Legislature(2023 - 2024)SENATE FINANCE 532
05/08/2024 01:30 PM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Aidea's March to Autonomy | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
May 8, 2024
1:34 p.m.
1:34:06 PM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 1:34 p.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Gregg Erickson, Erickson and Associates; Milton Barker, MB
Barker LLC; Julie Sande, Commissioner, Department of
Commerce, Community, and Economic Development; Randy Ruaro,
Executive Director, Alaska Industrial Development and
Export Authority.
SUMMARY
^AIDEA'S MARCH TO AUTONOMY
1:36:35 PM
GREGG ERICKSON, ERICKSON AND ASSOCIATES, introduced
himself. He explained that he and Milt Barket, of MB Market
LLC, had worked with had contracted with Salmon State to
produce the reports that informed the presentation. He
relayed that he and Mr. Barker had been working in the
field for over 40 years. He offered a brief educational and
work history of himself and Mr. Barker. He stated that
Salmon State had contracted him and Mr. Barker over two
years ago to do an analysis of AIDEA. He shared that he and
Mr. Barker had written a statement of work and had been
paid $55,000 over the two and a half years it took to
produce the four reports that would be summarized in the
presentation.
1:39:03 PM
Mr. Erickson discussed the presentation, "Economic Analysis
Of The Alaska Industrial Development And Export Authority's
Performance" (copy on file). He pointed to slide 2,
"Economic Reports":
AIDEA Cost and Financial Performance-A Long, Hard Look
AIDEA's March to Autonomy
AIDEA's Loan Participation Program A Closer Look
The AIDEA Endowment: A Short History of a Disputed
Resource
1:39:36 PM
Mr. Erickson pointed to slide 3, "Key Findings":
AIDEA cost the State $10 billion in lost revenues from
FY 1981-2021
AIDEA's Loan Participation Program (LPP) is a major
waste of public funds
AIDEA's endowment of $1.4 billion in net assets is
beyond what AIDEA needs to accomplish its economic
development goals
Mr. Erickson asserted that most projects AIDEA had entered
were defunct. He believed that the $1.4 billion in assets
could be put to better use for the state.
1:42:07 PM
Mr. Erickson looked at slide 4, "Key Finding 1: AIDEA Cost
The State $10 Billion In Lost Revenues":
Less than half of AIDEA's projects have made permanent
additions to Alaska's economy
Of AIDEA's 26 major development projects, 4 are
defunct, 7 were acquisitions of existing properties or
operations and 3 are still in the planning stages
Mr. Erickson continued to Slide 5, Ket finding 1
(cont..): AIDEA Cost the State $10 Billion in Lost
Revenue:
• As of June 30, 2023, AIDEA had written off $324
million in economic development projects
• From FY 1981 through FY 2023, AIDEA received $849
million in state money, sending back $557
million: 66 percent return OF state capital and 0
percent return ON state capital.
Mr. Erickson stressed that it was the legislature's duty to
determine whether the economic development projects under
AIDEA had been of worth to the state treasury. He said that
defenders of AIDEA would say that the purpose of AIDEA was
economic development and not to make money. He countered
whether the money from AIDEA was being deployed effectively
to foster economic development.
1:44:37 PM
Senator Kiehl wondered about the states return on
investment. He wondered whether the money going to AIDEA
was general seed capital of appropriations for specific
projects.
1:45:09 PM
Mr. Erickson replied that it was both. He added that the
nature of the money going out was primarily AIDEA
dividends.
MILTON BARKER, MB BARKER LLC, elaborated AIDEA was first
given $180 million in state general fund money in 1981,
prior to that AIDEA issued revenue bonds and had no assets.
He furthered that between 1983 and 1985, another $160
million was given to AIDEA for construction costs of the
Red Dog project. He said that over the years, smaller
transfers were made to the authority for various reasons.
1:48:21 PM
Senator Kiehl commented that a return of $557 million for
an $849 million investment constituted a negative return on
investment. He wondered whether the rest of the money was
still somewhere in the enterprise.
1:48:42 PM
Mr. Erickson responded that the recovery of capital had
been separated into one analysis for summarization. He said
that the problem with a negative return was that it had to
be calculated on a certain date.
