02/25/2021 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB15 | |
| SB17 | |
| SB13 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 15 | TELECONFERENCED | |
| *+ | SB 13 | TELECONFERENCED | |
| *+ | SB 17 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 25, 2021
3:31 p.m.
MEMBERS PRESENT
Senator Shelley Hughes, Chair
Senator David Wilson
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Robert Myers, Vice Chair
Senator Lyman Hoffman
COMMITTEE CALENDAR
SENATE BILL NO. 15
"An Act relating to the Open Meetings Act; and establishing a
civil penalty for violations of the open meeting requirements by
members of governmental bodies."
- HEARD & HELD
SENATE BILL NO. 17
"An Act relating to the retrofitting of certain public
facilities and community facilities; relating to the performance
of energy audits on schools and community facilities; relating
to the duties of the Alaska Energy Authority and the Alaska
Housing Finance Corporation; creating a rapid economic recovery
office in the Alaska Industrial Development and Export
Authority; and relating to the state energy policy and energy
source reporting by state agencies."
- HEARD & HELD
SENATE BILL NO. 13
"An Act relating to oil and gas exploration, production, and
pipeline transportation property taxes; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 15
SHORT TITLE: OPEN MEETINGS ACT; PENALTY
SPONSOR(s): SENATOR(s) COSTELLO
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) CRA, JUD
02/25/21 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 17
SHORT TITLE: ENERGY EFFICIENCY & POLICY: PUB. BLDGS
SPONSOR(s): SENATOR(s) BEGICH
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) CRA, L&C, FIN
02/25/21 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 13
SHORT TITLE: OIL AND GAS PROPERTY TAX
SPONSOR(s): SENATOR(s) BEGICH
01/22/21 (S) PREFILE RELEASED 1/8/21
01/22/21 (S) READ THE FIRST TIME - REFERRALS
01/22/21 (S) CRA, RES, FIN
02/25/21 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
MELODIE WILTERDINK, Staff
Senator Mia Costello
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 15 on behalf of the sponsor.
HEATHER HEBDON, Executive Director
Alaska Public Offices Commission
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 15.
SARA CHAMBERS, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community, and Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 15.
SENATOR TOM BEGICH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 17.
CONNOR OWENS, Staff
Senator Tom Begich
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a sectional analysis for SB 17.
MARK DAVIS, Director
Division of Facilities Services
Department of Transportation and Public Facilities
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 17.
CHRISTOPHER HODGIN, Senior Project Manager
Division of Facilities Services
Department of Transportation and Public Facilities
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 17.
LOKI TOBIN, Staff
Senator Tom Begich
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 17.
DR. SYDNEY LIENEMANN, Climate Advisor
Natural Resources Council
City of Albuquerque
Albuquerque, New Mexico
POSITION STATEMENT: Provided information and recommendations for
SB 17.
AMBER MCDONOUGH, Account Executive
Energy and Performance Services
Siemens Industry, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided information and recommendations for
SB 17.
ALAN WEITZNER, CEO/Executive Director
Alaska Industrial Development and Export Authority
Anchorage, Alaska
POSITION STATEMENT: During the hearing on SB 17, requested
follow up information from Siemens about the structure of
bundling in the bill that might impact AIDEA.
CURTIS THAYER, Executive Director
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Commented on SB 17.
SENATOR TOM BEGICH, Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 13.
NILS ANDREASSEN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Testified that AML does not have a position
on SB 13.
MERCEDES COLBERT, Staff
Senator Tom Begich
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for SB 13.
ACTION NARRATIVE
3:31:17 PM
CHAIR SHELLEY HUGHES called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:31 p.m. Present
at the call to order were Senators Wilson, Gray-Jackson, and
Chair Hughes.
SB 15-OPEN MEETINGS ACT; PENALTY
3:31:54 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 15
"An Act relating to the Open Meetings Act; and establishing a
civil penalty for violations of the open meeting requirements by
members of governmental bodies."
She asked Melodie Wilterdink to introduce the bill.
3:33:31 PM
MELODIE WILTERDINK, Staff, Senator Mia Costello, Alaska State
Legislature, Juneau, Alaska, introduced SB 15 on behalf of the
sponsor, with a PowerPoint that is embodied in the sponsor
statement:
The Open Meetings Act requires that all meetings of an
Alaska governmental body of a public entity be open to
the public, unless exempt by statute (the Legislature
and Judiciary are exempt). Despite the challenges of
public gathering brought on by COVID-19, it is
essential that elected officials continue to abide by
the Open Meetings Act and hold meetings that are
available to the public. During the summer of 2020,
residents of Anchorage tried repeatedly to attend and
testify at assembly meetings in person, but to no
avail. The Assembly capped attendance at 15 people,
preventing anyone but members, staff, and the press
from attending.
