02/26/2018 03:15 PM House LABOR & COMMERCE

             HB 340-REPEAL BIDCO ASSISTANCE PROGRAM                                                                         
                                                                                                                              
3:18:56 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  first order of business  would be                                                               
HOUSE  BILL  NO.   340,  "An  Act  repealing   the  Alaska  BIDCO                                                               
Assistance  program  and  repealing requirements  for  an  annual                                                               
examination of a BIDCO by  the Department of Commerce, Community,                                                               
and Economic Development."                                                                                                      
                                                                                                                                
3:19:20 PM                                                                                                                    
                                                                                                                                
MIKE  NAVARRE,  Commissioner  Designee, Department  of  Commerce,                                                               
Community &  Economic Development  (DCCED), introduced HB  340 on                                                               
behalf of the  House Rules Committee by request  of the governor.                                                               
He stated the  proposed bill was an efficiency  bill, repealing a                                                               
number of statutes for a program  that has never been funded.  He                                                               
said there  is only one  BIDCO in  Alaska, and the  proposed bill                                                               
would bring  the need  for examinations from  every 18  months to                                                               
"as needed."                                                                                                                    
                                                                                                                                
3:20:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  said she was  confused regarding                                                               
how the BIDCO  process works.  She said she  initially though the                                                               
proposed bill  would be  repealing the  program altogether.   She                                                               
asked  whether  it  was  the assistance  program  that  would  be                                                               
repealed.                                                                                                                       
                                                                                                                                
COMMISSIONER DESIGNEE  NAVARRE answered  in the affirmative.   He                                                               
said BIDCOs  would still  exist, but  the assistance  program had                                                               
never been funded.                                                                                                              
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD spoke  to the  loans for  BIDCOs                                                               
and some of the jobs data that the program created.                                                                             
                                                                                                                                
COMMISSIONER   DESIGNEE   NAVARRE   asked  to   which   documents                                                               
Representative Sullivan-Leonard referred.                                                                                       
                                                                                                                                
3:22:03 PM                                                                                                                    
                                                                                                                                
PATRICE   WALSH,  Chief   Examiner,  Division   of  Banking   and                                                               
Securities,   Department  of   Commerce,  Community   &  Economic                                                               
Development  (DCCED), answered  questions  in the  hearing on  HB
.    She  said  she  did  not  have  the  data  Representative                                                               
Sullivan-Leonard  was  looking  at,  so   could  not  answer  the                                                               
question.                                                                                                                       
                                                                                                                                
3:22:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SULLIVAN-LEONARD said  she would  follow up  with                                                               
Ms. Walsh at a later date.                                                                                                      
                                                                                                                                
COMMISSIONER DESIGNEE  NAVARRE suggested the question  was better                                                               
directed  at  Alaska  Growth  Capital,  which  facilitates  those                                                               
loans.                                                                                                                          
                                                                                                                                
3:23:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL  asked for clarification about  the different                                                               
uses of the term "BIDCO".                                                                                                       
                                                                                                                                
COMMISSIONER DESIGNEE  NAVARRE answered the only  BIDCO in Alaska                                                               
is the Alaska Growth Capital.                                                                                                   
                                                                                                                                
REPRESENTATIVE  WOOL asked  whether repealing  the BIDCO  program                                                               
was  the  goal of  the  proposed  bill.    He asked  whether  the                                                               
corporation formed  by the BIDCO  program would stay  intact, but                                                               
the program would go away.                                                                                                      
                                                                                                                                
COMMISSIONER  DESIGNEE NAVARRE  said the  regulatory board  would                                                               
remain, but the audit process  would be carried out when problems                                                               
were identified or when the entity is up for renewal.                                                                           
                                                                                                                                
3:25:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP  said  he   understood  the  program  isn't                                                               
functioning.  He asked about the intent of the BIDCOs.                                                                          
                                                                                                                                
COMMISSIONER DESIGNEE NAVARRE deferred to Ms. Walsh.                                                                            
                                                                                                                                
REPRESENTATIVE KNOPP  asked whether the state  still supports the                                                               
one BIDCO in the state.                                                                                                         
                                                                                                                                
3:27:18 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  explained that  BIDCOs were  a federal  construct and                                                               
Alaska adopted  a state  construct.  He  said he  thought federal                                                               
funding  coming  in  can  come  in  through  the  Small  Business                                                               
Administration and some entities are  eligible to be conduits for                                                               
the federal  money coming in.   He  said the proposed  bill would                                                               
remove the state  capitalization as well as  the state regulatory                                                               
requirement for an audit, which  would relieve some of the burden                                                               
on the  BIDCO and on the  department while allowing the  BIDCO to                                                               
benefit from federal programs.                                                                                                  
                                                                                                                                
REPRESENTATIVE KNOPP  asked whether  the program acts  as conduit                                                               
for federal money.                                                                                                              
                                                                                                                                
CHAIR KITO said he thought  it was benefiting Alaska by providing                                                               
loans from the SBA.                                                                                                             
                                                                                                                                
3:28:47 PM                                                                                                                    
                                                                                                                                
MS. WALSH said that all that had been stated was correct.                                                                       
                                                                                                                                
3:29:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP  asked whether the state  would be retaining                                                               
oversight authority.                                                                                                            
                                                                                                                                
COMMISSIONER DESIGNEE  NAVARRE answered  there are two  parts [to                                                               
the proposal].   He said the  first part is licensing,  which the                                                               
department  would continue  to oversee,  and the  second part  is                                                               
funding of  the BIDCO loan program  which would be repealed.   He                                                               
explained  BIDCOs   are  able  to  facilitate   loans  to  Alaska                                                               
businesses with federal dollars.                                                                                                
                                                                                                                                
3:30:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KNOPP asked whether  the state was still receiving                                                               
federal funds for BIDCOs.                                                                                                       
                                                                                                                                
COMMISSIONER  DESIGNEE NAVARRE  answered that  the one  BIDCO can                                                               
still access federal funds for loans.                                                                                           
                                                                                                                                
3:30:59 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO stated  public testimony  on  HB 340  was still  open                                                               
[from the previous bill hearing].   Upon ascertaining that no one                                                               
was available to testify, he closed public testimony.                                                                           
                                                                                                                                
3:31:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH reiterated  that his son is  employed at the                                                               
one BIDCO in the state.                                                                                                         
                                                                                                                                
REPRESENTATIVE WOOL  asked whether the  one BIDCO that  is funded                                                               
is an investment company.                                                                                                       
                                                                                                                                
COMMISSIONER DESIGNEE  NAVARRE answered  in the affirmative.   He                                                               
added the company assists businesses to access loan programs.                                                                   
                                                                                                                                
REPRESENTATIVE WOOL moved to report  HB 340 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no objection, it was so ordered.