I'd like to call the second meeting of the House Finance DCCED to order.
It is now 1201 Tuesday, February 10th in Grinberg room 120.
And members' presence are Representative Kai Holland, Representative Donna Meers,
Representative Delaina Johnson.
And I do want to remind everyone that this particular meeting does not need
So, with that in mind, I'll also ask you to please silence your cell phones for the meeting.
Thank you for being here, and I want to thank Renzo Moises from the Juneau LIO for moderating
the committee today.
Thank You.
Thank to the subcommittee A, David Zhang.
and our budget and these documents along with today's presentation can be found on basis.
Today we have Director Randy Raurow of ADA, the Alaska Industrial Development and Export Authority
online with us today to give an update on ADA's budget. And I do see that you're here.
Thank you so much Director Rarrow for being here, will you please put yourself on the record and
Yes, Madam Chair, this is Randy Ruaro, R-U-A-R-O.
I am the Executive Director for ADA, and if it pleases the chair and the members, I'll
go ahead and start on the presentation.
Yes.
Please proceed.
Okay.
I'm going to start and I will move quickly through quite a few of these slides, Chair.
answer any questions or spend a little more detail on it. But going in the presentation to page 3,
the policy behind ADA that's really embedded in The Alaska Constitution, Article 8,
Section 1, which talks about the quality of the state of Alaska being to develop its resources
and making them available for maximum use.
That policy is consistent with the Alaska State Head Act, section 6I,
in which Congress expressly gave ADA, not only, or Alaska,
I'm sorry, gave Alaska not
only title to 104 million acres of land in Alaska but also the subsurface
mineral deposits. And the idea was, of course, to give Alaska the ability to
support itself and its residents.
by developing its resources and generating revenue.
Thank you Director.
Thank You Director, pardon me but I'm gonna make sure
to let you know that we have also been joined
by Representative Castello and we're joined
by representative Bynum from the Finance Committee.
Thank-you, please proceed.
Thankyou Madam Chair.
Page four of the presentation did a little history on ADA.
data was created essentially almost immediately after statehood as an independent state corporation
because legislators understood that while we had a lot of natural resources we didn't have
many banks and we did not have many finance institutions and capital would be needed to develop
resources and to assist Alaska businesses. So you see a bill April 24 of 1961 that passed
Senate Bill 153, so within, you know, two years of statehood, the legislature had created
ADA, and then there was a major rewrite in 1967.
Page 5 of the presentation in our findings, our legislature, initial legislature that
negatives that occur from unemployment, particularly in parts of the state with high unemployment
rates.
And so they included a finding that unemployment is a serious menace to the health, safety,
and general welfare to Alaskans living in areas of high employment and also to people
of entire state.
slide 6, Madam Chair, is just a highlight of a recent story that ran in the Anchorage Daily News
about how we have currently a very high level of non-resident workers. That's a concern we want
Alaskans to be getting these jobs and I included that just to point out that while we
have significant employment numbers in Alaska, there is a significant number that are nonresident,
thoughts on how to work on that.
Slide 7 is what I think is a more accurate view of how the
state's economy is doing in terms of jobs.
And here we see that the labor participation rate,
which measures not only persons working or seeking work,
but persons who actually just given up looking for work
because it's either not there or...
they're disabled or some other reason and so when we look at that number we see that
almost one in three Alaskans is not in the labor pool and that's that significant concern.
Slide eight earnings levels in Alaska, these maps highlight how the increase significant
increases in jobs and wages are occurring in areas where there is resource development
You see the dark blue on the upper right map.
That's the North Slope, oil and gas.
And then you see Northwest Arctic Borough, Red Dog Mine,
and other work that's occurring in that borough.
And you can see in the bottom map,
a 15% increase in wages.
And I think that is due to the mancho mine.
So resource development does have a significant impact.
Director, before we move on to the next slide, we have a question, please, by Representative
Johnson.
Please.
Thank you, Madam Chair, and through the Chair to Mr. Ferraro.
