Legislature(2015 - 2016)BELTZ 105 (TSBldg)


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

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

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 19(CRA) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 12, 2015                                                                                         
                            3:30 p.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Chair                                                                                                     
Senator Bert Stedman, Vice Chair                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Dennis Egan                                                                                                             
MEMBERS ABSENT                                                                                                                
Senator Anna MacKinnon                                                                                                          
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 19                                                                                                              
"An Act relating to road service area boundary changes."                                                                        
     - MOVED CSSB 19(CRA) OUT OF COMMITTEE                                                                                      
SENATE BILL NO. 56                                                                                                              
"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: SB 19                                                                                                                   
SHORT TITLE: BOUNDARIES OF ROAD SERVICE AREAS                                                                                   
SPONSOR(s): SENATOR(s) COGHILL                                                                                                  
01/21/15       (S)       PREFILE RELEASED 1/16/15                                                                               
01/21/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (S)       CRA                                                                                                    
03/05/15       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/05/15       (S)       Heard & Held                                                                                           
03/05/15       (S)       MINUTE(CRA)                                                                                            
03/12/15       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 56                                                                                                                   
SHORT TITLE: MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
02/18/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/15       (S)       CRA, FIN                                                                                               
03/12/15       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
RENNIEVA MOSS, Staff                                                                                                            
Senator John Coghill                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Reviewed an amendment to SB 19.                                                                           
MICHAEL BREDLIE, Rural Services Manager                                                                                         
Fairbanks North Star Borough,                                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 19.                                                                            
GENE THERRIAULT, Director                                                                                                       
Energy Policy and Outreach                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Alaska Energy Authority (AEA), introduced SB                                                              
EMILY FORD, Manager                                                                                                             
Energy Policy and Outreach                                                                                                      
Alaska Energy Authority (AEA)                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Discussed PACE financing and its benefits.                                                                
LUKE HOPKINS, Mayor                                                                                                             
North Star Borough                                                                                                              
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of SB 56.                                                                            
ACTION NARRATIVE                                                                                                              
3:30:32 PM                                                                                                                    
CHAIR  CLICK  BISHOP  called the  Senate  Community  and  Regional                                                            
Affairs Standing Committee  meeting to order at  3:30 p.m. Present                                                              
at  the call  to  order were  Senators  Stedman,  Egan, and  Chair                                                              
             SB 19-BOUNDARIES OF ROAD SERVICE AREAS                                                                         
3:31:46 PM                                                                                                                    
CHAIR BISHOP announced  the consideration of SB 19  and noted that                                                              
version W was adopted last week.                                                                                                
RENNIEVA  MOSS,  Staff, Senator  John  Coghill, advised  that  the                                                              
difference  of  opinion  she mentioned  during  the  last  hearing                                                              
about the meaning  of AS 29.35.450(c)(3) is clarified  in proposed                                                              
Amendment 1.                                                                                                                    
SENATOR STEDMAN moved Amendment 1, labeled 29-LS0326\W.1.                                                                       
                           AMENDMENT 1                                                                                      
OFFERED IN THE SENATE                                                                                                           
     TO: CSSB 19 (   ), Draft Version "W"                                                                                       
Page 3, line 8, following "area":                                                                                           
     Insert ";                                                                                                                  
          (6) to a change in the boundaries of a road service                                                               
     area to include a parcel that is partially located in the                                                              
     road service area if roads maintained by the service area                                                              
     provide the only access to the parcel"                                                                                 
CHAIR BISHOP objected for discussion purposes.                                                                                  
MS. MOSS  explained that the bill  now does two things.  First, if                                                              
a parcel  is in two separate  service areas, the  borough assembly                                                              
can  vote to  place both  sections of  the parcel  in one  service                                                              