1:48:57 PM
Mr. Barker furthered that the characterization of the
states investment in the analysis was akin to a payback
period. He said that the analysis demonstrated that the
state had yet to get a full return on its investment. He
stated that he had a handout that showed what the rate of
return would be if all the dividends were treated as
interest. The rates would be over the entire period since
dividends had been paid. (copy on file.)
1:51:26 PM
Mr. Erickson highlighted slide 6, "Key Finding 1(Cont...):
AIDEA Cost The State $10 Billion In Lost Revenues
AIDEA's most successful project, Red Dog, did not need
AIDEA's subsidies to be successful
AIDEA's own consultants, SRI International (SRI),
concluded that the project would go forward regardless
of whether the State offered subsidies
Mr. Erickson relayed that AIDEA had financed the
transportation system for the mine and had contracted for
an analysis of the feasibility of the mine. Cominco, a
small Canadian mining corporation had proposed that AIDEA
subsidize the project. He stated that Cominco had been
unable to finance the project alone and the state subsidy
had been an effort by the company to retain control of the
asset. The analysis had questioned the need for substantial
state subsidy and had recommended that the rate of return
on the transportation be market rates, which was not what
resulted. He said that the state subsidy had been
substantial. He asserted that AIDEAs own analysis had
stated that no subsidy was needed, yet AIDEA continued to
claim that every job at the mine had been a consequence of
its support for the project. He said that he had tried to
get to the truth through conversations with the authority,
but that AIDEA refused to have the conversation.
1:54:39 PM
Mr. Erickson discussed slide 7, "Key Finding 2: AIDEA'S
Loan Participation Program (Lpp) Is A Major Waste Of Public
Funds":
AIDEA's Loan Participation Program accounts for $5.8
billion of the $10 billion that AIDEA has cost the
State
1:55:00 PM
Mr. Barker explained that the loan participation program
accounted for much of the $10 billion AIDEA had cost the
state in lost revenue. He said that program had been in
operation several years longer than any development project
the authority had undertaken and had higher average balance
of fund invested in loans than in projects altogether. He
said that he had researched the benefits to the state in
terms of employment and had found that AIDEAs job creation
numbers were overstated. He related that loans larger than
$3 million had to be approved by the board and smaller
loans were approved by a committee comprised of staff.
1:57:31 PM
Mr. Barker pointed to slide 8, "KEY FINDING 2 (CONT?):
AIDEA's Loan Participation Program (Lpp) Is A Major Waste
Of Public Funds":
AIDEA's job creation numbers are inflated by jobs that
would have been created without AIDEA lending.
From 2008-2023, AIDEA large loans only created 218
Alaska jobs compared to AIDEA's claims of 3,627 jobs
From FY 17 to FY 23, on 43 percent of its loans, AIDEA
claimed zero jobs created
Mr. Barker cited the handout, AIDEA Loan Participation
Program FY 2017-2023 All 184 Loans (copy on file). He
noted that AIDEA had not produced any numbers or statistics
on economic development, so looking at jobs created would
be an indication of economic development.
1:58:44 PM
Mr. Erickson furthered that AIDEA had never produced a
rigorous analysis of jobs produced. He was hopeful the
Northern Economic Study contracted by AIDEA to refute his
findings would produce some credible job numbers.
1:59:55 PM
Senator Kiehl asked whether the job numbers were direct
jobs or indirect and induced job numbers.
Mr. Barker responded that the numbers quoted on the handout
were direct jobs as reported by AIDEA in the loan dashboard
reports submitted to the board. He said that the numbers
from the last 15-year period were also direct jobs and the
information had been obtained through the minutes and audio
tapes of AIDEA board meetings. He said that AIDEA seemingly
reported indirect and induced job numbers in the OMB report
submitted to the administration for each years budget.
