Legislature(2015 - 2016)CAPITOL 17

03/17/2015 10:15 AM House ENERGY

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10:19:25 AM Start
10:19:57 AM HB118
11:04:10 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         March 17, 2015                                                                                         
                           10:19 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Jim Colver, Co-Chair                                                                                             
Representative Benjamin Nageak                                                                                                  
Representative David Talerico                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Matt Claman                                                                                                      
Representative Adam Wool                                                                                                        
MEMBERS ABSENT                                                                                                                
Representative Liz Vazquez, Co-Chair                                                                                            
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 118                                                                                                              
"An  Act adopting  the Municipal  Property Assessed  Clean Energy                                                               
Act; authorizing  municipalities to establish programs  to impose                                                               
assessments  for energy  improvements  in  regions designated  by                                                               
municipalities;  imposing fees;  and providing  for an  effective                                                               
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 118                                                                                                                  
SHORT TITLE: MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
02/18/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/15       (H)       ENE, CRA, FIN                                                                                          
03/05/15       (H)       ENE AT 10:15 AM CAPITOL 106                                                                            
03/05/15       (H)       Heard & Held                                                                                           
03/05/15       (H)       MINUTE(ENE)                                                                                            
03/17/15       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
WITNESS REGISTER                                                                                                              
EMILY FORD, Energy Policy and Outreach Manager                                                                                  
Alaska Energy Authority                                                                                                         
Department   of  Commerce,   Community  &   Economic  Development                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Reviewed HB  118 on behalf of  the sponsor,                                                             
the  House  Rules  Standing  Committee  at  the  request  of  the                                                               
GENE THERRIAULT, Deputy Director for Energy Policy Development                                                                  
Alaska Energy Authority                                                                                                         
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing on HB
KATHIE WASSERMAN, Executive Director                                                                                            
Alaska Municipal League                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 118.                                                                          
LUKE HOPKINS, Mayor                                                                                                             
Fairbanks North Star Borough                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 118.                                                                          
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 118.                                                                          
DAVID DUNSMORE, Staff                                                                                                           
Representative Adam Wool                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Explained Amendment 1 to HB 118.                                                                         
ACTION NARRATIVE                                                                                                              
10:19:25 AM                                                                                                                   
CO-CHAIR JIM COLVER called the  House Special Committee on Energy                                                             
meeting  to   order  at  10:19  a.m.     Representatives  Nageak,                                                               
Talerico, Tilton, Claman, and Colver  were present at the call to                                                               
order.    Representative  Wool  arrived as  the  meeting  was  in                                                               
         HB 118-MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS                                                                     
10:19:57 AM                                                                                                                   
CO-CHAIR COLVER announced  that the only order  of business would                                                               
be HOUSE  BILL NO. 118,  "An Act adopting the  Municipal Property                                                               
Assessed   Clean  Energy   Act;  authorizing   municipalities  to                                                               
establish programs to impose  assessments for energy improvements                                                               
in  regions  designated  by municipalities;  imposing  fees;  and                                                               
providing for an effective date."                                                                                               
10:20:13 AM                                                                                                                   
EMILY  FORD, Energy  Policy and  Outreach Manager,  Alaska Energy                                                               
Authority  (AEA), Department  of Commerce,  Community &  Economic                                                               
Development  (DCCED),  speaking  on  behalf of  the  House  Rules                                                               
Standing  Committee  at the  request  of  the governor,  sponsor,                                                               
provided a review  of HB 118, which was  originally introduced to                                                               
the  committee on  3/5/15.   Ms.  Ford  said Commercial  Property                                                               
Assessed Clean  Energy (PACE) programs  allow property  owners to                                                               
finance  qualifying  energy  efficiency  improvements  over  time                                                               
through a voluntary  assessment on their property tax  bill.  The                                                               
