Gov. Parnell signs bills expanding AIDEA finance ability
Gov. Sean Parnell signed two pieces of legislation June 12 to promote economic development in economically depressed areas and to facilitate financing for small to medium-sized energy projects in the state.
Both measures expand the ability of the Alaska Industrial Development and Export Authority, or AIDEA, to help finance projects. AIDEA is the state’s development finance corporation.
One bill Parnell signed was Senate Bill 25, the Alaska Sustainable Strategy for Energy Transmission and Supply Act.
Sponsored by state Sen. Lesil McGuire and state Rep. Lance Pruitt, both Anchorage Republicans, the bill establishes a new fund within AIDEA for financing energy projects.
Under the bill AIDEA will be able to make direct loans to borrowers for energy projects or participate in loans through banks or credit unions. The authority will also be able to insure project obligations by offering a loan or bond guarantee. Examples of possible projects include improving energy efficiency in commercial buildings and renewable energy development, Parnell said.
At the bill signing ceremony with the governor, McGuire gave credit to several of her legislative colleagues in helping with the bill, particularly Rep. Lance Pruitt, who led the effort on the bill in the House of Representatives. The measure is a complex and it took two years to draft and get through the House and Senate.
“It is seeded now with $125 million. I would liked to have seen more money placed in the fund, but this is a start,” she said.
Pruitt said the key advantage of the bill is having a mechanism to finance medium-to-small size energy projects in Alaska, so that the loan repayments are made here and the money stays in the state to circulate and finance other projects.
During the past two state budget cycles, the state has funded more than $1.5 billion for energy infrastructure and investments, Parnell said.
“It will bring the state closer to achieving its goal of 50 percent electricity generated by renewable energy by 2025,” Parnell said.
Another bill, Senate Bill 66, introduced by the governor, creates a new markets tax credit assistance guarantee and loan program with AIDEA.
Working under a federal tax credit program, SB 66 allows the state authority to issue guarantees and finance projects in low-income areas or otherwise serving low-income populations.
Hugh Short, chairman of AIDEA’s board and president of Alaska Growth Capital, an Anchorage-based development bank, said there have been several successful projects that have been financed through the use of new markets tax credits including the a seafood plant at Platinum, in southwest Alaska, and the Kotzebue Elder Care Facility and the Yukon-Koyukuk Elder Assisted Living Facility in Galena, Short said.
General Communications Inc., or GCI, has taken advantage of the program to help fund the company’s expansion of broadband service to western Alaska communities, Short said.
The benefits aren’t only for rural Alaska. Businesses in lower-income urban areas, like Mountain View in Anchorage, have been able to take advantage of the tax credits.
“This legislation represents a real hand up, not a hand out,” Parnell said. “Entrepreneurs who want to get businesses up and running in low-income communities should be very excited about this new way to generate capital. By incentivizing development in these regions, our ability to offer an economic boost to areas of the state that need it most is increased significantly.”