Senate Bill 15 would establish a civil penalty of up
to $1,000 for elected or appointed members of
governmental bodies who violate the Open Meetings Act.
The purpose of Senate Bill 15 is to encourage the
continuation of open public meetings, despite current
and future challenges.
In 1965, the late Senator Ted Stevens then
Representative Stevens introduced House Bill 170,
"An Act requiring that the meetings of agencies of the
state and its subdivisions be open to the public with
certain exceptions," which we now know as the Open
Meetings Act. His original bill included a fine of up
to $1,000 for elected officials who violated the Act.
She noted that many other states attach various penalties to
violations of the Open Meetings Act. She directed attention to
the comments on slide 4 from Anchorage residents when they felt
the Anchorage Assembly was quelling their opportunity to speak.
The slide read as follow:
The Assembly used COVID as their excuse to bar the
public from the meeting. In my opinion, a fine might
discourage them from a repeat. - Mary Barr, resident
of District K
I personally don't understand how the Anchorage
Assembly can unilaterally decide how the money is
spent without the input from the people that they are
appointed to represent. Rose Hubbard, resident of
District H
It was extremely frustrating that we were not allowed
to go in ? It was a quick and easy way of shutting us
out, not having to listen to us. Christine Hill,
resident of District L
3:35:47 PM
SENATOR WILSON asked if the bill changes the Open Meetings Act
to apply to legislators.
MS. WILTERDINK answered no; the legislature is held to the
Uniform Rules. To change whether legislators receive fines for
violating similar rules in the Uniform Rules would require a
separate piece of legislation or a resolution.
SENATOR GRAY-JACKSON referenced the first quote and said she
knows most of the assembly members and does not believe they
used COVID-19 as an excuse.
CHAIR HUGHES asked Ms. Wilterdink if she looked back at any of
the conversations when Representative Stevens had the Open
Meetings Act before the legislature and why he removed the
penalty from the initial bill.
MS. WILTERDINK answered she was not sure because not all the
committee meeting notes were unavailable.
CHAIR HUGHES asked her if she had data from other states on the
number of Open Meetings Act violations and correlating penalties
from mild to severe.
MS. WILTERDINK answered no, but she would follow up with the
information.
CHAIR HUGHES asked her if there was a mechanism to collect the
penalties indicated in the legislation.
MS. WILTERDINK answered yes. She explained the plan is to have
the Alaska Public Offices Commission (APOC) collect the
penalties.
CHAIR HUGHES asked Heather Hebdon with APOC what it would entail
for APOC to collect the penalties.
3:38:59 PM
HEATHER HEBDON, Executive Director, Alaska Public Offices
Commission, Department of Administration, Anchorage, Alaska,
stated as far as collecting the penalty, the legislation is not
clear how APOC would determine a violation occurred. They do not
have a mechanism to identify a violation or to determine how a
violation would be presented to APOC. APOC not only does not
regulate the Open Meetings Act, but it is subject to the Open
Meetings Act so the legislation presents a question of whether
there would be a conflict of interest in regulating the law.
CHAIR HUGHES stated the committee might have some things to work
through, but APOC first needs a mechanism. Secondly, the
legislature would have to give APOC the authority to deal with
the Open Meetings Act since the commission does not have the
prescribed duties at this point. She asked if those were the two
items she identified.
3:40:42 PM
MS. HEBDON answered yes.
CHAIR HUGHES asked Ms. Wilterdink if she and the sponsor had
considered an amendment or committee substitute to address those
points.
MS. WILTERDINK answered yes; the sponsor has an amendment that
would designate APOC for fine collections. She said her
understanding is APOC would follow a similar process to the
public complaint process where somebody brings a complaint about
an elected official and then it goes through the APOC process
where the commission does an investigation on both sides
followed by a recommendation and then a hearing.
SENATOR WILSON asked if APOC would work out the regulatory
language and process for fee collection should SB 15 pass.
3:42:02 PM
MS. HEBDON answered APOC currently does not have the statutory
authority to determine a violation of the Open Meetings Act.
Without statutory authority, she did not know if the regulatory
process would be sufficient.
SENATOR WILSON asked if the commission would go through the
regulatory process to collect fines if the committee were to
amend the bill to give APOC the statutory authority.
MS. HEBDON replied she could not speak to an amendment she had
not seen, but if APOC had the statutory authority it would make
sense to then go through the regulatory process to iron out
details. She added APOC expects this would have a significant
fiscal impact on the commission.
CHAIR HUGHES asked if that was due to a tremendous number of
violations. She said she thinks people would be on their toes
and violations would not be very frequent if SB 15 passed.
