04/01/2025 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SCR1 | |
| Presentation: What is Aidea and How Does It Benefit Alaskans? | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SCR 1 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
JOINT MEETING
SENATE STATE AFFAIRS STANDING COMMITTEE
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 1, 2025
3:33 p.m.
MEMBERS PRESENT
SENATE STATE AFFAIRS
Senator Scott Kawasaki, Chair
Senator Jesse Bjorkman, Vice Chair
Senator Bill Wielechowski
Senator Elvi Gray-Jackson
Senator Robert Yundt
HOUSE STATE AFFAIRS
Representative Ashley Carrick, Chair
Representative Andi Story, Vice Chair
Representative Rebecca Himschoot
Representative Ky Holland
Representative Sarah Vance
Representative Kevin McCabe
Representative Elexie Moore
MEMEBERS ABSENT
SENATE STATE AFFAIRS
All members present
HOUSE STATE AFFAIRS
All members present
COMMITTEE CALENDAR
SENATE CONCURRENT RESOLUTION NO. 1
Relating to the procedure that the Thirty-Fourth Alaska State
Legislature will use to reconsider bills and items vetoed by the
governor.
- MOVED SCR 1 OUT OF COMMITTEE
PRESENTATION: WHAT IS AIDEA AND HOW DOES IT BENEFIT ALASKANS?
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SCR 1
SHORT TITLE: ART. II, SEC. 16, CONST: VETO RECON
SPONSOR(s): SENATOR(s) CLAMAN
01/24/25 (S) READ THE FIRST TIME - REFERRALS
01/24/25 (S) STA, JUD
03/04/25 (S) STA AT 3:30 PM BELTZ 105 (TSBldg)
03/04/25 (S) Heard & Held
03/04/25 (S) MINUTE(STA)
04/01/25 (S) STA AT 3:30 PM SENATE FINANCE 532
WITNESS REGISTER
RANDY RUARO, Executive Director
Industrial Development and Export Authority (AIDEA)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview from AIDEA.
ACTION NARRATIVE
3:33:14 PM
CHAIR KAWASAKI called the joint meeting of the Senate and House
State Affairs Standing Committees to order at 3:33 p.m. Present
at the call to order were Senators, Wielechowski, Gray-Jackson,
Yundt and Chair Kawasaki. Senator Bjorkman arrived shortly
thereafter.
SCR 1-ART. II, SEC. 16, CONST: VETO RECON
3:33:49 PM
CHAIR KAWASAKI announced the consideration of SENATE CONCURRENT
RESOLUTION NO. 1 Relating to the procedure that the Thirty-
Fourth Alaska State Legislature will use to reconsider bills and
items vetoed by the governor.
3:34:01 PM
[CHAIR KAWASAKI solicited the will of the committee.]
3:34:05 PM
SENATOR WIELECHOWSKI moved to report SCR 1, work order 34-
LS0177\A, from committee with individual recommendations and
attached fiscal note(s).
3:34:20 PM
CHAIR KAWASAKI found no objection and SCR 1 was reported from
the Senate State Affairs Standing Committee.
3:34:42 PM
CHAIR KAWASAKI passed the gavel to Representative Chair Carrick.
3:34:55 PM
Present at the call to order were Representatives Moore, McCabe,
Vance, Holland, Himschoot, Story and Chair Carrick.
^PRESENTATION: WHAT IS AIDEA AND HOW DOES IT BENEFIT ALASKANS?
PRESENTATION: WHAT IS AIDEA AND HOW DOES IT BENEFIT ALASKANS?
3:35:21 PM
CHAIR CARRICK announced the presentation: What is AIDEA and how
does it benefit Alaskans?
3:35:37 PM
RANDY RUARO, Executive Director, Industrial Development and
Export Authority (AIDEA), Anchorage, Alaska, presented an
overview from AIDEA and moved to slide 2. He stated that Alaska
gained statehood in 1959 with unique provisions: unlike most
states, it received both surface lands and subsurface mineral
rights from the federal government. Congress intended this to
help Alaska develop its resources, support the national
interest, and enable the state to be financially self-sufficient
while creating good jobs. However, in the early years, Alaska
struggled economically; its economy was mostly coastal fishing,
banks were few and undercapitalized, state land selections and
mineral titles were incomplete, and unemployment was high.