2:01:30 PM
Mr. Erickson displayed slide 9, "Key Finding 3: AIDEA'S
Endowment Of $1.4 Billion In Net Assets Is Far More Than It
Needs To Keep Doing What It Does":
AIDEA has $631 million in cash and equivalents. This
money is producing neither jobs nor development
AIDEA can finance worthwhile economic development with
revenue bonds
AIDEA does not need a $1.4 billion economic endowment
to support economic development or job creation
Mr. Erickson thought that there was a real need for an
economic development agency in the state but that no state
had endowed their economic development agency with as
significant an amount of money as Alaska and most states
did not have an endowment but worked on annual
appropriations. He stated that AIDEA had $631 million in
cash and that the money was not doing any good for Alaska.
He believed that AIDEA could finance economic development
projects with revenue bonds, which had been the concept
upon creation of the agency and for its initial 15 years of
activity.
2:04:10 PM
Co-Chair Hoffman asked whether the authority for AIDEA to
appropriate dollars had been granted through legislation.
He noted that the legislature was the appropriating body.
2:04:48 PM
Mr. Erickson responded that once the legislature
appropriated the funds to AIDEA, AIDEA had the authority to
appropriate the funds.
2:05:16 PM
Mr. Barker furthered that state appropriations were
normally made for AIDEAs operating purposes. He said that
what AIDEA spent on development projects, pre project
development, was where the question lay. He stated that
AIDEA was currently spending substantial funds for pre-
development costs for several projects.
2:06:53 PM
Co-Chair Hoffman stated that he may follow up at the end of
the presentation.
2:07:05 PM
Mr. Erickson pointed to slide 10, "Key Finding 3 (Cont?):
AIDEA'S Endowment Of $1.4 Billion In Net Assets Is Far More
Than It Needs To Keep Doing What It Does":
Legislature has directed AIDEA to annually report
"whether assets of the authority exceed an amount
required ?" (AS 44.88.205)
Despite this directive AIDEA never provided
Legislature with a quantitative analysis justifying
its need for $1.4 billion or any part if that amount
Mr. Erickson said that in FY22, AIDEA provided a 10-page
report and in FY23 a letter was provided that offered
limited information. He contended that AIDEA should provide
a quantitative analysis justifying the need for the $1.4
billion endowment.
2:09:14 PM
Mr. Erickson looked at slide 11, "Key Finding 3 (Cont?):
AIDEA'S Endowment Of $1.4 Billion In Net Assets Is Far More
Than It Needs To Keep Doing What It Does":
The Legislature has the authority to use AIDEA's $631
million dollars of cash assets for other purposes
No reason to believe that redeploying AIDEA's liquid
assets would compromise AIDEA's ability to meet its
program goals
2:09:52 PM
Senator Bishop asked whether bond raters would give a
higher rating based on a higher cash reserve.
2:10:24 PM
Mr. Erickson deferred to Mr. Barker.
2:10:33 PM
Mr. Barker explained that the stronger the financials of
AIDEIA the lower the bond rate.
2:10:54 PM
Mr. Erickson interjected the interest rate would be lower
not the bond rating.
2:10:58 PM
Mr. Barker said that municipal bonds might be offered with
bond insurance, which gave an A rating and often a letter
of credit would be issued by a bank. He relayed that it was
questionable whether all projects would have a better rate
on bond financing because of other credit enhancements.
2:12:09 PM
Mr. Erickson explained that AIDEA did not currently have a
bond rating but had had one in the past. He stated that
several years ago, because of the states financial
situation, the bond rating had been put on a reduction
notice. To avoid the bad rating, AIDEA divested itself of
all its bonds.
2:13:33 PM
Mr. Erickson turned to slide 12, Key Findings:
• AIDEA cost the State $10 billion in lost revenues
from FY 1981-2021
• AIDEA's Loan Participation Program (LPP) is a major
waste of public funds
• AIDEA's endowment of $1.4 billion in net assets is
beyond what AIDEA needs to accomplish its economic
development goals
Mr. Erickson stressed that Mr. Barker had once been the
Deputy Commissioner at the Department of Revenue and sat on
the AIDEA board for 8 years.
2:14:18 PM
Senator Merrick understood that the presenter believed the
$1.4 million in net assets exceeded AIDEAs actual needs.
She queried what an appropriate number might be.