proposed bill  authorizes the  expansion of  taxation authorities                                                               
of  municipalities  in order  for  them  to participate  in  this                                                               
optional   program.     Authorizing   legislation  would   create                                                               
statewide consistency  while allowing  more control at  the local                                                               
level to  implement the  program.  She  noted that  local lending                                                               
sources  can be  used, and  municipalities  can choose  to use  a                                                               
local  government-driven process  by  issuing bonds  with a  PACE                                                               
office  administering  the  program between  commercial  property                                                               
owners  and  potential  lenders,  or  municipalities  can  use  a                                                               
private sector-driven  process, with a  third-party administrator                                                               
under  contract.   In  most states,  a hybrid  model  is used  to                                                               
provide access  to all potential  funding sources such  as bonds,                                                               
revolving  loan funds,  and private  capital.   Ms. Ford  advised                                                               
that  smaller  local  governments   which  cannot  implement  the                                                               
program on their own can contract with other local governments.                                                                 
10:22:52 AM                                                                                                                   
MS.  FORD  paraphrased  from   the  following  written  sectional                                                               
analysis [original punctuation provided]:                                                                                       
     Section 1:  Amends AS  29 by adding  a new  chapter 48.                                                                    
     Municipal  Assessed Clean  Energy  Act and  adds:   Sec                                                                    
     29.29.010,   Exercise    of   Powers,    which   allows                                                                    
     municipalities  to exercise  powers under  AS 29.40.060                                                                    
     (Judicial   Review).       Sec   29.49.020   Authorized                                                                    
     Assessments, allowing  for an assessment to  be imposed                                                                    
     to repay  the financing  of qualified projects  on real                                                                    
     property in  the municipality or local  government that                                                                    
     adopts this program. Qualified  projects do not include                                                                    
     undeveloped lots or lots  undergoing development at the                                                                    
     time  of  assessment or  the  purchase  of products  or                                                                    
     devises that are not a  permanent part of the property.                                                                    
     Sec.   29.49.030,  Written   Contract  for   Assessment                                                                    
     Required,  requires  a  written  contract  between  the                                                                    
     municipality  and record  owner  of  the real  property                                                                    
     before  the  PACE  mechanism can  be  utilized.    Sec.                                                                    
     29.49.040   Establishment    of   Program,   authorizes                                                                    
     municipalities  to  choose   to  establish  a  property                                                                    
     assessed  clean   energy  (PACE)  program   that  would                                                                    
     require a written contract with  a record owner of real                                                                    
     property. The  financing for the PACE  mechanism may be                                                                    
     provided  by a  third party,  or if  authorized by  the                                                                    
     program,  by a  municipality. Repayment  of third-party                                                                    
     or  municipal  financing  must  be  assured  through  a                                                                    
     written  contract with  the property  owner to  finance                                                                    
     the qualified project through  a voluntary property tax                                                                    
     assessment.  The financing  may include  project costs,                                                                    
     materials,   labor,  permit   fees,  inspection   fees,                                                                    
     lender's fees,  program application  and administrative                                                                    
     fees, project development  and engineering fees, third-                                                                    
     party review  fees, including verification  review fees                                                                    
     under  AS 29.49.090  and  any other  fees  that may  be                                                                    
     incurred  by   the  property  owner  relating   to  the                                                                    
     installation,   modification,    or   improvement,   as                                                                    
     determined  by   the  municipality.     Sec.  29.49.050                                                                    
     Designation  of  Region,  allows  the  municipality  to                                                                    
     participate  in the  program and  designate an  area of                                                                    
     the  municipality for  participation. This  may include                                                                    
     the entire  municipality or more  than one  region, but                                                                    
     each must  be located wholly within  the municipality's                                                                    
     jurisdiction.       Sec.   29.49.060    Procedure   for                                                                    
     Establishment   of  Program,   defines  the   necessary                                                                    
     actions  for a  municipality  to  establish a  property                                                                    
     assessed  clean  energy  finance  program.  These  are:                                                                    
     Adopt a  resolution of intent that  includes: a finding                                                                    
