Legislature(2007 - 2008)HOUSE FINANCE 519

04/03/2008 08:30 AM FINANCE

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08:42:54 AM Start
08:43:26 AM SB289
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                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 3, 2008                                                                                            
                         8:42 a.m.                                                                                              
CALL TO ORDER                                                                                                                 
Co-Chair Meyer called the House Finance Committee meeting to                                                                    
order at 8:42:54 AM.                                                                                                          
MEMBERS PRESENT                                                                                                               
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Harry Crawford                                                                                                   
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
Representative Bill Thomas Jr.                                                                                                  
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
John  Weise, Staff,  Senator  Lyman Hoffman;  Brian  Butcher,                                                                   
Legislative Liaison, Alaska Housing  Finance Corporation; Dan                                                                   
Fauske,  CEO/Executive   Director,  Alaska   Housing  Finance                                                                   
PRESENT VIA TELECONFERENCE                                                                                                    
Bob Breen, Director, Alaska Housing Finance Corporation.                                                                        
HB 366                                                                                                                          
          "An  Act  relating  to  an  exemption  from  public                                                                   
          disclosure  of  certain   appropriations  from  the                                                                   
          dividend  fund;  and  providing  for  an  effective                                                                   
          SB 303 was SCHEDULED, but NOT HEARD.                                                                                  
SB 289                                                                                                                          
          "An Act relating to home energy conservation and                                                                      
          weatherization for purposes of certain programs of                                                                    
          the Alaska Housing and Finance Corporation."                                                                          
          SB 289 was HEARD and HELD in Committee for further                                                                    
SB 303                                                                                                                          
          "An Act relating to certain grants awarded by the                                                                     
          Department of Environmental Conservation."                                                                            
          SB 303 was SCHEDULED, but NOT HEARD.                                                                                  
8:43:26 AM                                                                                                                    
SENATE BILL NO. 289                                                                                                           
     "An Act relating to home energy conservation and                                                                           
     weatherization for purposes of certain programs of the                                                                     
     Alaska Housing and Finance Corporation."                                                                                   
JOHN   WEISE,  STAFF,   SENATOR   LYMAN  HOFFMAN   (SPONSOR),                                                                   
testified  in  support  of the  legislation  and  provided  a                                                                   
PowerPoint  presentation,  "SB  289  Home  Energy"  (Copy  on                                                                   
Mr. Weise  referred to Page  2, Slide 1, "Housing  Assessment                                                                   
Survey 2005":                                                                                                                   
   · Estimated Housing Stock 2005 - 278,118                                                                                     
   · % older housing (21+ yrs) increasing                                                                                       
   · % new housing (0-10 yrs) decreasing                                                                                        
   · Households income eligible for weatherization services                                                                     
     - 45,000                                                                                                                   
   · Households report being drafty - 45%                                                                                       
Mr. Weise  pointed out that  the percentage of  older housing                                                                   
is  increasing  while  the  percentage   of  newer  homes  is                                                                   
decreasing. The sponsor's intent  is to help with high energy                                                                   
costs for the  tens of thousands of homes across  Alaska that                                                                   
need assistance.                                                                                                                
Mr. Weise reviewed Page 3, Slide 2, "Home Energy":                                                                              
   · Responsive to Alaskans being impacted by high energy                                                                       
   · Updates and expands the home energy efficiency and                                                                         
     weatherization programs in the AHFC                                                                                        
Mr.  Weise reported  that  the sponsor  met  with the  Alaska                                                                   
Housing  Finance  Corporation  (AHFC)  to  discuss  solutions                                                                   
aimed  at  helping  occupants  who are  suffering  the  most.                                                                   
Senate Bill  289 updates  and expands  two of AHFC's  current                                                                   
energy conservation and weatherization programs.                                                                                
8:46:27 AM                                                                                                                    
Mr. Weise discussed Page 4, Slide 3, "Weatherization":                                                                          
   · Focus on energy-efficient improvements                                                                                     
   · Direct the available funding to items that will save                                                                       
     the most energy                                                                                                            
   · Typical improvements include air sealing, insulating                                                                       
     and improved heater efficiencies                                                                                           
Mr. Weise observed that the bill  focuses primarily on energy                                                                   
efficient  improvements and  directs funding  to those  items                                                                   
that  would  save  the  most   energy.  Typical  improvements                                                                   
include  air   sealing,  insulating,  and   upgrading  heater                                                                   
