HB 124-AIDEA  3:37:21 PM CHAIR CARRICK announced the next order of business would be HOUSE BILL NO. 124, "An Act relating to the Alaska Industrial Development and Export Authority; and providing for an effective date." CHAIR CARRICK, as prime sponsor of HB 124, stated that today the committee would resume the HB 124 AIDEA Presentation on slide 16. 3:38:34 PM RANDY RUARO, Executive Director, Alaska Industrial Development & Export Authority (AIDEA), resumed the PowerPoint presentation [hard copy included in the committee file], which was started on 1/27/26. He began on slide 16, showing AIDEA Assets, Projects, Bonds, and Loans across the state of Alaska. He said AIDEA geographically has a significant reach, except in Southwest Alaska and the Aleutian chain. 3:40:09 PM REPRESENTATIVE HOLLAND asked if there is a list available of all the assets of the authority and the status of the different loans. By statute, it was due to the legislature by January 10. He did not see a list of all the assets. MR. RUARO said that he could provide the letter that was submitted to the Senate [Secretary] and House [Chief] Clerk that is separate from the report. He will be sure the committee gets this today. He could also provide a summary that breaks down by the programs and could even clarify further. 3:43:16 PM REPRESENTATIVE MCCABE stated that AIDEA follows the same fiscal year as the state. He asked if the report submitted covers this period. MR. RUARO replied that is correct. He stated that he can provide the update quickly. REPRESENTATIVE MCCABE asked whether it would be fair to say that some of the projects may be in negotiations and not public information yet. MR. RUARO replied that there is a pipeline of projects under review or due diligence. Some of these projects AIDEA would prefer to keep confidential. REPRESENTATIVE MCCABE proffered that a small business requesting a loan would not want this to be known. He asked when the last time general funds were given to AIDEA. MR. RUARO replied it was 12 to 15 years ago for the Ambler Road project. More recently in 2018, there were funds appropriated for the West Susitna Road project.  3:46:17 PM REPRESENTATIVE HOLLAND clarified that he wants a report on executed investments. He was going to ask for a separate report regarding what is in the pipeline of projects keeping confidential the names or individual firms. This information would allow the committee to review AIDEA's assets. MR. RUARO replied he could provide a pipeline summary that categorizes the project instead of providing individual names. 3:48:24 PM MR. RUARO returned to the PowerPoint presentation. He outlined on slide 17, "Healthcare Funding" the various funded projects. On slide 18 was "Ambler Access Project" Section 201 of Alaska National Interest Lands Conservation Act (ANILCA). This project has been around for decades; Congress decided that there needed to be an access corridor. The area has been mined for decades and Congress said specifically there shall be access in Section 201 ANILCA. He said AIDEA has worked with the local communities and tribes, held meetings in the communities with an event, and has resolutions from communities. The average wage of a miner is $130,000 per year, which would make close communities particularly interested in these jobs. MR. RUARO noted that on slide 19, "Section 1002 Area Leases of the Arctic National Wildlife Refuge (ANWR)," was the ANWR project. Congress directed the U.S. Department of the Interior to hold sales. He said AIDEA recognizes the value of the oil and gas in ANWR and bid on the leases. The leases have 4 billion barrels of oil and 7 trillion cubic feet of gas. He stated significant funds would need to be spent and AIDEA needs to find a partner to develop reserves. The revenue is roughly $2 billion a year. He said AIDEA has worked with Kaktovik, the only community in the region, and it supports development. 3:52:24 PM MR. RUARO outlined on slide 20, "West Susitna Access Project," where the legislature gave AIDEA funding and direction to develop this project. This road accesses several mines and recreational areas. 3:53:08 PM REPRESENTATIVE MCCABE noted the numerous meetings he has attended, many in Big Lake. He requested a list of upcoming meetings to share with the public. He asked for highlights of the West Susitna Access project. MR. RUARO answered the West Susitna Access project is working on the ongoing project design, bridges, and outreach to stakeholders, and a core permit will be filed with the Army Corp. There will be public participation through AIDEA and through the Army Corp. He said there will be multiple avenues for ongoing public input. REPRESENTATIVE MCCABE noted the West Susitna Access Project is all on borough land, not on state land, but questioned about the 1 percent wetlands in the project. MR. RUARO answered most of the land is state land and some borough land. He said that the U.S. Supreme Court case greatly reduced federal requirement for wetlands. 3:56:38 PM REPRESENTATIVE HIMSCHOOT asked about slide 18 and the concern expressed by folks regarding the road being public versus private. She asked how AIDEA can guarantee that it will be a private road. MR. RUARO replied that there are three layers of assurance that it will be kept as an industrial access and limited commercial access road. First, it will be needed for the permitting process in a formal designation by the U.S. Bureau of Land Management (BLM) limited access designation. Second, the road was incorporated by President Donald Trump. Third, the road must run through private land, Doyan and others, and to his knowledge none of those entities have allowed commercial access. REPRESENTATIVE HIMSCHOOT asked what the cost of the road is. MR. RUARO replied roughly estimated the cost of the road is from $500 million to $1 billion. This year, AIDEA is hoping to get out in the field and take geotechnical samples to produce solid cost estimates. The road is intended to follow the Red Dog model that AIDEA would not proceed until that the mines agree to cover the cost of the project. REPRESENTATIVE HIMSCHOOT questioned hearing that any time someone wants to lease land there must be a sort of bonding. She asked how the legislature knows projects AIDEA is funding are not permanent and will be cleaned up. MR. RUARO stated that AIDEA will follow federal and state rules for reclamation and bonding. The cost will be managed through those existing statutes and requirements. 