     that   financing   of    qualified   projects   through                                                                    
     contractual assessments  is a  valid public  purpose, a                                                                    
     statement  that   the  municipality  intends   to  make                                                                    
     contractual   assessments   to  repay   financing   for                                                                    
     qualified  projects available  to property  owners,   a                                                                    
     description  of the  types of  qualified  projects,   a                                                                    
     description of  the region  boundaries,   a description                                                                    
     of any proposed  arrangements for third-party financing                                                                    
     or  municipal   financing,     a  description   of  the                                                                    
     municipal  debt  servicing  procedures  if  third-party                                                                    
     financing  is  provided  and assessments  collected  to                                                                    
     service  the  third-party  debt,     reference  on  the                                                                    
     proposed   program  required   by   AS  29.49.010   and                                                                    
     identifying  where  the  report  is  available  to  the                                                                    
     public,   identifying the time  and place for  a public                                                                    
     hearing,  identifying the local official and assessor-                                                                     
     collector  for  the  proposed  contractual  assessments                                                                    
     with property  taxes imposed on the  assessed property;                                                                    
     Hold a hearing where the  public has the opportunity to                                                                    
     provide comment,  including on  the report  required in                                                                    
     AS  29.49.070.   Adopt  a  resolution establishing  and                                                                    
     defining  the terms  of the  program, including:   each                                                                    
     item  included  in the  report  under  AS 29.49.070;  a                                                                    
     description  of each  aspect of  the  program that  may                                                                    
     only  be amended  after another  public  hearing.   The                                                                    
     resolution may  incorporate the  report or  the amended                                                                    
     version of  the report as  reference.  The  program and                                                                    
     terms  may   be  amended  by  a   resolution  from  the                                                                    
     governing  body of  the municipality.   A  municipality                                                                    
     may hire  a program administrator and  program staff or                                                                    
     contract  for professional  services to  administer the                                                                    
     program.  Fees  may be assessed as  an application fee,                                                                    
     a component  of the interest  rate or a  combination of                                                                    
     both.    Sec.  29.49.070 Report  Regarding  Assessment,                                                                    
     defines   the   requirements  of   the   municipality's                                                                    
     publicly-available report  on the program,  as required                                                                    
     by  AS  29.49.060. The  report  must  include:   a  map                                                                    
     showing the  boundaries of the  proposed region  a form                                                                    
     contract  between the  municipality and  property owner                                                                    
     that specifies  the terms of the  assessment and either                                                                    
     the  third-party or  municipal  financing.   If  third-                                                                    
     party  financing  is  used, a  form  contract  must  be                                                                    
     included regarding  the servicing  of the  debt through                                                                    
     assessments.   A description of the  types of qualified                                                                    
     projects  and a  plan for  ensuring sufficient  capital                                                                    
     for   third-party  financing.     If   appropriate  and                                                                    
     municipal  bond  financing  is used,  the  report  must                                                                    
     identify:   A  plan for  raising capital  for municipal                                                                    
     financing;  a maximum  aggregate  annual dollar  amount                                                                    
     for financing to be provided  by the municipality;  the                                                                    
     method  for ranking  requests from  property owners  if                                                                    
     requests  will likely  exceed  the available  municipal                                                                    
     funding, and  the method  for determining  the interest                                                                    
     rate and  maximum amount  of an  assessment.   A method                                                                    
     for  ensuring  that  the repayment  schedule  does  not                                                                    
     exceed the  useful life  of the  qualified project.   A                                                                    
     description of the  application process and eligibility                                                                    
     requirements.  A method to  ensure that property owners                                                                    
     have  the   capacity  to  participate  and   repay  the                                                                    
     financing  obligations.    A statement  describing  the                                                                    
     assessment  and  collection   process  provided  by  AS                                                                    
     29.49.080.     A   statement   explaining  the   review                                                                    
     requirement provided  by AS  29.49.090.   A description                                                                    
