Legislature(2017 - 2018)HOUSE FINANCE 519
03/06/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB106 | |
| HB56 | |
| HB81 | |
| HB49 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 49 | TELECONFERENCED | |
| + | HB 56 | TELECONFERENCED | |
| + | HB 81 | TELECONFERENCED | |
| + | HB 106 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 81
"An Act making an entity that is exempt from federal
taxation under 26 U.S.C. 501(c)(3), (4), (6), (12), or
(19) (Internal Revenue Code) and a federally
recognized tribe eligible for a loan from the Alaska
energy efficiency revolving loan fund; relating to
loans from the Alaska energy efficiency revolving loan
fund; and relating to the annual report published by
the Alaska Housing Finance Corporation."
2:24:21 PM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, SPONSOR, introduced
himself and provided information about the legislation. He
believed that most members of the committee had seen
previous iterations of the legislation over the years. He
offered a history of the topic of the bill:
This bill gives nonprofit organizations and federally-
recognized tribes the power to apply for loans from
the Alaska Energy Efficiency Revolving Loan Fund.
Because AEERLF is such a god awful acronym, we call
this bill the More Energy Efficient Buildings Act
("MEEBA").
The AEERLF was created by the Alaska Sustainable
Energy Act in 2010. It authorized the Alaska Housing
Finance Corporation to make $250 million in low
interest loans for energy efficiency improvements to
public entities, namely municipalities and school
districts. One loan has been closed since the
program's creation in 2010.
Especially given our new and more austere fiscal
climate in which legislative grants are going to be
rare to nonexistent, many nonprofits are interested in
becoming more self-sufficient and accessing loans from
the revolving loan fund to invest in energy
efficiency. Right now, nonprofits such as soup
kitchens, arts organizations, American Legion posts,
and churches are not eligible to apply to the
revolving loan fund.
The More Energy Efficient Buildings Act authorizes
Alaska Housing to accept applications from non-profits
and federally recognized tribes for energy efficiency
improvements to their buildings. The More Energy
Efficient Buildings Act improves energy efficiency in
Alaska. It helps Alaska nonprofits, churches, and
veteran's organizations become more self-sufficient.
And it helps create a public benefit for a State
program that's presently under-used.
Representative Kreiss-Tompkins lamented that his previous
attempts to pass similar legislation had been met with
apathy and disinterest. He felt that the apathy had been
nurtured by the legislature, which had offered school
districts and municipalities' legislative grants to finance
their energy expenses.
2:29:26 PM
Representative Kreiss-Tompkins continued to address the
reasoning for the development of the legislation. He felt
that the bonding authority had been underused, and
suggested that expanding the eligibility to the revolving
loan fund to non-profits and organizations that needed
access to capital in order to deliver services to Alaskans.
Co-Chair Foster relayed there were individuals available
for questions.
2:31:13 PM
Representative Grenn queried they type of non-profit
entities that would be eligible under the bill.
Representative Kreiss-Tompkins replied that the eligibility
would be expanded to the suite of Internal Revenue Service
(IRS) designated non-profit organizations. He thought that
the bottom line was that energy efficiency was good no
matter who was benefiting from it; the more people who were
able to make energy efficiency improvements, the better.
2:33:42 PM
Representative Kawasaki requested further description of
the IRS designated non-profit entities.
Representative Kreiss-Tompkins answered that 501c 4 related
to civic leagues, social welfare or local employee
associations, and 501c 6 related to business leagues,
chambers of commerce, and industry umbrella organizations.
He furthered that 501c 12 related to mutual and cooperative
associations, and 501c 19 related to post-organizations of
past and present members of the armed forces. He deferred
to staff for any further clarification.
Representative Kawasaki asked whether a political
organization such as the Alaska Democratic or Republican
Party Headquarters would qualify.
Representative Kreiss-Tompkins replied that he did not know
and relayed that he would follow up with an answer.
Representative Kawasaki expressed concern for fairness in
the decision making process of who would qualify for the
loans. He asked about the constitutionality of the
inclusion of churches and religious organizations.
BERETT WILBER, STAFF, REPRESENTATIVE JONATHAN KREISS-
TOMKINS, directed committee attention to the memo from the
Division Legislative Legal provided in member's packets and
dated January 23, 2017(copy on file). She explained that
legislative legal had determined that allowing churches to
apply for loan funding under the energy efficiency program
was constitutional.
Representative Kawasaki asked if it was because everyone
that applied had an equal chance of receiving the loan.
2:37:37 PM
Ms. Wilber replied she would need to reread the memo, but
she believed he was correct.
Representative Wilson asked about prioritizing schools
first as recipients.
Ms. Wilber cited Section 7 of the legislation:
* Sec. 7. AS 18.56.855 is amended by adding new
subsections to read:
(k) In considering applications and making loans
from the Alaska energy efficiency revolving loan
fund, the corporation shall give priority to
energy efficiency improvements to buildings owned
by a regional educational attendance area, the
University of Alaska, a municipality, or the
state over other applications and loans.
(l) Notwithstanding any provision of this
section, the recipient of a loan under 28 this
section may not be a for-profit business
enterprise.
Representative Wilson thought some loans required audits
first.
Ms. Wilber answered that the loan required a federal-grade
audit that would specify the areas a building would save
money with energy efficiency improvements.
Representative Wilson asked whether a non-profits monetary
holding would be taken into account when determining
interest and eligibility of the loans.
2:40:08 PM
Ms. Wilber answered that there would be no limit to which
non-profits could apply for the loans. She said that AHFC
would set the interest rate. She deferred further
explanation to AHFC.
STACEY SCHUBERT, DIRECTOR, GOVERNMENTAL AFFAIRS AND PUBLIC
RELATIONS, ALASKA HOUSING FINANCE CORPORATION, ANCHORAGE
(via teleconference), explained that the current interest
rate for a 15 year loan was 4.25 percent.
Representative Wilson asked whether the interest rate would
be the same for a bank loan to the same applicant.
Ms. Schubert replied that she did not know the current
interest rate for other institutions.
Representative Wilson asserted that she did not want to
compete with banks or to loan money at a lower interest
rate than financial institutions. She asked who paid the
bill if an organization defaulted on the loan.
Ms. Schubert deferred the question to a colleague.
MICHAEL STRAND, CFO, ALASKA HOUSING FINANCE CORPORATION,
ANCHORAGE (via teleconference), informed the committee that
the money would come from the AHFC internal resources. He
said that if the total loan amounts reached over $50
million then AHFC would have to go to bond, the costs of
which would be absorbed by the program cost. He relayed
that AHFC would be responsible for any defaults; there
would be no risk to the state in the event of a default on
the loan.
2:44:07 PM
Representative Guttenberg referred to the previously
mentioned legal memo. He believed that the memo succinctly
explained the entities that were eligible for the loan. He
believed that the memo addressed the issues raised
Representative Wilson. He believed that non-profits would
take advantage of bank loans if they could qualify for one,
regardless of interest rates.
Representative Kreiss-Tompkins responded to Representative
Wilson's questions. He understood that because of the way
the program was structured, savings had to be demonstrated
through an audit before an entity could qualify. He added
that the energy savings essentially financed the debt,
which was a unique approach that was not used by banks and
traditional lending institutions.
2:47:15 PM
Co-Chair Foster OPENED and CLOSED public testimony.
HB 81 was HEARD and HELD in committee for further
consideration.