Legislature(2019 - 2020)BARNES 124

04/02/2019 08:00 AM COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 56 ESTABLISH HMONG-AMERICAN VETERANS DAY TELECONFERENCED
Moved HB 56 Out of Committee
*+ HB 32 AK ENERGY EFFICIENCY LOANS: ELIGIBILITY TELECONFERENCED
Heard & Held
-- Invited/Public Testimony <Time Limit> --
*+ HB 70 MAND. PHYS. ACTIVITY SCHOOLS; PLAAY DAY TELECONFERENCED
Heard & Held
-- Invited/Public Testimony <Time Limit> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB 32-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                      
                                                                                                                                
8:05:01 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND  announced that  the  next  order of  business                                                               
would be HOUSE BILL NO. 32,  "An Act making certain entities that                                                               
are exempt from federal taxation  under 26 U.S.C. 501(c)(3), (4),                                                               
(6),  (12), or  (19)  (Internal Revenue  Code), regional  housing                                                               
authorities, and federally recognized  tribes 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."                                                                                                   
                                                                                                                                
8:07:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS,  as  prime   sponsor  of  HB  32,                                                               
introduced the  bill and related  its history.   He said  this is                                                               
the  third  legislature  in  which   this  legislation  has  been                                                               
introduced.  He said two  legislatures ago the legislation passed                                                               
out of two  committees of referral and "died" in  the House Rules                                                               
Standing  Committee.   Last legislature,  the legislation  passed                                                               
all House  committees and  then "died" in  its last  committee of                                                               
referral in the  Senate.  He expressed his hope  that HB 56 would                                                               
"get all the way through" this attempt.                                                                                         
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS stated that  HB 32 would expand the                                                               
Alaska Energy Efficiency Revolving  Loan Fund (AEERLF) to include                                                               
nonprofits.     Currently,  those  eligible  for   the  fund  are                                                               
municipalities and  state government.  Nonprofits  would include,                                                               
for   example,  church   councils,   housing  authorities,   arts                                                               
councils,  and soup  kitchens that  may  have energy  inefficient                                                               
buildings   but  insufficient   capital  to   expend  on   energy                                                               
efficiency improvements.                                                                                                        
                                                                                                                                
8:10:40 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JACKSON  asked   why   the  legislation   "died"                                                               
previously.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  answered  that would  be  a  good                                                               
question for  the co-chair of  the Senate Finance  Committee, who                                                               
is no longer a legislator.                                                                                                      
                                                                                                                                
REPRESENTATIVE  JACKSON asked,  if a  nonprofit was  not able  to                                                               
make  the payments  on  the loan  allowed under  HB  32, who  the                                                               
responsible party would be.                                                                                                     
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  offered  his  understanding  that                                                               
currently  a loan  from  AEERLF  is given  only  when the  entity                                                               
applying for the loan has  demonstrated energy inefficiencies and                                                               
an audit has  been done.  The audit determines  how much money is                                                               
being  lost per  month due  to the  energy inefficiency,  and the                                                               
amount of the loan payment is  set at that amount; therefore, the                                                               
amount of money  the entity pays essentially stays the  same.  He                                                               
concluded that the  risk of an entity being unable  to pay on the                                                               
loan is low.                                                                                                                    
                                                                                                                                
REPRESENTATIVE JACKSON asked  why HB 32 would  not include "small                                                               
and independent businesses."                                                                                                    
                                                                                                                                
REPRESENTATIVE    KREISS-TOMKINS    answered    that    nonprofit                                                               
organizations are generally  cash poor in terms of  being able to                                                               
make investments.  He pointed  out that when this legislation was                                                               
first  introduced, Alaska  was just  beginning to  experience its                                                               
budget deficit.   Not too  many years  prior, he said,  the state                                                               
had been  "riding the  gravy train," and  any entity  that wanted                                                               
cash to  upgrade a  building came to  the legislature  "with hand                                                               
outstretched" and requested  a capital grant.   He indicated that                                                               
the AEERLF  would be  a means to  help nonprofit  entities become                                                               
more self-sufficient.   He said he thinks there  is an assumption                                                               
that nonprofits do good, and "we want to help."                                                                                 
                                                                                                                                
8:17:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN  queried how many  loans are currently  exist and                                                               
what the success rate of the loans are.                                                                                         
                                                                                                                                
8:17:29 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND  noted  that  Stacy Barnes,  from  the  Alaska                                                               
Housing  Finance  Corporation  (AHFC), was  available  to  answer                                                               
questions.                                                                                                                      
                                                                                                                                