     of marketing  and educational services to  be provided.                                                                    
     A  description  of   quality  assurance  and  antifraud                                                                    
     measures.    Collection  procedures.   The  method  for                                                                    
     ensuring  the demonstration  of financial  ability must                                                                    
     be   based   on   appropriate   underwriting   factors,                                                                    
     including verification  that the property owner  is the                                                                    
     legal owner  of the  property, current on  mortgage and                                                                    
     property  tax  payments  and is  not  insolvent  or  in                                                                    
     bankruptcy  proceedings. An  appropriate ration  of the                                                                    
     assessment to  the assessed value of  the property must                                                                    
     be maintained.  The  municipality shall make the report                                                                    
     publicly available online and  at the primary governing                                                                    
     office of the municipality.   Sec. 29.49.080, Notice to                                                                    
     Mortgage  Holder  Required  for Participation,  sets  a                                                                    
     series of  requirements for the municipality  before it                                                                    
     may enter into  a written contract with  a record owner                                                                    
     of real property:   The holder of any  mortgage lien on                                                                    
     the  property must  be given  written notice  within 30                                                                    
     days  before the  contract is  executed, and  a written                                                                    
     consent  from   the  mortgage   lien  holder   must  be                                                                    
     obtained.   Sec.  29.49.090, Review  Required, requires                                                                    
     the  third-party review  of baseline  energy conditions                                                                    
     in  a  proposed  qualified project  and  the  projected                                                                    
     energy   savings.   After    project   completion   the                                                                    
     municipality  must  obtain a  third-party  verification                                                                    
     that  the   project  was  properly  completed   and  is                                                                    
     operating   as  intended.     Sec.   29.49.100,  Direct                                                                    
     Acquisition   by   Owner,    the   proposed   financing                                                                    
     arrangements for a qualified  project may authorize the                                                                    
     property   owner   to   directly   purchase   necessary                                                                    
     equipment  and  materials, contract  directly-including                                                                    
     through  lease-  power   purchase  agreement  or  other                                                                    
     service contract  for the installation  or modification                                                                    
     of a  qualified project.  Sec.  29.49.110, Recording of                                                                    
     Notice for Contractual  Assessment Required, requires a                                                                    
     municipality   that    authorizes   financing   through                                                                    
     contractual assessments to file  written notice of each                                                                    
     contractual assessment in the  real property records of                                                                    
     the  recording  district  in   which  the  property  is                                                                    
     located.  This notice  must contain  the amount  of the                                                                    
     assessment, legal description of  the property, name of                                                                    
     each property  owner and a  reference to  the statutory                                                                    
     assessment  lien.   Sec. 29.49.120,  Lien, states  that                                                                    
     contractual  assessments as  part of  this program  and                                                                    
     any interest  and penalties are  liens on  the assessed                                                                    
     property  and  are prior  and  paramount  to all  liens                                                                    
     except  municipal tax  liens  and special  assessments.                                                                    
     Contractual  assessment   liens  may  be   enforced  as                                                                    
     provided  by  AS  29.45.320-  29.45.470.    Contractual                                                                    
     assessment  liens  are  attached   with  the  land  and                                                                    
     foreclosure of  a property tax lien  does not eliminate                                                                    
     outstanding  assessments.   Penalties and  interest may                                                                    
     be   added   to    delinquent   installments   of   the                                                                    
     assessments,   consistent  with   AS   29.45.250.     A                                                                    
     municipality may recover  costs and expenses, including                                                                    
     attorney  fees,   if  a  suit   is  filed   to  recover                                                                    
     delinquent installment of  assessments, consistent with                                                                    
     the  delinquent  property  tax   suit  process.    Sec.                                                                    
     29.49.130, Collection  of Assessments, states  that the                                                                    
     governing body of a municipality  may contract with the                                                                    
     governing  body  of  another  taxing  unit  to  collect                                                                    
     assessments  as  outlined  under this  chapter.    Sec.                                                                    
     29.49.140,  Bonds or  Notes, authorizes  a municipality                                                                    