3:38:26 PM
MR. RUARO moved to slide 3, In What Circumstances Was AIDEA
Created, and stated that in 1961, Alaska's legislature passed
Senate Bill 153, a precursor to the Alaska Industrial
Development Authority. The bill aimed to create jobs, support
economic development, and help new businesses grow. He said
lawmakers recognized that access to investment capital was
essential for job creation and improving Alaskans' welfare.
3:39:03 PM
MR. RUARO moved to slide 4, In What Circumstances Was AIDEA
Created, and stated that in 1967, the legislature passed House
Bill 14, establishing the Alaska Industrial Development
Authority's foundational statutes. He said the law emphasized
that access to capital for industry and manufacturing was vital
to Alaska's economic growth and reducing unemployment. The law
was approved on April 4, 1967.
3:39:41 PM
MR. RUARO moved to slide 5, AIDEA's Mission and Purpose, and
stated that over the years, amendments refined AIDEA's policies,
now codified in AS 44.88.010. The legislature found that high
unemployment threatened the health, safety, and welfare of both
specific regions and the state. The legislature declared it a
public purpose and state interest to promote new economic
activity, foster growth, and create jobs for Alaskans.
3:40:44 PM
MR. RUARO moved to slide 6, State Constitutional Authorities,
Foundational to AIDEA, and stated that AIDEA's mission reflects
Alaska's constitutional framework, particularly Article VIII:
Natural Resources. Sections 1 and 2 of Article VIII establish
that the state's resources must be developed, utilized, and
conserved for the maximum benefit of Alaskans and in public
interest. He said the resource development provides revenue to
support Article VII: Health, Education and Welfare obligations
while also reducing unemployment.
3:41:45 PM
MR. RUARO moved to slide 7, How is AIDEA Different from the
Alaska Permanent Fund, and stated that AIDEA and the Permanent
Fund serve different purposes: AIDEA focuses on job creation and
economic growth, while the Permanent Fund conserves state
revenues for future generations through financial investments
without a focus on economic development and jobs. AIDEA takes on
higher-risk economic development investments, acting as a shield
that protects the Permanent Fund from such pressures, making the
two complementary rather than competitive.
3:42:59 PM
MR. RUARO moved to slide 8, What Are the Circumstances AIDEA
Operates in Now, and stated that AIDEA faces major challenges in
promoting economic growth and reducing unemployment due to the
difficult federal permitting process. The process has become
lengthy, and litigious. He shared a study from S&P that found it
takes an average of 29 years to develop a U.S. mine, the second
longest timeframe globally after Zambia. This lengthy permitting
process has been a major change since statehood.
3:44:20 PM
MR. RUARO moved to slide 9, What Are the Circumstances AIDEA
Operates in Now, and stated that AIDEA now operates under added
challenges beyond federal permitting: national and international
campaigns pressure banks and insurers to avoid supporting oil
and gas projects in Alaska, particularly in the Arctic National
Wildlife Refuge area set aside by Section 1002 [of the Alaska
National Interest Lands Conservation Act]. He said as a result,
most major banks and many insurers refuse to fund or insure
North Slope development. Combined with lengthy, litigious
permitting, these financial and insurance restrictions make
advancing projects in Alaska especially difficult.
3:46:11 PM
MR. RUARO moved to slide 10, What Are the Circumstances AIDEA
Operates in Now, and stated that despite the challenges, AIDEA
views development as worthwhile for both financial and social
benefits. Successful projects like the Red Dog Mine generate
money that goes into dividends, royalties, and corporate taxes
for the state, while also distributing billions to Alaska Native
corporations under the Alaska Native Claims Settlement Act
(ANCSA) Section 7(i), benefiting shareholders statewide.
Socially, development creates jobs, supports small businesses,
and strengthens communities, helping to reduce social problems
linked to high unemployment.
3:47:27 PM
SENATOR GRAY-JACKSON referenced slide 7 and asked for more
details on how AIDEA protects the permanent fund.
