SB 140-AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND  2:52:04 PM CHAIR DUNLEAVY announced the consideration of SB 140. He noted that this was the second hearing and that there was a new committee substitute (CS). 2:52:39 PM SENATOR MICCICHE moved to adopt CS for SB 140, labeled 28- LS1246\R as the working document. CHAIR DUNLEAVY objected for discussion purposes. 2:53:10 PM JESSE LOGAN, Staff, Senator Lesil McGuire, sponsor of SB 140, reviewed the following changes found in Version R: Section 1. 44.88.088(a) Page 1, Line 5 thru Page 2, Line 19 · This section of existing statute establishes that the Alaska Industrial Development and Export Authority (AIDEA) shall adopt a policy for payment of a dividend to the state each fiscal year from two existing funds. · Line 9: adds the Arctic infrastructure development fund (AIDF) (AS 44.88.810) to the list of funds that repay a dividend each year to the state. · Page 2, Lines 14- 19 defines the amount of the dividend from the AIDF: the dividend may not be less than 25% nor more than 50% of the net income of the fund. · This section puts the AIDF in-line with AIDEA's revolving fund and sustainable energy transmission and supply development fund (SETS). Section 2. AS 44.88.088(b)(2) Page 2, Lines 20-29 · This section of existing statute defines "net income" o Lines 24-26: inserts the Arctic infrastructure development fund Section 3. AS 44.88.088(b)(3) Page 2, line 30 thru Page 3, line 7 · This section defines "unrestricted net income" for the purposes of this chapter. · Page 3, lines 3-4: inserts the Arctic infrastructure development fund Sections 4-9: No change    Section 10. AS 44.88 Page 6, line 5: · Following "fund" o Insert: "by a majority vote of the members of the authority under AS 44.88.050 from any other fund controlled" · This change clarifies that AIDEA is authorized to transfer money or assets from other funds it controls if there is a majority vote of the members, which constitutes and action of the Board of Directors. Page 7, Line 11: · Delete: "an application" · Insert: "a" o This reduces the encumbrance of an application being filled out, but the due diligence on the applicant and the project remain unchanged. Page 7, Line 23: · Delete: "30" · Insert: "40" o This number is more appropriate for infrastructure. Page 7, Line 27 thru Page 8, Line1 · 44.88.840 now includes this language pertaining to AS 44.88.900(19)(B) o 44.88.840(d) sets a floor or minimum amount for loans or bond guarantees for certain activities so that this program does not compete with existing state financing programs related to fisheries. Section 11. AS 44.88.900 Page 8, Line 7-14: A new definition of "Arctic Infrastructure Development" is established. · (19) "Arctic infrastructure development" means (A) the construction, improvement, rehabilitation , or expansion of a facility [IN THE ARCTIC OF A PORT, ROAD, ENERGY PROJECT, HANGAR, OR FACILITY TO AID IN DEVELOPMENT OR MEET EMERGENCY RESPONSE NEEDS]. (i) In the Arctic to aid in development or  meet emergency response needs; or  (ii) In the state if the construction,  improvement, rehabilitation, or expansion  supports or furthers the development of a  facility in the Arctic.  · The removal of the list of types of facilities was done to ensure that the list was inclusive, rather than exclusive, of unforeseen future infrastructure needs. · The addition of AS 44.88.900(19)(b) was done to ensure that the fund was authorized to help finance infrastructure needs in all areas of the state that may be necessary to support the development of infrastructure in the Arctic. Page 8, Lines 15-19: · Additional language added pertaining to fisheries: o 44.88.900(19)(B) ƒThe purchase or repair of a fishing  vessel for use in an federally managed  fishery, the purchase of quota shares or  individual fishing quota used in a  federally managed fishery in the Arctic,  or the construction, improvement ,  rehabilitation, or expansion of a plant,  facility, or equipment used in support of  a fishery in the Arctic.  o This language allows the AIDF to support fisheries in the Arctic. 2:55:39 PM CHAIR DUNLEAVY removed his objection. There being no further objection, Version [R] was adopted. 2:55:59 PM At ease. 2:56:11 PM CHAIR DUNLEAVY reconvened the meeting. SENATOR OLSON thanked the sponsor for bringing the bill forward. 2:56:45 PM SENATOR MICCICHE directed attention to the limitations on financing provision in Sec. 44.88.840 on page 7, line 15. He asked for a description of the provisions in paragraphs (1) and (2) in subsection (a). SENATOR MCGUIRE said her understanding was that without legislative approval, AIDEA could use the Arctic infrastructure development fund to make a loan for less than one-third of the capital cost of an Arctic infrastructure project or AIDEA could make a loan guarantee for less than $20 million. She deferred further explanation to AIDEA. SENATOR MICCICHE asked AIDEA to describe the provisions. 