2:14:27 PM
Mr. Erickson did not have a dollar amount. He thought that
AIDEA could give back $6 million to the state without
disrupting any of its current work or projects. He thought
that the legislature should investigate the issue.
2:15:39 PM
AT EASE
2:17:41 PM
RECONVENED
2:17:41 PM
JULIE SANDE, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, (DCCED) introduced
herself.
RANDY RUARO, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY, (AIDEA) introduced
himself. He gave some background on his work history.
2:19:32 PM
Mr. Ruaro contended that the previous testifiers had not
presented full numbers or had possibly misunderstood the
numbers as they pertained to AIDEA, its work, and its
budget. He said he would walk through and address the
concerns raised by Mr. Erickson and Mr. Barker. He noted
that his current workload prevented him from diving as deep
into the numbers as the previous testifiers.
2:20:38 PM
Co-Chair Stedman asked how long Mr. Ruaro had been CEO of
AIDEA.
2:20:45 PM
Mr. Ruaro replied that he had been CEO for approximately
1.5 years.
2:20:49 PM
Mr. Ruaro discussed the presentation, "AIDEA: Enabling
Economic Growth and Jobs for Alaskans" (copy on file). He
looked at slide 2, "About AIDEA":
AIDEA, and the precursor to AIDEA, has been investing
in Alaskans since 1961 to strengthen employment
opportunities and economic development.
2:21:35 PM
Mr. Ruaro pointed to slide 3, "AIDEA'S Mission":
Our mission is to "promote, develop, and advance the
creation of jobs and economic development in Alaska by
providing various means of financing and investment"
(AS 44.88.010).
The legislature made the creation of jobs and economic
development AIDEA's mission because unemployment is a
serious menace to the health, safety, and general
welfare to the people in rural Alaska and in the
entire state" 1967's House Bill 14).
Taking care of the "health, security, and general
welfare" of Alaskans is a constitutional duty under
Art. 7, sec. 4 of the Alaska Constitution as is the
development of Alaska's resources Art. 8, sec. 1.
2:23:22 PM
Co-Chair Hoffman asked whether there were communities in
the area of the Ambler Road project that opposed the
project.
2:23:35 PM
Mr. Ruaro replied that the Tanana Chiefs, the regional
tribe, opposed the road and were in litigation with AIDEA.
He said that he gave more credence to communities that were
closest to the road, such as the Doyon communities.
2:24:13 PM
Co-Chair Hoffman asked whether there were communities
farther west that opposed the project.
2:24:26 PM
Mr. Ruaro thought that there were several but could not
recall the names. He said that AIDEA would reach out to
those communities to educate them on the project.
2:25:05 PM
Co-Chair Hoffman queried the reasons that some groups would
oppose the road.
2:25:11 PM
Mr. Ruaro replied that the Tanana Chiefs opposed the road
out of concern that the road could eventually become a
public access road. He said that the other concerns
surrounded possible impact on subsistence resources. He
said that there was a Subsistence Committee made up of
community members closest to the proposed road.
2:26:07 PM
Co-Chair Olson asked about the position of communities in
the Northwest Arctic Borough.
2:26:21 PM
Mr. Ruaro said that a resolution from the borough had
indicated support for the process of reviewing the project
and finding mitigation measures moving forward.
2:26:43 PM
Co-Chair Olson had not interpreted the boroughs stance as
such. He asked whether Mr. Ruaro was familiar with the Nana
Corporation.
2:26:50 PM
Mr. Ruaro replied in the affirmative.
2:26:59 PM
Co-Chair Olson asked whether Mr. Ruaro was aware of their
withdrawal of involvement in the Ambler Road project.
2:27:04 PM
Mr. Ruaro responded that there would still be significant
development that would benefit from the road outside of
Nana Corporation land.
2:28:09 PM
Co-Chair Olson asked whether Nana Corporation ceasing
involvement had affected his view of the Ambler Road
project.
2:28:27 PM
Mr. Ruaro replied that Nana Corporation stepping out was
unfortunate, but AIEDA would go forward with the project.