area.  Second, if  a parcel  is in  a  road service  area and  the                                                              
homeowner  has to  use the  roads in  the service  area to  access                                                              
that parcel, the  borough assembly can put the  entire parcel into                                                              
the service  area. She noted  that the owner  of a $20,000  parcel                                                              
with a 1.89 millage rate would pay an additional $38 in taxes.                                                                  
3:34:19 PM                                                                                                                    
SENATOR HOFFMAN joined the committee                                                                                            
CHAIR  BISHOP   removed  his  objection   and  found   no  further                                                              
objection   so  Amendment   1  was  adopted.   He  opened   public                                                              
3:35:11 PM                                                                                                                    
MICHAEL  BREDLIE, Rural  Services  Manager,  Fairbanks North  Star                                                              
Borough,  testified in  support of  SB 19. He  explained that  the                                                              
borough has  105 road  service areas with  dozens of  parcels that                                                              
are either  partially in a  road service  area or in  two separate                                                              
road  service  areas.  Efforts  to  place a  parcel  in  one  road                                                              
service area  under the  existing statute  have been  unsuccessful                                                              
because  no  one  from  the  service   area  turned  out  for  the                                                              
election. This  legislation will allow  the borough to  change the                                                              
boundaries without borough approval.                                                                                            
SENATOR  STEDMAN  moved  to  report   CSSB  19,  [29-LS0326\W]  as                                                              
amended,  from  committee  with   individual  recommendations  and                                                              
attached fiscal note(s).                                                                                                        
CHAIR BISHOP  announced that  without objection  CSSB 19(CRA)  was                                                              
reported from the  Senate Community and Regional  Affairs Standing                                                              
3:36:31 PM                                                                                                                    
At ease                                                                                                                         
          SB 56-MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS                                                                     
3:39:32 PM                                                                                                                    
CHAIR   BISHOP   reconvened   the  meeting   and   announced   the                                                              
consideration of SB 56.                                                                                                         
GENE  THERRIAULT, Director,  Energy  Policy  and Outreach,  Alaska                                                              
Energy Authority  (AEA), provided  some background  for SB  56. He                                                              
explained that  in 2010 the legislature  set a goal  of increasing                                                              
statewide energy efficiency  15 percent by 2020,  and AEA operates                                                              
a  number of  programs  that work  toward that  goal.  One is  the                                                              
commercial facility  energy audit  program. Through that  program,                                                              
about 150 audits  have been performed and the  few building owners                                                              
that  have  used  the  information  have  achieved  a  30  percent                                                              
reduction  in their energy  use. At  this point  AEA is  trying to                                                              
figure  out why  more  owners aren't  following  through with  the                                                              
improvements suggested in the audit.                                                                                            
MR. THERRIAULT  said that  when he  became interested in  property                                                              
assess   clean  energy   (PACE)  financing   for  commercial   and                                                              
residential properties  he learned  that initial attempts  at this                                                              
type  of  financing   ran  into  difficulties  with   the  federal                                                              
secondary   loan  market.  They   opposed  including   residential                                                              
properties  out  of  concern  that  the  bank  loan  would  become                                                              
secondary  to  the   PACE  financing.  There  appears   to  be  no                                                              
opposition  to commercial properties  and 31  or 32 states  across                                                              
the country  are beginning  to take  advantage of commercial  Pace                                                              
financing to do energy efficiency upgrades.                                                                                     
MR. THERRIAULT  discussed the importance  of providing a  level of                                                              
uniformity  in  the  statutes  to  empower  local  governments  to                                                              
initiate PACE financing.  This will make it easier  for lenders to                                                              
figure out  how to  move forward  and help  the state achieve  the                                                              
goals intended by  PACE financing. He noted that SB  56 is modeled                                                              
on Texas legislation that provides protections for banks.                                                                       
3:44:56 PM                                                                                                                    
EMILY FORD,  Manager, Energy  Policy and  Outreach, Alaska  Energy                                                              
Authority  (AEA),  discussed  PACE  financing  and  its  benefits.                                                              
These  programs  allow  property   owners  to  finance  qualifying                                                              
energy efficiency  improvements through a voluntary  assessment on                                                              
their  property tax  bill.  Participation is  a  local option  for                                                              
municipalities  and   commercial  property  owners   and  mortgage                                                              
holder consent  is required before  applications can  be approved.                                                              
Improvements  can  include lighting  upgrades,  renewable  energy,                                                              