8:17:38 AM                                                                                                                    
                                                                                                                                
JOHN  SCANLON,  Staff,  Representative  Jonathan  Kreiss-Tomkins,                                                               
Alaska  State Legislature,  on behalf  of Representative  Kreiss-                                                               
Tomkins, prime sponsor  of HB 32, stated that  AEERLF was created                                                               
in 2010  and allowed AHFC to  bond up to $250  million to finance                                                               
energy  efficiency improvements.   He  offered his  understanding                                                               
that since  that time one  loan of $2.5  million, to the  City of                                                               
Galena, has been closed.                                                                                                        
                                                                                                                                
8:18:21 AM                                                                                                                    
                                                                                                                                
STACY  BARNES,   Director,  Governmental  Relations   and  Public                                                               
Affairs,  Alaska  Housing  Finance  Corporation,  confirmed  that                                                               
there has been one loan closed.   In response to Co-Chair Hannan,                                                               
she reported that AHFC has had  some interest in the loan program                                                               
over  the years.    She offered  information  regarding the  loan                                                               
program  in   the  context  of  a   current  Anchorage  Municipal                                                               
election,  in which  voters  are  being asked  to  decide upon  a                                                               
proposal for  an Anchorage School  District bond.   She indicated                                                               
that the includes just over $59  million in projects, a number of                                                               
which  might be  eligible  for the  [AEERLF],  which would  total                                                               
approximately  $30 million.    She  said there  are  a number  of                                                               
reasons  that the  Anchorage School  District would  not approach                                                               
AHFC for a loan.  She continued:                                                                                                
                                                                                                                                
     With this  bill, we see  it as  being one more  tool in                                                                    
     the  tool  box.    A Community  Reinvestment  Act  made                                                                    
     pricing competitive  for nonprofit and  public entities                                                                    
     to go elsewhere, whether it's  through a bond proposal,                                                                    
     like  Anchorage  voters  are being  asked  to  vote  on                                                                    
     today,  or if  it's other  sources of  financing across                                                                    
     the state and in the private sector.                                                                                       
                                                                                                                                
MS.  BARNES  responded  to   follow-up  questions  from  Co-Chair                                                               
Hannan.   She confirmed that the  loan to Galena is  the only one                                                               
that has  been closed  since 2010.   She confirmed  that "closed"                                                               
means "open";  therefore, only  one entity  is carrying  the loan                                                               
under AEERLF currently.   She said financing may  be available up                                                               
to 15  years for any  given project; therefore, "the  Galena loan                                                               
is still active and open on our books."                                                                                         
                                                                                                                                
CO-CHAIR HANNAN  expressed surprise  that more entities  have not                                                               
applied.                                                                                                                        
                                                                                                                                
MS. BARNES responded that AHFC  has a couple departments that are                                                               
involved in the loans:   the Research and Rural Development, also                                                               
known as  the Energy Department;  and the Mortgage  and Financing                                                               
Department.  She  said the Energy Department  has been aggressive                                                               
in talking  with leaders across  the state, including  the Alaska                                                               
Municipal  League  (AML),  so  there has  been  interest  in  the                                                               
program.   However,  in many  cases, communities  may choose  "to                                                               
bond on  their own  or have  found cheaper  financing elsewhere."                                                               
She  AHFC  views itself  as  "one  tool  in  the toolbox."    She                                                               
referred to  the letters of  support in the committee  packet and                                                               
offered  one misconception  is that  "this  loan would  be a  ...                                                               
subsidized  rate  -   low-cost  financing  -  and   that  is  not                                                               
necessarily true."  She said there  may be other options that are                                                               
in the  best interest  of the nonprofit  or local  government for                                                               
accessing financing outside of AHFC.                                                                                            
                                                                                                                                
8:23:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON recollected  that at  the time  the loan                                                               
was initialized and  from about 2010-2014, many  entities had the                                                               
energy efficiency of  their buildings tested, but  because of the                                                               
availability  of capital  at the  time, a  lot of  these entities                                                               
preferred to apply  for grants rather than apply for  a loan.  He                                                               
said there  are a  lot of  places that  could still  benefit from                                                               
this loan.                                                                                                                      
                                                                                                                                
MS. BARNES  said Representative Thompson  was correct.   She said                                                               
AHFC  received federal  money through  the American  Recovery and                                                               
Reinvestment  Act   and  was  able  to   benchmark  1,300  public                                                               
facilities  and conduct  investment-grade  audits  on 327  public                                                               
buildings,  and "the  potential  was  great at  the  time."   She                                                               
added, "But you'll also recall that  the price of oil was at over                                                               
$100 per  barrel, and so,  the energy efficiency savings  at that                                                               
time was also greater than it is in this current environment."                                                                  
                                                                                                                                
8:25:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REVAK  asked what the  total cost of the  loan was                                                               
in relation to the estimate of the work that needed to be done.                                                                 
                                                                                                                                
MS. BARNES answered that the  loan itself was consistent with the                                                               
estimate  that was  provided through  the investment-grade  audit                                                               
that had been performed prior to closing of the loan.                                                                           
                                                                                                                                
