AIDEA looks to make emergency regs permanent
The Alaska Industrial Development and Export Authority wants to turn emergency regulations adopted less than two weeks ago into permanent regulations.
The emergency regulations give the agency unprecedented flexibility in loosening rules on loans and financing in any way, as long as the action is not prohibited by state law.
The agency would have this power as long as the emergency declared by the governor lasts. AIDEA keeps many details of its operations secret under state laws that allow it to act in ways similar to that of a bank.
The emergency regulations give the authority the power to waive or modify rules on application processing, interest rates, costs and fees, loan or financing terms and conditions, collateral requirements, underwriting standards and other requirements in regulations.
The ability to waive financing rules will expire July 24 unless the regulations become permanent. Under the proposal, the authority would be able to ignore many existing regulations for as long as the emergency declared by the governor lasts. After that point, new loans would have to meet the regulations, but loans established during the emergency would not.
“The end of a declared statewide disaster emergency shall not affect waivers or modifications the authority previously approved for a loan, guarantee, or financing agreement,” the proposal says.
Allowing AIDEA to ignore all regulations about interest rates, costs, fees and financing terms is an extreme measure, one that the authority has not justified. It would make far more sense to put some limits on this power and to require AIDEA executive director Tom Boutin to explain what he has in mind.
Rather than make these changes permanent, the public would be better served if the authority had to renew them.
The biggest recent change made by AIDEA was the proposed creation of a $1 billion loan guarantee program, if the Legislature gives it the authority. It can make up to $50 million available for loan guarantees, but wants the Legislature to increase that by 20 times.
The agency plans to make loan guarantees of up to $1 million per business to 50 businesses or more. “The objective is to enable Alaska’s banks and financial institutions to immediately provide additional capital to Alaska businesses through their existing relationships as they continue to manage terms with those borrowers,” AIDEA said in a press release March 30.
If the Legislature approves the expansion, the program could provide a loan guarantee of up to $1 million to 1,000 or more businesses.
With these loan guarantees, AIDEA would promise to pay the loans off if the borrowers default. The guarantee may allow the borrower to qualify for a lower interest rate or allow the borrower to qualify for a loan that otherwise would not be available.
AIDEA says that the goal is to provide additional capital to Alaska businesses.