efficiencies involving water heaters, furnaces, or boilers.                                                                     
Mr. Weise referenced Page 5, Slide  4, "Energy Efficiency and                                                                   
Weatherization Program":                                                                                                        
   · Eligibility for home energy efficiency programs                                                                            
     extended from 60% to 100% median income.                                                                                   
   · Low income Alaskans will continue to receive the                                                                           
     priority focus of the program                                                                                              
Mr.  Weise  pointed  out  that  the  existing  weatherization                                                                   
program aids Alaskans  at the 60 percent median  income level                                                                   
or lower. He proposed raising  the eligibility for assistance                                                                   
to  100  percent  median  income  while  continuing  to  give                                                                   
priority  to  Alaskans  in the  lowest  income  groups.  This                                                                   
extension would  create a broader range of  income qualifying                                                                   
households  approaching   the  "tens  of   thousands"  number                                                                   
demonstrated earlier.  The expansion would allow  services to                                                                   
support more Alaskans impacted by high energy costs.                                                                            
Mr.  Weise   detailed  Page  6,   Slide  5,  "Median   Income                                                                   
     Family    60%       100%                                                                                                   
     Size      Median    Median                                                                                               
     1         $23,887   $39,812                                                                                              
     2         $31,236   $52,060                                                                                              
     3         $38,586   $64,310                                                                                              
     4         $45,936   $76,560                                                                                              
     5         $53,286   $88,810                                                                                              
    Each add'l person - 60% $1378 and 100% $2296                                                                                
Mr.  Weise  observed that  a  family  of  one would  go  from                                                                   
roughly $24,000  at 60  percent median  to almost $40,000  at                                                                   
100 percent  median. A family  of four would go  from $46,000                                                                   
to almost $77,000 in income.                                                                                                    
8:47:52 AM                                                                                                                    
Mr. Weise elaborated on the impact  of proposing $300 million                                                                   
for weatherization  programs  statewide on  Page 7,  Slide 6,                                                                   
"SB 289 Impact":                                                                                                                
     Past      $4.8      600         1700                                                                                       
     Years     million   households people                                                                                    
     Current   With $48 4167         11,800                                                                                     
     program   million   households  people                                                                                   
     Expanded $200       17,400      49,000                                                                                   
     Program   million                                                                                                          
     to 100%                                                                                                                    
Mr.  Weise  went on  that  in  past years,  AHFC  spent  $4.8                                                                   
million  per  year  ($1.8  million  federal  sources  and  $3                                                                   
million from  AHFC sources)  to help  600 households  or 1700                                                                   
people a year.  Mr. Weiss acknowledged that  all Alaskans are                                                                   
struggling  with high  energy costs but  reiterated that  the                                                                   
intention  behind SB  289 is  to make  certain that  Alaskans                                                                   
suffering the most at the lowest  income levels are receiving                                                                   
help  first. Under  the existing  program at  the 60  percent                                                                   
median income level  with funding jumping up  to $48 million,                                                                   
help  would   be  distributed   to  little  more   than  4000                                                                   
households or  12,000 people  falling substantially  short of                                                                   
the tens  of thousands  requiring assistance. By  comparison,                                                                   
expanding  the  program  to 100  percent  median  income  and                                                                   
allotting  $200  million  to this  qualifier,  AHFC  projects                                                                   
could  potentially  assist  more than  17,000  households  or                                                                   
50,000 people.                                                                                                                  
8:49:25 AM                                                                                                                    
Mr.  Weise  set forth  that  the  Home Energy  Rating  Rebate                                                                   
Program  portion  of  the bill  stresses  the  importance  of                                                                   
targeting Alaskans who through  unfortunate circumstances are                                                                   
living in hard  to heat dwellings. Unlike the  previous plan,                                                                   
this AHFC  program is not  dependent on income  level. Houses                                                                   
in Alaska  are divided into energy  ratings from one  to five                                                                   
stars. The sponsor  intends to allocate $100  million towards                                                                   
those  Alaskans living  in residences  with  the lowest  star                                                                   
ratings  and  provide  incentive   to  increase  home  energy                                                                   
efficiency.  Homeowners  would need  an  "As-is"  and a  post                                                                   
energy  rating assessment.  The rebate  would be  in a  step-                                                                   
approach as energy  star ratings increase; $2500  awarded for                                                                   
the  first  increase in  a  star  rating  and $500  for  each                                                                   
additional  star rating  on up  to  a total  of $5,000.  Half                                                                   