REPRESENTATIVE REVAK  said the  customer gets a  loan and  a more                                                               
efficient building but his/her costs  remain the same - there are                                                               
no savings.   He said he  assumes that is under  the estimate for                                                               
the work  that is to  be done.   He questioned what  happens when                                                               
the work done exceeds the estimate.                                                                                             
                                                                                                                                
MS.  BARNES  answered  that  AHFC  would  close  the  loan  after                                                               
completion of  the work,  so it  would know  what the  costs were                                                               
prior to closing of the loan.                                                                                                   
                                                                                                                                
8:27:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS added  that as soon as  the loan is                                                               
paid  back,  the nonprofit  entity  would  begin to  save  money,                                                               
because the building would be more energy efficient.                                                                            
                                                                                                                                
8:28:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JACKSON asked about  variants to interest rates on                                                               
the loans.                                                                                                                      
                                                                                                                                
MS. BARNES answered  that the rate is determined at  the time the                                                               
loan is  closed and is  based on  a number of  factors, including                                                               
the  duration of  the  loan  and the  risk  associated with  that                                                               
particular loan.                                                                                                                
                                                                                                                                
8:29:07 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN asked  about the duration and rate  of the Galena                                                               
loan.                                                                                                                           
                                                                                                                                
8:29:53 AM                                                                                                                    
                                                                                                                                
ERIC   HAVELOCK,   Lending   Officer,  Alaska   Housing   Finance                                                               
Corporation, recollected  that the term  for the Galena  loan was                                                               
15 years, at an interest rate just under 4 percent.                                                                             
                                                                                                                                
8:30:44 AM                                                                                                                    
                                                                                                                                
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP), spoke.  [Due to  technical difficulties, the first minute                                                               
of Mr. Rose's testimony was inaudible.]                                                                                         
                                                                                                                                
8:31:30 AM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease at 8:31 a.m.                                                                                 
                                                                                                                                
8:31:35 AM                                                                                                                    
                                                                                                                                
[Partially inaudible testimony.]                                                                                                
                                                                                                                                
MR. ROSE stated  that Alaskans are spending $5  billion on energy                                                               
annually;  that includes  transportation  fuel, electricity,  and                                                               
heat.     He  said  in   2008,  the  legislature  made   a  large                                                               
appropriation to the Weatherization  Rebate Program.  Over 50,000                                                               
homes  have  been  energy retrofitted,  and  AHFC  estimates  the                                                               
average savings  to be  30 percent.   He  stated that  REAP knows                                                               
there is  money to be saved  and it is important  to "push energy                                                               
efficiency."     He   said  REAP   thinks  there   are  nonprofit                                                               
organizations  that would  like  to take  advantage  of the  loan                                                               
program that would be available to them under HB 32.                                                                            
                                                                                                                                
MR. ROSE related  that for various reasons, some  of the original                                                               
targets for the loan program have  decided not to take the loans.                                                               
He  surmised  some  nonprofit  buildings   have  been  bonded  or                                                               
nonprofit groups  may have  hoped the state  would have  money to                                                               
give.   He said those are  not options for nonprofits,  but those                                                               
nonprofits would be able to  borrow money through AEERLF under HB                                                               
32.                                                                                                                             
                                                                                                                                
MR. ROSE  said payback periods  vary, but nationwide, it  is easy                                                               
to estimate  what an improvement  will cost and what  its payback                                                               
period  will be,  then to  structure  the loan  accordingly.   He                                                               
said, "There  is an awareness  of how much  the loan is  going to                                                               
have to be serviced given the interest rate and the terms."                                                                     
                                                                                                                                
8:34:55 AM                                                                                                                    
                                                                                                                                
CO-CHAIR DRUMMOND  connected with  Mr. Rose to  let him  know the                                                               
first portion  of his testimony  had not  been heard.   She asked                                                               
him to repeat the information.                                                                                                  
                                                                                                                                
8:35:40 AM                                                                                                                    
                                                                                                                                
MR. ROSE stated that there is a  huge amount of savings to be had                                                               
through AHFC  loans, and part of  the reason this is  apparent is                                                               
because  AHFC has  had success  with the  grants it  gave in  its                                                               
residential  programs.   He said  public and  nonprofit buildings                                                               
"will probably  have the same  opportunity to save  30-40 percent                                                               
on their energy  bills, depending on the shape  of the building."                                                               
He  echoed  Representative  Thompson's  remark that  one  of  the                                                               
possible reasons [owners of] public  buildings did not seek out a                                                               
loan back  in 2010 was  that they hoped to  get a grant  from the                                                               
state.   Further, many public  entities have the ability  to bond                                                               
on their own.  He  indicated those choices are "definitely lesser                                                               
opportunities  for nonprofits  today."   He reiterated  that REAP                                                               
believes that there  are some decision makers  at the nonprofits,                                                               
who would take  the opportunity to take a loan  from AHFC through                                                               
AEERLF.                                                                                                                         
                                                                                                                                