I have question on your slide eight, the diagram.
So you have variety of different statistics on the map.
like it shows apparently Dutch Harbor has a significant decline and then you would look
at the North Slope borough and you'd see the increase. Is that based on the location of
the job or is it the residency of the resident? I mean, is that is based
Through the chair, I can double check representative, but I believe it's based on the location of the job.
Okay, all right, thank you.
Thank you, and for other members, we're going to hold questions because we have 34 slides and we are at slide 8 and
we need to finish before.
for one. And then we will have for sure a question and answer time toward the end of this. So
I just wanted to ask for your patience. If you wouldn't mind, I'm happy to refer back to slides,
just if you would jot down the slide number and we'll make sure to do that. We also have a couple
of other members who will be joining us momentarily. I believe they're in another meeting.
Thank you Madam Chair. Slide 9 is an outline of how ADA was designed to work by the legislature.
The legislature soft fit to create ADA as a public corporation,
but with a separate existence from the state of Alaska,
and that was done so that ADA could issue bonds,
takes actions to finance projects and do so on its own revenue and receipts
So that decisions by ADA would not impact the state treasury or vice versa.
So there's some firewalls were built by the legislature between ADA and the
state. Slide 10, ADA has a ability, some abilities that are interesting and unique and helpful.
We can invest in companies and borrow funds on our own credit.
We currently have a AA-plus credit rating, which is higher than the state does,
and that's helpful to lower finance costs and other things when we finance projects.
You'll see in 4488, 190B that the legislature, again, with a firewall in mind, made it
so that ADA's receipts, funds, income, real property are not subject to the Executive Budget Act,
our operating budget, which is subject to the annual operating
budget is, subject, to
the Executive Budget Act.
Slide 11, legal challenges to ADA in this structure were brought
almost immediately in 1961 in a Alaska Supreme Court case
called the Armin versus Alaska State Development Corporation,
and the Alaska supreme court upheld ADA structures.
firewalls finding that the legislature had validly exercised its authority under
Article 2 of the Constitution. Slide 12, how has aid been doing? Like I mentioned
earlier, Madam Chair, that aid has just received its best bond rating in history
and the highest net revenue in the history, 64-year history of data, and we're on an upward trend.
We're going to keep building on that and improving on our economics and our returns.
Slide 14, FY 2025. We had statutory net income of 67.4 million. That was on gross income
We declared the board declared a $17 million dividend, although that number you could add to that
number. There is 6.5 million that will be coming back to the state treasury through our annual
lease payments. So 23. 5 million total coming from 8 of the treasury. 512 million in cumulative
Slide 15, we have some loan portfolio balances, loan participation program, which is a program
where Alaska banks come to ADA and seek a partnership with ADA to co-finance Alaska businesses.
That's one of our most popular programs, but very successful programs.
roughly 546 million dollars in that non-current balance for all the different
programs you see 352 million for the loan participation program alone. Next slide
Cash and cash equivalents is a $427 million that's invested in a number of different
ways.
It's not sitting in the bank.
We have securities, $383 million, again, that is invested and it's also set aside.
It is important to note that when I mention these numbers, consider those gross numbers.
projects which on the right hand you can see it's 214 million and that's for
projects like Ali S. Kim, hex cook inlet, wild birch hotel. So when you see the
numbers on left I would consider those somewhat gross revenue numbers,
estimates or asset estimates versus net. Potential commitments we have
A number of things, loan applications in review, different projects, in our general pipeline
of projects we literally have probably billions of dollars in potential projects which is
good in the sense that Alaska is very active right now with interested investors.
We're looking at a somewhat different model historically,
which is where aid of may take a very small position
and facilitate investment from other interested parties,
private equity, wherever that is,
so that we can do more and get more jobs
and more projects off the ground
and moving and helping the economy well, generating revenue.