2:29:07 PM
Mr. Ruaro addressed slide 4, "AIDEA's Focus":
• At the direction of the legislature, AIDEA is
focused on addressing the harms caused by unemployment
and a lack of jobs
• Particularly in rural areas where unemployment and
the cost of living is the highest
• A self reported cause of high suicide rates is a
lack of jobs and economic opportunity
2:30:14 PM
Mr. Ruaro looked at slide 5, "Rural Alaska Suicide Rates":
What happens in rural Alaska without enough jobs or
economic opportunities Suicide rates
• The suicide rate among Alaska Native adolescents
nearly doubled from 2018 to 2019.
• Rates by region were highest in the Northern and
Southwest regions (116.1 and 112.5 per 100,000 persons
aged 12 19 years, respectively), the national rate for
adolescents is 8.8 per 100,000.
• Rural Alaska rates of suicide are 12 14 times higher
than the national average.
• Suicide is the leading cause of death among Alaska
youth over the age of 15.
2:30:19 PM
Mr. Ruaro highlighted slide 6, "Labor Participation":
• Alaska is suffering from low rates of participation
in its workforce.
Mr. Ruaro shared that the labor participation rate in
Alaska was 60-65 percent, which meant that 1 in 3 Alaskans
was not working.
2:31:00 PM
Senator Kiehl appreciated that social mission of the
authority but questioned any positive impact by the
authority on state suicide rates or job creation.
2:31:25 PM
Mr. Ruaro replied that he was working to provide a study on
the mental health of rural Alaskans who worked at mines
versus those who were unemployed. He assumed that the
suicide rates among Alaskans employed at the Red Dog Mine
were lower than those of unemployed Alaskans.
2:32:11 PM
Senator Kiehl asked about the rest of the states. He asked
whether AIDEAs major investments or loan participation was
concentrated in areas of the state with the lowest labor
participation numbers and the highest suicide rates.
2:32:30 PM
Mr. Ruaro responded that other AIDEA programs were spread
over all senate districts. He offered to provide more
details to the committee.
2:32:51 PM
Mr. Ruaro discussed slide 7, "AIDEA and Red Dog Mine." He
contested that the idea that the Red Dog Mine would have
been built without the help of AIDEA:
o Early 1980s, local leaders such as Willie Hensley
and leaders such as Governor Sheffield, and
COMINCO officials discussed options for the
development of the Red Dog Mine
o Early to Mid 1980s, COMINCO was suffering from
low metal prices, a down economy, and high
interest rates. COMINCO was running hundreds of
millions in losses and by 1985 was more than $1
billion in debt. It sold some mines along with
other non core operations. Canadian Pacific
Railway, COMINCO's largest shareholder, sold out
of the company.
o In 1985, Legislation was introduced (SB 279 and
SB 280) to direct AIDEA to provide roughly one
third of the cost to develop the Red Dog project.
AIDEA would fund the port and road to the mine
(About $160m).
o Extensive hearings were held, along with public
testimony. Ultimately, the legislation passed
overwhelmingly, and the bills were signed into
law by Governor Sheffield. SB 280 passed the
House 32 7 and passed the Senate 19 1.
o The road, port, and mine were built and began
operations in 1989. By 1996, the mine had lost
nearly $300 million dollars. COMINCO determined
the only way to survive was to expand production
to take advantage of economies of scale. HB 526
was introduced in the legislature to authorize
AIDEA to fund the expansion. Hearings were held,
public testimony was taken, and the bill
overwhelmingly passed the legislature.
o After extensive review, research, hearings and
public testimony, the legislature found a need
for AIDEA to finance Red Dog both to build it and
keep it running. The Red Dog Mine and
Infrastructure is an AIDEA project.
2:35:36 PM
Senator Bishop asked whether the toll fees had been
negotiated before the construction of the Delong Mountain
Road.
2:35:41 PM
Mr. Ruaro replied that the finance plan had been
negotiated.
2:35:53 PM
Senator Bishop understood that the toll fees had been set
in those negotiations.
2:35:55 PM
Mr. Ruaro replied in the affirmative.
2:36:00 PM
Senator Bishop asked for the historical record of the
negotiations.
2:36:03 PM
Mr. Ruaro agreed to provide that information.