steps are included.                                                                                                             
Mr. Weise  recounted Page 9,  Slide 8, "Increase  Energy Star                                                                   
Ratings of Home":                                                                                                               
   · 1-step increase, $2500                                                                                                     
   · 2-steps, $3000                                                                                                             
   · 3-steps, $3500                                                                                                             
   · 4-steps, $4000                                                                                                             
   · 5 or more steps $5000                                                                                                      
Mr. Weise alleged that the amount  of money needed to replace                                                                   
an inefficient  boiler and gain  the efficiencies  would cost                                                                   
somewhere between $5,000-$10,000 dollars.                                                                                       
8:50:39 AM                                                                                                                    
Mr. Weise read  Page 10, Slide 9, "Home Energy  Rating Rebate                                                                   
    · Expected 30% reduction in home energy costs                                                                               
    · Up to $5,000 rebate                                                                                                       
    · State cost - $100 million                                                                                                 
    · Homeowner investment - est $175 million                                                                                   
Mr. Weise testified  that in a past evaluation  of the rebate                                                                   
program,  AHFC  found  that  on  average  energy  costs  were                                                                   
reduced  by 30  percent  and  in some  cases  as  high as  70                                                                   
percent. The  cost or investment  to the State would  be $100                                                                   
million. In  addition, Alaskan  homeowner investment  through                                                                   
self-financing or  procuring a loan would be  upwards of $175                                                                   
Mr.  Weise summarized  that SB  289 creates  an improved  and                                                                   
more  flexible process  to allow  AHFC to  respond to  rising                                                                   
fuel costs across the state. Senate  Bill 289 broadens AHFC's                                                                   
scope of influence by helping  the organization to reach more                                                                   
8:52:19 AM                                                                                                                    
Mr.  Weise noted  legal  response  regarding  the removal  of                                                                   
references  to two  private entities,  Alaska Craftsman  Home                                                                   
Program and Energy  Rated Homes of Alaska. He  also impressed                                                                   
upon the  committee the three  categories inserted on  Page 3                                                                   
of  the bill:  the home  energy loan  program, rural  capital                                                                   
retrofit program,  and energy  efficiency and  weatherization                                                                   
program.   The  latter   primarily   targets   weatherization                                                                   
activities   from   the   $300  million   proposed   in   the                                                                   
supplemental appropriation.                                                                                                     
8:53:30 AM                                                                                                                    
Representative  Gara  asked Mr.  Weise  if the  $300  million                                                                   
appropriation  is in  conjunction with  the bill. He  further                                                                   
queried the number  of improvements that would  qualify for a                                                                   
rebate if a person is below the  60 percent median income and                                                                   
owns a home.                                                                                                                    
Mr. Weise explained that AHFC  assesses homes using a program                                                                   
to verify  predicted energy  savings.  Those who qualify  for                                                                   
energy  savings would  extend  to 100  percent median  income                                                                   
level.  All expenses  would be  paid through  AHFC and  there                                                                   
would  be no  out-of-pocket expenses  to  the homeowner.  The                                                                   
retrofits would  be subsequently  verified by AHFC  to affirm                                                                   
that the actions applied increase energy efficiency.                                                                            
8:55:22 AM                                                                                                                    
Representative  Gara asked if  an applicant below  60 percent                                                                   
of  the  median  income,  with a  five  star  upgrade,  would                                                                   
receive 100 percent of the rebate.                                                                                              
Mr. Weise  elucidated the two  prong approach:  first, income                                                                   
qualifications  or  second,  energy  efficiency  verified  by                                                                   
AHFC. He  avowed that state  assistance is available  as long                                                                   
as energy  savings is confirmed.  Those not qualifying  under                                                                   
low  income  would  undergo a  pre-assessment  by  AHFC  with                                                                   
approval in advance of work proposed.  The homeowner would be                                                                   
responsible for  either performing the work  or contracting a                                                                   
company  to do  so. The  Alaska  Housing Finance  Corporation                                                                   
would  do a  post-assessment corroborating  the  improvements                                                                   
and  as long  as  they were  in  accordance,  a rebate  would                                                                   
arrive to match the program model in energy star ratings.                                                                       
Representative Gara asked if there would be an income cap.                                                                      
8:56:56 AM                                                                                                                    
Mr. Wiese observed that there  are no income requirements for                                                                   
the rebate program. Those who  apply would most likely have a                                                                   
low energy  star rating.  A person who  lives in a  four star                                                                   
home and  gets approval from AHFC  to rebuild to a  five star                                                                   
