Alaska Municipal Bond Bank Alaska Industrial & Export Authority February 15, 2010

Alaska Municipal Bond Bank Alaska Public Debt Book – Table 4.5 and Alaska Municipal Bond Bank Annual Reports 2

Bond Bank Statute Changes Increase borrowing limit by $250 million  $162.8 million of cap remaining at June 30  $120.5 million of cap remaining on March 1.  Expect up to $100 million of loan requests during the remainder of calendar year 2010 Eliminate restriction on Revenue Bonds Eliminate restrictions on leases 3

4 History and Applicable Laws for Recovery Zone Bonds The “American Recovery and Reinvestment Act of 2009” created a number of new financing options for communities  Providing valuable incentives for both public and private projects  With limited windows of opportunity

Build America Bonds Alternative structure for financings that otherwise qualify as tax exempt Sell taxable bonds and receive 35% subsidy from Federal Government on interest expense Beneficial on yields for maturities beyond years depending upon market On 20 year loan has lowered interest rate by 50 to 100 basis points depending on market 5

Recovery Zone Bonds Recovery Zone Economic Development Bonds  Identical to BABs but a boosted 45% subsidy  $90 million allocation to Alaska Recovery Zone Facility Bonds  Provide opportunity for municipalities to offer tax exemption to businesses investing in their communities.  $135 million allocated to Alaska 6

Recovery Zone A “recovery zone” is:  An area designated as having significant poverty, unemployment, rate of home foreclosures, or general distress  An area economically distressed due to military installation closure or base realignment  An empowerment zone or renewal community 7

Recovery Zone Allocations AREAEconomic Development BondsFacility Bonds Anchorage 0 0 Aleutians East Borough 0 0 Aleutians West Census Area$ 4,680,000$ 7,020,000 Bethel Census Area$15,271,000$22,906,000 Bristol Bay Borough$ 246,000 $ 369,000 Denali Borough 0 0 Dillingham Census Area$ 1,724,000$ 2,586,000 Fairbanks North Star Borough$32,760,000$49,137,000 Haines Borough$ 1,576,000$ 2,365,000 Juneau Borough$ 7,586,000$11,379,000 Kenai Peninsula Borough$ 4,877,000$ 7,315,000 Ketchikan Gateway Borough$ 3,744,000$ 5,616,000 Kodiak Island Borough$ 2,266,000$ 3,399,000 Lake & Peninsula Borough$ 1,970,000$ 2,956,000 Matanuska-Susitna Borough 0 0 Nome Census Area$ 1,773,000$ 2,660,000 North Slope Borough 0 0 Northwest Arctic Borough$ 887,000$ 1,330,000 Prince of Wales-Outer Ketchikan Census Area$ 1,921,000$ 2,956,000 Sitka Borough$ 2,709,000$ 4,064,000 Skagway Hoonah Angoon Census Area $ 985,000 $ 1,478,000 Southeast Fairbanks Census Area 0 0 Valdez-Cordova Census Area$ 2,906,000$ 4,360,000 Wade Hampton Census Area 0 0 Wrangell Petersburg Census Area$ 2,020,000$ 3,030,000 Yakutat Borough$ 99,000$ 148,000 Yukon-Koyukuk Census Area 0 0 8

Why Legislation? Status quo has disconnect between allocations and projects Failure to use allocation results in loss of allocation on 1/1/2011 Current allocations will guarantee loss of substantial volume cap Establishes a framework and legal basis to ensure this limited resource is used 9

Alaska Municipal Bond Bank Recovery Zone Statutes Provides for sub allocating the allocations to Census Areas to the communities in the Census Areas immediately Provides for Boroughs to waive allocations that aren’t needed or can’t be used immediately Provides a June 30, 2010 deadline for Boroughs to use their allocations Provides for reallocation of the allocations with priority to projects in original allocation regions 10

11 Alaska Industrial Development and Export Authority Recovery Zone Facility Bonds Used to finance new capital improvements owned and used by almost any:  Industrial  Commercial  Retail  Office  Or other business activity located in a “recovery zone” Exceptions are rental housing, airplanes, health clubs, liquor stores, race tracks, luxury boxes, gambling facilities, massage parlors, etc.

12 Alaska Industrial Development and Export Authority Recovery Zone Facility Bonds Features and Uses Issued for private projects Interest is tax-exempt (no 45% or 35% subsidy as with Recovery Zone Economic Development Bonds and other BAB’s) Offer lower interest rates Likely issued in Alaska as conduit private activity bonds (PAB’s) Debt service is funded by the private business that owns and uses the property Subject to most federal tax and securities laws relating to PAB’s and all applicable state and local laws limiting bond issuances

Alaska Industrial Development and Export Authority Recovery Zone Regulations Regulation features: Ensure allocations to recovery zones and areas of high unemployment and economic distress Efficient use of reallocated volume cap to avoid lapsing Giving priority to original allocations Want to make sure we do not lose this opportunity 13