3:47:49 PM
MR. RUARO replied that AIDEA often takes the lead on high-risk
project proposals that may benefit Alaska, as proponents usually
approach AIDEA rather than the Permanent Fund. While not legally
barred from seeking Permanent Fund support, developers see AIDEA
as the go-to entity for financing. This frontline role positions
AIDEA as a buffer, absorbing risks that might otherwise pressure
the Permanent Fund.
3:48:45 PM
REPRESENTATIVE HOLLAND mentioned that he has reflected on
AIDEA's wide-ranging projects, which span from low- to high-
risk. He asked whether the board uses a specific rubric or
policy to manage the risks of the projects it undertakes.
3:49:58 PM
MR. RUARO replied that since his tenure at AIDEA, the board's
approach has been to balance risk and potential benefit when
evaluating projects. For high-risk ventures like ANWR leases,
AIDEA conducts thorough due diligence, including expert
geological reviews, to de-risk investments and assess potential
returns. He said recent investments, such as Alyeschem and Cook
Inlet/Hex Fury, illustrate this careful evaluation. AIDEA
leverages both talented internal staff and outside experts to
quantify risks, maximize upside, and make well-informed
recommendations to the board.
3:52:38 PM
SENATOR BJORKMAN stated that the Permanent Fund invests in in-
state ventures, similarly, AIDEA invests in Alaskan businesses,
while the Division of Investments pursues investment
opportunities. Alaska Commercial Fishing and Agriculture Bank
(CFAB) also has the ability to make loans. He asked what level
of coordination and communication exists among these Alaska
government entities to ensure Alaska's dollars are used
effectively and efficiently.
3:53:40 PM
MR. RUARO replied that AIDEA coordinates with the entities
mentioned above. Two of AIDEA's loan programs are managed
through the Division of Investments. AIDEA also communicates
with the Permanent Fund regarding potential investment
opportunities and maintains ongoing dialogue with these other
entities to discuss programs, capital needs, and collaboration.
3:54:28 PM
REPRESENTATIVE HIMSCHOOT referenced slide 10 and said it seems
the focus on potential suicide prevention measures in rural
communities is quite narrow. She said considering aspects like
culture, access to subsistence resources, and language
revitalization there needs to be a broader approach. She asked
if the board approaches this topic from a wider perspective or
if this the primary lens that's recommended to use.
3:55:18 PM
MR. RUARO agreed that access to jobs, education, and healthcare
are important but stated his belief that they should not be seen
as the sole factor in addressing suicide. Multiple causes
contribute to the issue, and a broader perspective is necessary.
3:56:00 PM
REPRESENTATIVE HIMSCHOOT noted that the legislature is focused
on the issue highlighted on slide 10 and expects that investment
in rural Alaska should be comparable to that in urban areas,
although she is not yet certain if this is currently the case.
3:56:29 PM
SENATOR WIELECHOWSKI stated that the Barker and Erickson report,
a 126-page economic analysis of AIDEA, found that AIDEA had
received a net $301 million in public funds for economic
development. He said had these funds been allocated to and
earnings retained in the Alaska Permanent Fund, it would have
been $11.4 billion richer as of 2021, compared to AIDEA's net
worth of $1.4 billion, a difference of about $10 billion. He
asked if Mr. Ruaro disagreed with the findings.
3:57:15 PM
MR. RUARO replied that he disagrees with the findings. He said
the findings overlook the full returns from AIDEA investments,
including 7(i) revenue, corporate income taxes, and royalties.
He gave an example of the Alyeschem Project that yielded an
internal rate of return of 22 percent when all benefits are
considered, much higher than the Permanent Fund's typical 8
percent return. He emphasized that AIDEA invests in Alaskan
resource projects, which provide broader financial and social
benefits, including jobs and state revenue, and that these
factors should be included when assessing AIDEA's overall value.