She asked her if SB 15 would be a lot of work for APOC, not just
the development of the regulations, but also because of the
large number of incidents the commission would receive in a
year.
3:43:47 PM
MS. HEBDON answered because APOC does not currently have the
regulatory authority, the commission does not have any
foundational knowledge as to how many violations might occur.
Because of the definition of a governmental body, the
legislation would have far-reaching impacts all the way down to
local community councils. Given the size of the agency and what
the commission is currently responsible for, it is unrealistic
to think they could competently regulate this. She reiterated it
is unclear how these violations would be identified.
CHAIR HUGHES said she had not thought about the legislation
reaching down to the community council level, because that means
it would apply to hundreds if not thousands.
She asked Sara Chambers if she knew how many state and local
officials are in the state.
3:45:26 PM
SARA CHAMBERS, Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community, and
Economic Development, Juneau, Alaska, replied she did not know
but she would refer the question to the director of the Division
of Community and Regional Affairs.
MS. CHAMBERS noted she was responsible for the 21 licensing
boards.
CHAIR HUGHES asked how the bill would apply to the licensing
boards.
MS. CHAMBERS answered the division has 21 boards that manage all
governing functions for half of the licensing programs. Since
the boards fall under the definition that is in the law as a
public official, they would be subject to a fine. The
department's concern is that board members are volunteers and
finding enough volunteers to meet certain criteria is already
difficult. The bill would be another deterrent and risk that
volunteers would take when they consider whether to serve the
state.
SENATOR GRAY-JACKSON noted that by charter the Municipality of
Anchorage Assembly is responsible for the 38 community councils
it established. She suggested making the Anchorage Assembly
responsible for identifying and fining those community councils
for violations of the Open Meetings Act.
3:47:35 PM
CHAIR HUGHES asked Ms. Chambers if boards and commission are
subject to the Open Meetings Act.
MS. CHAMBERS answered yes.
CHAIR HUGHES commented on the informal nature of community
council meetings and asked Ms. Wilterdink if the sponsor
intended the legislation to go to the community council level.
MS. WILTERDINK answered yes, the sponsor intended the bill to
cover everybody covered by the Open Meetings Act. The exceptions
are the legislature and the judiciary.
CHAIR HUGHES asked Ms. Wilterdink to provide the sectional
analysis for SB 15.
3:49:00 PM
MS. WILTERDINK read the sectional analysis for SB 15:
Section 1
AS 44.62.310(h), page 1, lines 4-6, is amended to
define the terms "knowingly" and "public official."
Under this section, "knowingly" has the meaning given
in AS 11.81.900(a)(2), "public official" has the
meaning given in AS 39.50.200(a)(9).
Section 2
Page 1, lines 7-10, is amended to add a civil penalty
of up to $1,000 for elected or appointed members of a
governmental body who knowingly attend a meeting that
violates the Open Meetings Act.
Section 3
Page 1, lines 11-14, and page 2, line 1, it provides
that the penalties added by this bill apply to
offenses occurring on or after the effective date of
this Act.
3:50:13 PM
CHAIR HUGHES asked how the two statutory references define the
terms "knowingly" and "public officials."
MS. WILTERDINK answered her general understanding is that that
"public official" effectively is everybody who is not in the
legislature and not in the judiciary. The definition of
"knowingly" is as follows:
A person acts knowingly with respect to conduct or to
a circumstance described by a provision of law
defining an offense when the person is aware that the
conduct is of that nature or that the circumstance
exists.
When knowledge of the existence of a particular fact
is an element of an offense, that knowledge is
established if a person is aware of a substantial
probability of its existence, unless the person
actually believes it does not exist.
A person who is unaware of conduct or a circumstance
of which the person would have been aware had that
person not been intoxicated, acts knowingly with
respect to that conduct or circumstance.
3:52:03 PM
SENATOR GRAY-JACKSON noted that the Municipality of Anchorage
has its own ethics code and commission to address violations of
the Open Meetings Act. She asked how that works with this bill.
MS. WILTERDINK answered she would look into it and follow up
with the answer.
SENATOR GRAY-JACKSON added that the Municipality of Anchorage
also has a reprimand in code for violations, and how that works
with the bill should also be investigated.
CHAIR HUGHES opined that was important information to have on
the record. She offered her understanding that some municipal
officials raised this concern with the sponsor. She asked if
they filed a complaint through the Municipality of Anchorage.
MS. WILTERDINK replied she had not seen complaints to that
effect. She has seen some concerns about the bill that she was
happy to share with the committee.
3:54:35 PM
CHAIR HUGHES held SB 15 in committee.