conversion   to   natural  gas,   high-efficiency   boilers,   and                                                              
additional   energy   efficiency   improvements.   The   repayment                                                              
obligation transfers with the sale of the property.                                                                             
She explained  that energy efficiency  upgrades are  financed with                                                              
capital  secured  by  a  primary  lien  on  the  property,  lower-                                                              
interest  capital,  and  favorable  repayment terms  that  can  be                                                              
raised from the  private sector. With a longer  repayment periods,                                                              
the building  owner can realize  immediate savings  while repaying                                                              
the debt.  Traditional lending sources  can be used and  in Alaska                                                              
it provides consistency with the state energy goals.                                                                            
Thirty  one  states  have authorized  PACE  programs  after  their                                                              
state  legislature provided  the authority  for local  governments                                                              
to establish  and operate the  program. Municipalities  can create                                                              
the program  and select  the financing models  and there  are many                                                              
national  resources available  to both  governments and  consumers                                                              
including  the U.S.  Department  of  Energy, PaceNow.org,  and  C-                                                              
MS. FORD  explained that  there are  three potential PACE  models.                                                              
In  the   local-government  driven   model  either  the   property                                                              
assessment  office or  a PACE  office  is used  to interface  with                                                              
commercial property  owners and potential lenders.  Municipal bond                                                              
financing is  available for improvement  efforts. In  the private-                                                              
sector driven  model there  is a  third-party administrator  under                                                              
contract  with  the  local government  and  private  financing  is                                                              
emphasized.  In the  hybrid model  all  potential funding  sources                                                              
are available for  use including bonds, revolving  loan funds, and                                                              
private   capital.   Smaller   governments   can   contract   with                                                              
communities or regional organizations to administer the program.                                                                
MS. FORD  discussed  the provisions  in SB 56.  It is  authorizing                                                              
legislation  for the 24  local governments  that collect  property                                                              
taxes to  choose to  create a  PACE program  and allow  commercial                                                              
property owners to opt in.                                                                                                      
She provided a sectional analysis for SB 56.                                                                                    
Section 1  amends Title 29 by  adding a new chapter  49: Municipal                                                              
Property Assessed Clean Energy Act.                                                                                             
AS  29.49.020 would  allow property  tax assessments  to be  added                                                              
for  financing  of  qualified  projects   on  real  property.  The                                                              
improvements  may   not  be  made  to  vacant   lots  or  property                                                              
undergoing  development  at  the   time  of  the  assessment.  The                                                              
financing  may  not be  used  to  purchase temporary  products  or                                                              
anything not permanently fixed to real property.                                                                                
AS 29.49.030  would require a  written contract between  the local                                                              
government and owner of record of the real property.                                                                            
3:49:08 PM                                                                                                                    
CHAIR BISHOP asked  if a business that manufactures  modular homes                                                              
for a North Slope  camp could qualify for financing  under section                                                              
MR.  THERRIAULT replied  the manufacturing  facility itself  could                                                              
take  advantage  of  the  financing,  but  not  the  product  they                                                              
MS. FORD continued the sectional analysis.                                                                                      
AS  29.49.040  says that  a  local  government  may enter  into  a                                                              
contract  with   a  property  owner   to  impose   an  assessment.                                                              
Financing can  be provided by  the municipality or  a third-party.                                                              
If third-party  financing is  used, the municipality,  third-party                                                              
financer and real  property owner must enter into  a contract. The                                                              
assessment  may  cover  some costs  for  the  commercial  property                                                              
owner,  including permit  and  lenders fees,  administration,  and                                                              
project development and engineering costs.                                                                                      
AS 29.49.050  states that  the municipality's  governing body  may                                                              
designate   one   or  more   areas   within   the   municipality's                                                              
jurisdiction as a PACE-eligible region.                                                                                         
AS 29.49.060 defines  the procedure to create the  program. If the                                                              
municipality chooses  to create a PACE program  the governing body                                                              
first  must adopt  a  resolution  of intent  that:  1) shows  that                                                              
providing  the PACE  program  serves a  valid  public purpose;  2)                                                              
includes  a  statement  the  municipality  intends  to  make  PACE                                                              
available  to  property  owners;  3)  includes  a  description  of                                                              
qualified projects; 4) describes the boundaries  of the region; 5)                                                              