3:58:57 PM
SENATOR WIELECHOWSKI noted that since 1980, AIDEA earned an
average annual investment return of 3.8 percent, compared to the
Permanent Fund's 9.4 percent. While there have been successes,
like the Alyeschem Project, AIDEA also experienced failures,
including the Healy Clean Coal Project, Alaska Seafood
International, Seward Coal Facility, and Skagway Ore Terminal,
which have lost over $233.3 million. He stated that AIDEA has
lost money in 17 of 35 years they have been in existence. He
said there have been concerns that many loans were low-interest
and would have been made by the private sector anyway. This has
led some Alaskans to question AIDEA's ongoing role and consider
withdrawing funds.
4:00:25 PM
MR. RUARO responded that the Loan Participation Program (LPP) is
a legislative initiative, and AIDEA does not initiate loans.
Loans are only made when an Alaska bank requests AIDEA's
participation to reduce risk and make the loan feasible, often
resulting in slightly below market interest rates. He said the
program supports Alaskan businesses, job creation, and projects
that might not proceed without AIDEA. Additionally, the board
has recently adopted a new investment policy aimed at achieving
significantly higher returns, addressing concerns about past
investment performance.
4:02:22 PM
MR. RUARO moved to slide 11, What is the Status of Employment in
the United States, and shared a chart. He said that AIDEA's
mission to reduce unemployment is highlighted by limitations in
official unemployment statistics. The Bureau of Labor
Statistics' rate can be misleading, as it excludes people who
have stopped looking for work due to a lack of jobs, disability,
or other reasons. He said considering the broader labor
participation rate, which includes those not actively in the
workforce, revealed a much larger portion of the population was
affected and underscored the continued need for AIDEA in Alaska.
4:03:44 PM
MR. RUARO moved to slide 12, Employment and Labor Force
Participation in Alaska, and shared a chart. He said Alaska's
labor participation rate is slightly above the national average
at 65 percent, but some rural areas fall below this due to
limited economic activity. Addressing job scarcity in these
regions was a key concern when AIDEA was established in 1967.
4:04:28 PM
MR. RUARO moved to slide 13 and shared a video about why AIDEA
does what they do.
4:06:27 PM
MR. RUARO moved to slide 15, AIDEA Assets, Projects, Bonds and
Loans, and shared a map that illustrates the number of projects
AIDEA is part of. Some AIDEA projects, like revenue bonds for
the Yukon-Kushokwim Health Corporation's (YKHC's) new hospital,
didn't generate a large financial return. However, some projects
still provide significant economic benefits, creating jobs and
improving healthcare services, demonstrating value to Alaskans
beyond direct profit.
4:07:27 PM
REPRESENTATIVE STORY referenced slide 9 of the presentation and
asked if she could receive the references to the study on the
Alaska arctic ice and snow damage. She asked Mr. Ruaro to speak
about the board's new investment policy.
4:08:18 PM
MR. RUARO replied that the board updated its investment policy
to allow up to 20 percent of AIDEA's assets to be invested in
equities. Previously, investments were limited to fixed income,
which is more secure but offers lower returns. This change aims
to increase returns without significantly increasing risk.
4:09:03 PM
REPRESENTATIVE MCCABE stated that Alaska has multiple funds with
distinct purposes: the Permanent Fund supports government
operations, AHFC funds housing, the Mental Health Trust funds
mental health programs, and the Retirement Fund supports
pensions. He said AIDEA, however, provides financing for
infrastructure projects that create jobs. He asked if the
legislative removal of funds from AIDEA would impact its ability
to fund infrastructure projects and, in turn, provide
employment, particularly in communities like Shungnak and
Tetlin, where jobs are scarce.
4:10:13 PM
MR. RUARO replied that appropriating AIDEA funds would severely
damage its financial standing, effectively turning its bonds
into "junk bonds" and increasing the costor even preventing
future financing. Experience shows that even small legislative
appropriations or threats of appropriation, such as in 2019 or
during the Healy Clean Coal Project, led to reduced bond ratings
and lost investor confidence. He said that AIDEA's statutory
protection from budget appropriations is critical to maintain
investor trust and the ability to fund projects.