I would add that when aid funds,
oil and gas project it's not uncommon for the total combined return rate between our dividend
payments back to the state and the production property tax and royalties to go over 22 to 23
percent return so we have a very good return from our oil gas projects. Slide 17 is some fixed asset
That would be chipyard, red dog, rodent port, FedEx hanger, Camp Denali, which is a U.S.
Coast Guard headquarters over at Jay Bear.
Some numbers there.
You see the loan participation numbers we talked about earlier.
And then we have Anwar Seismic, which we're working on now,
and possibly bonding for part of the Amblin Road.
I think I'm going to skip slide 18, Madam Chair,
because I don't think we've covered it.
Slide 19, ADA operating budget.
You can see our operating budgets scrolling from
FY 2025 to FY 2027 roughly $750,000 and most of that in the personal services line it's
health and wages. I think there was a bill that passed.
I want to say SB 257 that required some adjustments in salary schedules and that affects
We have seen a slight increase, I guess, roughly 8% in those three fiscal years.
I'll stop there, some questions.
I would add on the permanent full-time employees, while we show 43 positions,
I think seven or eight of those are shared positions with AEA,
but they continue to show on our party's summary.
Director I'm going to ask if you would please proceed.
Sure.
Slide 20, this is the operating facility component.
So this adds in we have our building here in Anchorage at 813 West Northern Lights.
So it's cost us roughly 500,000 a year.
to keep up to maintain, and so you add that number
to our operating components on the previous page,
and you get to an operating budget of roughly 12.4
to 12,7 million for FY 2027.
Slide 21, again, goes into some details on
the LPP program, the loan participation program
of the Alaska banks.
And you can see we've got a significant coverage throughout southeast, central, south-central interior.
I would personally like to see more loans, more work done on economic development in the southwest region of the state,
and we'll be working on ways to step up our presence in that region.
geographically shows up in the state from that program.
Slide 23, we also have a small business loan program
that's administered for us by the Department of Commerce.
And then we have rural development loan
program that is also administered
for our by-the-department commerce.
That program, the small-business program
is actually becoming more and more popular.
We recently, or the board recently approved,
recapitalizing that small business economic development loan program with
six million more dollars and we hear that at least half of that is probably
already applied for so we're going to keep an eye on that program and as it
needs more funds I'm confident the board will recapitalize the program.
Slide 24 just shows some of the again the geographic and dollar number of some
Slide 25 is a summary of some health care funding that aid has done in the recent past
Harry and Sally Porter Heart Center of Providence Health Services and Anchorage, the Blood Bank,
the YK Health Corporation in Bethel and the Chief Andrew Isaac Health Center in Fairbanks.
This is I think one of the most exciting projects that we're working on right now,
we do have six leases now and our geologists, our experts have looked at those leases
and estimate that, we have billions of barrels of oil and trillions of cubic feet of gas
on those leases and so we are diligently working Madam Chair to advance that project through
to confirm the resources and then we'll be moving forward with finding a partner
to develop those ANMAR leases. Slide 27, the Amler Access Project,
significant benefits in jobs. I think mining jobs are now averaging 130,000 a
year, so very significant for particularly the communities close to the
And significant revenue generated back to the state again in the form of corporate income taxes, other things.
Wetsuit and Access projects like 28.
This is a different road project than the AMBLA project, which is limited access.
There's gold, copper, silver, coal, antimony, other mineral resources in the yet in
the mining district, lots of state land available, and a significant amount of
massive burrow land that I think near Alexander Creek that's got a lot of
potential. So another road project there. Life 29 is the catch you can't ship
I think one of the most successful projects that we've had in the last year 2025, we decided after 20 years to transition to a different operator.
Jake Greenroop has taken over the shipyard.
When they started on day one, they had 15 employees and they're now up to 150 to 175.
At least half of those, I can think, are from Ketchikan or the region.
JAG to do workforce training.
So very good things happening at Kitchkin Shipyard.
We have some other fixed assets, FedEx, Hangar, and other things.
There are slide 30.
Interior energy projects.