8:37:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMPSON recalled  that  in the  past, after  the                                                               
energy  efficiency   evaluations  were   done,  there   had  been                                                               
variances in  loan rates.   He questioned  how many  who realized                                                               
they  could have  "a  savings on  energy  efficiency" might  have                                                               
approached other  commercial entities  because of  lower interest                                                               
rates there than with AHFC.   He recalled some banks reacted back                                                               
then by  claiming they  could meet or  beat the  offered interest                                                               
rates.   He  asked  how  many places  did  the energy  efficiency                                                               
upgrades but not with AHFC loans.                                                                                               
                                                                                                                                
MR. ROSE  said he  does not  have that  data but  anecdotally has                                                               
heard  the  same thing:    entities  could  either find  a  lower                                                               
interest  rate somewhere  else or  bond themselves.   He  said he                                                               
knows for  a fact that many  building [owners] did "go  ahead and                                                               
do  energy  efficiency   anyway,  not  using  this   fund."    He                                                               
concluded, "That  is true that the  interest rate may or  may not                                                               
have been competitive for some entities."                                                                                       
                                                                                                                                
8:39:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND  opened public  testimony  on  HB 32.    After                                                               
ascertaining that  there was  no one who  wished to  testify, she                                                               
closed public testimony.                                                                                                        
                                                                                                                                
8:39:43 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN  opined that  this was good  legislation in                                                               
the last  legislative session,  and he  thanked the  bill sponsor                                                               
for keeping it going.                                                                                                           
                                                                                                                                
8:39:54 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND, in  response  to  Co-Chair Hannan,  clarified                                                               
that the bill would be accompanied by a zero fiscal note.                                                                       
                                                                                                                                
8:40:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  said for  four to five  years now,                                                               
he  has   maintained  dialogue  with   the  Division   of  Public                                                               
Facilities  within  the  Department of  Transportation  &  Public                                                               
Facilities  (DOT&PF)  regarding   energy  efficiencies  in  state                                                               
buildings.   He  noted that  the State  of Alaska  is one  of the                                                               
eligible entities and  has many facilities, not all  of which are                                                               
energy  efficient.   He  said  there  have been  investment-grade                                                               
audits demonstrating that "there  are some improvements that have                                                               
pretty competitive paybacks."  He  said DOT&PF has proceeded with                                                               
some of the energy efficiency improvements.   He said he had been                                                               
curious  as to  whether the  agency would  take advantage  of the                                                               
AEERLF or seek other capital.   He said the agency put together a                                                               
substantial energy  efficiency investment package a  couple years                                                               
ago and  found a  more competitive interest  rate elsewhere.   He                                                               
said he is  "cautiously optimistic" that [the  provision under HB                                                               
32] and "the  specialized nature of this" will fill  the void for                                                               
smaller nonprofit  organizations that are less  sophisticated and                                                               
do not have access to more institutional capital.                                                                               
                                                                                                                                
8:44:04 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DRUMMOND said  the recent  renovation  of the  Capitol,                                                               
which  included upgrading  exterior  walls,  doors, and  windows,                                                               
showed good results.   She said she is interested  in finding out                                                               
from the  Legislative Affairs Agency  how much savings  in energy                                                               
costs is being seen now as a result.                                                                                            
                                                                                                                                
8:45:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR DRUMMOND announced that HB 32 was held over.                                                                           
                                                                                                                                

Document Name Date/Time Subjects
HB032 ver A.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB032 Sponsor Statement 2.28.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB032 Sectional Analysis 2.28.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB032 Supporting Document-Rural Retrofits Report 2.28.2019.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB032 Additional Documents-Memo Legal 2.28.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB070 ver A 3.5.19.PDF HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Sponsor Statement 3.5.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Sectional Analysis ver A 3.5.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Additional Documents-Physical Activity and Sedentary Behavior and Academic Grades.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Additional Documents-The Association Between School-Based Physical Activity Including Physical Education and Academic Performance.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Additional Documents-More Recess Improves Academic Performance.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Additional Documents-Physical Education Recess Policy Survey - Denali Daniels.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB032 Fiscal Note.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB 070 Supporting Document-Letter of Support - Kelly Lessens 3.29.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB 070 Supporting Document-Letter of Support - Carey Carpenter 3.29.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB070 Fiscal Note.pdf HCRA 4/2/2019 8:00:00 AM
HB 70
HB032 Background Document-HFC Loan Program Guide 4.2.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 32
HB032 Supporting Document-Support Letters 4.9.19.pdf HCRA 4/2/2019 8:00:00 AM
HB 32