Legislature(2009 - 2010)SENATE FINANCE 532

02/15/2010 09:00 AM Senate FINANCE

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                  SENATE FINANCE COMMITTEE                                                                                      
                     February 15, 2010                                                                                          
                         9:03 a.m.                                                                                              
9:03:12 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 9:03 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Deven  Mitchell, Executive  Director,  Alaska Municipal  Bond                                                                   
Bank   Authority,  Department   of   Revenue;  Ted   Leonard,                                                                   
Executive Director, Alaska Industrial  Development and Export                                                                   
Authority;  Bryan Butcher, Director,  Government Affairs  and                                                                   
Public   Relations,  Alaska   Housing  Finance   Corporation,                                                                   
Department  Of  Revenue;  Joe Dubler,  Director  of  Finance,                                                                   
Alaska Housing Finance Corporation                                                                                              
PRESENT VIA TELECONFERENCE                                                                                                    
SB 269    ECON. STIMULUS BONDS: REALLOCATION/WAIVER                                                                             
          SB 269 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
SB 270    AK HOUSING FIN CORP DIVIDEND                                                                                          
          SB 270 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
9:03:21 AM                                                                                                                    
SENATE BILL NO. 269                                                                                                           
     "An Act relating to the waiver of volume cap of                                                                            
     recovery zone economic development bonds authorized by                                                                     
     26 U.S.C. 1400U-2 and reallocation by the Alaska                                                                           
     Municipal Bond Bank Authority of the waived volume                                                                         
     cap; relating to the waiver of volume cap of recovery                                                                      
     zone facility bonds authorized by 26 U.S.C. 1400U-3                                                                        
     and reallocation by the Alaska Industrial Development                                                                      
     and Export Authority of the waived volume cap;                                                                             
     increasing the total amount of bonds and notes that                                                                        
     the Alaska Municipal Bond Bank Authority may have                                                                          
     outstanding; relating to revenue bonds issued by the                                                                       
     Alaska Municipal Bond Bank Authority; and providing                                                                        
     for an effective date."                                                                                                    
9:03:45 AM                                                                                                                    
Co-Chair  Stedman brought  the meeting  to order and  thanked                                                                   
participants for  coming on a  holiday. He went  over today's                                                                   
9:04:56 AM                                                                                                                    
DEVEN  MITCHELL, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  BOND                                                                   
BANK  AUTHORITY,   DEPARTMENT   OF  REVENUE,  explained   the                                                                   
different issues in the bill.  The first issue deals with the                                                                   
Alaska  Municipal  Bond  Bank  Authority  and  the  need  for                                                                   
statutory  revisions  in the  program  and the  second  issue                                                                   
deals with  temporary opportunities  related to the  recovery                                                                   
act.  He  introduced  the  PowerPoint   presentation,  Alaska                                                                   
Municipal Bond  Bank, Alaska  Industrial & Export  Authority,                                                                   
February 15, 2010 (copy on file).                                                                                               
Mr. Mitchell  reviewed the Alaska  Municipal Bond  Bank, page                                                                   
2,  which is  a public  corporation  of the  state of  Alaska                                                                   
created  in 1975  to provide  access to  capital markets  for                                                                   
Alaska  communities through  the  use of  state support.  The                                                                   
summary statistics  from FY2001 through FY2009  are presented                                                                   
with community's savings in the  amount the communities would                                                                   
have  otherwise had  to  pay in  addition  to their  original                                                                   
obligation payments. He indicated  that there are benefits to                                                                   
Alaska communities  from the program.  Mr. Mitchell  moved to                                                                   
the  Bank  Statute Changes,  page  3  showing the  bond  bank                                                                   
increase borrowing  limit by $250 million. He  noted there is                                                                   
a $750  million  cap increase  from $500  million about  four                                                                   
years ago.  He noted that  as of June  30, $162.8  million of                                                                   
the  cap remains.  There  are  applications for  another  $40                                                                   
million with  additional applications expected  to total $100                                                                   
Co-Chair  Stedman referred  to the list  of outstanding  loan                                                                   
amounts  for  communities  around  the  state  totaling  $564                                                                   
million. He requested a time frame  when the communities will                                                                   
pay off this debt. He mentioned  that the city of Sitka's $34                                                                   
million loan will be paid off  in seven years and wondered if                                                                   
there  would be the  authority  to reuse the  money on  other                                                                   
Mr. Mitchell  replied that it  is a revolving  authority that                                                                   
