Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/10/2017 09:00 AM LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SCR 10 ALASKA YEAR OF INNOVATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 81 AK ENERGY EFFICIENCY LOANS: ELIGIBILITY TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 157 LIFE & HEALTH INSURANCE GUARANTY ASSN. TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
         HB  81-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                     
                                                                                                                                
9:12:10 AM                                                                                                                    
CHAIR COSTELLO announced  the consideration of HB  81. She stated                                                               
that the intention  is to hear the  introduction, take questions,                                                               
open   public  testimony,   and   hold  the   bill  for   further                                                               
consideration. [CSHB 81(ENE) was before the committee.]                                                                         
                                                                                                                                
9:12:38 AM                                                                                                                    
JOHNATHON  KREIS-THOMPSON, Alaska  State Legislature,  sponsor of                                                               
HB  81,  introduced the  legislation  speaking  to the  following                                                               
sponsor statement:                                                                                                              
                                                                                                                                
     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.  Only one  loan has  been  closed since  the                                                                    
     program's creation in  2010, to the City  of Galena for                                                                    
     $2.6 million.                                                                                                              
                                                                                                                                
     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 program to invest  in energy efficiency. These                                                                    
     projects allow  them to    save money on  energy costs,                                                                    
     make  the state  money  in interest,  create jobs,  and                                                                    
     stimulates   the  economy.   Recognizing  these   clear                                                                    
     benefits,  the  MEEBA   authorizes  Alaska  Housing  to                                                                    
     accept applications from  non-profits, regional housing                                                                    
     authorities, and federally  recognized tribes to invest                                                                    
     in energy efficiency.                                                                                                      
                                                                                                                                
     The  More  Energy   Efficient  Buildings  Act  improves                                                                    
     energy   efficiency  in   Alaska.   It's  an   economic                                                                    
     stimulator, makes  the state money, and  helps create a                                                                    
     public  benefit for  a state  program that's  presently                                                                    
     underused.                                                                                                                 
                                                                                                                                
9:14:55 AM                                                                                                                    
REPRESENTATIVE KREISS-TOMKINS noted that HB 81 passed the other                                                                 
body by a 35:1 vote.                                                                                                            
                                                                                                                                
CHAIR COSTELLO asked Ms. Wilber to walk through a sectional                                                                     
analysis for HB 81.                                                                                                             
                                                                                                                                
BERETT WILBER, Staff, Representative Kreiss-Tomkins, Alaska                                                                     
State Legislature, delivered the following sectional analysis                                                                   
for HB 81.                                                                                                                      
                                                                                                                                
     Section   1  requests   the   Alaska  Housing   Finance                                                                    
     Corporation  to include  a report  of activities  under                                                                    
     the  Alaska Energy  Efficiency Revolving  Loan Fund  in                                                                    
     their annual report.                                                                                                       
                                                                                                                                
     Section  2 adds  federally recognized  tribes, regional                                                                    
     housing  authorities, and  non-profits to  the list  of                                                                    
     entities that  can be offered loans  through the Alaska                                                                    
     Energy Efficiency Revolving Loan Fund.                                                                                     
                                                                                                                                
     Section 3 is a conforming  change to existing law which                                                                    
     adds  tribes to  the  current  loan enforcement  terms.                                                                    
     Under  this  section, tribes  would  join  the list  of                                                                    
     entities  which agree  to  waive  a sovereign  immunity                                                                    
     defense  as  such a  defense  could  be applied  to  an                                                                    
     energy efficiency loan.                                                                                                    
                                                                                                                                
     Section 4  adds tribes  and nonprofits  to the  list of                                                                    
     those authorized to borrow from the loan program.                                                                          
                                                                                                                                
     Section 5 is  a conforming change which  adds the newly                                                                    
     eligible entities  to existing laws, which  lay out the                                                                    
     financial  responsibilities of  loan recipients  to the                                                                    
     State of Alaska if they default on a loan.                                                                                 
                                                                                                                                
     Section 6 includes definitions  for the bill, including                                                                    
     definitions for  federally recognized  tribes, regional                                                                    
     housing authorities,  and nonprofits. Under  this bill,                                                                    
     nonprofits  that are  designated as  501(c)(3), (c)(4),                                                                    
     (c)(6), (c)(12)  and (c)(19) can apply  for loans under                                                                    
     the Alaska Energy Efficiency Revolving Loan Fund.                                                                          
                                                                                                                                
