02/11/2020 10:15 AM House ENERGY

                  HB 232-MUNICIPAL TAX CREDITS                                                                              
                                                                                                                                
10:22:54 AM                                                                                                                   
                                                                                                                                
CHAIR HOPKINS  announced that the  first order of  business would                                                               
be  HOUSE BILL  NO.  232, "An  Act relating  to  a municipal  air                                                               
quality  improvement  tax credit;  and  relating  to a  municipal                                                               
energy efficient new construction tax credit."                                                                                  
                                                                                                                                
10:23:44 AM                                                                                                                   
                                                                                                                                
[Chair Hopkins passed the gavel to Vice Chair Spohnholz.]                                                                       
                                                                                                                                
10:23:46 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:23 a.m. to 10:24 a.m.                                                                     
                                                                                                                                
10:24:34 AM                                                                                                                   
                                                                                                                                
CHAIR HOPKINS, as prime sponsor, presented HB 232.  He                                                                          
paraphrased from a prepared statement, an overview of proposed                                                                  
HB 232, which read [original punctuation provided]:                                                                             
                                                                                                                                
     Chair Spohnholz    thank you for the  opportunity to do                                                                    
     a quick  overview on House Bill  232.   This  year, the                                                                    
     Fairbanks  North Star  Borough approached  the Interior                                                                    
     Delegation,  seeking to  have  the option  as a  second                                                                    
     class  borough  to  utilize municipal  tax  credits  to                                                                    
     encourage   energy    efficiency   and    air   quality                                                                    
     improvements   when    private   property    is   newly                                                                    
     constructed  or renovated.   HB  232 is  the result  of                                                                    
     their request.   As  stated earlier, it  is my  hope to                                                                    
     hear the  bill today and  take public testimony  on the                                                                    
     bill during  our meetings  next week  and then  look to                                                                    
     the will of the committee.                                                                                                 
                                                                                                                                
     HB 232 allows local  governments to offer municipal tax                                                                    
     credits  for home  and business  owners  who invest  in                                                                    
     property improvements which  result in increased energy                                                                    
     efficiency  or improve  local air  quality.   This bill                                                                    
     does  not mandate  any action  by  municipalities    it                                                                    
     offers   local  governments   additional  avenues   for                                                                    
     addressing local challenges  and priorities and creates                                                                    
     partnerships  with local  businesses  to stimulate  and                                                                    
     diversify local economies.                                                                                                 
                                                                                                                                
     Relying  on  the adage  that  local  problems are  best                                                                    
     solved   through  local   solutions,   HB  232   allows                                                                    
     municipal  tax  credits  to  be  targeted  towards  new                                                                    
     construction   that    results   in    overall   energy                                                                    
     efficiency.       Additionally,    the   bill    allows                                                                    
     municipalities  facing chronic  air  quality issues  to                                                                    
     offer tax credits to businesses  and residents who make                                                                    
     investments that  will result  in a reduction  in PM2.5                                                                    
     pollution.                                                                                                                 
                                                                                                                                
     It  is  the hope  of  the  sponsor and  the  requesting                                                                    
     municipality  that  these  tools will  result  in  more                                                                    
     Interior  Alaskans  choosing   to  convert  their  home                                                                    
     heating systems  and connect to the  expanding Interior                                                                    
     Gas  Utility,  thereby  maximizing the  return  on  the                                                                    
     state's  investment  in  the  system.    An  additional                                                                    
     benefit of  this legislation  will be  streamlining the                                                                    
     efforts  of the  Fairbanks North  Star Borough  and the                                                                    
     Department  of  Environmental Conservation  to  improve                                                                    
     air quality in Interior Alaska.                                                                                            
                                                                                                                                
CHAIR  HOPKINS added  that the  air  quality improvements  credit                                                               
could be utilized  by other municipalities that also  had a PM2.5                                                               
problem.    He  reported  that the  Department  of  Environmental                                                               
Conservation's state improvement plan to  deal with PM2.5 did not                                                               
"look to get us under the  federal level of PM2.5 pollution until                                                               
2029,"  and expressed  his hope  that  this would  speed up  this                                                               
process  resulting in  fewer non-attainment  days.   He continued                                                               
with his overview of the proposed bill, which read:                                                                             
                                                                                                                                
     The   bill   allows    for   maximum   flexibility   by                                                                    
     municipalities  who  choose  to  offer  these  credits,                                                                    
     avoiding a "top  down" approach to local  issues.  This                                                                    
     simple  "no harm"  bill  will  foster new  partnerships                                                                    
     with  local  contractors,  businesses  and  homeowners.                                                                    
     Unleashing  local creativity  is critically  important,                                                                    
     allowing  local governments  to  harness  the power  of                                                                    
     private  enterprise and  address  local challenges  and                                                                    
     priorities where most effective and appropriate.                                                                           
     For the information of the  committee, we have provided                                                                    
     in the bill packet the following items:                                                                                    
   • The latest version of the bill.                                                                                            
   • A sectional analysis                                                                                                       
   • Letters of support from the Alaska State Homebuilders                                                                      
     Association, the Alaska Municipal League and the                                                                           
     Fairbanks North Star Borough                                                                                               
                                                                                                                                
10:28:08 AM                                                                                                                   
                                                                                                                                
JOE  HARDENBROOK,  Staff,  Representative Grier  Hopkins,  Alaska                                                               
State  Legislature, on  behalf of  Representative Hopkins,  prime                                                               
sponsor  of  HB 232,  paraphrased  from  the sectional  analysis,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Section 1:   Amends 29.45 to reinstate  the Air Quality                                                                    
     Improvement Tax  Credit which sunsetted in  2016.  This                                                                    
     section applies  only to  local governments  with areas                                                                    
     failing   to  meet   federal  or   state  air   quality                                                                    
     standards.   Improvements  must have  been made  in the                                                                    
     preceding  tax   year.    The  municipality   shall  be                                                                    
     responsible    for    developing    and    implementing                                                                    
     eligibility standards and other criteria.                                                                                  
                                                                                                                                
     Section 2: Amends 29.45 to  create the Energy Efficient                                                                    
     New  Construction Tax  Credit, allowing  municipalities                                                                    
     across  the  state to  offer  property  tax credits  to                                                                    
     offset the  cost of  new energy  efficient construction                                                                    
     in  the prior  tax  year.   Municipalities choosing  to                                                                    
     participate  in this  tax credit  shall be  responsible                                                                    
     for developing  and implementing  eligibility standards                                                                    
     and other criteria.                                                                                                        
                                                                                                                                
10:29:16 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS asked to be added as a sponsor to proposed                                                                
HB 232.                                                                                                                         
                                                                                                                                
10:29:37 AM                                                                                                                   
                                                                                                                                
VICE CHAIR SPOHNHOLZ announced that HB 232 would be held over.