     to issue bonds or  notes to finance qualified projects.                                                                    
     Bonds issued under this section  must be secured by one                                                                    
     or  more of  the  following:   payments of  contractual                                                                    
     assessments  on  benefited  property  in  one  or  more                                                                    
     specified  regions;     reserves  established   by  the                                                                    
     municipality  from grants;  bonds  or  net proceeds  or                                                                    
     lawfully  available funds;   municipal  bond insurance,                                                                    
     lines of credit, public  or private guaranties, standby                                                                    
     bond   purchase  agreements,   collateral  assignments,                                                                    
     mortgages  or any  other available  means of  providing                                                                    
     credit  support  or  liquidity,  and  any  other  funds                                                                    
     lawfully  available for  purposes consistent  with this                                                                    
     chapter.   The governing body of  the municipality must                                                                    
     include this information in  a resolution approving the                                                                    
     bonds  or  notes.      The  municipality's  contractual                                                                    
     rights  in connection  with the  issuance  of bonds  or                                                                    
     notes is a first lien  on the property, without further                                                                    
     action  by  the municipality.  The  lien  is valid  and                                                                    
     binding  against  any  other person,  with  or  without                                                                    
     notice.  Bonds  or  notes  issues  under  this  chapter                                                                    
     further an  essential public and  governmental purpose,                                                                    
     including  the:    Improvement of  the  reliability  of                                                                    
     local electrical  systems;  Reduction of  energy costs;                                                                    
     Reduction   of  energy   demand  on   local  utilities;                                                                    
     Economic stimulation  and development;   Enhancement of                                                                    
     property   values,   and  Enhancement   of   employment                                                                    
     opportunities.   Sec. 29.49.150,  Joint Implementation,                                                                    
     any combination of municipalities  may agree to jointly                                                                    
     implement or  administer a program under  this chapter,                                                                    
     or  contract  with  a  third-party.   If  two  or  more                                                                    
     municipalities  jointly   administer  the   program,  a                                                                    
     public  hearing  is  to  be  held  by  the  cooperating                                                                    
     municipalities sufficient  to satisfy  the requirements                                                                    
     of  AS 29.49.060.    Sec.  29.49.160, Prohibited  Acts,                                                                    
     states  that  participation  in  the  program  must  be                                                                    
     voluntary.   A municipality  that establishes  a region                                                                    
     under  this chapter  may not  require  a real  property                                                                    
     owner in  that region to participate  in the assessment                                                                    
     program outlined  in this chapter  in order to  issue a                                                                    
     permit,  license or  other municipal  authorization, or                                                                    
     otherwise  compel a  property  owner in  the region  to                                                                    
     enter into  a written  contract to repay  the financing                                                                    
     of    a   qualified    project   through    contractual                                                                    
     assessments.    Sec.  29.49.900,  Definitions,  defines                                                                    
     terminology included  in the chapter.   Sec. 29.49.995,                                                                    
     Short  Title, indicates  this chapter  may be  cited as                                                                    
     the  Municipal Property  Assessment  Clean Energy  Act.                                                                    
     Section 2 sets an immediate effective date.                                                                                
10:31:52 AM                                                                                                                   
REPRESENTATIVE  NAGEAK  observed  that PACE  financing  places  a                                                               
primary lien  on property,  and asked for  the consequences  if a                                                               
property owner defaults on the loan.                                                                                            
MS. FORD responded that if a  property tax payment is missed, the                                                               
property reverts to the municipality;  however, the default rates                                                               
on property taxes  are very low, thus this is  a secure financing                                                               
10:33:26 AM                                                                                                                   
GENE THERRIAULT,  Deputy Director for Energy  Policy Development,                                                               
Alaska Energy Authority (AEA),  Department of Commerce, Community                                                               
& Economic  Development (DCCED), added  that if a  property owner                                                               
takes  out a  PACE  loan, the  loan  is the  senior  lien on  the                                                               
property.    If   there  is  a  default,   the  municipality  can                                                               
foreclose,  sell  the  property,  and the  PACE  loan  obligation                                                               
passes to the  new owner.  He  advised this is a  benefit of PACE                                                               