exists  under  the  borrowing  cap.  He  commented  that  the                                                                   
program is  mature at  this point meaning  the debt  is level                                                                   
and will  continually step down  to a zero balance  in thirty                                                                   
years.  The borrowing  of the  communities  has outpaced  the                                                                   
maturity of the outstanding obligations.                                                                                        
Co-Chair  Stedman  requested additional  information  showing                                                                   
how the authorization will step  down to give the committee a                                                                   
better  understanding  of the  incremental  increase to  $250                                                                   
million and how  much room will be out in five  to ten years.                                                                   
Mr.  Mitchell agreed  that could  be  done. Co-Chair  Stedman                                                                   
also asked for the cost of the debt to the communities.                                                                         
Mr. Mitchell agreed he could put  together a schedule showing                                                                   
the  aggregate debt  services  by community  showing how  the                                                                   
maturity  looks over  time. Mr.  Mitchell  continued that  in                                                                   
addition  to  increasing  the borrowing  limit,  the  statute                                                                   
eliminates  restrictions  on   Revenue  Bond  issues  of  the                                                                   
program  and   eliminates  restrictions  on  leases   of  the                                                                   
program.  These changes  are  requested  by communities  that                                                                   
currently have opportunities to  finance capital projects. If                                                                   
the bond bank  were not available the communities  would have                                                                   
to borrow at higher interest rates.  He referred to the Sitka                                                                   
hydro project that is looking  to refinance about $21 million                                                                   
worth of  bonds. The refunding  can benefit in  gross dollars                                                                   
of  $1.7  million  by the  bond  bank  participating  in  the                                                                   
Co-Chair Stedman explained that  the community of Sitka wants                                                                   
to refinance  an old hydro  project, lower the  debt service,                                                                   
and use  the savings to pay  additional debt service  for the                                                                   
next increment  of raising a  dam face. The local  electrical                                                                   
rates will not change.                                                                                                          
Senator  Olson questioned  what was  the anticipated  default                                                                   
expected over  the next  ten to fifteen  years in  looking at                                                                   
the increased  borrowing rate.  Mr. Mitchell expected  a zero                                                                   
default.  He  reported  that  the  program  is  not  a  grant                                                                   
program, but a loan program. He  declared that in the history                                                                   
of  the bond  bank there  has never  been a  default where  a                                                                   
community  has not  paid. The  intent  of the  program is  to                                                                   
provide  lower costs  to  the communities  that  need it  the                                                                   
Senator Olson  asked if  all the communities  on page  2 were                                                                   
into  revenue bonds  or other  types of  bonds. Mr.  Mitchell                                                                   
responded that  the bonds  were primarily general  obligation                                                                   
and revenue.  Senator Olson  asked for  the breakdown  of the                                                                   
bonds. Mr.  Mitchell responded  that there were  more general                                                                   
obligation bonds than revenue bonds.                                                                                            
9:15:38 AM                                                                                                                    
Mr. Mitchell continued his presentation  with the History and                                                                   
Applicable  Laws   for  Recovery  Zone  Bonds,   page  4.  He                                                                   
explained that the American Recovery  and Reinvestment Act of                                                                   
2009  created opportunities  to  provide  the incentives  for                                                                   
both public  and private partnerships,  but within  a limited                                                                   
window. After the  end of the calendar year,  the allocations                                                                   
will no longer be available for use.                                                                                            
Mr. Mitchell continued with the  Build America Bonds, page 5.                                                                   
He remarked  this is a structure  of financing  available for                                                                   
any tax  exempt financing.  Where otherwise  they would  sell                                                                   
tax  exempt bonds,  now would  sell taxable  bonds where  the                                                                   
federal  government  provides a  35  percent  subsidy on  the                                                                   
interest expense  on those bonds.  He informed  the committee                                                                   
there may  be an  extension to  the program,  but at  a lower                                                                   
subsidy rate.  He moved to the  Recovery Zone Bonds,  page 6.                                                                   
He  mentioned   that  the  economic  development   bonds  are                                                                   
identical to the Building American  Bonds except it boosted a                                                                   
45   percent   subsidy   on  the   interest   expense.   This                                                                   
significantly  increases the  value on  the long  end of  the                                                                   
loan. He informed that $90 million  has been allocated to the                                                                   
state of  Alaska. Mr.  Mitchell explained  that the  recovery                                                                   
zone   facility    bonds   provide   the    opportunity   for                                                                   