There's some projects, Cook Inlet Energy, Hexalone.
That's a revolving loan that can be paid down and then reused.
tax was very successful this last year and drilling too well. I think they've gone from
zero percent of production of coconut gas when they came out of bankruptcy on day one
to currently producing roughly 12% of all gas production in coconut. And I
think if they're successful in 26 with additional drilling, they could be up as high as 18 to 20%.
The model, of course, the most successful project that aid is invested in is the Red Dog Mine.
That was back in 1845, and legislature authorized some bonds for the project.
And one of the most important is not a payment back to the state, but it's the nearly two billion dollars
that
Anks the corporations particularly village corporations have received through the seven-eye revenue sharing process
I think that's been extremely helpful to those things corporations
And a huge benefit to state
Slide 32 some areas that we're looking into
We've got a project at Cordova that's going to use excess hydropower that would otherwise
go unused for running some data center cabinets, some GPUs, and we think that is going
to produce revenue for Cordoba that will lower the cost of energy for people living in that
city.
coastal communities or other locations, tokenization or it's a new finance method that we're working
on, and then new energy sources we are looking at, geothermal projects like Mount Augustine,
methanol like LESKM is going to produce on the north slope and several other projects that
we have in progress. Slide, I guess that would be 33. The bottom line is that
It is, I think, performing well, best financial results in our 64-year history.
We've got a lot of things that we're helping on, even if we are not a primary financing
tool or part of the financing capital stack.
We're still trying to get projects moving, if you're taking a small interest.
projects up and running as many Alaskans employed in good jobs as we can.
With that, Madam Chair, I'll stop.
Well, thank you so much, Director.
That was a very comprehensive report.
I appreciate that very much.
You already do have a queue here, so I'm going to get started with Representative Bynum,
and Representative Beynam, if you have
a specific slide, you'd like us to
referred to. I think we have some help here with Director
Lager. Is that the right name? I
think that's right. Okay, great. And so please proceed.
Thank you, Madam Chair. My first question, I'm not going to
ask that because I'll ask a Department of Labor. Probably
more quick for that.
I did have two other quick questions. One had to do with
returns. First of all, thank you Director for being here. Even
I really appreciate all the work that you do.
I don't care what they say about you.
I think you're a heck of a director.
So I appreciate the hard work you are doing specifically
for my region in the shipyard.
And that will be a part of my second question.
I just want to get that away.
So thank you very much.
You talked a little bit about through the chair.
You talk a bit a about returns.
And I was hoping that we had 22% returns,
Basically, in comparison to all of your assets that are invested,
so if we were to do a direct comparison,
to say, for example, the investments of our CVR,
and then we get a return on that, is that going to apples
to apple's comparison?
Are you specifically targeting that return number
to a particular item of investment?
Through the chair, Representative Bynum,
particularly oil and gas projects that we have financed when you take into account the dividend return
plus the return to the state treasury directly from property tax, production tax and royalties
and corporate income tax.
Okay. Thank you for that. And then I'll follow up offline specifically about overall returns.
Probably not going to have those numbers here today.
do understand your mission is to create jobs and specifically for jobs through
the chair. You mentioned the catch can shipyard. I know that there were some
really tough decisions that had happened there over the past year and a half but
the results have been phenomenal. So thank you from district one. We've seen
that ship yard grow in employment and that's what it is really trying to do
is grow jobs. And we've see a tremendous amount of jobs grow there. They're
really quick and soon. So good to see that, want to
see, that continue to grow, specifically making future investments. There is
an opportunity in wrangle. I don't know if many of the folks here in the legislature
know of potential shipyard opportunity and wrangled, but I was hoping to get your thoughts
on what ADA might be able to do to assist that opportunity.
I know it's in early stages,
but we're talking about 400 direct jobs and over a thousand
collateral jobs in the region so I was hoping you might be able to directly
comment on that and if there's something that we can do specifically as a finance
subcommittee and as the legislature to assist in that I'd like to also know
what that might. Director Rauraro? Yes ma'am. Did you hear the question?