SB 17-ENERGY EFFICIENCY & POLICY: PUB. BLDGS
3:54:59 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 17
"An Act relating to the retrofitting of certain public
facilities and community facilities; relating to the performance
of energy audits on schools and community facilities; relating
to the duties of the Alaska Energy Authority and the Alaska
Housing Finance Corporation; creating a rapid economic recovery
office in the Alaska Industrial Development and Export
Authority; and relating to the state energy policy and energy
source reporting by state agencies."
3:56:55 PM
SENATOR TOM BEGICH, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 17, explained the bill is about energy efficiency
and policy of public buildings.
He said the committee members already know the first invited
testifier, Dr. Sydney Lienemann. She has a PhD in chemical
physics and has spent the last decade working at the
intersection of energy, science, and policy. She was the
legislative assistant for clean energy for U.S. Senator Mark
Begich and then led the Artic Energy Diplomacy Program at the
U.S. State Department, focusing on distributed energy and
affordability.
SENATOR BEGICH detailed Dr. Lienemann left her position with the
U.S. State Department to serve as his chief of staff for two-
and-a-half years and helped develop this legislation in a prior
legislature. She currently is the climate advisor to the City of
Albuquerque where she is overseeing an energy service
performance contract across 50 facilities and over 2 million
square feet of police stations, libraries, pools, community
centers, and office space. He noted that SB 17 refers to
something similar.
SENATOR BEGICH said the second invited testifier, Amber
McDonough, is an account executive for energy and environmental
solutions for Siemens Energy. She has a degree in chemical
engineering from the University of Alaska Fairbanks and is a
certified professional engineer.
He added both Dr. Lienemann and Ms. McDonough will testify
specifically to the nature of the (energy service company) ESCO
portion of the bill.
3:59:02 PM
SENATOR BEGICH explained SB 17 is responding to a lot of needs
in the state and in many ways is an economic recovery bill and a
bill that continues policy made by the legislature in prior
years.
He said the State of Alaska is responsible for $600 million in
energy costs associated with close to 5,000 state-owned public
facilities. With significant economic headwinds visible on the
horizon, reducing the state's energy costs through sound
investments and clean energy not only makes good fiscal sense,
but it also fulfills the legislative promise of bringing
renewable energy to Alaskan communities.
He remarked everyone's own families recognize the impact of
storage, energy facilities, and alternative energies; all of us
are looking for those alternatives including Alaska's partners
in the oil and gas industry and others who have been
diversifying the very field.
He detailed in 2010, the Alaska State Legislature passed House
Bill 306 which established the goal of obtaining 50 percent of
the state's energy from renewable energy by 2025. With some of
the highest costs of energy in the nation, increasing the share
of renewable electricity and heat will save the state money and
help insulate costs from volatility and fuel pricing.
SENATOR BEGICH said he has from time to time talked about energy
costs, school districts in particular. The Matanuska-Susitna
School District's annual energy cost is around $5 million, which
is the same as the cost for the Lower Kuskokwim School District
that has a significantly smaller population. SB 17 potentially
would help reduce those costs, he said.
SENATOR BEGICH detailed in 2010, the Alaska Sustainable Energy
Act also set forth a goal of retrofitting 25 percent of the
state's buildings over 10,000 square feet for energy efficiency
by 2020, but successfully achieved that goal by 2014 through
public and private partnerships described in the SB 17.
He said building on the success of the Alaska Sustainable Energy
Act, SB 17 extends the energy efficiency retrofit program to
schools and community centers which are eligible for the Power
Cost Equalization (PCE) program. This creates incentives to
reform retrofits for buildings that receive State support for
their energy bills, which will save money for the state, school
districts and communities. However, single retrofit projects,
which is a lot of the rural project, may not be attractive or
profitable to private retrofit enterprises that were interested
in the earlier bill.
4:02:00 PM
SENATOR BEGICH explained SB 17 also directs the Alaska
Industrial Development and Export Authority (AIDEA) to establish
a rapid economic recovery office to facilitate state energy
policy and encourage private investment through a process of
grouping a number of ESCOs. This new office will review energy
audits to identify, and bundle retrofit and other clean energy
projects for marketing and engagement with the Department of
Transportation and Public Facilities (DOT&PF) for contracting
with private investors. This will ensure the benefits of the
state's energy policy, clean energy, and energy retrofitting to
proliferate into rural communities, rather than just reaching
the goal through one large Railbelt project.
He summarized SB 17 will provide rapid economic recovery by
bringing in new investment to support an Alaska-based clean
energy industry and reduce the challenges and barriers that may
prevent private companies from investing in Alaska's
infrastructure development.
CHAIR HUGHES requested a sectional analysis for SB 17.
SENATOR BEGICH referenced a supporting document for SB 17 from
DOT&PF. The department continually updates its energy efficiency
program and they have gone beyond the 25 percent and have a
remarkable story that they hopefully will share with the
committee.
