Legislature(2013 - 2014)BELTZ 105 (TSBldg)

02/18/2014 01:30 PM LABOR & COMMERCE

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Heard & Held
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Heard & Held
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         SB 140-AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND                                                                      
2:32:48 PM                                                                                                                    
CO-CHAIR  DUNLEAVY  reconvened  the  meeting  and  announced  the                                                               
consideration   of  SB   140."An    Act   creating  the   Arctic                                                               
infrastructure  development  program  and   fund  in  the  Alaska                                                               
Industrial Development and Export  Authority." This was the first                                                               
2:33:04 PM                                                                                                                    
SENATOR MCGUIRE, sponsor of SB 140, introduced the legislation                                                                  
speaking to the following sponsor statement:                                                                                    
     Globally,  all  eyes  are  on  the  Arctic.  The  World                                                                    
     Economic   Forum   has   recently   identified   Arctic                                                                    
     Infrastructure development  as one of the  top Four (4)                                                                    
     challenges facing  the regions.  Alaska's future  is in                                                                    
     the Arctic, and in order  for Alaskans to capitalize on                                                                    
     the   incredible   opportunities   and   overcome   the                                                                    
     significant  challenges that  this region  presents, we                                                                    
     must begin to build infrastructure now.                                                                                    
     Aside  from  a few  areas  in  Norway and  the  Russian                                                                    
     Federation  the  Arctic  as   a  whole  remains  vastly                                                                    
     underserved  by  transportation, ports,  communication,                                                                    
     emergency   response,   defense  and   other   critical                                                                    
     infrastructure.  For  further   development  to  occur,                                                                    
     which  Alaskans   deserve,  both  public   and  private                                                                    
     interests must  come together  to boost  the investment                                                                    
     in the Arctic.                                                                                                             
     For these  reasons I have  introduced Senate  Bill 140,                                                                    
     Arctic  Infrastructure  Development Fund  ("AIDF").  SB
     140  expands AIDEA's  tool bag  by  extending the  same                                                                    
     authority for  loans, loan  guarantees, bonds  and bond                                                                    
     guarantees  that it  currently utilizes  in the  energy                                                                    
     sector via the  SETS fund (AS 44.88.650-  690) in order                                                                    
     to  develop Infrastructure  in the  Arctic. AIDEA  used                                                                    
     SETS  to  facilitate  the  financing  of  the  Interior                                                                    
     Energy Project.  This tool helps to  create the public-                                                                    
     private  partnerships  that  are  needed  to  encourage                                                                    
     large investment in capital intensive infrastructure.                                                                      
     Senate  Bill  140  extends AIDEA's  existing  power  to                                                                    
     finance,  or facilitate  the financing  of projects  to                                                                    
     the  realm of  Arctic  Infrastructure  by granting  the                                                                    
     Authority the ability to:                                                                                                  
     1. Insure  project obligations  and guarantee  loans or                                                                    
     bonds for projects.                                                                                                        
     2. Defer principle payments and capitalize interest.                                                                       
     3. Offer financing terms of up to 30 years.                                                                                
     4.  Enter   into  lease   agreements,  sales-lease-back                                                                    
     agreements,   build-operate-transfer   agreements   and                                                                    
     other  agreements  to   finance  Arctic  infrastructure                                                                    
     These powers  already provide  flexible terms  that can                                                                    
     reduce  the  ultimate  cost of  energy  (via  the  SETS                                                                    
     program)  to  consumers, and  if  it  can work  in  the                                                                    
     energy realm, it can  work for infrastructure. However,                                                                    
     SB   140  also   requires   legislative  approval   for                                                                    
     investments  that   are  more   than  one-third   of  a                                                                    
     project's capital costs or if  a loan guarantee exceeds                                                                    
     $20  Million.  By  subjecting  certain  investments  to                                                                    
     legislative approval,  SB 140 maintains  an appropriate                                                                    
     level of due diligence for projects.                                                                                       
     By   making   financing   available  we   can   empower                                                                    
     communities  and attract  a global  pool of  investment                                                                    
     that is  an alternative to the  traditional grant model                                                                    
     that  too  often  underfunds   projects  and  leads  to                                                                    
     delays. Relying  on credit  also ensures  that sponsors                                                                    
     have  some  skin  in  the  game  and  a  stake  in  the                                                                    
     project's  success.  Most  importantly, we  expand  the                                                                    
     arena of where  Alaskan assets are working  in order to                                                                    
     grow  our  own  economy. Currently,  many  of  Alaska's                                                                    
     savings accounts are invested  in stocks and bonds that                                                                    
     drive  economic  activity  outside of  Alaska.  SB  140                                                                    
