individual                      
  recommendations and a fiscal note.