municipalities  to offer tax  exempt financing to  businesses                                                                   
investing in their  communities. He stated that  $135 million                                                                   
has been allocated the state of Alaska.                                                                                         
9:19:09 AM                                                                                                                    
Mr. Mitchell observed  that the Recovery Zone, page  7 is for                                                                   
a  community that  declares  itself a  recovery  zone with  a                                                                   
required resolution from the local city council.                                                                                
TED   LEONARD,   EXECUTIVE   DIRECTOR,    ALASKA   INDUSTRIAL                                                                   
DEVELOPMENT   AND  EXPORT  AUTHORITY,   explained   that  the                                                                   
original recovery  zones were allocated by the  U.S. Treasury                                                                   
based on  June 2008  employment declines.  The U.S.  Treasury                                                                   
looked at employment populations  in cities and counties, but                                                                   
in the unorganized  areas of Alaska the census  area was used                                                                   
to allocate the portion.                                                                                                        
Mr. Mitchell  referred  to the Recovery  Zone Allocations  on                                                                   
page 8.  The economic development  bond total is  $90 million                                                                   
with facility bonds  at $135 million based on  the employment                                                                   
Co-Chair  Stedman  asked  for  more information  on  why  the                                                                   
Yukon-Koyukuk Census  Area and the Wade Hampton  Census areas                                                                   
were zero.                                                                                                                      
Mr.  Mitchell  responded that  those  areas  did not  have  a                                                                   
decline in employment  statistics for the  qualifying period.                                                                   
He  referred  to page  9,  Why  Legislation? to  explain  the                                                                   
disconnect  between allocations  and potential projects.  The                                                                   
failure to use the allocation  money will result in a loss of                                                                   
funds  on  January   1,  2011.  He  explained   that  current                                                                   
allocations will  guarantee the loss of a  substantial volume                                                                   
cap. This  bill establishes  a framework  and legal  basis to                                                                   
ensure this limited resource is used.                                                                                           
Mr.  Mitchell  referred to  the  Alaska Municipal  Bond  Bank                                                                   
Recovery Zone  Statutes on page 10 providing  for communities                                                                   
in census  areas  to receive  consideration immediately  upon                                                                   
the  bill becoming  effective.  It provides  for boroughs  to                                                                   
waive  allocations that  are  not needed  or  cannot be  used                                                                   
Co-Chair  Stedman elaborated  with an  example on  page 8  of                                                                   
Prince of Wales-Outer Ketchikan  Census Area for $1.9 million                                                                   
in economic  development bonds  and $2.9 million  in facility                                                                   
bonds.  He asked  for  an explanation  on  how the  mechanism                                                                   
would work.                                                                                                                     
9:25:23 AM                                                                                                                    
Mr. Mitchell  responded  that upon the  bill's passage  there                                                                   
would  be  an   immediate  outreach  to   census  communities                                                                   
querying if  there were any  planned capital projects.  Based                                                                   
on  the  response  an  allocation  would  be  made  to  those                                                                   
communities  with projects.  He explained  that if a  borough                                                                   
has  not  used   the  allocation  then  it   will  be  waived                                                                   
automatically  so  it can  be  refocused to  other  community                                                                   
projects.  There  is  the concern  that  areas  of  increased                                                                   
unemployment  would  be  penalized, but  he  reiterated  that                                                                   
although  this is  not the  intent of  the bill  it would  be                                                                   
allowed to make sure allocations are used.                                                                                      
9:28:38 AM                                                                                                                    
Mr. Leonard  remarked that the Alaska Industrial  Development                                                                   
and Export Authority Recovery  Zone Facility Bonds on page 11                                                                   
are  specifically  designed to  be  used with  businesses  in                                                                   
conjunction  with banks.  This  can be  used for  industrial,                                                                   
commercial,  retail, and  office.  Facility  bonds cannot  be                                                                   
used  for rental  housing,  airplanes,  health clubs,  liquor                                                                   
stores, race  tracks, luxury  boxes, gambling facilities,  or                                                                   
massage parlors.   There is one allocation of  $29 million by                                                                   
the  Fairbanks   North  Star  Borough  to  the   Alaska  Port                                                                   
Authority for the natural gas project.                                                                                          
Co-Chair  Stedman  asked  if these  would  be  available  for                                                                   
community fishing  quotas. Mr.  Leonard responded he  was not                                                                   
sure, but noted it does not say it cannot be used for that.                                                                     
Co-Chair  Stedman  restated  it  would be  used  for  fishing                                                                   
permits  not   the  equipment.   He  added  there   has  been                                                                   