programs because  a business can make  improvements, amortize the                                                               
payments  over a  long period  of time,  and then  sell to  a new                                                               
owner who would  pay thereafter.  Also, PACE  rates are generally                                                               
lower than market rates.                                                                                                        
CO-CHAIR COLVER  questioned whether  the default  is added  to an                                                               
owner's property taxes.                                                                                                         
MR. THERRIAULT explained that the  PACE loan repayment becomes an                                                               
additional assessment on the owner's  property tax bill, which is                                                               
a  contractual arrangement  between  the property  owner and  the                                                               
local government.                                                                                                               
CO-CHAIR COLVER  asked whether  PACE financing  could be  used to                                                               
finance consumers' conversions  to natural gas in  the North Pole                                                               
area.   He  suggested  this could  be  a vehicle  to  pay for  an                                                               
assessment to cover  the costs of extending the main  gas line to                                                               
each house.                                                                                                                     
MR. THERRIAULT  said it  could be, although  PACE is  a statewide                                                               
program  for  any  municipality that  has  property  tax  powers.                                                               
Also, this  program applies only  to businesses,  but conversions                                                               
from  fuel oil  to natural  gas  do qualify  as energy  efficient                                                               
CO-CHAIR  COLVER inquired  as to  the availability  of provisions                                                               
for  the cost  of  residential conversions  to  natural gas,  and                                                               
asked whether the program can be broadened.                                                                                     
10:37:24 AM                                                                                                                   
MR. THERRIAULT  said when  PACE was  first considered  there were                                                               
two programs,  commercial and  residential; however,  the Federal                                                               
National Mortgage Association and  the Federal Home Loan Mortgage                                                               
Corporation  opposed the  residential  program  because the  PACE                                                               
loan  becomes  the superior  lien.    He noted  that  residential                                                               
programs  are   possible,  although  with  lesser   impact,  more                                                               
governmental support,  higher interest rates, and  more reserves.                                                               
In addition, the PACE loan must  be cashed out if the property is                                                               
sold.   Mr.  Therriault  cautioned against  adding a  residential                                                               
program to  HB 118.    The Fairbanks North Star  Borough seeks to                                                               
provide a residential financing program.                                                                                        
CO-CHAIR  COLVER   commented  on  the  senior   position  of  the                                                               
assessment, which  is not required to  be paid at closing  of the                                                               
sale of a property.                                                                                                             
MR. THERRIAULT pointed  out that a buyer is  provided with notice                                                               
of the lien.                                                                                                                    
REPRESENTATIVE WOOL asked for the length of the PACE loan.                                                                      
MR.  THERRIAULT  responded the  term  is  generally 10-20  years,                                                               
which is beneficial  to business owners.  In  further response to                                                               
Representative Wool, he said if  there is an existing mortgage on                                                               
a  property,  the  lender  must  give permission  to  move  to  a                                                               
secondary lien  position behind the  PACE financing.   Experience                                                               
has  shown  that  lenders  are   willing  to  agree  because  the                                                               
collateral for their loan is improved.                                                                                          
10:42:53 AM                                                                                                                   
REPRESENTATIVE  CLAMAN  asked  whether municipalities  would  use                                                               
cash reserves, or  create new bonding for the  necessary funds to                                                               
make the loans.                                                                                                                 
MR.  THERRIAULT  explained that  local  governments  can bond  to                                                               
create  a  pool  of  money   to  lend,  but  cannot  use  general                                                               
obligation  (GO)  bonds.    Municipalities  can  also  use  local                                                               
lenders  that may  use  low-cost capital  because  the loans  are                                                               
attractive to  lenders.  Finally, many  municipalities blend bond                                                               
funds with funds from local lenders.                                                                                            
REPRESENTATIVE  CLAMAN  surmised  municipalities  would  look  at                                                               
ways, without  using GO  bonds, to  secure a  source of  funds to                                                               
loan to the eligible businesses.                                                                                                
MR. THERRIAULT said  correct.  He advised that  revenue bonds are                                                               
based on  the revenue  from the "repayment  stream" of  the loans                                                               
that is pledged to secure the bond.                                                                                             