     suggests  instead   that  some  of  those   savings  be                                                                    
     invested  here in  Alaska through  AIDEA, not  as blank                                                                    
     checks  for development,  but  as  investments for  our                                                                    
     future in Arctic Infrastructure.                                                                                           
     For  the purposes  of  this Act,  I  propose that  this                                                                    
     program  and fund  focus infrastructure  development in                                                                    
     the geographical  definition of the Arctic  as laid out                                                                    
     in Arctic Research and Policy  Act (amended 1990). That                                                                    
     definition  includes the  area of  the State  of Alaska                                                                    
     north  of the  Arctic  Circle, north  and  west of  the                                                                    
     boundary formed by the  Porcupine, Yukon, and Kuskokwim                                                                    
     Rivers,  all  contiguous  seas,  including  the  Arctic                                                                    
     Ocean, and the Beaufort,  Bering, and Chukchi Seas, and                                                                    
     the Aleutian chain.                                                                                                        
     With AIDF I am proposing that the State expand AIDEA's                                                                     
        existing authority to finance, or facilitate the                                                                        
     financing of, Arctic Infrastructure.                                                                                       
2:43:30 PM                                                                                                                    
SENATOR STEDMAN agreed  with the bill sponsor that  Alaska has to                                                               
get  aggressive  in  developing   infrastructure  in  the  Arctic                                                               
because the federal government is lagging.                                                                                      
JESSE LOGAN, Staff, Senator Lesil  McGuire, stated that after the                                                               
bill was  introduced the  sponsor worked  with AIDEA,  the Arctic                                                               
Policy  Commission, and  other stakeholders  to identify  ways to                                                               
strengthen  the   bill  and  help   the  development   of  Arctic                                                               
infrastructure. He noted  the packets contain a  sectional of the                                                               
suggested changes.                                                                                                              
SENATOR  STEDMAN  asked  if  the process  will  be  to  introduce                                                               
potential changes and return with a committee substitute.                                                                       
MR. LOGAN said yes.                                                                                                             
CHAIR DUNLEAVY asked Mr. Davis if he had anything to add.                                                                       
MARK DAVIS,  Deputy Director,  Alaska Industrial  Development and                                                               
Export Authority,  (AIDEA), agreed with  Mr. Logan that  AIDEA is                                                               
working  with  the  sponsor's  office  on  a  possible  committee                                                               
2:45:30 PM                                                                                                                    
STEPHEN TRIMBLE,  President, Trimble  Strategies, LLC  and public                                                               
member  of the  Alaska Arctic  Policy Commission,  stated support                                                               
for SB 140,  which would create an  Arctic infrastructure program                                                               
and fund within  AIDEA. He described the Arctic as  the future of                                                               
Alaska   and   emphasized   the  importance   of   investing   in                                                               
infrastructure now  in order to  have a meaningful place  in this                                                               
new  global frontier.  Industry  has responded  to  the call  for                                                               
public investment and  now is the time  to further public/private                                                               
investment  within   Alaska.  Enabling  AIDEA  with   the  powers                                                               
provided by SB 140 is an investment in the future of Alaska.                                                                    
2:47:11 PM                                                                                                                    
STEPHEN KLINE,  Managing Principle, First Infrastructure  Inc., a                                                               
consulting firm based  in New Jersey, said he is  testifying as a                                                               
professional in the financial field.  He reported that he advises                                                               
AIDEA  on a  number of  matters, the  regulations and  procedures                                                               
relating to the SETS fund in particular.                                                                                        
He related that he is  a strong proponent of guarantee structures                                                               
to  stretch  relatively  scarce public  sector  dollars  for  the                                                               
benefit of what  are deemed to be  worthwhile projects. Utilizing                                                               
such  a structure  in support  of Arctic  infrastructure projects                                                               
would be  a wise use of  the state's scarce public  resources, he                                                               
2:49:24 PM                                                                                                                    
CHRIS  HLADICK,  Manager,  City of  Unalaska,  Unalaska,  Alaska,                                                               
reported that  he served on  both the Northern Waters  Task Force                                                               
and the Arctic Policy Commission  and is testifying in support of                                                               
SB  140. He  said  that  Unalaska is  seeing  explosive needs  to                                                               
accommodate  the  anticipated  arrival   of  the  oil  companies.                                                               
Infrastructure  needs  have  been identified  that  will  require                                                               
public/private partnership  and SB 140 provides  another tool. He                                                               
acknowledged   that    a   lot   of   places    need   additional                                                               
infrastructure,  and  pointed  out that  all  the  infrastructure                                                               
development in places  like Kotzebue, Nome or  Port Clarence will                                                               
have to pass through Unalaska/Dutch Harbor.                                                                                     
CO-CHAIR  DUNLEAVY  commented  that  he  was  impressed  when  he                                                               