rating would be reimbursed the  rebate amount of $2500, equal                                                                   
to one rating jump, even if they spent $10,000.                                                                                 
8:57:49 AM                                                                                                                    
Vice-Chair Stoltze asked if the  inherent economic value of a                                                                   
home is figured into the formula  and what would constitute a                                                                   
bad investment for Alaska Housing Finance Corporation.                                                                          
Mr. Weise replied  that AHFC has engaged in  these activities                                                                   
for some time. He felt assured  that AHFC would not invest in                                                                   
something that would not result in efficiency.                                                                                  
8:59:34 AM                                                                                                                    
BRIAN  BUTCHER, LEGILSATIVE  LIASON,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION, explained that the  organization would determine                                                                   
what amount of  work is reasonable. The previous  goal was to                                                                   
spread $4  million in  state and federal  funds as  widely as                                                                   
possible.   In this instance a  low sum of $4,000  turned out                                                                   
to  be the  average  amount spent  on  a home.  With  greater                                                                   
monies  available there  could be  an increase  to $7,000  or                                                                   
$8,000 per house.  He reiterated that through  the regulation                                                                   
process AHFC would  ascertain a reasonable amount  of average                                                                   
funds per home.                                                                                                                 
Vice-Chair  Stoltze  asked  if   the  priority  would  be  to                                                                   
identify the  most efficient approach regardless  of esthetic                                                                   
value  under a  $7000 cap.  Mr. Butcher  responded that  most                                                                   
energy efficient improvements are relatively inexpensive.                                                                       
9:02:18 AM                                                                                                                    
Mr. Butcher explained  the rating process. Based  on the pre-                                                                   
evaluation, a homeowner can choose  what project to pursue in                                                                   
order to receive a higher rating.  The home is assessed again                                                                   
for effective  upgrades upon completion,  at which  point the                                                                   
homeowner is eligible for a rebate.                                                                                             
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  added that  with a $5000  investment,  based on                                                                   
oil prices  of $100 per  barrel, the return is  approximately                                                                   
57 percent.  He underlined  that the high  rate of  return is                                                                   
due  to energy  efficiency.  He  noted  that in  the  present                                                                   
economy payback is accelerated and substantial.                                                                                 
9:04:59 AM                                                                                                                    
Co-Chair Meyer clarified that  the program is contingent upon                                                                   
the $300  million in the  supplemental budget.  He understood                                                                   
that  $200  million  would  be  for  persons  meeting  income                                                                   
requirements and $100 million  would be for homes conditional                                                                   
upon  authorization   by  AHFC.   Mr.  Weise  confirmed   the                                                                   
9:05:23 AM                                                                                                                    
Representative Nelson  asked about the process  of requesting                                                                   
a rater in a small community.  Mr. Butcher explained that for                                                                   
cost  efficiency an  energy  rater would  be  scheduled in  a                                                                   
community  to  assess  all homes  requesting  a  rating.  The                                                                   
organization  is   currently  working  on   streamlining  the                                                                   
9:06:45 AM                                                                                                                    
Representative  Nelson noted  that  that there  are over  200                                                                   
villages  and  inquired  about prioritizing  by  region.  Mr.                                                                   
Butcher confirmed  that there is a regional  breakdown of the                                                                   
state  by  population  and  heating  days  which  establishes                                                                   
priority order and monetary distribution.                                                                                       
9:07:24 AM                                                                                                                    
Representative Hawker understood  that there are two programs                                                                   
within  AHFC  that have  been  developed  over time  under  a                                                                   
broader  statutory  authority.  He clarified  that  they  are                                                                   
developed  internally within  AHFC, not  programs that  exist                                                                   
independently in statute.                                                                                                       
Mr. Bryan  Butcher, assented that  the practical  details are                                                                   
mapped out in the regulations.                                                                                                  
Representative  Hawker ascertained  that the  purpose of  the                                                                   
legislation  is to empower  AHFC to  define how the  programs                                                                   
should  operate. Mr.  Butcher  revealed that  there had  been                                                                   
discussion internally  about raising the median  income limit                                                                   
for  the  weatherization  program.   He  stated  that  though                                                                   
assistance for  low income households will always  remain the                                                                   
priority, those  above the current median also  struggle with                                                                   
energy costs.                                                                                                                   
9:09:09 AM                                                                                                                    
Representative  Hawker noted  that the  change in the  median                                                                   