I did.
Sorry.
Through the chair, Representative Bynum, so when it comes to wrangle, I think one of
the most exciting opportunities was mentioned in a subcommittee here in Congress, last week
by Commandant Lunde when he said he was looking to post at least four midsize icebreakers
strong Coast Guard presence on the coastal communities.
You see jobs, you see families come to town.
They're very positive presence.
I'm a big fan personally as a Coast guard.
And Ada will be working.
We've already spoken with Senator Sullivan,
Senator Dan Sullivan in DC,
who chairs the subcommittee for the Coastguard in NOAA.
And we have some financing tools at our
Disposal so Ada has financed in the past the u.s. Coast Guard headquarters building at Jay Bear
we have the ability to
Assist and finance and improvements and so we are engaged with and and talking to the US Senator
Senator Sullivan about Wrangle and other opportunities, you know, the Coast guard's gonna bring four
ice breakers to Alaska
mid-size ice breakers. That's a huge impact, positive impact to communities. So we're
interested in helping on those. Thank you very much, Director. And I'm going to move on then
in the queue. We have Co-Chair Holland. Great.
Thank You through the chair. Mr. Raro, thank you for being here today. I think, you know, for
Looking at the budget I have a couple questions just related ultimately to how can we understand the ability to increase the
economic benefit to the state of investing in terms of
unrestricted general funds and our ability, to just simply deal with a
incredible fiscal crisis that as I've
Told some folks recently, you know for those that are looking for the fiscal cliff. It's behind us already
the time that it will now take us to be able to address our fiscal gaps will take
us a couple more years before they improve and like I said so I'm kind of curious
on a few questions here first off in terms of the dividend that's been
shown in this current budget and I understand that it's including also the A to lease is
But I'm looking primarily at the operating dividend. I am curious how that's been determined
it would appear from slide 16 that
one might determine that there was an additional 43 million dollars that might have been
Distributed as a dividend in addition to the 17 million
And of course, we're at a point in time with our state budget where every one of those millions would be money towards education or towards medical programs towards many important priorities.
How is this dividend determined with that $42.8 million sitting there?
theoretically net funds available after accounting for all of the potential commitments, all
of likely commitments and all the board commitments.
Why isn't the dividend larger?
that statutorily set the dividend from ADA at between 25% and 50% of statutory net income,
which is defined further in that statute.
And so the board is restricted by sideboards, so to speak, in considering the amounts to
by that statute, so it can only declare a dividend between $17 million, which was 25%
and 50% are roughly $34 million in a dividend in the year.
That was done if you look at the legislative history of House Bill 5.6.
income and revenue to performance duties while also providing a fair, what was viewed as a
fair dividend back to the state with some discretion to
the board to manage based on needs of the agency or needs
of ADA circumstances of data from year to year. So there's some flexibility given to
in order to preserve the financial integrity of ADA.
Thank you Director. We do have a follow-up.
Great. Thank You for that. So if I understand
the information and I'm going back also to slide 14,
the Board could have provided a dividend of
about 33.
$34 million basically it could have had a dividend twice the size of the current dividend
is that correct based upon that 50% formula the chair representative Holland that is correct
I can provide some background for the committee of factors that the board considered some
two of the largest projects in state history, mega projects before it, one of which Anwar
is going to require a fair amount of investment to confirm the resource with seismic drilling
and then additional investment from there. But, you know, so the board is balancing needs
Anwar and Amblar and West Sioux and the shipyard, other things pending, they've
allenced all the factors and came up at the low end of the dividend scale. But the bright
side of that, of course, is that if these projects are successful, just An War alone,
based on the new royalty split adopted by Congress at 70-30 in the state's favor.
will be producing, could produce as much as $2.3 billion a year in revenue to the state.
So it's a long-term view, I guess, of the needs and best interest of state and ADA.