     Section 7  adds a provision  to the bill  that requires                                                                    
     the  loan  program  to preference  originally  eligible                                                                    
     entities, which are  municipalities, schools, and state                                                                    
     buildings,  or the  newly  eligible  entities. It  also                                                                    
     expressly  forbids for-profit  entities from  receiving                                                                    
     loans from the fund.                                                                                                       
                                                                                                                                
9:17:28 AM                                                                                                                    
CHAIR COSTELLO asked where the language is broadened to include                                                                 
schools.                                                                                                                        
                                                                                                                                
MS. BARRETT  advised that schools  are already eligible  to apply                                                               
for  these  energy loan  funds.  She  directed attention  to  the                                                               
language on  page 2, line  17, and  said that while  the language                                                               
doesn't  specifically mention  schools, Legislative  Legal agrees                                                               
that they are included.                                                                                                         
                                                                                                                                
CHAIR  COSTELLO  listed  the   individuals  available  to  answer                                                               
questions.                                                                                                                      
                                                                                                                                
SENATOR MEYER  asked if  just one entity  had taken  advantage of                                                               
the loan program.                                                                                                               
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   said  that's   correct.   "It's                                                               
dramatically underused."                                                                                                        
                                                                                                                                
SENATOR MEYER asked why that the case.                                                                                          
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS said  his anecdotal  assessment is                                                               
that  entities have  been  accustomed to  looking  for grants  or                                                               
getting money  through capital projects.  Why would you  assume a                                                               
loan when  there's free money?  He opined that  thought processes                                                               
are changing  as people look  to be more self-sufficient  in this                                                               
more austere environment.                                                                                                       
                                                                                                                                
9:21:21 AM                                                                                                                    
SENATOR  MEYER commented  that the  last sizeable  capital budget                                                               
was  in  2013  so  it's  surprising that  the  loan  fund  is  so                                                               
underused. He  asked if  he sees this  program as  competition to                                                               
banks.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  said  him thinks  there  will  be                                                               
increased interest  in the program  going forward. The  fact that                                                               
the  first loan  was taken  out just  last December  supports the                                                               
notion that entities are realizing that  free money is a thing of                                                               
the past and  that the more austere fiscal  environment is likely                                                               
here  to  stay. He  explained  that  the  loan program  does  not                                                               
compete with  banks because the  financing for the  Alaska Energy                                                               
Efficiency Revolving Loan  Fund is highly unique  and banks don't                                                               
have an analog.  The way the program works is  that the structure                                                               
first  needs  an energy  audit  that  identifies specific  energy                                                               
efficiency  improvements and  the  amount  that the  improvements                                                               
will save. The loan is based on the cost of the improvements.                                                                   
                                                                                                                                
SENATOR  MEYER asked  if  he has  an estimate  of  the number  of                                                               
nonprofits and tribes that might apply for a loan.                                                                              
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS said  he's speculating  but a  few                                                               
facts  might inform  what would  happen  if this  becomes law.  A                                                               
partnership in  Fairbanks between the Denali  Commission, Foraker                                                               
Group,  Cold  Climate  Housing  Research  Center  and  others  is                                                               
looking at  energy efficiency  improvements for  nonprofits. That                                                               
pilot  program was  designed  to  look at  the  payback and  cost                                                               
benefits of making these sorts  of improvements. He said he knows                                                               
that those entities are interested  in scaling this in the future                                                               
and have  been involved in  drafting and supporting the  bill. He                                                               
pointed  out  that   many  of  the  nonprofits   in  Alaska  have                                                               
relatively  small  budgets  compared  to  a  school  district  or                                                               
municipality and  their loans would  conceivably be  just $20,000                                                               
to  $50,000, but  that size  energy efficiency  improvement would                                                               
proportionally make a big difference.                                                                                           
                                                                                                                                
9:27:04 AM                                                                                                                    
SENATOR GARDNER asked  if this applies to all  nonprofits such as                                                               
churches and the Girl Scouts.                                                                                                   
                                                                                                                                