income level would be addressed  through internal regulation.                                                                   
Though the provision allows for  a broader scope, there is no                                                                   
mandate  to make  the changes  and  nothing prohibiting  AHFC                                                                   
from  establishing  the  percentage   at  whatever  it  deems                                                                   
appropriate. Mr. Butcher agreed.                                                                                                
9:10:26 AM                                                                                                                    
Representative  Hawker said the  policy question is  how much                                                                   
control the  legislature wants to  have and how  much control                                                                   
is allowed  for AHFC. He asked  if a letter of  intent should                                                                   
accompany the bill in order to establish parameters.                                                                            
9:11:54 AM                                                                                                                    
Mr.  Fauske  acknowledged  that  the  intent  is  clearly  to                                                                   
control  the  program  by  not  leaving  it  open  to  abuse.                                                                   
Further,  the intent  addresses  quality of  life issues  and                                                                   
improvement  on  the  housing   stock  but  most  importantly                                                                   
maximizing  the reduction  of  energy use  in  the state.  He                                                                   
emphasized  both a  desire  to  be as  broad  as possible  to                                                                   
capture  as  many homeowners  as  possible  and a  desire  to                                                                   
stretch funds as far as possible.  He was unfamiliar with the                                                                   
effects  of  a  legislative restriction  placed  on  AHFC  by                                                                   
writing down the median income requirements.                                                                                    
9:12:57 AM                                                                                                                    
Representative  Hawker asked  if  raising the  weatherization                                                                   
percentage to 100  percent, would be high enough  to maximize                                                                   
the benefit  to the  State. Mr.  Fauske felt that  increasing                                                                   
the percentage would  be a wise, effective tool  in expanding                                                                   
the benefit to more people.                                                                                                     
9:14:11 AM                                                                                                                    
Mr. Butcher speculated on the  exclusion of the median income                                                                   
level percentage in  statute. He said that it  was not talked                                                                   
about because AHFC  can only estimate how quickly  funds will                                                                   
be used  and how  many homes  will receive  the funds.  There                                                                   
will not  be certainty with  regards to the right  percentage                                                                   
until the program  is underway for two or more  years. Alaska                                                                   
Housing  Finance  Corporation  plans to  strive  towards  100                                                                   
percent,  but  the omission  allows  AHFC  to return  to  the                                                                   
legislature if adjustments need  to be made to administer the                                                                   
program effectively.                                                                                                            
9:14:52 AM                                                                                                                    
Co-Chair  Meyer commented  that  the bill  would  be held  in                                                                   
Committee and that  the provisions in the bill  are dependent                                                                   
on the passage of the $300 million in the supplemental.                                                                         
Representative  Gara  surmised  that  if funds  are  used  up                                                                   
quickly than  there is  no need  to increase the  eligibility                                                                   
guidelines. He  emphasized the importance of  maintaining the                                                                   
advantage  for low  income. Mr.  Butcher  agreed the  highest                                                                   
priority  is   for  low  income  residents.   Each  community                                                                   
benefits if the amount of energy being used is reduced.                                                                         
9:16:28 AM                                                                                                                    
Representative  Gara  questioned  if there  are  construction                                                                   
requirements  that new  houses have to  be energy  efficient.                                                                   
Mr. Butcher  said AHFC funds are  not available to  new homes                                                                   
unless  they  are  built  to a  four  or  five  star  rating.                                                                   
Currently homes  across the state are almost  uniformly being                                                                   
built to  that level. Representative  Gara wanted to  know if                                                                   
commercial  buildings are  built to higher  ratings  as well.                                                                   
Mr. Fauske believed  they were but was not  certain. He noted                                                                 
that the provision will generate  approximately 1000 jobs. He                                                                   
named  various  ways  to  economize   programs  and  projects                                                                   
through mass  purchasing and addressing  the rating  of homes                                                                   
more efficiently.                                                                                                               
9:19:24 AM                                                                                                                    
Representative Joule asked if  housing authorities around the                                                                   
state have raters.  Mr. Fauske responded that  AHFC certifies                                                                   
the raters.                                                                                                                     
BOB  BREEN,  DIRECTOR, ALASKA  HOUSING  FINANCE  CORPORATION,                                                                   
(Testified  via Teleconference),  disclosed there are  energy                                                                   
raters who  already work  for some  housing authorities.   He                                                                   
elaborated that AHFC also sends  raters to work with a number                                                                   
of housing authorities  needing inspectors. The  intent is to                                                                   
train 40 to 60 more energy raters statewide.                                                                                    