Follow-up. Go chair Holland. Thank you for that additional detail. The last thing I wanted to touch on coming back to the
UGF issue is from your perspective of looking at the pipeline of investments that you
See in the future and understanding the fiscal
Challenge that we're in today. What are your suggestions about how ADA could be deploying more of its
assets, I think it looks like there's about 50% of your assets that are available in some
form to be deployed in the future.
And I understand you have a pipeline of current plan projects, but what are your suggestions
to us about how we could be working with ADA and how ADA could contributing towards helping
fiscal future. And I say that in part recognizing that jobs are
absolutely important, but jobs don't necessarily contribute to UGF
directly and
to the extent that many of these companies are LLCs.
They're not paying corporate taxes,
so they don't contribute to UGF directly.
How would you suggest ADA could be helping us
with this fiscal deficit that we seem to be projecting out
for the next 10 years without something being done differently
about our economic development policies
and the use of the resources we have?
Director.
Through the Chair and Representative Holland,
I'm particularly excited about in terms of producing value for the state, economic value
for state in the future.
One of those areas is the eastern part of the North Slope, which is The Anwar Point
Thompson area.
I think based on what we're seeing in results from Mr. Armstrong's company, from our geologic
Point Thompson historic results. I think there's a significantly large
Possibly very large amount of oil and gas not just gas, but also oil
In plays that are similar to the picot deposit top set plays
Stepping all the way inside of and more
to The East and so if we can figure out a way to make it easier and quicker to develop
those deposits, I think we could have a very significant addition to revenue and oil production
and royalty deposits to the permanent fund from that eastern side. I know there's a lot of focus
on NPRA. There's lot focus on the traditional Prudhoe Bay area, but I
very exciting, and Ada has some ideas on how to help push that development forward,
one of which would be a road over to Point Thompson area and Anwar and some other ideas.
But, you know, our geologists are telling Ada that we have roughly eight times the amount of oil
several more of those, maybe a lot more those. So we think the eastern side is very exciting.
The other area I would mention is the area of AI and data centers. I understand there's not
many jobs there, but there is a very significant revenue potential corporate income tax, property
tax. Particularly, I've been looking at two counties in Washington state, Grant County and
Those are rural farm counties but they also happen to have a number of data centers located
inside those counties and I think some of those county have built up hundreds of millions of dollars
in reserves from property tax on these large data center so less of a revenue I guess to the
state in that instance but very significant revenue to boroughs and counties possible that
and other things make other improvements.
So I'm studying those fiscal systems
and looking at the potential for Alaska
from not only the large, you know,
hyperscale projects, but also the much smaller
Cordova style projects where,
you even the production of three to four million
in revenue per year for a small community
is huge in terms of lowering.
cost of energy and producing revenue for the communities to help them become self-sufficient.
So eastern side of North Slope and data centers, edge computing, even the small data center is something that I'm pretty excited about.
Take Thayer Lake Hydro and Dune for example, I think they're going to, when that dam is built, they'll be producing roughly 30% more power than the community needs.
That would be an ideal location if we can get fiber or they've got to get
fiber connection. That'd be ideal locations to put an edge data center in,
possibly right at the hydro site as we're doing in Cordova.
And at that point, you know, and doing
largely becomes self-sufficient.
So those are two areas that were focused
on. I mean, we are looking at a lot of other things too, including geothermal and
But there's a lot to work on, but those are two areas that we're pretty excited about.
Thank you, Director.
We're going to move on.
We have co-chair mirrors and followed by Representative Costello.
Thank You.
Through the chair to Mr. O'Rara, I recognize you've got about 10 minutes left in committee
today.
I have three pretty big questions.
if we can get through them briefly now and perhaps in detail later so that
Representative Costello has an opportunity to ask her question as well.
She says she just has one. We'll see, maybe we'll generate more. So I wanted to
follow up on Representative Holland's questions about the dividend so I was
able to listen into the board meeting.