MS. WILBER  clarified that  the bill only  applies to  a specific                                                               
subsection of  nonprofits. It  specifically opens  eligibility to                                                               
501(c)(3)s   that  include   churches,  religious,   educational,                                                               
charitable,  literary,  and  scientific groups;  501(c)(4)s  that                                                               
include civic and social welfare  organizations such as Lions and                                                               
Rotary  Clubs;  501(c)(6)s  that  tend to  be  business  leagues,                                                               
chambers of  commerce, and  industry umbrella  organizations such                                                               
as  the Alaska  Pharmacist  Association and  the Alaska  Truckers                                                               
Association;  501(c)(12)s   that  are  mutuals   and  cooperative                                                               
associations  like  telephone  and electrical  cooperatives;  and                                                               
501(c)(19)s that are  organizations that have to do  with past or                                                               
present  members of  the armed  forces such  as VFWs  or American                                                               
Foreign Legions.                                                                                                                
                                                                                                                                
CHAIR COSTELLO asked Stacey Schubert  to address the question why                                                               
schools and other nonprofits haven't  taken advantage of the loan                                                               
fund.                                                                                                                           
                                                                                                                                
9:29:29 AM                                                                                                                    
STACEY  SCHUBERT,  Director,   Government  Relations  and  Public                                                               
Affairs,  Alaska Housing  Finance Corporation  (AHFC), Anchorage,                                                               
said  she  agrees  with  the   sponsor's  explanation.  When  the                                                               
legislation passed in 2010, authorizing  AHFC to go to the market                                                               
and bond  up to $250 million  for the program, schools  and other                                                               
public facilities had  grant money available so  they didn't need                                                               
to  go to  AHFC for  a loan.  As the  fiscal climate  has changed                                                               
there has  been more interest  in the program. For  example, AHFC                                                               
worked  with   the  Department   of  Transportation   and  Public                                                               
Facilities  on projects  they identified  for public  facilities,                                                               
but  the  department  found less  expensive  funds  from  another                                                               
source. AHFC  is participating with  the Alaska  Municipal League                                                               
and others to make sure they are aware of the program, she said.                                                                
                                                                                                                                
9:30:36 AM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 81.                                                                                
                                                                                                                                
9:30:48 AM                                                                                                                    
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP),  stated that  REAP  supports  HB 81.  He  said  we are  a                                                               
statewide nonprofit education advocacy  group that has focused on                                                               
promoting renewable energy and energy  efficiency for the last 13                                                               
years. HB 81 offers nonprofits  and tribes an opportunity to take                                                               
advantage  of this  loan  program. He  said  REAP estimates  that                                                               
Alaskans   collectively  spend   about   $5   billion  on   heat,                                                               
transportation,  and electricity  each  year.  He estimated  that                                                               
about  20  percent  of  the energy  consumption  could  be  saved                                                               
through energy  efficiency. Keeping  close to  $1 billion  in the                                                               
economy is  a worthy goal.  The nonprofits and tribes  around the                                                               
state  often   reside  in   energy  inefficient   buildings.  The                                                               
structure of  the loans that  AHFC is offering is  something that                                                               
tribes  and nonprofits  could  take advantage  of.  He urged  the                                                               
committee to consider and move the bill forward.                                                                                
                                                                                                                                
9:32:42 AM                                                                                                                    
CHAIR  COSTELLO closed  public testimony  on HB  81 and  held the                                                               
bill in committee for further review.                                                                                           
                                                                                                                                

Document Name Date/Time Subjects
HB 81 - Background Document - Memo Legal.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Background Document - AEERLFP.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Fiscal Note - DOR-AHFC.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Summary of Changes ver A to ver D.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Support Letter - AAHA.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Support Letters.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81.PDF SL&C 4/10/2017 9:00:00 AM
HB 81
HB 157 - Fiscal Note.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Sectional Analysis.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157.PDF SL&C 4/10/2017 9:00:00 AM
HB 157
SCR 10.PDF SL&C 4/10/2017 9:00:00 AM
SCR 10
SCR 10 - Fiscal Note.pdf SL&C 4/10/2017 9:00:00 AM
SCR 10
SCR 10 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
SCR 10
HB 157 - Support Letter - Div. of Insurance.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Support Letter - AK Life & Health Guaranty Assoc..pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Support Letter - ACLI.pdf SL&C 4/10/2017 9:00:00 AM
HB 157