CS FOR HOUSE BILL NO. 119(EDT) "An Act relating to the procurement of supplies, services, professional services, and construction for the Alaska Industrial Development and Export Authority; relating to the definition of 'own' for the economic development account; relating to the definitions of 'development project', 'plant', 'facility', and 'project' for the Alaska Industrial Development and Export Authority; relating to the Alaska Industrial Development and Export Authority creating subsidiaries regarding projects financed under AS 44.88.172; and providing for an effective date." 9:54:12 AM Co-Chair Hoffman proposed committee substitute, work draft #27-GH1745/E, Kirsch, 4/12/11. Co-Chair Stedman OBJECTED for purpose of discussion. DARWIN PETERSON, SENATE FINANCE COMMITTEE, detailed the CS. He noted changes in Section 6 and 7, which were added to allow a regional housing authority eligibility for grants under the municipal harbor grant program. He stated that while most harbors are owned by municipalities, it was not the case in Chenega and Tatitlek where the state transferred ownership of the local harbors to the regional housing authorities. The housing authorities were used as a political subdivision because neither community was incorporated. The communities were thus ineligible for the harbor matching grant program without the statutory change. Mr. Peterson mentioned new language on Page 4, Lines 17 through 20, which allowed the community to use cruise ship head tax money and harbor transfer payments as matching funds for the municipal harbor grant program. Section 8 added a definition for the regional housing authority in Alaska Statutes 2960, which is the municipal harbor matching grants program. The next change was found in Section 10, where "Alaska Industrial Development and Export Authority (AIDEA)" was removed from the definition of agency, to exempt it from the state procurement code. The conforming amendment was brought to the committee's attention by legislative legal services. The amendment conforms with Section 9 of the bill which adds AIDEA to the list of state entities allowed to adopt their own procurement code. Without the amendment, the authority could have been subject to their procurement regulations and the state procurement code. Mr. Peterson highlighted changes in Section 16, Page 9, where AIDEA was given legislative approval to bond for up to $65 million for improvement and expansion at the Skagway Ore Terminal. The expansion was necessary to meet environmental standards and prepare for substantial increases in the use of the terminal by new Yukon mines. He noted that Section 17 makes the addition of harbor transfer payments as eligible matching funds for the municipal harbor grant program retroactive to January 1, 1993. Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. 9:58:48 AM TED LEONARD, EXECUTIVE DIRECTOR, AIDEA thanked the committee for the opportunity to testify. MARK DAVIS, AIDEA, stated that the bill allowed AIDEA to advance economic development across a broad spectrum of the economy. He pointed out the proposed amendment to the Alaska Procurement Code, which would allow AIDEA to develop regulations for state procurement. The Department of Transportation and Public Facilities (DOT/PF) and Department of Administration (DOA) supported AIDEA's ability to issue regulations in a method similar to that used by the Alaska Housing Finance Corporation (AHFC). Mr. Davis spoke to the change allowing AIDEA to own a percentage or all of a development project through a Limited Liability Corporation (LLC) or corporation. Another change allowed AIDEA to create a subsidiary corporation by the board which could issue bonds or undertake debt. The funds would be used to create projects to be sold later. The AIDEA board expressed interested in creating the divestiture to bring assets back into the private sector. The bill also expanded the definition of "development project." Since 1993, the Alaska economy expanded dramatically and the new definition would allow AIDEA to invest in communications and work on community projects and federal facilities. The bill would allow AIDEA to work on prototype or new technology. 10:03:51 AM TOM SMITH, SKAGWAY BOROUGH MANAGER (via teleconference), testified in favor of the legislation. He stated that the borough strongly supported the bonding authority for AIDEA to proceed with improvements at the Skagway ore facility. He claimed that the funding would increase capacity and improve environmental standards. 10:05:46 AM TOM COCHRAN, MAYOR OF SKAGWAY (via teleconference), echoed the testimony of Tim Smith. He stated that the bonding package for the ore terminal would provide substantial economic development. 10:06:27 AM GENERAL TOM KATKUS, COMMISSIONER DEPARTMENT OF MILITARY AND VETERANS AFFAIRS, testified in support of the legislation. He mentioned the portion of the bill allowing the military to have options regarding development of projects or facilities. He pointed out that the military construction process was long and tenuous. The legislation provides another option to support the military by financing and developing lease agreements with the National Guard and the Coast Guard for the development of facilities. 10:08:12 AM Co-Chair Stedman mentioned two zero fiscal notes, one from Department of Revenue the other from Department of Commerce, Community and Economic Development. Mr. Leonard added that the legislation provide AIDEA flexibility and tools to encourage greater investment in Alaska's economy and resource development. Co-Chair Hoffman asked about the new board. Mr. Leonard responded that the new board provided better perspective from the private sector and allowed for improved analysis of projects. 10:09:29 AM SCSCSHB 119 was HEARD and HELD in Committee for further consideration. 10:09:53 AM RECESSED