2:36:10 PM
Mr. Ruaro pointed to slide 8, "AIDEA and Alaska Permanent
Fund":
• AIDEA's purpose is to "increase job opportunities
and?encourage the economic growth of the state?" (AS
44.88.010
• The Alaska Permanent Fund "provide[s] a means of
conserving a portion of the state's revenue from
mineral resources to benefit all generations of
Alaskans" (AS 37.13.020)
• AIDEA protects the Permanent Fund, allowing it to
focus on investing the state's resource wealth
• AIDEA acts as "a shield, absorbing the risk of state
lending and deflecting political pressure."
• Along with other state corporations, like AHFC, "the
Permanent Fund probably would not have survived the
fate of becoming a development bank itself."
Dave Rose, first executive director of the Alaska
Permanent Fund Corporation
2:38:06 PM
Mr. Ruaro addressed slide 9, "AIDEA Being Targeted by Dark
Money."
2:38:30 PM
AT EASE
2:38:37 PM
RECONVENED
2:38:42 PM
Mr. Ruaro looked at slide 10, "AIDEA Being Targeted by Dark
Money."
2:39:05 PM
Senator Kiehl directed the committee's attention to an
additional packet of information provided by AIDEA (copy on
file). He highlighted an editorial, Soros and other elites
are funding the campus agitators stoking anti-Israel,
antisemitic protests. He noted that the article did not
mention Alaska, AIDEA, economic development, jobs, loans,
mines, fish, or anything else currently under discussion.
He contended that using the phrase Soros and other elites
was a dog whistle for antisemites. He asked what the
article was doing in the backup materials.
2:40:39 PM
Mr. Ruaro responded that the article was meant to
illustrate the reach of Arabella Advisors and the New
Venture Fund. He said that there had been no intent to
offend. He expounded on the ways that dark money was
funding Salmon State and attacking AIDEA.
2:41:14 PM
Mr. Ruaro discussed slide 11, "Outside Influences Into
Alaska Land Management":
Kaktovik is the only community in the 1002 Coastal
Plain . . .
We are not an exhibit in a museum. Nor is the land
that we have survived and thrived on for centuries to
be locked away for the peace of mind of those from
faraway places. This school of thought amounts to
nothing more than green colonialism land grabbing in
the name of the environment."
- from the testimony by Fenton Rexford of Kaktovik
before the House Resource Committee, March 6, 2019,
1:57 p.m.
2:43:25 PM
Mr. Ruaro displayed slide 13, "AIDEA Infrastructure
Development Delong Mountain Transportation System":
• SB 284 and SB 285 (1985) Authorized and directed
AIDEA to bond for the road and dock improvements.
• In 1986, AIDEA funds mine, road, and port with $160
million.
• AIDEA saves mine in 1990s with funding $85 million
for expansion.
• Project continues to yield significant dividends for
NANA royalty of $255 million in 2021 and shares 60
percent of the royalty with other Regional
Corporations).
• Future opportunities also exist (Aktigiruq prospect
could be one of the largest undeveloped zinc deposits
in the world
• AIDEA has received nearly $1 billion in revenue.
2:44:52 PM
Mr. Ruaro pointed to slide 14, "AIDEA Loan Participation
Program (LPP)":
FY2023 HIGHLIGHTS
•$23.6 Million Financed
•387.5 Million in Outstanding (Existing) Loans
$83 Million in Potential Pipeline
percent Delinquency
27 Industries Represented
2:45:33 PM
Mr. Ruaro looked at Slide 15, "AIDEA'S Direct Finance
Program":
• Facilitate investment in Alaska's industrial sectors
• Direct investment as owner/partner/lender
• Partner in projects with private sector developers
(P3)
• Future Alyeschem financing decision in process
• Applications pending for Cook Inlet Natural Gas
2:46:48 PM
Co-Chair Stedman asked Mr. Ruaro to define LPP.
2:46:51 PM
Mr. Ruaro explained that LPP was the Loan Participation
Program where local banks approached AIDEA with the request
that they carry some of the weight of the loan. The AIDEA
board would review the requests and either approve or deny
the application.
2:47:20 PM
Co-Chair Hoffman requested a list of standing LPP loans.
