Today, Jan 22, Representative Ashley Carrick (D-Fairbanks) introduced HB 124, the AIDEA Accountability Act, to the House State Affairs Committee. HB 124 seeks to enhance “legislative and public oversight of AIDEA as a state corporation.”
According to Carrick, the intent of the bill is to strike a balance between public backlash against the Alaska Industrial Development and Export Authority (AIDEA) and the State’s desire for AIDEA to move forward. AIDEA’s mission is “to promote, develop, and advance economic growth and diversification in AK by providing various means of financing and investment.” Since its establishment in 1987, AIDEA has had substantial success in generating economic development in Alaska.
Key AIDEA Projects
Some of the projects funded by AIDEA include:
Sectional Analysis
Stuart Relay, Staff to Rep. Carrick gave the sectional analysis, which readers can view in full below.
Committee Discussion
Following the introduction and section analysis, the House State Affairs Committee held a discussion focused on the bill’s ability to balance transparency and oversight goals with continuing AIDEA’s success and independent decision-making.
Why Micromanage?
Representatives Kevin McCabe (R-Big Lake) and Sarah Vance (R-Homer) expressed concern that the bill seemed like “micromanagement.” “Why should we try to micromanage AIDEA,” asked McCabe directly. Rep. Vance said the bill “seems anti economic development.”
Rep. Carrick responded that the bill’s components are broad and designed to help the public. She also admitted that the bill is just at its starting point and she is open to revising the bill after hearing from her colleagues. Carrick expressed that she would like to “elevate the good, heavily supported work that AIDEA does,” while also addressing the public’s concerns about transparency. Becuase AIDEA’s projects impact a large number of communities, Carrick says there needs to be better balance, better oversight, and a better “two-way street between AIDEA and the State of Alaska.”
AIDEA Dividend as State Revenue
Representatives McCabe (R-Big Lake), Himshoot (I-Sitka), and Holland (I-Anchorage) addressed AIDEA’s substantial dividend return to the State of Alaska. AIDEA was the only corporation to return a dividend to the State. Over the years, AIDEA has returned half a billion dollars to State in dividends. McCabe suggests, “we let them alone and let them do their thing,” so they continue to provide revenue for the State.
Countering McCabe’s hand-off approach, Holland asked Carrick if the bill could be used to amend the corporation’s dividend decision-making process to increase State revenue. According to Holland, a Percent of Market Value (POMV) of 5% would indicate a $70 million dividend this year, but AIDEA intends to give only a $20 million dividend. Carrick responded that she is “definitely open to considering” the idea, but emphasized the need for “a sustainable draw.”
Holland also stated, “The bill suggests substantial divestment of AIDEA’s investments” with AIDEA potentially asked to divest of 2/3 of its current portfolio. Holland asked Carrick for details about what is in that portfolio and the impact of divestment. Carrick responded that her staff will take note of the questions, but she did not have any available answers. “Those are great questions for AIDEA when we hear from them,” she stated.
Slowing Down Economic Development
Another concern addressed by Holland and McCabe is the effect of requiring additional legislative approval for AIDEA’s large projects. The legislative approval requirement could slow down important development projects in Alaska. Carrick answered that this is “the biggest policy question for this piece of legislation.” Currently, the threshold defining a “large project” is $10 million, but Carrick says that can be adjusted and requires further discussion. “We want AIDEA to be able to strike while the iron is hot, within reason,” she stated.