4:04:17 PM
CONNOR OWENS, Staff, Senator Tom Begich, Alaska State
Legislature, Juneau, Alaska, provided a sectional analysis for
SB 17:
Section 1
Establishes legislative intent to outfit public
buildings, facilities, and schools with new energy
upgrades to ultimately reduce net energy costs by
2026.
Section 2
Amends AS 18.56 by adding a section AS 18.56.865 which
authorizes the Alaska Energy Authority (AEA) to
conduct energy audits of public facilities upon
requests.
Section 3
Amends AS 42.45.110 by adding a new subsection which
permits owners of public facilities that use power
cost equalization under subsection (b) of this statute
to allow AEA, the Alaska Housing Finance Corporation,
or DOT&PF to perform energy audits and retrofits.
Section 4
Amends AS 44.42.065(a) by adding public school
buildings to the list of community facilities that
DOT&PF must perform energy audits for every seven
years.
Section 5
Amends AS 44.42.065(c) by including the definition of
public school as defined by AS 14.25.220. This
definition does not include charter schools as defined
by AS 14.03.290.
4:06:57 PM
Section 6
Amends AS 44.42.065 by adding a new subsection which
authorizes DOT&PF to coordinate with AEA to conduct
energy audits by request.
Section 7
Amends the date under AS 44.42.067(a) to which DOT&PF
shall retrofit at least 25 percent of all public
facilities to no later than January 1, 2026.
Section 8
Amends AS 44.42.067(e) to include education facilities
in addition to government and public use facilities
within the definition of public facilities. This
section also the square foot requirement from 10,000
square feet to 5,000 square feet for public use
facilities.
Section 9
Adds a new section under AS 44.83, AS 44.83.088 which
directs AIDEA to coordinate with DOT&PF for energy
audits on public facilities that use power cost
equalization as defined by AS 44.45.110(b). This
section also directs AEA to perform these audits at
least once every seven years and allows AEA to work
with entities that own public facilities to identify
sources of funding for audits or retrofits.
Section 10
Amends AS 44.88 by inserting a new section, AS
44.88.179, which directs AIDEA to establish a rapid
economic recovery office to facilitate State energy
policy and encourage private investment. This section
also directs this new office of rapid economic
recovery to review energy audits, identify energy
retrofit projects to be bundled, market these bundled
projects, and engage with DOT&PF to contract with
private investors.
Section 11
Adds a new subsection under AS 44.99.115, which
establishes a state energy policy target date of 2026
to have at least 50 percent of total energy used by
the state coming from clean energy sources and
authorizes AEA to request periodic updates from State
facilities on the estimated percent of total energy
used obtained from clean energy sources. For the
purpose of this legislation, this section also
includes definitions of what is classified as clean
energy. This section also includes the previously used
definitions of power cost equalization and State
funded public facilities which includes public school
buildings but excludes charter schools.
4:10:40 PM
SENATOR GRAY-JACKSON asked if public facilities and buildings
refer to all public facilities throughout the state, not just
those the state owns.
SENATOR BEGICH answered public buildings are state public
buildings. Currently the law has the retrofitting occurring for
state public buildings that are 10,000 square feet or greater;
this would lower that threshold to 5,000 square feet and then
expand it to include public school buildings.
SENATOR GRAY-JACKSON asked him to confirm the bill only applies
to state facilities and not to, for example, to the Municipality
of Anchorage buildings.
SENATOR BEGICH explained the intent of the bill is for state and
school district buildings, not municipality buildings. The bill
does include buildings that qualify for the PCE program. If a
building qualified under PCE, it would qualify under SB 17.
SENATOR WILSON asked why the bill does not include charter
schools.
4:12:30 PM
SENATOR BEGICH offered his understanding that no charter school
meets the size threshold of 5,000 square foot and some are in
private buildings. He deferred further response to DOT&PF or
other individuals might have more details about the reason for
excluding charter schools.
CHAIR HUGHES asked Mark Davis with DOT&PF to answer Senator
Wilson's question.
4:13:33 PM
MARK DAVIS, Director, Division of Facilities Services,
Department of Transportation and Public Facilities, Anchorage,
Alaska, deferred the question to Christopher Hodgin.
4:13:54 PM
CHRISTOPHER HODGIN, Senior Project Manager, Division of
Facilities Services, Department of Transportation and Public
Facilities, Anchorage, Alaska, said he believes the focus is on
the public facilities and schools that receive a majority of
their funding from the state and charter schools do not receive
much in the way of state funds.
SENATOR BEGICH suggested either Dr. Lienemann or Ms. Tobin
answer the question.