4:12:22 PM
REPRESENTATIVE MCCABE emphasized that AIDEA's mission is to fund
projects that create jobs in Alaska. While some past projects
failed, like the salmon packing plant and grain elevators,
successes would have directly advanced that mission. He said
there has been discussion about risk balancing and about
portfolios between the Permanent Fund and AIDEA. He asked how
AIDEA incorporates the human impact into the risk balancing
decisions.
4:13:46 PM
MR. RUARO replied that AIDEA begins project evaluation by
thoroughly assessing risk. Once risks are understood, AIDEA
considers potential financial returns and then factors in
employment impacts. He said job creation is a top consideration,
but it comes after ensuring the project's risks are manageable
and financial benefits are viable.
4:14:53 PM
REPRESENTATIVE VANCE asked if he knew how many times an AIDEA
invested dollar turns over in the economy.
4:15:02 PM
MR. RUARO replied that ICER studies found that each dollar
circulates three to seven times in the economy. He said to
fairly assess AIDEA's value, one must consider all economic
impacts, including 7(i) distributions, royalties, and private
sector business contracts, which together provide a more
comprehensive measure of its overall contribution.
4:15:54 PM
MR. RUARO moved to slide 16, AIDEA Fiscal Year 2024, Financial
Highlights, and stated that AIDEA's net position is $1.49
billion, composed of roughly $500 million in loan participation
program (LPP) loans, $200$250 million in hard assets like Red
Dog Road, $50$100 million in accounts receivable, investments,
and a revolving fundso it is not all cash. In 2024, net income
rose 2030 percent to $65 million, the highest statutory net
income in AIDEA history, with expectations for even higher
returns in 2025 from new investments totaling $150$200 million.
He said the board sets dividends from 2550 percent of statutory
net income; for 2026, the dividend was $20 million, the highest
in a decade. Since 1997, total dividends have approached half a
billion dollars, reflecting ongoing job creation, economic
development, and returns.
4:18:29 PM
MR. RUARO moved to slide 17, AIDEA's Financial Toolbox and
stated that AIDEA employs a variety of financing tools for
projects:
-Loan Participation Program: fixed-rate loans brought by local
Alaska banks.
-Project Finance Program: funds projects like Alyeschem and
Hexfury.
-Conduit Revenue Bonds has financed: Native health clinics in
Bethel and Fairbanks; renewed interest from other Alaska Native
health entities.
-Energy and Resource Development Programs: including SETS and
Arctic Infrastructure Program.
-Cook Inlet Reserve Base Lending Program: established last year.
-Asset Ownership and Federal Infrastructure Financing: owns
assets like FedEx Hangar and Camp Denali for the U.S. Coast
Guard, with the ability to finance federal projects.
-Tax-Exempt Bonds authority to issue these, supported by a
strong in-house team.
4:20:11 PM
MR. RUARO moved to slide 18, AIDEA Metrics and Considerations
for Project Undertaking and stated that advancing resource
development projects is complex, but progress is being made.
AIDEA recently had its annual leases reinstated by the court and
anticipates securing the Ambler Road right-of-way, as required
by the 1980 Alaska National Interest Lands Conservation Act
(ANILCA) legislation. These projects are expected to generate
significant state returns and create jobs.
4:20:58 PM
MR. RUARO moved to slide 19, How Does AIDEA Engage with the
Public and stated that AIDEA maintains regular board meetings
with publicly posted notices and actively engages in outreach.
He said staff attend trade shows, conferences, and visit
communities like Shungnak to connect with Alaskans. AIDEA also
participates in federal permitting agency events and meets with
tribal representatives to ensure broad engagement.
4:22:22 PM
CHAIR KAWASAKI referenced slide 18 and stated that two years ago
AIDEA indicated that an independent economic analysis would be
completed and submitted to the legislature by the following
year. He stated that the committee had not yet received the
report and asked why.
4:23:00 PM
MR. RUARO replied that issues with contractor turnover and a
request for the inclusion of additional information are why the
report has not been released. The contractor has been asked to
include social benefits, such as job creation, while not
suggesting jobs are the sole solution to issues like suicide.