Last year where the dividend was set for this year and this here it was not a board recommendation
It was a staff recommendation for the $17 million at about 25%
rather than around $34 million and you at the time explained it
Mentioning a lot of other projects
So now we've got more data in front of us including those cash reserves of $42 million or you know unanticipated
Need for that money in the next year
Um, what damage would it do to ADA programs to maximize the dividend this year?
Uh, through the chair, representative years.
So, um, the system, ADA is run on a system of rules and statutes for 64 years that separate, uh,
state budget every year. I think the legislature wanted us to be isolated to some degree from
changing needs per year, so there wasn't this fluctuating kind of ad hoc changing
draws on aid of funds to fill gaps. That type of system would send a message to our investors
and our project proponents that at any year things could change and there would be a large
you know, deficit at ADA or draw on ADA reserves. Our bonds would be undermined, you
know. Things like that. I think those were the concerns. And so I'm sorry through the
chair to Mr. Aurora. That's not addressing my question and we are running out of time
here. It I am sorry. Feels like you're running at the clock.
I' m not asking about the $42 million.
of the dividend up to 50 percent and that's the question I'm asking. I am not asking for over 50
percent dividend. So through the chair, Representative Mierd, the discretion is vested to the board.
Staff did have a recommendation and the recommendation was based on the amount of money that we are
very, very high multiples of that gap between a 25%
and a 50% dividend.
So based on our project pipeline,
the large number of things we're trying to do,
based our mega projects, you know,
that was the decision that it was made.
And that is a decision.
That's made by the board.
I as staff don't get a vote.
So that wasn't decision made
by board members.
follow-up co-chair Mears thank you representative Galvin I just like to
say I'm not fully satisfied with that answer but I have a couple of other
things that I am curious about one is that when we're looking at
through the net funds available, I'm on page 16.
It looks like looking at the nut funds
available the balance of invested funds
versus what we've got in loans and lease portfolio.
We're taking more money in by investments
outside of Alaska than what were we are
in and loans in leases and projects in Alaska
is that, am I reading that correctly?
Through the chair, Representative Mears, I'd have to ask you if he could explain a little further
on the question, elaborate on it a lil' for me, please.
I'm not sure I am understanding the questions.
I think you mentioned a net or an asset balance and then mentioned an annual revenue.
stream and I'm not sure how you're relating exactly through the chair it
looks like the balance of invested funds over on the right-hand column is just
short of 800 million dollars but when I look over in the asset balance our
loan portfolio and our lease portfolio
is a little over seven hundred thousand dollars so it appears you know from a
quick look that we're investing more outside of Alaska than we are inside of
Alaska through ADA. Through the chair I guess the total balance of
invested funds I'll say it's subject to the commitments by the board made for
other projects. So that's more of a gross number than a net number. When you add those projects in,
you start seeing, you know, several hundred million dollars come off of that number
and move towards the invested directly in Alaska number under loans or direct investment.
And then the final question. Follow up.
co-chair mirrors and thank you through the chair.
So we don't have enough time to get into this today,
but I would really like to see the business model
for the Ambler Road.
When we spoke about this in the fall,
there was still a lot of data that needed to be collected
and design work that need to done.
I understand DNR is supplying free.
gravel for the project and we've got a $250 million commitment from ADA so
we're not going to have enough time to go through that today but I think that a
lot more details at least on that project I'd like to know a lot
more thank you. Thank you co-chair Mears and director would you be able to in
weeks or months whenever you pull together that data if it is something
that's relevant to spend that may be taking place next year if you could go
ahead and forward that to the committee I'd appreciate it. To the chair I will
put together some information for that on and be available to try to help
Perfect. Thanks so much. And next in the queue, we have Representative Costello.
Thank you, Chair Galvin. Mr. Raro, I wanted to thank you also for all your work and what you're doing at ADA.
I know that there's a lot of really exciting projects on the horizon for our state and
I have a special, a keen interest in the jobs that are being created by those projects,
so I appreciate all the work that's being done.
