SENATE BILL NO. 218 "An Act relating to the Alaska Municipal Bond Bank Authority; and providing for an effective date." 3:52:49 PM Co-Chair Kelly MOVED to ADOPT the proposed committee substitute for CSSB 218(FIN), Work Draft 28-LS1567\N (Wallace, 4/9/14). Co-Chair Meyer OBJECTED for discussion. Ms. Armstrong stated that there were two sections that were added to the legislation. She looked at page 5, lines 10 through 24, Section 8, which was legislative approval for bond authorization for the UAF heat and power plant. The section authorized UA to issue revenue bonds, and use the proceeds of the bonds to pay for the design, construction, acquisition, and equipping for the heat and power plant facility at UAF. The legislative approval and authorization was required by statute. She pointed to page 5, lines 25 through 31, and page 6, lines 1 through 7, which was Section 9. The section was the loan authorization for UA to borrow an amount not to exceed $150 million by issuing revenue bonds or entering into a loan agreement with the Alaska Municipal Bond Bank Authority. She stated that it provided the statutory legislative approval and authorization for the bonds that were discussed under SB 119. Co-Chair Meyer wondered if the municipal loan bond would allow for bonding of additional $87.5 million. Ms. Armstrong replied in the affirmative. Co-Chair Kelly wondered if $70 million was a revenue bond. Ms. Armstrong responded in the affirmative. Vice-Chair Fairclough looked at the fiscal note, and noted the addition of $7 million annually from the general fund, and wondered if that should be considered university receipts. Co-Chair Kelly replied that it did not include the revenue bond, but rather was sourced from the bond bank. Vice-Chair Fairclough remarked that the fiscal reflected $7 million of new general fund money. Ms. Armstrong deferred to Ms. Rizk to discuss the fiscal note. Co-Chair Meyer wondered if there was an amendment to the bill. Ms. Armstrong stated that there would be clarifying language to the bill. MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING AND BUDGET, UNIVERSITY OF ALASKA, looked at the fiscal impact note from UA, and explained that the amount represented the debt service associated with $87.5 million that UA intended to borrow from the Alaska Municipal Bond Bank. In addition to the amount, UA would issue $70 million of UA revenue bonds, so UA would be responsible for the debt service with the majority of the funding sources from utility savings. Co-Chair Kelly surmised that the savings would not occur until 2018 or 2019. Ms. Rizk agreed with that summation. Vice-Chair Fairclough wondered if the state was embarking on its own debt service from its own loan. Ms. Rizk responded that the operating budget reflected a significant reduction to the UA budget of approximately $16 million. The current fiscal climate did not allow for UA to find an additional $7 million in addition to the contribution of the UA revenue bonds. 3:58:42 PM AT EASE 4:03:09 PM RECONVENED Vice-Chair Fairclough remarked that she was discussing the overall bond debt for Alaska, and stressed that the Port of Anchorage would also be requesting money. Co-Chair Meyer asked for a summary of the financing for the heat and power plant at UAF. Ms. Armstrong replied that SB 119 had a reappropriation of $50 million; an FY 15 appropriation of $37.5 million; and SB 218 had two authorizations: an authorization for UA to issue revenue bonds in the amount of $70 million and authorization for UAF to utilize the Alaska Municipal Bond Bank Authority in the amount of $87.5 million. The total would be $245 million. Co-Chair Meyer stressed that the different fund sources were the reason for the higher summary sheets. Co-Chair Meyer REMOVED his OBJECTION. There being NO OBJECTION, the proposed committee substitute for CSSB 218(FIN) was adopted. Ms. Armstrong stated that there would be a conceptual amendment. Co-Chair Kelly MOVED the conceptual amendment: Page 5, Line 29 After the word, "by", insert the phrase, "issuing revenue bonds and" Co-Chair Meyer OBJECTED for discussion. 4:08:42 PM DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND BANK AUTHORITY, DEPARTMENT OF REVENUE, explained that the conceptual amendment was required because the bond bank program worked by purchasing the securities of local jurisdictions on a private placement basis. The other amendment provided a definition that allowed UA to participate in the Alaska Municipal Bond Bank program that uses the revenue bonds. He stated that the conceptual amendment would provide two separate terminologies to match to ensure that the Alaska Municipal Bond Bank could carry out the legislative intent of the bill. Co-Chair Meyer REMOVED his OBJECTION. There being NO further OBJECTION, it was so ordered. Co-Chair Kelly MOVED to REPORT CSSB 218(FIN) out of committee with individual recommendations and the accompanying fiscal notes. CSSB 218(FIN) was REPORTED out of committee with individual recommendations and with two new fiscal impact notes from Department of Revenue and one new fiscal impact note from the University of Alaska.