Additionally, the contractor is evaluating AIDEA's net returns
more broadly, considering not just direct financial returns but
also royalties, production taxes, corporate income taxes,
private sector returns, and 7(i) distributions. He said
preliminary in-house analysis of projects like Alyeschem shows a
comprehensive return of around 22 percent, and the contractor is
expected to include this broader perspective in the final
report.
4:25:07 PM
CHAIR KAWASAKI asked if the study is conducted by Northern
Economics.
MR. RUARO responded that is correct.
CHAIR KAWASAKI referenced the Barker and Erickson report which
criticized AIDEA saying that some projects, like Red Dog Mine,
might have still been successful without AIDEA's involvement.
4:25:43 PM
MR. RUARO replied that former Senator Hensley who was the
commissioner of Commerce and Economic Development when Red Dog
went through and was adamant that Red Dog would not have gone
through without AIDEA's help. He stated that research into
Kamiko's financial condition at the time showed the company was
struggling and losing money for several years, selling assets,
and needing capital. AIDEA's support was therefore essential,
and both the governor and legislature agreed, approving AIDEA's
bonds with overwhelming support. He said Red Dog would not have
gone forward without AIDEA's involvement.
CHAIR KAWASAKI asked when Northern Economics would complete the
independent audit.
MR. RUARO answered that he hopes to get the report out in the
next two weeks.
4:29:04 PM
CHAIR CARRICK referenced slide 19 and asked who AIDEA's
constituents are and how does public input factor into the
decision-making process.
4:29:26 PM
MR. RUARO replied that every Alaskan is AIDEA's constituents. He
said AIDEA reviews and responds to public comments.
Communications staff gather input and while not every individual
receives a direct call, AIDEA tries to be responsive and
incorporate public feedback into decisions.
4:30:25 PM
CHAIR CARRICK stated that someone testified as a community
advocate during a House Resource Committee hearing but was a
paid consultant for AIDEA. She asked how many paid consultants
AIDEA currently employs; when the consultants provide testimony,
are they considered part of community or public input in
addition to their consultant role, and how does AIDEA manage
that distinction.
4:31:01 PM
MR. RUARO replied that AIDEA hires local representatives, often
tribal members, to assist with outreach in rural communities
because they understand local issues better than outside staff.
He said for example, Chief Simon of Allakaket serves both as a
community leader and as a paid outreach contractor. AIDEA
emphasized that these representatives are not asked to
compromise their views and freely share community perspectives
and concerns while helping facilitate engagement.
CHAIR CARRICK asked how many paid consultants are on AIDEA's
payroll.
MR. RUARO replied ADIEA has three consultants for stakeholder
outreach.
4:33:10 PM
SENATOR WIELECHOWSKI stated that a report found that between
2008 and 2023, AIDEA was responsible for only 6 percent of the
jobs it claimed to create, with 94 percent attributed to bank
lending that would have happened without AIDEA. He asked what
AIDEA's role is in the gas line, specifically its involvement
with Glenfarne, Alaska Gasline Development Corporation (AGDC),
and 8 Star and whether AIDEA is funding or providing financial
backing for the project.
4:33:41 PM
MR. RUARO replied that AIDEA confirmed it received an
application from AGDC seeking potential backstop funding for
project work, which is still under review with no final
agreement reached with AGDC or Glenfarne. He said discussions
are ongoing, as with any project applicant. He expressed
optimism about the gasline project's prospects, noting it
appears stronger now than in the past, but emphasized the
application remains active and undecided.
4:34:46 PM
REPRESENTATIVE HOLLAND referenced slide 18 and stated that the
state has produced several reports and strategies, including
from the Governor's Energy Security Task Force, the Fisheries
and Mariculture Task Forces, and the 2022 comprehensive economic
development strategy, all outlining steps to diversify the
economy and support emerging sectors. He asked how AIDEA
influences whether the board prioritizes diversification and
emerging sectors versus continuing to focus on traditional
resource-based projects and are these reports shaping AIDEA's
role as a catalyst for Alaska's future economy now or in the
future.
4:36:14 PM
MR. RUARO replied that AIDEA monitors economic trends and
opportunities, primarily reacting to projects brought forward by
banks (via the LPP program) or project proponents. However,
AIDEA is also proactively exploring new areas, such as
manufacturing from natural gas and IT infrastructure like data
centers, to create revenue and benefits for the state, even if
job creation is limited. He said some significant applications
in these emerging sectors are currently under review.