visited Unalaska.                                                                                                               
SENATOR MICCICHE asked if the  changes in Section 8 would include                                                               
the ability for LNG storage and infrastructure needs.                                                                           
MR. HLADICK said he didn't know.                                                                                                
SENATOR  MICCICHE asked  to hear  from the  sponsor after  public                                                               
testimony so she could answer the question.                                                                                     
2:52:10 PM                                                                                                                    
RON LONG, Assistant City Manager,  City of Seward, stated that if                                                               
the  state  is to  succeed  in  the  development of  the  Arctic,                                                               
whether  it's in  fisheries,  resource  development, tourism,  or                                                               
response  and monitoring  capacity  for  foreign flagged  vessels                                                               
transiting  the Bering  Straits, it  is critical  to have  a deep                                                               
water port or  ports to support the effort. SB  140 helps advance                                                               
those  goals. AIDEA's  track record  with Red  Dog transportation                                                               
infrastructure and Alaska Ship and  Dry Dock speaks well of their                                                               
ability to help move these projects forward.                                                                                    
He expressed  hope that  as the  bill moves  forward it  would be                                                               
amended  to  include  provisions  that  will  build  on  existing                                                               
capacity within  the state to  support the staging  and logistics                                                               
necessary to  make a number  of port developments  successful. He                                                               
noted  that   when  he  attended   an  Institute  of   the  North                                                               
presentation in  Seattle on Arctic opportunities  and challenges,                                                               
a  representative  from a  Washington  state  port declared  that                                                               
Bellingham would  be the  gateway to the  Arctic. He  warned that                                                               
just  as other  nations are  moving into  the Arctic  with active                                                               
plans and resource  commitments while the U.S. is  trying to form                                                               
an action plan,  other states are looking  for opportunities that                                                               
should remain in Alaska.                                                                                                        
SENATOR MICCICHE  expressed appreciation  for the recent  tour of                                                               
Seward's  breakwater  expansion.  He   observed  that  there  are                                                               
communities that  are ready to  support the Arctic,  although all                                                               
need a  bit of infrastructure boost  to ensure the safety  of the                                                               
2:55:33 PM                                                                                                                    
CHAIR  DUNLEAVY asked  Senator Micciche  to restate  his question                                                               
for the sponsor.                                                                                                                
SENATOR MICCICHE expressed interest  in helping with an amendment                                                               
to ensure that  the bill will consider  energy infrastructure and                                                               
projects in western and northwest Alaska.                                                                                       
SENATOR MCGUIRE said  that has already been addressed  both in SB
140 and the  changes to SETS in SB 99.  She described where these                                                               
changes are  found. Section  11, paragraphs (18)  and (19)  of SB
140   change  the   way  "Arctic"   and  "Arctic   infrastructure                                                               
development" is  defined so that  all of Alaska can  benefit from                                                               
the new  fund. On  page 3,  lines 1-4,  of SB  99 it  states that                                                               
liquefaction,  regasification   storage,  and  natural   gas  are                                                               
included in the definition of "qualified energy development."                                                                   
2:59:14 PM                                                                                                                    
CO-CHAIR DUNLEAVY  announced he  would hold  SB 140  in committee                                                               
for further  consideration. Public  testimony would be  opened at                                                               
the next hearing.                                                                                                               

Document Name Date/Time Subjects
SB159.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
Sponsor Statement for SB159.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
Section Summary for SB159.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159-DCCED-DOI-2-10-14.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
02 – Division of Insurance letter by Katie Campbell to Dina Yunker, 12 November 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
03 – Division of Insurance letter by Katie Campbell to Airlift Northwest, 16 July 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
04 – Division of Insurance letter by Katie Campbell to Dina Yunker, 19 August 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
A - State tells medevac payment program to drop Alaska members, 26 November 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
Airlift Northwest letter, 22 November 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
B - Medevac insurance plan shut, Chilkat Valley News, 5 December 2013.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB 159 Support Letter_Airlift NW.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB 159_Support Letter_CommissionOnAging.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159_Support Letter_SEAFA.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159_Support Letter_SEAFA.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159_Letter of Support_Guggenbickler.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159_SupportLetter_Brantner.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB159_SupportLetter_Dangel.pdf SL&C 2/18/2014 1:30:00 PM
SB 159
SB 99A (28-LS0741A).pdf SL&C 2/18/2014 1:30:00 PM
SB 99
SB 99 Sponsor Statement.pdf SL&C 2/18/2014 1:30:00 PM
SB 99
SB 99 Sectional Analysis.pdf SL&C 2/18/2014 1:30:00 PM
SB 99
SB99-DCCED-AIDEA-02-14-14.pdf SL&C 2/18/2014 1:30:00 PM
SB 99
SB 99 Supporting Document- AS 44.88.650-690; AS 44.88.900.pdf SL&C 2/18/2014 1:30:00 PM
SB 99
Proposed Amendment to Senate Bill 99 FINAL.PDF SL&C 2/18/2014 1:30:00 PM
SB 99
SB 140 A.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB 140 Sponsor Statement.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB 140 Sectional Analysis (2).pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB 140 Sectional Analysis.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB 140 ARPA_Polar map.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB140-DCCED-AIDEA-02-14-14.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB140_PotentialChanges.pdf SL&C 2/18/2014 1:30:00 PM
SB 140
SB140_Planning and Infrastructure Section of AAPC Preliminary Report.pdf SL&C 2/18/2014 1:30:00 PM
SB 140