describes  the  available  financing for  qualified  projects;  6)                                                              
describes the municipal  debt servicing procedures  if third-party                                                              
financing  is used  7) describes  how  the public  can access  the                                                              
program  report  required  by  AS  29.29.070;  and  8)  identifies                                                              
public  contacts   regarding  the   collection  of  the   proposed                                                              
contractual  assessments. Second, the  governing body  must hold a                                                              
public hearing with  the opportunity for public  comment. Finally,                                                              
the  governing  body  must adopt  a  resolution  establishing  the                                                              
program, including  terms consistent  with the  publicly-available                                                              
program report required by AS 29.49.070.                                                                                        
3:51:11 PM                                                                                                                    
The program  can only be amended  by resolution.  The municipality                                                              
may  hire and  set compensation  for an  administrator, staff,  or                                                              
contract for  professional services and impose fees to  offset the                                                              
costs of administering the program.                                                                                             
AS 29.49.070  requires  a publicly-available  program report  that                                                              
is available online  and at municipal offices that  includes: 1) a                                                              
map of the program  region boundaries; 2) a form  contract between                                                              
the municipality and  the property owner that  specifies the terms                                                              
of the  assessment and  any financing;  3) if  appropriate  a form                                                              
contract between  the municipalities and the  third-party financer                                                              
regarding  the servicing  of the  debt through  assessments; 4)  a                                                              
description  of  qualified  projects;   5)  a  plan  for  ensuring                                                              
sufficient  capital; 6)  bonds  information  if appropriate  about                                                              
the  maximum  aggregate  annual dollar  amount  for  financing,  a                                                              
method for  ranking requests  from property  owners, and  a method                                                              
for  determining  the  interest  rate and  maximum  amount  of  an                                                              
assessment;  and 7)  a method  for ensuring  the repayment  period                                                              
does not  exceed the useful  life of the  qualified project;  8) a                                                              
description   of   the   application   process   and   eligibility                                                              
requirements; 9)  a method for  ensuring qualified  applicants can                                                              
demonstrate  financial ability  to  fulfill financial  obligations                                                              
and verify  the applicant is the  legal owner of the  property, is                                                              
current on  mortgage and  property taxes and  is not  insolvent or                                                              
in  bankruptcy;   10)  an  explanation   of  the   assessment  and                                                              
collection  process;  11)  an explanation  of  the  lender  notice                                                              
requirement provided  by AS 29.40.080;  12) an explanation  of the                                                              
review requirement  provided  by AS 29.49.090;  12) a  description                                                              
of the  marketing and  education  services to  be provided;  14) a                                                              
description  of  quality  assurance and  antifraud  measures;  15)                                                              
collection procedures;  and 16) a  requirement for  an appropriate                                                              
ratio between the assessment and property value.                                                                                
AS 29.49.080 requires notice to a mortgage holder.                                                                              
AS  29.49.090 requires  a third-party  baseline  energy audit  and                                                              
projected  energy  savings.  Once  the project  is  complete,  the                                                              
municipality  shall  obtain  third-party   verification  that  the                                                              
project was properly completed and operating as intended.                                                                       
AS 29.49.100 allows direct acquisition by the owner.                                                                            
AS  29.49.110  states  that the  contractual  assessment  must  be                                                              
noticed and filed in the real property records.                                                                                 
AS  29.49.210   states  that   contractual  assessments   and  any                                                              
interest  or penalties  are  primary liens  on  the property.  The                                                              
exceptions  are  municipal  tax  liens  and  special  assessments.                                                              
These  leans  stay  with  the  land  and  are  not  eliminated  by                                                              
foreclosure.  Penalties and  interest may  be added to  delinquent                                                              
installments  and municipalities  may recover  costs and  expenses                                                              
to collect a delinquent installment.                                                                                            
3:54:38 PM                                                                                                                    
AS  29.49.130  allows  municipalities  to  contract  with  another                                                              
governing  body  of another  taxing  unit to  perform  assessments                                                              
collections.  This is  important  for small  communities that  may                                                              
not have the capacity to implement a PACE program.                                                                              
AS 29.49.140  allows municipalities to  issue bonds. They  may not                                                              
be general obligations  bonds and must be  secured by one  or more                                                              
of  the  following:  payments  of   the  contractual  assessments;                                                              
municipal  reserves;  municipal  bond  insurance;  and  any  other                                                              
