AIDEA wants to borrow $300 million to bankroll unidentified projects
The Alaska Industrial Development and Export Authority wants approval to borrow $300 million without telling the Legislature or the public where the money would go. Trust us, says AIDEA. It will be a great deal.
The agency, run by Gov. Mike Dunleavy’s former chief of staff, Randy Ruaro, and a board comprised of Dunleavy employees and political supporters, is telling the Legislature to approve the $300 million and stop worrying. AIDEA will pick the right projects, AIDEA says.
The agency claims that once it decides what to do with the $300 million, there will not be enough time to get approval from the Legislature on the specifics.
Any delay could kill the deal, say the AIDEA sales team, using time-tested logic deployed by generations of used car salesmen.
All AIDEA will say is that the borrowed $300 million—to be paid back with AIDEA earnings—would be used to build and finance infrastructure that supports “critical mineral and rare earth element projects located in the state.”
That phrase is broad enough that it could be used for almost anything. It could be used to support gold and copper projects that may have small amounts of other minerals. The state would own the “critical mineral and rare earth element project infrastructure” or finance it.
AIDEA had its $300 million authorization slipped into an unrelated bill on March 14 with no public notice and no information.
The AIDEA amendment was not available to the public when the House Transportation Committee met that day. Here is the amendment.
Anchorage Rep. Tom McKay read the text of the blank check amendment given to him by AIDEA.
“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,” McKay read.
“Example projects are: West Susitna access road, the Nova mineral processing facility, Graphite One Mine and etc.,” McKay read.
AIDEA attorney Mark Davis said that in addition to those projects, there are prospects all over the state that might need $300 million and there won’t be time for legislative approval.
“If we’re developing a project and we are ready to go, if we have to go back to the Legislature to get bonding approval—if you want to use bonds backed by AIDEA—then it takes time and it sometimes means that the deal doesn’t even go forward,” said Davis.
“So what we’re doing here is asking for preauthorization for rare earth metals up to that amount, for 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. That’s important to note. So really this is just legislative authorization to have these bonds available if we need them,” he said.
Contrary to Davis’s claim, the revenues of AIDEA that would pay off these bonds are revenues of the state.
On Monday, Ruaro told the House Finance Committee that AIDEA has more than 120 pages of regulations and statutes that make it a transparent organization.
If AIDEA had 500 pages of regulations and statutes, it would still be one of the most opaque portions of state government, controlled by the governor.
Ruaro kept harping on the theme that there would be no time for legislative approval on how to use $300 million when AIDEA decides to pull the trigger.
Ruaro did not mention the West Susitna road project and the Nova minerals processing project as potential uses for the $300 million, two of the projects that AIDEA mentioned in March.
Ruaro, the former head of statehood defense for Dunleavy, cited deadlines with a federal program to provide $290 billion in loans and loan guarantees as the reason why AIDEA should be trusted with the $300 million plan.
“There’s a time press to have AIDEA ready and able to provide the match for those federal funds. And in terms of the project or what projects would be brought forward, those each individual projects, if it qualified, would go through a due diligence process and then be brought forward one at a time through our board process,” Ruaro said.
There is no reason to believe those claims or to trust AIDEA will operate in the open with $300 million. The Legislature can act quickly when necessary. There should be no added bonding authority until a specific project comes together and can be debated in the open in the Legislature.
What’s really going on here is that Dunleavy and his hand-picked AIDEA team want to be able to decide what to do without public interference or discussion.
Avoiding public review is the most transparent element about AIDEA’s operations, a truth nowhere to be found in the 120 pages of regulations and statutes.
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