discussion  of  using  funds to  help  some  communities  buy                                                                   
community quotas to create jobs.                                                                                                
Senator Thomas inquired where  this is addressed in the bill.                                                                   
Mr. Leonard specified that it is in the federal statutes.                                                                       
Mr. Leonard continued on page  12 with the Features and Uses.                                                                   
The bonds are  issued for private projects with  the interest                                                                   
tax-exempt. These bonds would  be issued as a conduit private                                                                   
activity bond and  the debt service is funded  by the private                                                                   
business that owns and uses the property.                                                                                       
9:32:43 AM                                                                                                                    
Mr. Leonard continued  with the Recovery Zone  Regulations on                                                                   
page 13 with  the goal of ensuring all the  allocations would                                                                   
be used in recovery zones and  areas of high unemployment and                                                                   
economic distress.  One of the  benefits of the bill  is that                                                                   
it  allows  AIDEA  and  the bond  bank  to  work  with  other                                                                   
entities not in the recovery zone.                                                                                              
9:33:40 AM                                                                                                                    
Senator  Huggins inquired  if  Alaska could  have  state-wide                                                                   
projects. Mr. Leonard replied  that the area would have to be                                                                   
designated as a  recovery zone. The criteria  must be logical                                                                   
and make sense.                                                                                                                 
Senator Huggins  voiced his concern  if this will  make sense                                                                   
later on. Mr.  Leonard responded that was a  concern of AIDEA                                                                   
who wanted to be a participant  in order to look at the state                                                                   
as  a  whole.  Based  on  the  criteria  and  public  hearing                                                                   
process, it  should have the  mechanism on why  the decisions                                                                   
were made.                                                                                                                      
9:36:03 AM                                                                                                                    
Senator Huggins questioned  if that did not  happen, what was                                                                   
Mr. Leonard's confidence level  in the mechanism to make this                                                                   
Mr. Leonard responded  that if it does not  happen then AIDEA                                                                   
estimates there  will be a  50 per cent  loss of the  cap. He                                                                   
added that almost every state  has a reallocation process. He                                                                   
noted that  the first thing is  to be sure that  each project                                                                   
meets the qualifications to be  a project. Businesses can not                                                                   
just ask for  money without a firm and verified  project that                                                                   
meets  requirements  for  unemployment.  He  emphasized  that                                                                   
there are  processes in place  to verify that the  project is                                                                   
feasible in the area and meets  the criteria for unemployment                                                                   
or  distress  and  also  has the  resources  to  monitor  it.                                                                   
Regulations could also state that  if it is not being used by                                                                   
a certain date then it could be  pulled back. AIDEA is hoping                                                                   
to have  a list of  projects so that  if allocations  are not                                                                   
used, then another project could  be brought forth to use the                                                                   
Co-Chair Stedman  questioned if  the allocations not  used in                                                                   
the unorganized areas would flow into Anchorage and Matsu.                                                                      
Mr. Leonard replied that it could.  Co-Chair Stedman believed                                                                   
that it  would most likely flow  to areas with  the structure                                                                   
to  handle  the  project,  but   did  not  meet  the  federal                                                                   
criteria.   Mr. Leonard agreed  that specific areas  within a                                                                   
larger metropolitan area could be looked at as distressed.                                                                      
9:38:56 AM                                                                                                                    
Co-Chair Stedman referred to the  Department of Commerce zero                                                                   
fiscal note  and an $80,000  fiscal note from  the Department                                                                   
of  Revenue and  the  Alaska Municipal  Bond  Bank for  legal                                                                   
counsel, financial advisory service, and travel.                                                                                
SB  269  was   HEARD  and  HELD  in  Committee   for  further                                                                   
9:40:10 AM     AT EASE                                                                                                        
9:41:13 AM     RECONVENED                                                                                                     
9:41:23 AM                                                                                                                    
SENATE BILL NO. 270                                                                                                           
     "An Act relating to the dividend paid to the state by                                                                      
     the Alaska Housing Finance Corporation; and providing                                                                      
     for an effective date."                                                                                                    
BRYAN  BUTCHER,  DIRECTOR,  GOVERNMENT   AFFAIRS  AND  PUBLIC                                                                   
RELATIONS, ALASKA HOUSING FINANCE  CORPORATION, DEPARTMENT OF                                                                   