REPRESENTATIVE CLAMAN  understood that the municipality  would be                                                               
signing on  to guarantee the  loan; however, the  municipality is                                                               
assured by a loan secured by  the business, and in first position                                                               
for repayment.                                                                                                                  
MR.  THERRIAULT  said  correct.    The  bill  directs  the  local                                                               
government  to   collect  any  fees   required,  but   the  local                                                               
government does not  actually guarantee the loan because  is it a                                                               
revenue bond based  on the repayment revenue stream,  unlike a GO                                                               
bond.  In fact, after default,  the municipalities do not have to                                                               
"step in," but they may want to establish a loan loss pool.                                                                     
REPRESENTATIVE  CLAMAN opined  the  municipality may  be at  some                                                               
risk,  but  it  is  low,  and municipal  tax  liens  and  special                                                               
assessments also are placed superior to prior lenders.                                                                          
MR. THERRIAULT said correct.                                                                                                    
10:48:13 AM                                                                                                                   
CO-CHAIR COLVER opened public testimony on HB 118.                                                                              
10:48:37 AM                                                                                                                   
KATHIE  WASSERMAN, Executive  Director, Alaska  Municipal League,                                                               
informed the  committee that AML  is in support  of HB 118.   The                                                               
bill is voluntary  and provides municipalities tools  in order to                                                               
benefit   businesses  and,   hopefully,   municipalities.     She                                                               
acknowledged there are some risks;  however, the bill is of value                                                               
to first  class cities  and boroughs  with taxing  authority, and                                                               
allows for  a public process.   Ms. Wasserman opined the  bill is                                                               
not a detriment  to the state or to municipalities.   In response                                                               
to Co-Chair  Colver, she said second  class cities do not  levy a                                                               
property tax.                                                                                                                   
10:51:19 AM                                                                                                                   
LUKE HOPKINS,  Mayor, Fairbanks North  Star Borough,  stated that                                                               
HB 118 works  for the Fairbanks North Star Borough  in that first                                                               
class  cities  within  the  borough  have  the  local  option  to                                                               
participate.   For  commercial properties  to convert  to another                                                               
energy  source is  expensive, and  he expressed  his support  for                                                               
businesses to  have a mechanism  to provide financing  to convert                                                               
to   lower-cost  and   more  efficient   energy.     Furthermore,                                                               
conversion to more  efficient energy will help with  the poor air                                                               
quality in  Fairbanks.   The Fairbanks North  Star Borough  has a                                                               
three-year process  for the collection  of property  taxes, which                                                               
allows  for general  discussions  with property  owners prior  to                                                               
foreclosure.   Mayor  Hopkins concluded  that the  bill is  well-                                                               
conceived,  and  provides  extensive  guidelines.   He  spoke  in                                                               
support of  the bill and  for a  residential PACE program  in the                                                               
CO-CHAIR  COLVER  asked Mayor  Hopkins  to  address the  proposed                                                               
MAYOR  HOPKINS stated  he was  unaware of  any problems  with the                                                               
amendments,  although  he  had not  reviewed  the  amendments  in                                                               
detail.   He  asked  for the  committee's  support of  amendments                                                               
presented by the agency.                                                                                                        
10:55:29 AM                                                                                                                   
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP), said  REAP is  a statewide  education and  advocacy group                                                               
for renewables and energy efficiency -  made up of a coalition of                                                               
over 80 organizations  - which has promoted the  PACE concept for                                                               
two  years.   He  expressed REAP's  support for  HB  118 and  the                                                               
Alaska  Energy  Authority's efforts  to  provide  a solution  for                                                               
business  owners who  want to  make their  buildings more  energy                                                               
efficient.   Mr. Rose acknowledged  there are  excellent programs                                                               
for residential weatherization, and  a public building loan fund;                                                               
however,  these   programs  are   not  available  to   owners  of                                                               
commercial buildings.                                                                                                           
10:57:10 AM                                                                                                                   
CO-CHAIR  COLVER,  after determining  no  one  further wished  to                                                               
testify, closed public testimony.                                                                                               
10:57:43 AM                                                                                                                   