4:37:49 PM
REPRESENTATIVE HOLLAND stated that banking options in the state
are limited. He asked what AIDEA recommends or what the
legislature could do to create an environment that supports more
bankable loans for projects. He emphasized the current
bottleneck in the banking sector's appetite for the type of work
the state needs and asked how the legislature or AIDEA could
help unlock or expand available loan assets for programs.
4:39:00 PM
MR. RUARO replied that over the past year, AIDEA has noticed
strong interest from large private equity investors wanting to
invest in Alaska but were unsure where to start. He said to
bridge this gap, AIDEA plans to host an annual event to connect
these investors with local Alaskan businesses and entrepreneurs,
facilitating funding and job creation even if AIDEA itself
doesn't invest.
4:40:36 PM
REPRESENTATIVE STORY noted that the public often feels they can
only provide input after project decisions are underway, rather
than early enough to influence which projects are considered.
She asked at what point in the process does the public become
aware that a project is under consideration, and when is the
most effective time for them to provide input.
4:41:44 PM
MR. RUARO replied that public access starts at the legislature.
He said the public has opportunities to provide input on
projects, starting from years prior with appropriations. Board
decisions aren't made until after public comment is allowed, and
meetings are properly noticed. He said public attendance is
often low, though opportunities to comment always exist once the
board considers a resolution.
4:43:09 PM
REPRESENTATIVE STORY stated that it would be helpful for the
public to know upcoming projects early and understand how to
provide input. There's interest in contributing at the early
planning stages, such as for agriculture or resource projects,
so examining AIDEA's process for early engagement may improve
public participation.
4:43:54 PM
MR. RUARO replied that balancing early public input with project
confidentiality can be challenging, as applicants may need to
keep details like finances and location private until board
approval. He said AIDEA can explore ways to improve engagement
opportunities.
4:44:23 PM
REPRESENTATIVE STORY asked if it's possible to search somewhere
to see what projects are on the horizon.
MR. RUARO replied approved projects are on the board's agenda
and projects not approved follow confidentiality statutes until
they are put in front of the board.
4:45:46 PM
REPRESENTATIVE MCCABE suggested that connecting large investment
funds with the Alaska Railroad may be a valuable opportunity for
investment in Alaska.
4:46:22 PM
MR. RUARO moved to slide 21, Red Dog Mine, and stated that the
expansion road and new deposit site may extend operations by 30
40 years. He said this would generate continued payments to
AIDEA , shared with the legislature through the dividend. It
would also mean sustained jobs and infrastructure funding for
the Northwest Arctic Borough, which relies 80 percent on the
Red-Dog for revenue in the form of payment in lieu of taxes
(PILT).
4:47:25 PM
MR. RUARO moved to slide 22, Loan Participation Program (LPP),
and stated that Alaska banks come to AIDEA and look for
assistance in making loans.
4:47:37 PM
MR. RUARO moved to slide 23, AIDEA Small Business Loans, and
highlighted that there are two loan programs managed by the
Division of Investments: The Rural Development Initiative Fund
and the Small Business Economic Development Program. He noted
there is an ongoing review to determine if they need more
capital, rule changes, or other adjustments to increase small
business lending.
4:48:14 PM
MR. RUARO moved to slide 24, Innovative Commercialization of
Natural Resources, and stated that the Alyeschem project on the
North Slope is progressing, with hopes that it will serve as the
start of a larger chemical production industry using Alaska's
natural gas, potentially expanding significantly in the coming
years.
4:48:40 PM
MR. RUARO moved to slide 25, Interior Energy Project for
Fairbanks, and stated that Interior Gas Utility (IGU) will stop
drawing gas from Cook Inlet in June, freeing up gas for other
users, while gas from the North Slope will begin being
transported in larger trucks.