funds  lawfully  available  for   purposes  consistent  with  this                                                              
AS 29.49.150  allows for  joint implementation.  A combination  of                                                              
municipalities  may  join to  implement  the program  or  contract                                                              
with a third party.                                                                                                             
AS  29.49.160 discusses  prohibited  acts.  Permits, licenses  and                                                              
authorizations   cannot  be  made   contingent  on  a   commercial                                                              
building entering a PACE program.                                                                                               
AS 29.49.900 adds definitions.                                                                                                  
AS 29.49.995 adds the short title.                                                                                              
Section 2 establishes an immediate effective date.                                                                              
CHAIR BISHOP stated he would hold SB 56 in committee.                                                                           
3:56:12 PM                                                                                                                    
SENATOR EGAN  asked Mr. Therriault  if this legislation  addresses                                                              
the concerns that financial institutions have voiced.                                                                           
MR.  THERRIAULT  advised  that  separating   the  residential  and                                                              
commercial components  has allowed  the commercial PACE  financing                                                              
to move  forward. Concerns  about residential  PACE financing  was                                                              
the basis of  the Fanny Mae and  Freddie Mac lawsuits in  a number                                                              
of  states  and  jurisdictions  because  they  didn't  want  their                                                              
residential loan to  become secondary to the PACE  financing. Most                                                              
states  addressed the  problem by  separating the  two and  moving                                                              
forward  with the  commercial  component.  That has  made  lenders                                                              
more  comfortable, particularly  if there's  the requirement  that                                                              
the mortgage holder  give their consent before  the property owner                                                              
can participate in the program.                                                                                                 
He noted that  he began working with the banking  association last                                                              
fall letting  them know AEA was  considering the concept  and that                                                              
it would  likely be  patterned after  the Texas  model. He  opined                                                              
that the banks will  be watching to see that the  protection stays                                                              
in the legislation.                                                                                                             
SENATOR HOFFMAN  asked how  the program  will be implemented  when                                                              
there's a zero fiscal note.                                                                                                     
MR.  THERRIAULT explained  that the  implementation and  operation                                                              
of  the program  is  a local  option  and the  municipalities  are                                                              
allowed to charge fees to cover the costs.                                                                                      
MS. FORD highlighted  that the costs of the audit  and third-party                                                              
review do not have to be borne by the municipality.                                                                             
4:00:26 PM                                                                                                                    
LUKE  HOPKINS, Mayor,  Fairbanks  North Star  Borough,  Fairbanks,                                                              
Alaska, noted  that he submitted  written testimony in  support of                                                              
SB  56.  He  stated  that the  option  of  having  the  owners  of                                                              
commercial properties  use PACE financing for  energy improvements                                                              
and conversions  is well worthwhile  and the process is  well laid                                                              
CHAIR BISHOP closed public testimony.                                                                                           
4:04:08 PM                                                                                                                    
At ease                                                                                                                         
4:04:21 PM                                                                                                                    
MR.  THERRIAULT   highlighted  that   this  would  apply   to  any                                                              
municipality that  has property tax  powers. He noted that  it has                                                              
special  meaning  for  Fairbanks  because  the hope  there  is  to                                                              
convert as  much of  the community  as possible  from fuel  oil to                                                              
natural gas. That  qualifies as an energy efficient  step and is a                                                              
tool that would be applicable statewide.                                                                                        
CHAIR BISHOP held SB 56 in committee for further consideration.                                                                 
4:06:01 PM                                                                                                                    
There  being no  further business  to come  before the  committee,                                                              
Chair Bishop adjourned  the Senate Community and  Regional Affairs                                                              
Standing Committee meeting at 4:06 p.m.                                                                                         

Document Name Date/Time Subjects
SB 56 PACE Presentation 03 12 15.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Fiscal Note.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Request for Hearing and Explanation of Bill.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Bill Text.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 REAP Support Letter.docx SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 IGU Support Letter.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 FNSB Support Letter.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
CSSB 19 Version H.pdf SCRA 3/12/2015 3:30:00 PM
SB 19
CSSB 19 Amendment.pdf SCRA 3/12/2015 3:30:00 PM
SB 19
SB 19 Amendment Explanation.pdf SCRA 3/12/2015 3:30:00 PM
SB 19
SB 56 ABA Support Letter.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 DEC USDOE Support Letter.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Doyon Support Letter.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Hearing Request.pdf SCRA 3/12/2015 3:30:00 PM
SB 56
SB 56 Sectional Analysis.pdf SCRA 3/12/2015 3:30:00 PM
SB 56