Section 44.88.159. Interest rates.

   (a) The interest rate on a loan purchased from the proceeds of tax-exempt bonds secured by the Alaska Industrial Development and Export Authority sustainable energy transmission and supply development fund (AS 44.88.660) under AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased from the proceeds of tax-exempt bonds or expected by the authority to be purchased from the proceeds of tax-exempt bonds under AS 44.88.155 shall be determined under the regulations adopted by the authority under AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In this subsection, "cost of funds" means the true interest cost expressed as a rate on tax-exempt bonds of the authority plus an additional percentage as determined by the authority to represent the allocable expenses of operation, costs of issuance, and loan servicing costs.
   (b) The interest rate on a loan purchased from the proceeds of taxable bonds secured by the Alaska Industrial Development and Export Authority sustainable energy transmission and supply development fund (AS 44.88.660) under AS 44.88.650 - 44.88.690 or by the Arctic infrastructure development fund (AS 44.88.810) under AS 44.88.800 - 44.88.840 or a loan participation purchased from the proceeds of taxable bonds under AS 44.88.155 or expected by the authority to be purchased from the proceeds of taxable bonds under AS 44.88.155 shall be determined under the regulations adopted by the authority under AS 44.88.085(g)(2)(C) and shall be not less than the cost of funds to the authority. In this subsection, "cost of funds" means the true interest cost expressed as a rate on taxable bonds, plus an additional percentage as determined by the authority to represent the allocable expenses of operation, costs of issuance, and loan servicing costs.
   (c)   [Repealed, Sec. 23 ch 123 SLA 1990]. 
   (d) The provisions of this section apply only to a loan participation purchased under AS 44.88.155 - 44.88.159 or to a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840.
   (e) The interest rate on a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 or a loan participation purchased directly from the assets of the authority shall be determined under the regulations adopted by the authority under AS 44.88.085(g)(2)(C) and shall be not less than the total of a percentage as determined by the authority to represent the allocable expenses of operation and costs of loan origination and servicing, plus the cost of funds. In this subsection,
        (1) "comparable financial security" means a type or category of financial security the authority identifies in the regulations adopted by the authority under AS 44.88.085(g)(2)(C) that has a term and financial conditions comparable to the term and financial conditions of a loan participation or a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 and for which a regularly published, nationally recognized market index is available;
        (2) "cost of funds" means the earnings, expressed as an annual interest rate, the authority would receive on a comparable financial security, and, for a loan participation or a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 with a fixed interest rate, the cost of funds must equal or exceed the minimum interest rate;
        (3) "minimum interest rate" means the five-year return on investment funds of the authority, expressed as an annual interest rate, achieved by all internal and external investment managers of the authority combined.
   (f) In determining an interest rate under the regulations adopted by the authority under AS 44.88.085(g)(2)(C), the authority may determine to disregard the minimum interest rate required under (a), (b), or (e) of this section for a loan participation purchased by the authority or a loan made under AS 44.88.650 - 44.88.690 or 44.88.800 - 44.88.840 to resolve lending limits or reserve restrictions imposed on the financial institution and may instead determine to retain the interest rate existing at the time the authority makes the loan or purchases the authority's loan participation.
   (g) The authority may, in the regulations adopted by the authority under AS 44.88.085(g)(2)(C), establish a program to pay to borrowers of loan participations determined by the authority to meet sufficient job creation, rural development, Arctic infrastructure development, renewable energy development, or other economic development criteria incentive rate rebates of not more than one percent of the interest rate charged on the authority's portion of a loan participation. The following standards apply to the program:
        (1) the payment of an incentive rate rebate may reduce the interest rate to a rate that is less than the minimum interest rate required under (a), (b), or (e) of this section;
        (2) the authority may not commit to pay an incentive rate rebate for a proposed loan participation if the total of the amount of the proposed loan participation plus the combined outstanding balance of all loan participations for which the authority has committed to pay incentive rate rebates would exceed five percent of the total of the amount of the proposed loan participation plus the combined outstanding balance of all loan participations of the authority;
        (3) an incentive rate rebate may not accrue for more than five years after the date the loan participation is purchased;
        (4) the authority may establish a separate account for the incentive rate rebate program.

Notes

Recent Bills that will modify this

HB 246 AIDEA: FUNDS; LOANS; PROGRAMS; DIVIDEND
SB 129 AIDEA: FUNDS; LOANS; PROGRAMS; DIVIDEND

Implemented As

3 AAC 99.250
3 AAC 99.350

History

(Sec. 41 ch 115 SLA 1981; am Sec. 54 ch 113 SLA 1982; am Sec. 34 ch 42 SLA 1987; am Sec. 23 ch 123 SLA 1990; am Sec. 8, 9 ch 51 SLA 1992; am Sec. 5 - 7 ch 111 SLA 1996; am Sec. 3 - 6 ch 73 SLA 2003; am Sec. 2, 3 ch 69 SLA 2010; am Sec. 6 - 11 ch 60 SLA 2012; am Sec. 4 - 9 ch 93 SLA 2014)