REPRESENTATIVE  WOOL  made  a motion  to  adopt  two  amendments,                                                               
labeled  29-GH1021\A.1,   Shutts,  3/11/15,   and  29-GH1021\A.3,                                                               
Shutts, 3/16/15, which at the  direction of Co-Chair Colver, were                                                               
combined as Amendment 1, and read:                                                                                              
     Amendment labeled 29-GH1021\A.1,                                                                                           
     Page 1, following line 5:                                                                                                  
     Insert a new bill section to read:                                                                                         
       "* Section 1. AS 29.10.200 is amended by adding a                                                                      
     new paragraph to read:                                                                                                     
               (65) AS 29.49 (energy improvement assessment                                                                     
     Page 1, line 6:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
     Renumber the following bill section accordingly.                                                                           
     Page 10, following line 12:                                                                                                
     Insert a new section to read:                                                                                              
          "Sec. 29.49.890. Application of chapter. This chapter                                                             
     applies to home rule and general law municipalities.                                                                       
     Amendment labeled 29-GH1021\A.3,                                                                                           
     Page 4, lines 9 - 10:                                                                                                      
          Delete "as provided by"                                                                                               
          Insert "required under"                                                                                               
     Page 4, line 14, following "(I)":                                                                                          
          Delete "a"                                                                                                            
     Page 4, line 19:                                                                                                           
          Delete ", including the report required by"                                                                           
          Insert "and the report required under"                                                                                
     Page 4, line 20:                                                                                                           
          Delete "a resolution"                                                                                                 
          Insert "an ordinance"                                                                                                 
     Page 4, line 22:                                                                                                           
          Following "report":                                                                                                   
          Insert "required"                                                                                                     
          Following "AS 29.49.070":                                                                                             
          Insert ", which may be incorporated by reference"                                                                     
     Page 4, lines 25 - 29:                                                                                                     
          Delete all material.                                                                                                  
     Reletter the following subsections accordingly.                                                                            
10:58:30 AM                                                                                                                   
CO-CHAIR COLVER objected for the purposes of discussion.                                                                        
REPRESENTATIVE WOOL  explained Amendment  1 changes  the language                                                               
in the bill  from "resolution" to "ordinance" in  order to comply                                                               
with Alaska  legal conventions  and more easily  adapt to  use by                                                               
10:59:22 AM                                                                                                                   
DAVID DUNSMORE,  Staff, Representative  Adam Wool,  explained the                                                               
portion  of Amendment  1 labeled  A.1 [text  previously provided]                                                               
expands HB  118 to apply  to home rule municipalities  as advised                                                               
by AEA.  The portion of  Amendment 1 labeled A.3 [text previously                                                               
provided]  would streamline  the  process  for municipalities  to                                                               
adopt the program directed by HB 118.   As advised by AEA and the                                                               
Department of  Law, this change  is necessary  for municipalities                                                               
to implement  the PACE  program, without  changing the  intent of                                                               
the bill.                                                                                                                       
REPRESENTATIVE NAGEAK asked for clarification on the amendments.                                                                
MR.  DUNSMORE  said  the  amendments  labeled  A.1  and  A.3  are                                                               
combined into Amendment 1.                                                                                                      
11:02:18 AM                                                                                                                   
CO-CHAIR COLVER  removed his objection.   There being  no further                                                               
objection, Amendment 1 was adopted.                                                                                             
REPRESENTATIVE  TILTON disclosed  that a  family member  provides                                                               
energy ratings related to HB 118.                                                                                               
11:03:58 AM                                                                                                                   
HB 118 was held over.                                                                                                           
11:04:10 AM                                                                                                                   
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 11:04 a.m.                                                                 

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