My question has to do with, in
the past when the legislature has made attempts to appropriate ADA funds, could you talk about
how that might impact ADA when
the Legislature has that interest?
Through the chair, Representative Costello, yes, I think it was in 2019 there was an appropriation of
roughly two million dollars that made it through a
lot of funds and
That appropriation resulted in a significant downgrade of our credit rating
Because it broke frankly broke the rules based system
for determining how much funds will come out of ADA.
I do have our Chief Investment Officer here that may be able to provide some more detail
on the fact that ADA's bonding ability.
Thank you. Director, would you please ask the
investment director to go ahead and answer the question, put himself on
the record, if possible, or herself?
Sure.
Thank you.
Yes.
Thank You, Madam Chair.
For the record, my name is Jeffrey Johns.
I'm the Chief Investment Officer of ADA.
And quite simply put as Executive Director Raro indicated in 2019, there was that $2 million
appropriation and resulted in the two-step downgrade by Moody's rating and a negative
outlook on ADA because of the appropriation risk that we're facing and quite
is that consistent with the comments made earlier by Executive Director Raro with respect to our
recent AA plus rating by S&P and our ability to issue debt or take on debt at a lower cost of
capital, that appropriation risk and a negative outlook in a downgrade would ultimately increase
and make our capital projects significantly more expensive and potentially challenging for us
to finance projects solely within the state of Alaska.
Thank you. I appreciate that. And this is Chief Investment Officer. Is that correct, Jeffrey?
add one question. I have one for myself and I'm, I believe this would be for Director
Rauro. One house, well, it was HR1, the big beautiful bill passed and there were new,
I guess what I'll call shares put in place for Alaska to get the 70-30, which is a big
oil and gas. My question is when does that take place? Is it for new leases or is it
for previous leases and where does it take
place. You referred to ANWR and the possibility of some major wins for Alaska
and for our revenue and I just wanted to make sure that I have a sense of
when we might be able to see some of those returns.
To the chair, I believe the bill,
the reconciliation bill had an effective date of 2034.
I'm sorry,
I've been corrected 2036 for the new revenue split,
7030 and that split applied to,
I'd believe both ANWR and NPRA.
Thank you very much.
make sure that we're all aware in 10 years, then we may be seeing that should this prove up to be as
as great as the geologists are saying today.
So exciting times, but we of course don't know
the price of oil at that time, it's 10 years out.
But I do appreciate hearing these major wins
that could be on the horizon many years
out to the point of what I'm hearing from several of you
in this committee.
We still have the here and now to be concerned about.
And I appreciate that as well.
But that's why we're here.
We're hear to look at all the dollars and cents, and I appreciate each and every one
of you for being here today.
And Director, do you have any closing comments you'd like to share?
Thank you, Madam Chair.
I'd appreciate your time and the committee's time.
I know you're pressed on a number of issues, any time we can help provide information.
We will.
I'm happy to do that.
I'll be in Juneau.
This Thursday, it can visit with some members if they'd like to visit.
And I do have a number of documents.
I'll check with your, your committee aid in yourself if
they think it'd be helpful, but we can put some reports and
other things into the committee if, if you'd, like us to do that.
If it's something related to a question that you've heard today, then I'm sure folks will
depreciate more information.
But the main thing is I am just grateful that all of you came.
Thank you for the presentation you have given, and we look forward to more work together
in the future.
So with that in mind, I will go ahead and close this again.
And I appreciate also having Ms. Lager's assistance.
Thank you.
And the next house finance.
DCCED Subcommittee will be held next Tuesday,
that's February 17th from 12 to 1.
At that hearing, we will have a series of
short budgetary update presentations from AOGCC,
which is the Alaska Oil and Gas Conservation Commission,
AAGDC, which
is Alaska Gas Sign Development Corporation,
and AEA, Alaska Energy Authority.
Lots of exciting opportunities ahead.
time is now 1257 and the House Finance DCCED Subcommittee meeting is adjourned.