REVENUE, explained that sponsor statement.                                                                                      
                     SPONSOR STATEMENT                                                                                        
     Senate Bill 270 will modify the Alaska Housing Finance                                                                     
     Corporation's transfer plan statutes to reflect federal                                                                    
     changes in generally accepted accounting principles.                                                                       
     House Bill 256 passed in 2003 that set in statute a                                                                        
     transfer plan for AHFC to pay an annual dividend to the                                                                    
     state of Alaska. The yearly dividend would be lesser of                                                                    
     $103 million or 75 percent of the Corporation's net                                                                        
     income for the previously completed fiscal year minus                                                                      
     bond repayments for state capital projects.                                                                                
     In 2006, Senate Bill 236 passed that made the first                                                                        
     adjustments to the transfer plan. This bill changed the                                                                    
     definition of "net income" to "adjusted change in net                                                                      
     assets", which reflected federal changes to generally                                                                      
     accepted accounting principles.                                                                                            
     SB 270 will make another modification due to federal                                                                       
     changes in generally accepted accounting principles. It                                                                    
     will add to the definition of "adjusted change in net                                                                      
     assets" to include "temporary market value adjustments to                                                                  
     assets and liabilities made during the base fiscal year".                                                                  
     This change will allow for a true dollar figure for the                                                                    
     Corporation's dividend to be calculated from rather than                                                                   
     inaccurately high or low numbers based on how interest                                                                     
     rate swaps are now considered.                                                                                             
Co-Chair  Stedman asked  for an explanation  of the  interest                                                                   
rate swap.                                                                                                                      
JOE  DUBLER,  DIRECTOR  OF FINANCE,  ALASKA  HOUSING  FINANCE                                                                   
CORPORATION,  explained  that  an  interest rate  swap  is  a                                                                   
derivative financial instrument  where the corporation enters                                                                   
into a contract  with a counter  party where they are  paid a                                                                   
fixed  rate in  exchange for  a variable  rate. The  variable                                                                   
rate is  based on an  index. This allows  for the  selling of                                                                   
variable rate  bonds to  hedge the  change of interest  rates                                                                   
over the  30 year time period  bonds are typically  sold. The                                                                   
Alaska Housing  Finance Corporation has lowered  the costs of                                                                   
funds by entering these interest swaps.                                                                                         
Mr. Butcher remarked  that SB 270 is a simple  bill. Co-Chair                                                                   
Stedman inquired  if there have been any  problems collecting                                                                   
on the swaps.  Mr. Dubler responded that currently  the swaps                                                                   
are marked  to market every  quarter for financial  statement                                                                   
presentation. If the swap out  was closed today than it would                                                                   
require a payment to the counter party.                                                                                         
Senator Olson  asked who would  want an interest  rate switch                                                                   
in light of the  low interest rates on the  world market. Mr.                                                                   
Dubler answered  that these swaps  were entered into  in 2001                                                                   
through 2006  when the  corporation saw  the majority  of the                                                                   
mortgage activity  was from home buyers. The  mortgage market                                                                   
started  offering very  sophisticated  loan  products to  all                                                                   
borrowers that caused the Alaska  Housing Finance Corporation                                                                   
concern.  The  corporation  decided   to  take  on  the  risk                                                                   
themselves because  they had the  expertise to take  on these                                                                   
types of transactions  and pass the benefit  to the borrowers                                                                   
in  the  form  of a  lower  interest  rate.  Most  for-profit                                                                   
corporations enter into some sort of interest rate hedge.                                                                       
9:49:27 AM                                                                                                                    
Co-Chair Stedman  remarked that  many parties were  caught by                                                                   
surprise by the derivative market.  Mr. Butcher remarked that                                                                   
the corporation  had three  swaps with  Lehman Brothers,  but                                                                   
when  Lehman Brothers  went bankrupt,  the corporation  wrote                                                                   
them  a check  to purchase  out  of the  position. The  three                                                                   
swaps were  rebid and  several million  dollars were  made in                                                                   
the transaction.                                                                                                                
9:50:38 AM                                                                                                                    
Co-Chair  Stedman  reported  a  zero  fiscal  note  from  the                                                                   
Department of Revenue.                                                                                                          
Senator  Thomas asked  if  this was  being  made during  base                                                                   