9:20:39 AM                                                                                                                    
Representative  Joule   queried  geographic   adjustment  for                                                                   
higher  costs farther  out. Mr. Fauske  answered that  though                                                                   
there are no regional cost adjustments,  experience has shown                                                                   
that the cost differentials are taken into account.                                                                             
9:21:40 AM                                                                                                                    
Representative Joule alluded to  earlier discussion regarding                                                                   
monetary  adjustments   to  accomplish  the  same   goals  in                                                                   
different  townships. Mr.  Breen explained  a variable  built                                                                   
into  the software  rating program  that  takes into  account                                                                   
cost of  fuel, heating  degree  days, and cost  of living  in                                                                   
different areas.                                                                                                                
9:23:12 AM                                                                                                                    
Representative Kelly requested  an outline from AHFC spanning                                                                   
the 30  year history of  its conservation and  weatherization                                                                   
programs. He  specifically requested numbers  referencing the                                                                   
percentage of  the housing stock rated for  energy efficiency                                                                   
and  dollars  spent on  upgrades.  He  asked the  opinion  of                                                                   
Alaska  Craftsman Home  Program and  energy rated  homeowners                                                                   
regarding the broader language in the bill.                                                                                     
9:24:18 AM                                                                                                                    
Mr. Fauske provided  some history. Eleven years  ago, feuding                                                                   
erupted  among state  housing agencies;  thus specific  names                                                                   
appear  in statute.  Alaska Housing  Finance Corporation  did                                                                   
not  want to  regulate the  industry  and felt  home-building                                                                   
groups should police themselves.  However, adopting a general                                                                   
rating  system would  require  a standard.  The Cold  Climate                                                                   
Housing  Research  Center  (CCHRC)  developed  as  a  central                                                                   
testing center  and institution  whose methods were  accepted                                                                   
by  all. The  main reason  for  removing the  names from  the                                                                   
statute is  that they are  no longer necessary  and encourage                                                                   
earmarking.  He said  there have  been no  complaints to  the                                                                   
Representative Kelly  asked for assurance of  continuing high                                                                   
standards set  by key players  no longer referred by  name in                                                                   
the bill. He again requested figures for the past 30 years.                                                                     
9:26:33 AM                                                                                                                    
Mr. Breen agreed  to provide the information.  He interjected                                                                   
that in the  early years the program ran on  minimal funding.                                                                   
Federal regulations allowed only  a small amount of money for                                                                   
each home. Good work happened  but often not enough to make a                                                                   
home energy efficient.                                                                                                          
Mr. Fauske recalled  an incident eight years  ago celebrating                                                                   
the weatherization of the 10,000th  home statewide to achieve                                                                   
energy efficiency.                                                                                                              
Mr.  Breen affirmed  varying degrees  of program  assistance,                                                                   
with  one home  receiving $500  worth of  repair and  another                                                                   
$4,000. He applauded  the program's long history  and success                                                                   
as  a  win-win  situation  and  emphasized  his  thirty  year                                                                   
association with it.                                                                                                            
9:28:29 AM                                                                                                                    
Representative Kelly  pointed out that cabins  in rural areas                                                                   
are sometimes heated very differently  than homes in an urban                                                                   
center such  as Fairbanks. He  wanted to ensure that  AHFC is                                                                   
not  overly focused  on  places  with multiple  resources  as                                                                   
opposed to areas where a majority of the population lives.                                                                      
9:29:49 AM                                                                                                                    
Representative   Thomas  commented   on  a  Senate   majority                                                                   
presentation  which  divulged  the large  difference  between                                                                   
heating a home  in Anchorage at an average rate  of $1400 and                                                                   
a home in Fairbanks at $14,000.  He stressed concentration of                                                                   
efficiency upgrades in rural places  where the cost of energy                                                                   
is higher.                                                                                                                      
Representative  Thomas  related  a personal  experience  with                                                                   
wood heat  and electricity.   He probed into  AHFC's changing                                                                   
"specs"  and  was curious  to  know  if  in  a house  with  a                                                                   
thermostat the water  tank and furnace are linked  to turn on                                                                   
every 20 minutes under current efficiency criteria.                                                                             
He queried  about what  to do  for someone  with a five  star                                                                   
energy rating  whose costs have  increased. As a  past tribal                                                                   
president, he  interpreted SB 289 as duplicating  hundreds of                                                                   
thousands  of  dollars  of  work  already  done  through  The                                                                   