4:02:09 PM MR. RUARO continued with slide 21, "Maritime & Logistics Investing in Coastal Alaska." This slide outlines information on the Ketchikan shipyard, which he estimates could create additional jobs. Slide 22, "Energy Security and Affordability," outlines the Interior Energy Project (IEP); Cook Inlet Energy Security (HEX, LLC); and sustainable energy transmission and supply development (SETS) f und. On slide 23, "Direct Investment Model The Red Dog Mine System," shows how the dollars flow in an AIDEA project. This project has produced nearly $2 billion, 800 to 1,000 jobs, and $50 million annually in wages. 4:07:07 PM MR. RUARO continued with slide 24, "Future Horizons 2026 & Beyond." He outlined three emerging investments in data centers, tokenization, and new energy sources. He said AIDEA is trying to create a model that could be repeated elsewhere in the state. He said the next few slides are regarding how AIDEA would be affected by HB 224. 4:09:09 PM REPRESENTATIVE HOLLAND asked how AIDEA has worked with the state's comprehensive development strategy. He said AIDEA has been able to help grow early stages of businesses opportunities. He asked what the current strategy is to use the resources that AIDEA has on emerging and velocity of early-stage businesses. MR. RUARO replied that AIDEA has just approved a tech subsidiary to help vet, review, and promote technological projects. He said AIDEA should find other partners beyond the tech subsidiary to work with people with ideas about small businesses, especially with artificial intelligence (AI). He stated that AIDEA needs to set up a central location where Alaskans' ideas can be advanced to grow a business. REPRESENTATIVE HOLLAND asked if he could share more information on the tech subsidiary. MR. RUARO replied that he has a resolution establishing the subsidiary and public notice distributed that he can share. 4:12:52 PM REPRESENTATIVE MCCABE followed up on the loan participation program (LPP). He asked if there was a list available, at least by geography, if not by name. MR. RUARO replied he would have to look at the loan contracts. REPRESENTATIVE MCCABE clarified maybe it could be an aggregate list. MR. RUARO said he would have to look at confidentiality issues. 4:15:20 PM CHAIR CARRICK clarified McCabe's request to request a heat map [of LPP program participation] of each of the regions in Alaska. 4:15:46 PM REPRESENTATIVE HOLLAND followed up that the amounts would be helpful to understand what AIDEA needs fiscally to do its work. He said knowing how much money is currently obligated would help understand the balance sheet. CHAIR CARRICK said she would let staff work with Mr. Ruaro to produce the report. One thing she wants to highlight is small business development and the loan participation program. 4:18:26 PM MR. RUARO continued slide 26, "How HB 124 affect AIDEA?" and outlined additional changes not listed in the presentation. He said Section 2 changes the makeup of the board and adds on an environmental member, as well as adds on former legislators. As he read the bill, board members would have to meet the requirements currently outlined. He recommended that Section 2 be deleted. He said Section 3 changes the staggering of the board terms and allows for removal of board members. He said he opposes Section 3. Section 4 requires AIDEA to adopt personnel rules. He reflected that AIDEA follows personnel rules and is not sure if Section 4 is needed. Section 5 is about the attorney general controlling whether AIDEA can file a complaint to protect its contracts. He said AIDEA opposes this, as it has a preference for its in-house council. He recommended that Section 5 be deleted. He stated that Section 6 is agreeable to adopting regulations and he is not opposed to these requirements. MR. RUARO continued with Section 8 [outlined in the presentation] that will stop AIDEA from performing its functions and require AIDEA to sell off roughly $1.2 billion by the end of 2026. He warned this would result in hundreds of millions of dollars in losses. The $500 million asset limit would prohibit new loans. He pointed to Section 9, [paragraph] (1), and said AIDEA has serious concerns about getting a resolution from a political subdivision. A hundred percent approval will hinder the projects from moving forward. He noted that the requirements in [paragraph] (2) regarding findings are already in legislation. [Paragraph] (3) would have AIDEA compile and make available to the public a document that summarizes the projected economic, social, and environmental effects of the project. He said AIDEA is interested in this requirement, which happens on some of the large projects through a federal agency. [Paragraph] (4) requires reporting to the legislature and [paragraph] (5) requires legislative approval. He said he thinks these are already required. Section 10 prevents a board member from voting on indirect or direct interest, and he said he cannot comment without more understanding or a definition of an indirect interest. Section 11 repeals and reimposes providing an accounting of assets. He is unclear what new requirements are established in this section. Section 12 requires AIDEA to develop performance metrics. He said AIDEA does not object to missions and measures. Section 13 attempts to make proprietary and confidential financial information submitted by a project applicant to AIDEA open to the public. He couldn't tell if the normal protections under the public records statue would apply or if it was just considered public information. This section needs to be clarified, he advised. 