4:15:23 PM
LOKI TOBIN, Staff, Senator Tom Begich, Alaska State Legislature,
Juneau, Alaska, explained the statute referenced in the
sectional analysis defines public schools as those "that are
supported by public funds," which includes a publicly funded
charter school. SB 17 simply clarifies that a charter school
that uses or receives support from private funds is not included
in the definition of a public facility.
CHAIR HUGHES asked if some charter schools in the state are
solely funded through private funds while others receive public
funds.
MS. TOBIN answered that is correct.
CHAIR HUGHES asked her to provide a list of the charter schools
and how they are funded.
SENATOR WILSON asked if the bill excludes all charter schools or
just the privately funded charter schools.
MS. TOBIN replied she will ask Legal Services to clarify. The
bill is intended to only exclude charter schools that use or are
supported by private funds.
SENATOR WILSON expressed concern that in communities that have
base power costs, adding schools may help the energy costs for
the school but it may increase costs for individual ratepayers
to cover the cost of decreased utilization.
4:18:10 PM
SENATOR BEGICH answered the bundling capacity shares the risk,
but that is a possibility. Should costs increase for some
communities, some other level of intervention would be necessary
for those communities. He added that if the bill were to start
moving, his office would get further clarification from DOT&PF
and the other entities. He acknowledged it was a good question.
CHAIR HUGHES asked if most of the buildings that qualified for
the retrofit under the 2010 bill were in urban areas along the
Railbelt.
SENATOR BEGICH answered virtually all the structures were on the
Railbelt. He deferred to Mr. Hodgin to provide details.
4:20:27 PM
MR. HODGIN stated retrofit projects were executed in over 75
facilities since the legislation passed in 2010. Many were along
the Railbelt, but rural retrofits were done in St. Mary's, Nome,
and Bethel, as well as locations in Ketchikan, Sitka, and
Juneau.
MR. HODGIN noted the annual energy savings from the completed
retrofit projects is greater than $4.1 million. That represents
an investment of about $40 million in projects and that
investment is from state, federal, and financed funds. The
payback is about 10 years, so some of the projects have already
started completion of their financing terms and have realized
some of the savings.
CHAIR HUGHES asked how much the state contributed of the $40
million investment.
MR. HODGIN answered he would follow up with the information.
4:22:29 PM
SENATOR BEGICH said the largest state expense in the ESCO
process is staff going out to conduct the audits and supervise
the program. When the audit is complete, the private businesses
pay themselves back for their retrofitting investment with the
energy savings from the energy so there is no state outlay for
that.
CHAIR HUGHES asked him to explain the intent language at the
bottom of page 1 and top of page 2 that states:
...by 2026, enter into energy service performance
contracts valued at $100,000,000 to retrofit public
facilities... while avoiding an upfront cost to the
state,...
She asked how this will work with little upfront cost to the
state.
SENATOR BEGICH suggested the committee hear from Dr. Lienemann
and Ms. McDonough.
4:24:46 PM
CHAIR HUGHES moved to invited testimony on SB 17.
4:24:57 PM
SYDNEY LIENEMANN, PhD, Climate Advisor representing self,
Albuquerque, New Mexico stated she has worked most of her career
looking at ways to improve the affordability and accessibility
of clean energy including energy efficiency. Her career started
with writing grants to study wind energy potential in Southwest
Alaska. She eventually left Alaska to earn her PhD in chemical
physics where she studied how to make materials for next
generation solar energy. Afterwards, she worked in the U.S.
Senate and led the U.S. Department of State's Arctic Energy
Diplomacy program which focused on Alaska rural energy expertise
with the rest of the circumpolar north. Thereafter she worked
for the Alaska State Legislature as the chief of staff for
Senator Begich and currently is the climate advisor to the City
of Albuquerque, New Mexico.
DR. LIENEMANN said that when she and Senator Begich's office
first worked on the legislation, the first step was outlining
the problem they wanted to solve. Energy efficiency is harder to
finance off the Railbelt because things are smaller, and
communities are more spread out. After the [American Recovery
and Reinvestment Act of 2009], DOT&PF did an incredible job
retrofitting buildings 10,000 square feet or greater using
performance contract financing which has saved the state over $4
million in the last 10 years.
DR. LIENEMANN explained the problem is that there are not a lot
of buildings over 10,000 square feet in rural Alaska. The
challenge is how to make sure models, like performance
contracting where there are no upfront costs to the state, are
available to rural Alaska when there are not the economies of
scale that downtown Anchorage or Juneau have. Solving the
problem will only happen through significant stakeholder
engagement to understand the unique challenges. And to Senator
Wilson's point, fit them without raising the cost of energy for
everyone else.
