Alaska Permanent Fund Corporation
RESOLUTION OF THE BOARD OF TRUSTEES
OF THE ALASKA PERMANENT FUND CORPORATION
RELATING TO THE PERMANENT IMPAIRMENT OF
REAL ESTATE INVESTMENT VALUATION
RESOLUTION 95-9
WHEREAS, pursuant to AS 37.13.010(c) and 37.13.040, the Alaska Permanent
Fund Corporation ("Corporation"), under the direction and control of the Board of Trustees
("Trustees"), is given complete authority for the investment and management of assets of the
Alaska Permanent Fund ("Fund"); and
WHEREAS, AS 37.13.140 provides that the Corporation shall compute net
income of the Fund in accordance with generally accepted accounting principles; and
WHEREAS, generally accepted accounting principles for governmental entities
such as the Fund are established by the Governmental Accounting Standards Board (“GASB”);
and
WHEREAS, GASB Statement No. 20 provides that, in the absence of definitive
GASB accounting standards, accounting standards established by the Financial Accounting
Standards Board (“FASB”) may be applied as generally accepted accounting principles for
governmental entities; and
WHEREAS, the GASB has not established accounting standards with respect to
the valuation of long-lived assets, such as investment-grade real estate; and
WHEREAS, the FASB has issued Statement of Financial Accounting Standard
No. 121 (“SFAS 121”), Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, which is effective for years beginning after December 31, 1995; and
WHEREAS, SFAS 121 provides guidelines for the recognition of asset valuation
impairment losses and a threshold to determine if generally accepted accounting principles
require such recognition; and
WHEREAS, the Trustees have determined that it is in the best interests of the
Fund and Corporation to adopt SFAS 121 in advance of its effective date as an accounting policy
of the Corporation to be applied to the valuation of its investments in real estate;
NOW, THEREFORE, BE IT RESOLVED by the Board of Trustees that the
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provisions of SFAS 121, whenever applicable, shall be continuously applied to the investment of
Fund assets in real estate, including participating mortgages and equivalent obligations, pursuant
to the following guidelines:
(a)
A real estate investment shall be reviewed for possible impairment of value within thirty
(30) days of an appraisal received by the Corporation, provided that its ❶ current book
value exceeds $10,000,000 and ❷ appraised market value is less than eighty percent
(80%) of its current book value.
(b)
Internal and external appraisals may establish the appraised market value of real estate
investments for purposes of this Resolution 95-9. To the extent of any direct conflict
between an internal appraisal and an external appraisal of a real estate investment, the
external appraisal shall prevail.
(c)
A permanent loss due to impairment in asset value shall be recognized by a charge
against current operating income if the estimated future cash flows of a real estate
investment, undiscounted and without interest, for its estimated holding period and final
disposition shall be less than the book value of the investment.
(d)
The amount to be recognized as an impairment loss shall be the computed difference
between the book value of a real estate investment and its current appraised market value,
provided that such recognition is required by (c) of this Resolution 95-9.
(e)
Each real estate investment that is separately identified on the books of the Corporation
shall be independently reviewed for possible impairment of value and shall not be
grouped with other real estate investments for purposes of this Resolution 95-9, provided
that individual cash flows can be separately identified.
(f)
Recognition of permanent impairment in the valuation of real estate investments shall be
preceded by notification to the Audit Committee at its next meeting.
(g)
Recognition of subsequent recoveries in the market value of real estate investments is
prohibited.
(h)
To the extent of any direct conflict between the provisions of SFAS 121 and these
guidelines, the provisions of SFAS 121 shall prevail.
FURTHER RESOLVED, that the Executive Director is hereby authorized, empowered
and directed to take such actions as are necessary, convenient and desirable for the recognition of
permanent impairment in the value of real estate investments, pursuant to the provisions of this
Resolution 95-9; and
FURTHER RESOLVED, that this Resolution 95-9 shall take effect upon approval
by the Board of Trustees with respect to the provisions of SFAS 121 and the guidelines set forth
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herein.
PASSED AND APPROVED by the Board of Trustees of the Alaska Permanent
Fund Corporation, this 29th day of August, 1995.
Eric E. Wohlforth
Chairman, Board of Trustees
Alaska Permanent Fund Corporation
ATTEST:
Byron I. Mallott
Corporate Secretary
Resolution 95-9
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