4:28:42 PM MR. RUARO continued with the sectional review, noting that Section 14 is in regard to the attorney general lawsuit approval. For the reasons mentioned earlier, he said AIDEA drafts contracts with inhouse council and uses out-of-house council as needed. He said AIDEA is opposed to making this a decision of the attorney general. Section 15 removes standard protection that exists for every state employee. He warned that employees would be subject to being sued or being personally liable. Section 17 provides for an effective date of January 1, 2027. It is unclear whether assets under contracts now would have to be used on this date or whether some contracts would be exempted. 4:31:10 PM REPRESENTATIVE HOLLAND asked what the deferred inflows of resources are currently, noting that what is being stated looks like $163 million. MR. RUARO deferred to the chief financial officer to answer the question, noting that he can get a written response from her. REPRESENTATIVE HOLLAND asked for the difference between nonoperating revenues and operating revenues and the breakdown between the two. MR. RUARO replied he will get a specific breakdown. REPRESENTATIVE HOLLAND said it looks like $1.05 billion are invested funds, either firm capital or open loans, which would seem to suggest there is another $6 million not invested. MR. RUARO replied that AIDEA would get that breakdown. The majority - 95 percent - are working on a project or investing in bonds. 4:35:28 PM REPRESENTATIVE MCCABE, on slide 26, said he thinks Mr. Ruaro meant billions, not millions of assets. The Interior Gas Utility (IGU) was a loan that AIDEA gave in Fairbanks to transport natural gas for heat. The terms of the loan of $139 million for a 35-year loan with the first 15 years' payment interest free and the rest of the loan a quarter of a point for payment. He asked how this would work if AIDEA had to divest assets and whether it would create issues for Fairbanks. MR. RUARO replied that if forced to sell assets under the statutory requirements AIDEA is taking steps that are reasonable and prudent. The assets would be ranked highest to least performing and by statue the IGU loan is a very low performing asset by design. He said AIDEA would have to analyze it and see if AIDEA could sell or remove it from its assets under this bill. It may be difficult to find a buyer, and the buyer would likely be looking at the terms. REPRESENTATIVE MCCABE stated that buyers look at the short-term deadlines that AIDEA are offering on these assets "up on the chopping block." He asked if AIDEA could find buyers for various projects. MR. RUARO replied that AIDEA would reach out to private investors that showed previous interest. The investors could wait until close to the deadline to make a deal and AIDEA would have a low recovery rate. REPRESENTATIVE MCCABE asked if people employed at AIDEA projects should be worried about their jobs if this bill passes. MR. RUARO replied if the bill passed it would force AIDEA into several positions. He said AIDEA would seek legal counsel to see if it could break a contract. The contract clause would need to be looked at in the Alaska Constitution. He said AIDEA would look at the legality of the bill. 4:42:27 PM CHAIR CARRICK asked about the Northern Economic study done that the legislature spent a quarter of a million dollars on. It was released two years late and was less robust, being only sixteen pages long. MR. RUARO replied that it was only the executive summary; the full study is due and will be hundreds of pages long. He said part of the delay was due to addressing allegations of AIDEA that were made. It takes more time to do these investigations and give a factual representation of AIDEA. Also, the report had to be updated as another annual report was completed and a fiscal year passed. He said AIDEA paid for the study and hopes to get it out this week. CHAIR CARRICK asked if the role of AIDEA is to use public funds to provide a report that is two years late and a rebuttal to public groups in Alaska. MR. RUARO replied it was a policy decision to try to inform the public of accurate facts. It is important for the public to have accurate information and there will be a significant benefit. 4:47:01 PM REPRESENTATIVE STORY agreed with Representative Holland's request for more information. She asked about the public process and that public comment time is recognized. She asked how AIDEA is going to be more responsive to the public process. MR. RUARO replied there is always an opportunity for public comment which is a minimum of two minutes. The meetings are publicly announced a month in advance. The board does not engage in back-and-forth debate about the merits of a project. The nature of the organization is that AIDEA's statutory mission is to advance economic development and create jobs. This may be at odds with the people that are commenting on the projects. REPRESENTATIVE STORY asked if there is a limit on time of two minutes and whether, if the technology fails, there is make-up time for public comment. MR. RUARO replied on the agenda there is a notice for public comment, there is no limit on the total time for public comment. The public comment is part of the record, so AIDEA could post them. REPRESENTATIVE STORY asked about the project's background information, such as survey and environmental studies, and she asked whether these are posted. MR. RUARO responded that lots of information is posted. For example, the effect of the Ambler Road on caribou was recently posted. 4:54:13 PM CHAIR CARRICK announced that HB 224 was held over.