4:27:13 PM
DR. LIENEMANN stated New Mexico has some interesting
similarities to Alaska's rural-urban divide. Like Alaska, most
of New Mexico's large buildings are within two or three major
population centers, and ensuring rural communities have access
to programs designed to lower energy costs is a huge problem. To
address these challenges, the New Mexico State Legislature
created two programs over the last 30 years that resulted in a
thriving energy efficient economy statewide. New Mexico now has
the largest job growth in the energy efficiencies sector in the
country. She opined that is largely because of the two programs
that are in place.
DR. LIENEMANN detailed the first program was the creation of the
New Mexico Finance Authority (NMFA) and the public project
revolving loan fund used to finance many rural energy efficiency
projects around the state. To incentivize low-income communities
in particular, New Mexico offers low or no interest loans for
areas with median income below the state average.
DR. LIENEMANN explained NMFA coordinates the financing of state
and local infrastructure and building projects to include public
schools. It looks for opportunities to build economies of scale
by coordinating between government entities. For example, if a
rural school requires major maintenance, NMFA will identify
other scheduled upgrades in that community and combine the
financing to help with the logistics of the project. This is
bundling multiple projects in one area or across the state to
take advantage of the tax-exempt bond market for financing.
Since 1992, NMFA has made over 1,800 loans totaling about $40
billion.
4:28:55 PM
DR. LIENEMANN said the second thing the New Mexico State
Legislature established is the Public Facility Energy Efficiency
and Water Conservation program. This created a framework for
state and local governments and school districts to use energy
service performance contracting to finance sustainability
related upgrades. This is energy efficiency and renewable
energy. For New Mexico it is always water savings and water
reclamation projects.
She detailed New Mexico created template contracts and price
agreements with contractors to allow local governments to avoid
long request for proposal (RFP) processes and get projects
scoped, financed, and completed a lot faster. Since that program
started about 20 years ago, the program has resulted in close to
$100 million in energy efficiency projects in public facilities
including schools, municipal buildings, and museums.
DR. LIENEMANN noted the City of Albuquerque just completed
scoping and selected a contractor for its own energy service
performance contract. Like many other government entities, the
City of Albuquerque does not have the financing to pay for
upgrades up front. They are financing their projects over 12 to
15 years, guaranteed by the energy savings. This is for more
than 50 buildings, over 2 million square feet. She said she does
not believe the program would have been possible without the
framework, paperwork, and legal templates available through New
Mexico's state program.
DR. LIENEMANN offered her belief New Mexico's success in energy
efficiencies stems from the combination of a financing entity
able to combine public and private funding, and bundling small
projects to take advantage of economies of scale. New Mexico
also has the office she serves in that resulted from energy
service performance contracting legislation that identifies
potential projects and offers best practices and legal document
templates. That has made it easier for local governments and
school district employees to get energy efficiency projects up
and going.
DR. LIENEMANN said she thinks the bill before the committee
accomplishes the two goals she previously noted and provides a
framework that will encourage energy efficiency across Alaska.
SENATOR BEGICH asked her to address Chair Hughes' question on
how the savings occur from the energy efficiency projects.
DR. LIENEMANN explained energy costs are going to go down as a
result of the energy efficiency upgrades, and energy cost
savings are quantifiable. The state can use the energy cost
savings to guarantee a loan to do the energy efficiency
upgrades. If a project takes 10 years to payoff a loan, the
state will realize the full energy savings. The office the
legislation proposes would help to find private or public
financing. The state would not ever see a cost increase, there
is no upfront cost, and even the facilities' monthly bill would
go down. The state would have the best of both worlds with no
big bill due at the completion of energy efficiency upgrades,
and the project payoffs occur over a time while energy bills go
down.
4:34:00 PM
CHAIR HUGHES asked her to confirm the state would realize the
savings after paying off the loan.
DR. LIENEMANN explained the usual structure of loans would allow
the state to immediately realize half of the cost savings by
splitting the difference between cost savings and paying off the
loan. Once the program pays off the loans, typically in 10-15
years, the state realizes the full savings from an energy
efficient building.
4:35:22 PM
AMBER MCDONOUGH, Account Executive, Energy and Performance
Services, Siemens Industry, Inc., Anchorage, Alaska, stated she
has been developing energy performance contracting work for
Siemens as an ESCO in Alaska for over 12 years. During that
time, Siemens has implemented approximately $50 million in
energy savings performance contracting work.
She explained, in its simplest form, an energy savings
performance contract allows facility owners to implement
improvements by capturing wasted energy and operational dollars
to pay for infrastructure improvements over time. Under a
performance contract, an ESCO designs, develops, and constructs
energy projects and guarantees the savings results over time.
