HOUSE BILL NO. 500 "An Act amending the principal amount of bonds that may be issued by the Alaska Industrial Development and Export Authority for the purpose of financing the development of Hatcher Pass." This was the first hearing for this bill in the Senate Finance Committee. 9:12:21 AM BEN MULLIGAN, Staff to Representative Bill Stoltze, the bill's sponsor, informed the Committee this bill would allow the Matanuska-Susitna (Mat-Su) Borough to advance its Hatcher Pass development efforts by expanding the scope of what the Alaska Industrial Development and Export Authority (AIDEA) bonds and other financing could be utilized for. In addition, the AIDEA bond authority would be increased from $15 million to $25 million. Co-Chair Green summarized the bill. It would expand the scope of the project and increase the bond amount. Mr. Mulligan affirmed. 9:13:42 AM JOHN DUFFY, Manager, Matanuska-Susitna Borough, testified via teleconference from an offnet site in support of the bill. Granting this authority to AIDEA is essential to the project, as AIDEA's "participation is critical to the success of this public/private partnership" proposed for Hatcher Pass. This project is the result of the Borough's long-term economic development effort to enhance its economy, diversify the area's tax base, and increase recreational opportunities. Mr. Duffy stated that both the Borough and the State have contributed money for infrastructure improvements. He particularly acknowledged Co-Chair Green's efforts in getting electric power expanded to the site. The Borough has funded geotechnical and hydrological studies and an economic impact assessment, which concluded that the project would create approximately 1,500 jobs. The construction phase of the project is anticipated to cost $41 million. "A very strong cooperative effort" between the Department of Natural Resources' Division of Mining, Land and Water and the Division of Parks & Outdoor Recreation State Parks, and the Borough also furthered the advancement of this project. 9:16:04 AM DAVID GERMER, Project Manager, JL Properties, Inc. testified via teleconference from Anchorage. Cooperative efforts on this project began in October 2003 when JL Properties, a private sector business, "responded to a solicitation from the Borough to develop an alpine and nordic ski area at Hatcher Pass". During the next two years, JL Properties, the Borough, and Borough consultants worked on developing the scope of the project and a financial plan. In order to ensure the overall success of the project, it was determined that the project must "integrate an alpine ski area, a residential community, and a Nordic ski area and trail system". Mr. Germer characterized the development of the financial plan, which would include "a unique blend of private and public financing", as "quite challenging". AIDEA's participation "is an integral part of the financing plan", and the approval of this legislation would be essential to the project. The next step would be for the Borough, AIDEA, and JL Properties to independently "conduct its own due diligence analysis" on "the financial feasibility of the project". AIDEA's Board of Directors would base their decision on whether or not to approve the financing plan upon the due diligence analysis and the financial feasibility studies. Approval of the financing plan would allow construction of the project to commence in the summer of 2006 with a completion date of spring 2008. 9:18:33 AM JIM MCMILLAN, Deputy Director, Credit and Business Development, Alaska Industrial Development & Export Authority, Department of Commerce, Community and Economic Development testified in Juneau in support of the bill. Alaska Statute (AS) 44.88 would require AIDEA to receive Legislative authority in order "to issue in excess of ten million dollars worth of bonds". He clarified that passage of this legislation "would not guarantee financing". It would however, allow AIDEA to conduct the due diligence and project feasibility analysis. This effort would allow AIDEA to review technical, operational, and financial aspects of the project and determine how "to mitigate" any risks found. Were the project to be deemed feasible, "a finance plan will be the presented to AIDEA's Board of Directors for approval". Mr. McMillan reminded the Committee that AIDEA has been associated with the efforts to develop Hatcher Pass for many years. While numerous proposals had been discussed, none were advanced. However, the conceptual plan being presented is "worthy of our consideration", as AIDEA deems the timing, the plan, and the private developer involved in the project with the Mat-Su Borough as being the "right" mix of circumstances. 9:20:47 AM Co-Chair Green pointed out that language in the Analysis section of the Department of Commerce, Community and Economic Development's fiscal note #1, specifies that this bond authorization would have "no fiscal impact on AIDEA operations". 9:20:59 AM Mr. McMillan affirmed the passage of this legislation would have no fiscal impact on AIDEA. This legislation "is merely the authorization to move forward with the feasibility work". Were the Board to authorize the financing of the project, there "would be additional receipts to AIDEA", which could be used to support such things as operations and dividends. Co-Chair Green observed that the bill would increase the level of bonds that could be authorized by AIDEA. Mr. McMillan concurred. 9:21:39 AM Senator Olson asked the reason for increasing the bond authorization from $15 million to $25 million. Mr. McMillan responded that the original bill on the Hatcher Pass project was passed in 1998. That proposal was limited to the development of a $20 million alpine ski area. The project now proposed is "much more expansive and comprehensive", with an anticipated project cost of $42 million; thus, the need to increase AIDEA's participation. Co-Chair Green deemed the public and private sector partnership being advanced in this project to differ from most other projects presented to the Committee. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. Without objection, HB 500 was REPORTED from Committee with previous zero fiscal note #1 dated April 14, 2006 from the Department of Commerce, Community and Economic Development. AT EASE 9:23:30 AM / 9:25:00 AM