2:47:25 PM
Mr. Ruaro agreed to provide that information.
2:47:40 PM
Senator Kiehl wondered about the structural differences of
the different loans that were not listed on the slide.
2:48:14 PM
Mr. Ruaro said that regardless of whether the approval came
from the legislature or from inside the agency, there was a
set of due diligence requirements in regulation and outside
counsel could be hired for further due diligence. He stated
that if the legislature appropriated funds for a project it
relayed to AIDEA that the legislature wanted the project to
go forward.
2:49:26 PM
Mr. Ruaro discussed slide 16, "AIDEA Project Finance FedEx
Aircraft Hangar":
The FedEx Maintenance, Repair, and Operations Facility
is a hangar capable of accommodating one wide body
aircraft, such as a Boeing 747
AIDEA owned asset, no debt remaining
Initial investment $32.5 million
Preliminary discussions are underway regarding lease
extension
2:49:36 PM
Mr. Ruaro pointed to slide 17, "AIDEA Bonding":
• AIDEA Bonds ? Blank Check
• Bonds are a form of debt that must be repaid
• AIDEA's debt is not a debt to the State
• AIDEA bonds are funded through the private sector
The private sector buys (i.e., funds) the
bonds, not the State or AIDEA
• Bonds are repaid with interest through project
revenues
• No State money is involved
• AIDEA has issued $1.3 billion of bonds and has never
been in default 1
• Currently, AIDEA has no outstanding bond debt
• AIDEA bonds can enhance the State's capital budget
• During periods of lower State revenue, AIDEA
bonds can deploy capital funding to provide
economic development and jobs for the working
families of Alaska
• AIDEA is a State Energy Financing Institution (SEFI
• AIDEA bonds could serve as a 95 5 percent match
ratio for Department of Energy Title 17 funds
($290 billion available
2:50:14 PM
Mr. Ruaro looked at slide 19, "AIDEA Bonding Authority":
• AS 44.88.090 Bonds of the Authority
• AIDEA can finance infrastructure by issuing
bonds that are repaid from:
• Income derived from the project; and/or
•Income derived from AIDEA.
• AS 44.88.095 Bonding Limitations
• AIDEA can issue bonds up to $25 million without
legislative approval;
• AIDEA cannot have more than $400 million of
outstanding bonds in a 12 month period;
• Bonds cannot mature more than 40 years from the
date of issuance.
• AS 44.88.120 Nonliability on Bonds
• Bonds issued by AIDEA are not debt of the
State. The State is not financially responsible
for AIDEA's debt;
• AIDEA cannot make financial commitments or
enter into agreements on behalf of the State.
• AS 44.88.130 Pledge of the State
• The State of Alaska pledges to respect AIDEA's
financial autonomy and not hinder AIDEA's ability
to work with private financial markets or fulfill
contract terms
2:50:37 PM
Co-Chair Stedman asked how much of AIDEAs bonding
authority was outstanding.
2:50:45 PM
Mr. Ruaro replied that the only outstanding authority was
with Snettisham for approximately $30 million.
2:50:52 PM
Co-Chair Stedman asked how much bonding authority had not
yet been issued.
2:51:02 PM
Mr. Ruaro replied that AIDEA did not currently have any
outstanding bonds that would count against the $400 million
limit and had no pending bond issuance that would reach the
$25 million limit that required approval.
Co-Chair Stedman asked whether Mr. Ruaro knew of any
impending requests.
2:51:28 PM
Mr. Ruaro replied that some of the federal programs and
large amounts of money expired in 24 months. Some pre-
authorization had been requested for bonding for critical
minerals and rare earth projects.
2:52:01 PM
Co-Chair Stedman recalled that bonding authority had been
extended for a project on Prince of Whales.
2:52:21 PM
Mr. Ruaro responded that SB 99 had passed in 2014, which
had authorized approximately $125 million for the Bokan
Mountain mining project. He said that the money was still
on the books.
2:52:38 PM
Co-Chair Stedman asked whether there were other
authorizations on the books and what the total of those
projects was.
