Session & Interim: State Capitol, Room 513 Juneau, AK 99801-1182 Phone: (907) 465-4859 Fax: (907) 465-3799

Sponsor Statement for HB 368
Fishery Enhancement Loans

An Act authorizing the commissioner of community and economic development to refinance and extend the term of a fishery enhancement loan.

House Bill 368 authorizes the Commissioner of the Department of Community and Economic Development to refinance loans made by the Fisheries Enhancement Revolving Loan Fund. It also gives the Commissioner the ability to extend the term of the loan when justified.

The construction and operational funding provided by the Fisheries Enhancement Revolving Loan program have helped to create an extremely successful statewide salmon rehabilitation program. The hatchery system was established in 1974 to address concerns over the depletion of Alaska's wild salmon stocks created by over fishing during the 1960's and 1970's. Now, approximately 40% of the entire salmon harvest in Alaska is enhanced fish. The nearly one billion dollars of salmon created by these state financed private nonprofit hatcheries, have been invaluable to the economy of the many coastal communities so dependent on salmon for their survival, as well as to urban Alaskans working within the industry.

A simple, low cost measure for maintaining a strong enhancement industry, HB 368 allows hatcheries to refinance their debt at a lower interest rate. A majority of the loans made under this program carry the maximum allowable interest rate of 9.5%. It makes good business sense and is good public policy to allow these borrowers to take advantage of current lower interest rates. Financially sound hatcheries are better able to continue producing fish for the industry, and smaller loan payments make it easier for them to pay back their obligations to the State.

The last Legislative Audit of private nonprofit hatcheries, published in 1997, recommended that the Division of Investments in the Department of Community and Economic Development seek the authority to restructure hatchery loans. This legislation does just that. The Department is sufficiently staffed to accommodate the few applications necessary to refinance these loans. These is no forgiveness of principal or interest allowed under this legislation, and all payments are made directly to the loan fund-no general fund monies are impacted.

House Bill 368 recognizes the public trust nature of these non-profit entities. This legislation protects the State's financial interest by guaranteeing sustained production of salmon for the commercial and sports fishing industries, and assuring continued payments of outstanding debts to the state.

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