Native  American Housing  Assistance  and  Self-Determination                                                                   
Act.  He  wondered how many times  a rater returns  to a home                                                                   
to assess efficiency as standards adapt.                                                                                        
9:32:39 AM                                                                                                                    
Mr. Fauske  noted AHFC's  challenge in  balancing both  urban                                                                   
and higher-cost,  harder to access rural areas  of the state.                                                                   
He  also recognized  that  communities  rely  on a  range  of                                                                   
heating   sources.  He   assured   understanding  that   AHFC                                                                   
accurately prioritize  and delegate dollar  amounts according                                                                   
to  many  variables  including:  kinds  of  energy  consumed,                                                                   
remoteness  of  locations,  time  allotted to  a  ramping  up                                                                   
period, density of  dwellings in an area and  types of houses                                                                   
Mr.  Fauske  expressed  excitement  over  the  proposed  $300                                                                   
million  allocation,  its  equitable   distribution  and  the                                                                   
ultimate  goal of  a  reduction in  energy  usage around  the                                                                   
state.  He  assured   that  the  AHFC  network   will  remain                                                                   
receptive  to   communication  from  people  living   in  all                                                                   
9:35:27 AM                                                                                                                    
Mr.  Fauske  realized, with  regards  to  four or  five  star                                                                   
homes,  that new  technologies have  limits. The  idea is  to                                                                   
make  improvements that  will last  30 years;  AHFC will  not                                                                   
revisit  a house every  few years.  A highly-rated  homeowner                                                                   
may choose  to redo an attic  or replace windows  knowing the                                                                   
cost benefit ratio has payback in itself.                                                                                       
9:36:20 AM                                                                                                                    
Mr.  Butcher  spoke  to  the  $300  million  dollar  sum  and                                                                   
reiterated  unknowns as  to how  many people  will choose  to                                                                   
participate.   Until  the  program   is  underway   there  is                                                                   
uncertainty of how much money is ample.                                                                                         
9:37:32 AM                                                                                                                    
Mr.  Fauske envisioned  the legislation  expanding to  public                                                                   
buildings as well.                                                                                                              
9:38:07 AM                                                                                                                    
Representative   Hawker   referenced  discussions   with   an                                                                   
economist. He asked if opposition  has surfaced regarding the                                                                   
efficiency  of this  approach  in dealing  with  a long  term                                                                   
energy plan.                                                                                                                    
Mr. Fauske  stated that some  had suggested funds  are better                                                                   
spent  in  alternative  energy.  He maintained  that  he  had                                                                   
personally witnessed  results and that the program,  if well-                                                                   
managed, is an extremely efficient plan.                                                                                        
Representative Hawker  shared Mr. Fauske's beliefs  and added                                                                   
that if  there is  disagreement he wanted  the other  side to                                                                   
come forward.                                                                                                                   
9:41:07 AM                                                                                                                    
Mr. Fauske spoke of savings through technological upgrades.                                                                     
Mr.  Breen encouraged  the economist  to visit  the CCHRC  in                                                                   
Fairbanks  to talk  with  their  President, Jack  Hébert.  He                                                                   
upheld  that touring  the  facility's labs  is  both an  eye-                                                                   
opening and impressive experience.                                                                                              
9:42:30 AM                                                                                                                    
Representative   Nelson    expressed   gratitude    for   the                                                                   
legislation and  commented that  weatherization was  named as                                                                   
the first tactic in a state energy  policy by newly appointed                                                                   
Energy  Coordinator, Steven  Haagenson.  She  added that  her                                                                   
district  would  continue to  rely  on  diesel even  as  they                                                                   
explore a  replacement through  wind power.  High-penetration                                                                   
turbines  are  not a  constant  resource  when there  are  no                                                                   
hydrogen  storage units  to save  the energy.  She noticed  a                                                                   
trend in which families at prime  earning capacity who cannot                                                                   
afford  fuel  in  their  newer homes  are  moving  back  into                                                                   
smaller,  dilapidated buildings.   Residents  are looking  in                                                                   
turn  at  weatherizing  these  old houses.  She  thanked  the                                                                   
administrators  for  expanding  the program  and  its  timely                                                                   
arrival for needy families.                                                                                                     
9:45:21 AM                                                                                                                    
Mr.  Fauske cited  a  conversation  with an  individual  from                                                                   
Bethel,  Tim Meyers  who also  says that  people are  tending                                                                   
back  to  the  old  ways  with  new  technology  to  maximize                                                                   
efficiency. Mr.  Meyers possesses  a unique design  sense and                                                                   
collaborates with CCHRC.  He has  built and continues to farm                                                                   