4:49:02 PM
MR. RUARO moved to slide 26, Railbelt Energy Solutions HEX Cook
Inlet LLC, and stated that AIDEA is finalizing a $50 million
revolving line of credit for Hex Cook Inlet. He noted that HEX
Cook Inlet has a positive repayment history and has success in
finding gas, making the project promising for Cook Inlet gas
production.
4:49:32 PM
MR. RUARO moved to slide 27, Alaska Wildbirch Hotel, and stated
that the downtown Anchorage hotel is a major renovation project
AIDEA invested in to help rejuvenate downtown Anchorage.
4:49:45 PM
MR. RUARO moved to slide 28, AIDEA's Future Opportunities, and
stated that AIDEA is exploring projects in AI data centers,
chemical manufacturing, and critical mineral processing,
recognizing the growing importance of critical minerals for the
economy and Department of Defense needs.
4:50:18 PM
SENATOR GRAY-JACKSON asked if he would give more information
regarding qualifying for the small business loan program.
4:50:30 PM
MR. RUARO stated his belief that the small business program
offers loans capped at $700k. He said the program is run by the
Division of Investments and us under federal rules and control.
AIDEA is seeking to remove those restrictions to allow greater
flexibility, expand lending, and adjust borrower requirements,
with plans to advance changes at the next board meeting.
4:51:29 PM
REPRESENTATIVE VANCE asked for AIDEA's recommendations on areas
where reforms or new focus might help, especially with emerging
sectors like AI data centers and what steps the legislature can
take to strengthen Alaska's economy and fill in the gaps.
4:52:46 PM
MR. RUARO replied that AI and small-scale data centers may bring
significant opportunities, especially in communities with excess
power capacity. He suggested the legislature explore policies on
AI, data centers, and related taxation, while also investing in
workforce training to prepare Alaskans for jobs in the AI/IT
sector. He cautioned that automation and AI might also displace
jobs, create potential disruption, and encourage the legislature
to study what other states are doing to address these
challenges.
4:56:49 PM
CHAIR CARRICK asked how the extended contract for the economic
analysis study was funded since the appropriated funds for the
study were no longer available.
4:57:10 PM
MR. RUARO replied that the contract required completion of the
study, and while additional work was requested, most has been
done by AIDEA. He said the contractor isn't expected to charge
much more, but if extra funds are needed, AIDEA is prepared to
cover the cost.
CHAIR CARRICK asked whether the study would remain independent
if AIDEA funded the work.
MR. RUARO replied that funds for the study were always paid by
AIDEA. He said he was not aware of a legislative appropriation.
4:58:13 PM
REPRESENTATIVE STORY shared a concern regarding the Skagway Ore
Terminal and AIDEA's lack of cleaningup after the terminal was
returned to the city. She asked whether communities should worry
about AIDEA not following through on clean up and proper closure
when projects end.
4:59:20 PM
MR. RUARO replied that when the Skagway ore terminal lease
ended, the new occupants, Minto Minerals of Canada left the
facility in poor condition before going bankrupt. AIDEA pursued
recovery in Canadian court, securing about $50,000$60,000.
AIDEA offered those funds, along with hiring the former facility
manager for cleanup, but the borough manager at the time
declined. He said with new local leadership, AIDEA plans to re-
offer the funds and support to address the contamination.
5:00:47 PM
REPRESENTATIVE STORY noted that cleaning up the Skagway facility
will likely cost much more than the $5060,000. She emphasized
that AIDEA held the lease during the contracted operation. She
thanked AIDEA for the cleanup offer but stressed the need for a
larger effort.
5:01:12 PM
MR. RUARO said AIDEA has inspected the Skagway facility and is
offering to address the basic mess left behind. He emphasized
that AIDEA is not solely responsible for mineral contamination,
as past leaseholders and the borough share responsibility. AIDEA
will formally offer assistance for the remaining basic cleanup.
CHAIR CARRICK thanked the presenters for their overview.
5:03:27 PM
There being no further business to come before the committees,
Chair Carrick adjourned the joint Senate and House State Affairs
Standing Committee meeting at 5:03 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 04-02-2025 Joint Senate and House State Affairs Committee Presentation - Alaska State Legislature .pdf |
SSTA 4/1/2025 3:30:00 PM |
AIDEA |