2:53:09 PM
Mr. Ruaro highlighted slide 21, "AIDEA Status":
• AIDEA's employee turnover of 30 percent down to 0
percent in past six months.
Challenged projects, such as Mustang, are being
addressed.
• Investments are 4x the average.
• Reviewing hundreds of millions of dollars in project
pipeline with public and private entities.
Identifying turnkey opportunities for the state
(I.e. Alyeschem Methanol Plant on BOD agenda next
week).
Increased collaboration and coordination with
legislators is possible through AIDEA statutes.
The AIDEA leadership team is stable with positions
staffed.
2:54:53 PM
Co-Chair Stedman understood that the state had hired an
outside consultant to look at AIDEAs return on investment
overtime.
2:55:02 PM
Mr. Ruaro replied in the affirmative. He shared that there
were benefits to the state from the construction and
operation of the Red Dog Mine that could be directly linked
to AIDEAs original investment.
2:55:40 PM
Co-Chair Stedman thought that it was unlikely that the
consultants report would be done within the next few days.
He said that the report would be reviewed before the
committee once it was complete. He expressed concern for
the previous management of AIDEA and hoped that the
administration could make improvements in the future.
2:57:04 PM
Co-Chair Hoffman mentioned AS 44.88.205, which required
AIDEAs annual report of assets and whether they exceeded
the amount required. He requested the previous 10 annual
reports so that the legislature could review them.
2:57:52 PM
Co-Chair Stedman agreed with the request. he hoped
committee staff could review the reports during the
interim.
2:58:22 PM
Co-Chair Olson referred to the testimony from the previous
presenter and asked about the $631 million in cash that
AIDEA presumably had on hand. He asked about a
constituents concern that AIDEA had requested several
hundred thousand dollars in subsidies.
2:59:06 PM
Mr. Ruaro was unaware of any request in the budget other
than use of its own receipts for its operating budget and
dividends.
2:59:17 PM
Co-Chair Olson hoped that AIDEA has a response ready for
assertions from the Nana Corporation that AIDEA had
provided insufficient consultation and that its projects
did not align with Nanas values.
2:59:42 PM
Co-Chair Stedman asked whether AIDEA had crafted a
response.
2:59:47 PM
Mr. Ruaro agreed to provide that information.
2:59:59 PM
Senator Kiehl asked about AIDEAs work to combat suicide
and unemployment rates in the state. He cited the third
bullet point on slide 21 and how much of the 4x investment
was loan participation versus AIDEAs large projects.
Mr. Ruaro agreed to provide the information.
3:00:37 PM
Commissioner Sande interjected that people in the area of
the proposed Ambler Mine Road had expressed fear of
unemployment rates and the deterioration of their
communities. She compared the project to Red Dog Mine and
believed that the Ambler Road project could provide
benefits for people in the Ambler Road area.
3:02:04 PM
Co-Chair Stedman commented that substantial bonding
authority for AIDEA was not something that the committee
was interested in issuing.
3:02:42 PM
Mr. Ruaro extended an invitation to legislators who were
interested in attending any AIDEA meetings.
3:02:56 PM
Co-Chair Hoffman asked when a meeting would be held in
Bethel.
Co-Chair Stedman joked that it would occur after the
meeting in Ketchikan.
Co-Chair Olson stated that he would like to be present at
any meeting concerning the Ambler Road project.
Mr. Ruaro said he would keep the committee posted.
Co-Chair Stedman requested that he let the committee know
the meeting schedule.
Co-Chair Stedman discussed housekeeping.
ADJOURNMENT
3:04:04 PM
The meeting was adjourned at 3:04 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 050824 AIDEA March to Autonomy Senate Finance Committee Presentation FINAL.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 AIDEA March to Autonomy Information Packet 2.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 AIDEA March to Autonomy Information Packet.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 MB Barker LLC AIDEA Loan Participation Slide.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 MB Barker LLC AIDEA Rate of Return Slide.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 AIDEA executive summary 2024_03_29.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 AIDEA Report Executive Summary Final.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |
| 050824 AIDEA Presentation Barker Erickson.pdf |
SFIN 5/8/2024 1:30:00 PM |
AIDEA |