Conservative legislators advance plan to give AIDEA blank check to borrow $300 million for 'critical minerals'
With no public notice and little discussion, Republican legislators who identify themselves as conservatives slipped $300 million in borrowing authority for AIDEA and $58 million in borrowing authority for the Alaska Railroad into a bill.
The $358 million in borrowing authority was added to a bill that would also allow the railroad to borrow $90 million more to rebuild the Seward passenger dock and terminal. It is House Bill 122.
Adding the AIDEA amendment could very well kill the bill to replace the Seward dock and terminal. Adding $58 million revenue bond authorization for completion of the Port MacKenzie rail extension could also derail the bill.
The AIDEA $300 million blank check and the $58 million railroad amendment ought to be stripped from HB 122 by the House Finance Committee.
It appears that the West Susitna road access project is one of the items that AIDEA hopes to finance, rebranding access to gold deposits as access to “critical minerals and rare earth elements.”
It will say that the road is infrastructure that supports the development of critical minerals and rare earth elements, as some will be found as part of the gold search.
At the request of the Alaska Industrial Development and Export Authority, Anchorage Rep. Tom McKay introduced the amendment to allow AIDEA to borrow $300 million—to be paid back with AIDEA earnings—to build and finance infrastructure to support “critical mineral and rare earth projects located in Alaska.”
The AIDEA amendment was not available to the public when the House Transportation Committee met Thursday. Here is the amendment.
McKay read a document likely written for him by AIDEA to explain the AIDEA amendment.
“This bonding authority does not appropriate any state or AIDEA funds,” read McKay from the AIDEA script.
“This amendment simply grants the legislative approval necessary for AIDEA to issue bonds to finance economically viable projects. By granting this legislative approval, it will allow AIDEA to market its ability to finance critical minerals projects and seek out additional investments from the private sector. Example projects are: West Susitna access road, the Nova Mineral processing facility, Graphite One mine and etc.,” McKay read.
McCabe, McKay, Craig Johnson, Jesse Sumner and Sarah Vance voted for allowing AIDEA to borrow $300 million, while Reps. Louise Stutes and Genevieve Mina voted no.
Mark Davis, AIDEA’s lawyer, said the corporation has not decided what it would do with $300 million, but it has lots of options. And it would not have to come back to the Legislature for approval of whatever projects it picks.
“We are in discussions with companies that would like to have this bonding authority,” said Davis.
“Basically this is a preauthorization for bonds that would issued by AIDEA, under the auspices of AIDEA, not revenue bonds. We issue two kinds of bonds. And we have projects all over the state that would deal with critical minerals and the potential of rare earth metals,” he said.
In addition to those mentioned by McKay, there are projects in Southeast Alaska, he said.
He said that if AIDEA is ready to go on a project “if we have to go back to the Legislature to get bonding approval, “then it takes time and sometimes means that the deal doesn’t go forward.”
That is complete nonsense. If AIDEA has a $300 million project, it should seek legislative approval. There would be plenty of time.
“So what we’re doing here is asking for preauthorization for rare earth metals up to the amount, with that amount, but it’s also specified that these will be from the revenues of AIDEA and they are not the debt of the state,” he said.
Earnings of AIDEA are public funds.
“This is really just legislative authorization to have these bonds available, if we need them,” Davis said.
“This is limited to our effort on the rare earth metals,” said Davis, neglecting to mention that the amendment is also for “critical minerals.”
Vance said that all she needed to hear was that the state would get some revenue if an AIDEA project moves ahead on state mining claims.
Davis said there would be revenue. He didn’t say how much. No one asked him to guess how much or when.
AIDEA can issue general obligation bonds of less than $25 million without legislative approval. It can issue revenue bonds without legislative approval, Davis said.
Davis said any projects would have to go through “all of our governance, to make sure that they track and they make sense. AIDEA has never issued a bond that has had a financial difficulty and we’ll work to maintain that record.”
“All of our governance” is the AIDEA board, which consists of two Dunleavy employees and four Dunleavy political supporters. The AIDEA executive director is Dunleavy’s former chief of staff, Randy Ruaro. AIDEA is Dunleavy’s chosen instrument to “say yes to everything.”
Davis said AIDEA asked for the $300 million approval because it is a state corporation and the underlying bill deals with another state corporation, the railroad.
Rarely has anyone given a weaker justification for a blank check to borrow any money, let alone $300 million. But it was all that AIDEA needed.
The entire process in McCabe’s committee was so inept that the committee approved the bill and sent it to the House Finance Committee without ever getting to a second AIDEA amendment that the corporation says it wants—raising its ability to borrow from $400 million in a year to $600 million.
That amendment would also allow the corporation to borrow $100 million without bothering with legislative approval, up from the current $25 million, a change that the AIDEA attorney forgot to mention.
AIDEA will find some other bill to try to slip this into, cutting the public out of its plans.
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