fiscal year or on an annual basis.                                                                                              
Mr.  Butcher   responded  that   the  adjustments   are  made                                                                   
annually.  This  makes  an  adjustment   from  the  financial                                                                   
statements to what  was originally agreed to  in the transfer                                                                   
plan.  Accounts have  made a lot  of changes  over the  years                                                                   
that have  affected the agreement  with the legislature  over                                                                   
what the  dividend would be on  an annual basis.  The general                                                                   
accounting principals have been  modified to require      the                                                                   
corporation  to  include  changes  in  the  market  value  of                                                                   
certain  interest  rate  swaps.  This  was not  part  of  the                                                                   
original deal with the legislature.  SB 270 asks to back this                                                                   
modification out.                                                                                                               
Senator  Thomas inquired  if  it would  be  broader with  the                                                                   
Mr. Butcher explained there was  another motivation from 1997                                                                   
that  required the  corporation to  bring booking  marketable                                                                   
debts securities to market. The  change was immaterial to the                                                                   
corporation's financial statements.  The swap situation could                                                                   
have large  swings in value from  quarter to quarter  and the                                                                   
corporation did  not want a $10  million net increase  in one                                                                   
year  affecting  the  dividend,  then  maybe  a  $10  million                                                                   
decrease for the following year  also affecting the dividend.                                                                   
9:53:53 AM                                                                                                                    
Co-Chair Stedman  questioned the  corporation's intention  of                                                                   
going forward with derivatives.                                                                                                 
Mr. Butcher  responded that they  would not be  entering into                                                                   
any more in the near future. The  corporation's debt issuance                                                                   
for this  calendar year will  consist mainly of  some federal                                                                   
bonds through 2010.                                                                                                             
Co-Chair  Stedman  questioned the  reason  for  not doing  it                                                                   
anymore.  Mr. Butcher  replied that the  interest rate  swaps                                                                   
entered to date  have been swaps that change  a variable rate                                                                   
debt into  a fixed  rate obligation  of the corporation.  The                                                                   
variable rate  debt market in  the world has had  some issues                                                                   
with liquidity in  the past year and a half.  There have been                                                                   
a  lot  of bond  holders  putting  the  bonds back  into  the                                                                   
corporation and  they have  had to come  up with the  cash to                                                                   
pay  off their  position.  The  variable rate  interest  rate                                                                   
today  is  almost   non-existent  due  to  the   shortage  of                                                                   
Co-Chair  Stedman asked  if these  are  standardized or  non-                                                                   
standardized  contracts.   Mr.  Butcher  remarked   that  the                                                                   
general terms are  standardized, but each firm  has their own                                                                   
way of doing business. Co-Chair  Stedman asked Mr. Butcher to                                                                   
explain  the  difference  between  a  standardized  and  non-                                                                   
standardized contract.                                                                                                          
9:57:04 AM                                                                                                                    
Mr. Butcher  explained that the  liquidity facilities  are an                                                                   
agreement  where  the  provider   supplies  liquidity  for  a                                                                   
variable rate  debt obligation.  Bond holders have  the right                                                                   
every seven days to put the bonds  back into the corporation;                                                                   
therefore the  corporation must have  the money to  pay those                                                                   
bonds off. Since  the corporation does not usually  have that                                                                   
large a sum  of money available an agreement  is entered into                                                                   
with a bank to provide liquidity  in case a bond holder wants                                                                   
their money.  There are then  further agreements  between the                                                                   
corporation and the bank.                                                                                                       
9:59:22 AM                                                                                                                    
Co-Chair  Stedman  understood  the standardization,  but  the                                                                   
transparency was  not as apparent  as many thought  hence the                                                                   
world financial  situation. The state  of Alaska did  not get                                                                   
hit as bad as  many areas in the country,  but comfort levels                                                                   
are still not high.                                                                                                             
SB270   was  HEARD  and   HELD  in   Committee  for   further                                                                   
The meeting was adjourned at 10:02 AM.                                                                                          

Document Name Date/Time Subjects
SB 270 AHFC Transfer Plan Sectional Analysis.pdf SFIN 2/15/2010 9:00:00 AM
SB 270
SB 270 AHFC transfer plan Sponsor Statement.pdf SFIN 2/15/2010 9:00:00 AM
SB 270
bondbank09annualreport.pdf SFIN 2/15/2010 9:00:00 AM
SB 269
February 15 2010wAIDEA_Presentation.ppt SFIN 2/15/2010 9:00:00 AM
SB 269
Agenda 021510.docx SFIN 2/15/2010 9:00:00 AM