2:58:31 PM MARK DAVIS, Deputy Director, Alaska Industrial Development & Export Authority (AIDEA), Anchorage, Alaska, explained that the limitations are designed so that AIDEA is always working with the private sector on these types of financing. The explanation for the one-third limitation on the loan is that AIDEA would like to use private sector lending whenever possible. The idea behind the $20 million cap on the loan guarantee is to ensure that AIDEA's bonding capability remains intact. He noted that the legislature could waive either of those limitations and they were waived last session in Senate Bill 23 in support of the Interior Energy Project. AIDEA feels it is appropriate to obtain legislative approval for very large projects like that. 3:01:03 PM SENATOR MICCICHE moved to adopt Amendment 1, labeled 28- LS1246\R.2. AMENDMENT 1 OFFERED IN THE SENATE BY SENATOR MICCICHE TO: CSSB 140( ), Draft Version "R" Page 7, following line 26: Insert a new subsection to read: "(d) Notwithstanding (a) of this section, the authority may not provide financing or loans or bond guarantees in an amount less than $7,000,000 for the purchase or repair of a fishing vessel used in a federally managed fishery, the purchase of quota shares or individual fishing quota used in a federally managed fishery in the Arctic, or the construction, improvement, rehabilitation, or expansion of a plant, facility, or equipment used in support of a state- managed fishery in the Arctic." Page 8, line 1, following "means": Insert "(A)" Page 8, line 3: Delete "(A)" Insert "(i)" Page 8, line 5: Delete "(B)" Insert "(ii)" Page 8, line 6, following "Arctic": Insert "; or (B) the purchase or repair of a fishing vessel for use in a federally managed fishery, the purchase of quota shares or individual fishing quota used in a federally managed fishery in the Arctic, or the construction, improvement, rehabilitation, or expansion of a plant, facility, or equipment used in support of a state-managed fishery in the Arctic" CHAIR DUNLEAVY objected for discussion purposes. SENATOR MICCICHE read the amendment. SENATOR OLSON asked if the sponsor supported the amendment. SENATOR MCGUIRE said she did support the amendment. 3:02:10 PM SENATOR STEDMAN asked the purpose of the amendment. SENATOR MICCICHE explained that the amendment allows support for Arctic infrastructure and Arctic-related projects for ports that support the Arctic but aren't located in the Arctic but. SENATOR OLSON asked if the fiscal note would be affected. SENATOR MICCICHE replied it doesn't change the fiscal note. SENATOR OLSON asked if AIDEA supported the amendment. MR. DAVIS said AIDEA generally supports the amendment but would suggest on page 1, line 8, striking the term "state-managed" because AIDEA supports both federal and state-managed fisheries. 3:04:27 PM SENATOR STEDMAN asked if that change was acceptable to the amendment sponsor. 3:05:03 PM At ease 3:06:27 PM CHAIR DUNLEAVY reconvened the meeting. SENATOR MICCICHE said he doesn't object to the suggested revision. CHAIR DUNLEAVY asked if there was any objection to the amendment to the amendment. 3:07:12 PM At ease 3:07:41 PM SENATOR MICCICHE withdrew his motion to adopt Amendment 1, labeled 28-LS1246\R.2. SENATOR MICCICHE moved to adopt 28-LS1246\R.2 as amended. AMENDMENT 2 OFFERED IN THE SENATE BY SENATOR MICCICHE TO: CSSB 140( ), Draft Version "R" Page 7, following line 26: Insert a new subsection to read: "(d) Notwithstanding (a) of this section, the authority may not provide financing or loans or bond guarantees in an amount less than $7,000,000 for the purchase or repair of a fishing vessel used in a federally managed fishery, the purchase of quota shares or individual fishing quota used in a federally managed fishery in the Arctic, or the construction, improvement, rehabilitation, or expansion of a plant, facility, or equipment used in support of a state- managed fishery in the Arctic." Page 8, line 1, following "means": Insert "(A)" Page 8, line 3: Delete "(A)" Insert "(i)" Page 8, line 5: Delete "(B)" Insert "(ii)" Page 8, line 6, following "Arctic": Insert "; or (B) the purchase or repair of a fishing vessel for use in a federally managed fishery, the purchase of quota shares or individual fishing quota used in a federally managed fishery in the Arctic, or the construction, improvement, rehabilitation, or expansion of a plant, facility, or equipment used in support of a fishery in the Arctic" CHAIR DUNLEAVY objected for discussion purposes. SENATOR MICCICHE explained that the foregoing discussion was to remove the term "state-managed" from page 1, line 8, of the original amendment, 28-LS1246\R.2. There was no other change. CHAIR DUNLEAVY removed his objection and opened public testimony. 3:09:40 PM RON LONG, City of Seward, stated support for SB 140 as amended, consistent with their testimony on the original bill. 3:10:11 PM CHAIR DUNLEAVY closed public testimony. 3:10:21 PM SENATOR STEDMAN moved to report CS for SB 140, as amended, from committee with individual recommendations and attached fiscal note(s). CHAIR DUNLEAVY announced that without objection, CSSB 140(L&C) moved from the Senate Labor and Commerce Standing Committee.