potatoes underground.                                                                                                           
Mr.   Fauske   regretted   that  sometimes   change   in   an                                                                   
unconventional  direction is difficult.  Retired persons  are                                                                   
moving to town  because they cannot afford rural  living on a                                                                   
fixed income.   He  agreed, along with  Mr. Meyers  who feels                                                                   
adamantly, that all technologies need to be looked at.                                                                          
9:46:31 AM                                                                                                                    
Representative  Gara  expressed  support  for  the  bill  but                                                                   
voiced concern as to whether the  distribution of funds would                                                                   
take into  account the hardship  on people in  districts with                                                                   
elevated  monthly fuel  bills.   Mr. Fauske  pledged that  an                                                                   
extreme effort would be made to assist those areas quickly.                                                                     
Representative   Gara    inquired   about    weatherizing   a                                                                   
residential  home before  a  recreational  cabin. Mr.  Fauske                                                                   
confirmed  that the buildings  would be  attended to  in this                                                                   
Representative  Gara asked  if a wood-heated  house  would be                                                                   
discriminated   against  because   of  more  greenhouse   gas                                                                   
emissions or the cost and effort  problems facing a homeowner                                                                   
who cuts his own fuel verses buying it.                                                                                         
Mr. Fauske responded that it would not.                                                                                         
9:48:28 AM                                                                                                                    
Representative Kelly  asked if the AHFC would  participate in                                                                   
installing  a  catalytic  converter wood  stove.  Mr.  Fauske                                                                   
stated  that the  AHFC has  no restrictions  on any  building                                                                   
technologies  as   long  as  the   house  is   conforming  to                                                                   
standards. Mr.  Breen concurred and added that  he encourages                                                                   
homeowners to  explore alternatives and provides  information                                                                   
about other less costly heating sources.                                                                                        
9:49:46 AM                                                                                                                    
Representative   Kelly  rephrased   his   inquiry  into   the                                                                   
willingness of  the AHFC to help  with the purchase  of a new                                                                   
stove.  Mr.   Breen  replied   yes;  assistance   is  usually                                                                   
reflected in the post-rating.                                                                                                   
Representative  Kelly  asked   about  the  extent  of  AHFC's                                                                   
backlogged   application  requests.   He   delved  into   the                                                                   
procedure  of  framing  in unnecessary  windows.  Mr.  Fauske                                                                   
confirmed the practice.                                                                                                         
Representative  Kelly  broached the  topic  of  fraud in  the                                                                   
initial program and inquired as to current status.                                                                              
9:51:30 AM                                                                                                                    
Mr. Fauske said  he had not heard the term fraud  used at all                                                                   
in recent memory.  Inspection and follow-up seem  to leave no                                                                   
room  for   deception,  and   the  post-assessment   test  is                                                                   
conclusive. On the  $1 million rebate side of  the bill where                                                                   
substantial  enhancements   towards  energy   efficiency  are                                                                   
verified by AHFC,  he approved of an initial  investment that                                                                   
pays benefits.  Deducting the inspection fee  from the rebate                                                                   
or  raising the  rebate amount  are subjects  that have  also                                                                   
been discussed.                                                                                                                 
Representative   Kelly  asked   for   clarification  of   the                                                                   
investment  piece   on  the  $2  million  side,   the  income                                                                   
qualification portion of the bill.                                                                                              
9:53:25 AM                                                                                                                    
Mr.  Butcher  informed  the committee  that  the  $2  million                                                                   
appropriation  funds a  grant  program for  people under  the                                                                   
100%  median   income  level   who  can  not   afford  energy                                                                   
improvements to  their home. He repeated that  investing with                                                                   
benefits  over time is  for folks  who can  afford to  put in                                                                   
their own  money and get a  rebate. As AHFC  proceeds through                                                                   
the regulation process and public  comment, it will determine                                                                   
incentives  appearing  as  a  definitive  rebate  amount.  He                                                                   
offered  some history  and detailed that  the rebate  program                                                                   
has  been  inactive  since  the   early  1990s  when  it  was                                                                   
eliminated due to budget pressures.                                                                                             
9:54:21 AM                                                                                                                    
Representative  Kelly warned against  the potential  of waste                                                                   
when no  investment is  required by  those persons  receiving                                                                   
money from  the state. He  solicited ideas regarding  ways to                                                                   
hold low-income Alaskans accountable.                                                                                           
SB  289  was   HEARD  and  HELD  in  Committee   for  further                                                                   
The meeting was adjourned at 9:55 AM.                                                                                           

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