Energy savings performance contracts are budget neutral with
very little out of pocket expense for facility owners. The ESCO
typically does not take out a loan to pay for the improvements
directly, but instead helps owners procure financing directly
from third-party lenders to ensure the lowest possible interest
rates.
MS. MCDONOUGH detailed a typical energy performance contract
involves development in four phases: preliminary assessment,
investment grade audit, project construction, and then a
performance assurance period or savings guarantee period. The
State of Alaska requires a three-year minimum savings guarantee,
but it considers projects as cost effective if the net project
pays for itself over a 15-year term. Savings accrue for the
customer as soon as construction starts, during the repayment
period, and then after the repayment period in 10 years or 15
years, the savings go directly to the customer for the life of
the equipment upgrades.
4:37:33 PM
MS. MCDONOUGH said the design of SB 17 seems to encourage more
energy performance contracting throughout the state, especially
for rural communities and educational institutions. However,
even for performance contracting projects that make enormous
technical and economic sense, she has found that project
financing for smaller clients without reliable revenue streams
is a challenge.
She noted earlier in February she requested a credit check for
the City of Galena, population 500, for approximately $1 million
to $2 million to complete a funding gap for a proposed microgrid
project. She said the lender told her the loan was too risky and
too much money for too small of a community, so she was unable
to approach the city with an alternative financing solution.
MS. MCDONOUGH said regarding SB 17, she has a few comments and
recommendations regarding the bundling of projects, the types of
audits used, and the retrofit targets set by the bill.
CHAIR HUGHES asked for the suggestions.
4:38:50 PM
MS. MCDONOUGH said regarding bundling projects, SB 17 seems to
direct AIDEA to establish a rapid economic recovery office to
facilitate the review of energy audits, identify energy retrofit
projects for bundling, market the bundled projects, and engage
with private investors.
She said she assumes AIDEA would use the state to provide energy
audits, estimate the amount of construction funding needed, and
then work to identify a third-party financier to provide
financing for the total amount of the bundle projects.
MS. MCDONOUGH said the legislation could help by leveraging the
good credit of the State of Alaska to allow the financier to
contractually deal with the State as the sole entity. This
reduces the risk of the overall loan and hopefully provides a
competitive interest rate to the state.
MS. MCDONOUGH said the biggest problem she sees with securing
private investors for rural communities, and especially rural
education area schools, is their lack of tax base and revenue
that would guarantee the ability to repay debt on their own. An
agreement between the State of Alaska and the financier would be
a big help for bundling projects.
She noted she has run into challenges when trying to vet
financing for single owners with a lot of tenants, such as the
Dimond Shopping Mall and the Ted Stevens Anchorage International
Airport. These places have a single owner with a lot of
independent tenants who need to agree on the improvements before
project approval and financing.
MS. MCDONOUGH said she sees the project bundling proposed by SB
17 as an example of a single owner with multiple tenants where
the state asks lenders to provide one loan for multiple projects
with different owners. Bundling consideration for SB 17 should
include how the state will downflow individual loan agreements
to each of the project owners within the bundle, and how it will
manage the accounting and repayment of the loans by individual
project owners that flow back to the primary lender.
MS. MCDONOUGH said when she considered solutions to the project
bundling questions, she inquired if the state has considered
using the Alaska Housing Finance Corporation's (AHFC) existing
Alaska Energy Efficiency Revolving Loan Fund to issue energy
performance contracting loans. One example of this is that AHFC
has been previously willing to consider loans to rural education
areas at predetermined interest rates based on the term of the
loans rather than the credit ratings of the individual borrower.
4:42:08 PM
SENATOR BEGICH asked her to clarify that the bill does not
adequately specify the nature of how bundling would occur.
MS. MCDONOUGH answered correct. She said if she were a
financier, she would see the current version of the bill as
bundling of projects but still having to potentially write
individual loan contracts for each of the projects, which is
undesirable.
SENATOR BEGICH asked if she would be interested in providing the
language to help clarify that in the bill to meet the particular
goal she suggested.
MS. MCDONOUGH answered yes, Siemens has financial managers that
would be willing to assist in drafting language that would be
more attractive to financiers.
CHAIR HUGHES asked if she had any additional comments.
4:43:26 PM
MS. MCDONOUGH replied she had a few comments on the audits. The
legislation focuses on enabling AEA and DOT&PF to coordinate
efforts to provide energy audits to rural schools. However, the
bill does not define the level of detail required for the energy
audits the state will be performing. For example, the state
should define the type of audits performed via either a
feasibility study American Society of Heating, Refrigerating,
and Air-Conditioning Engineers (ASHRAE) Level One energy audit;
a more detailed ASHRAE Level Two energy audit; or a hybrid style
investment grade audit used by ESCOs to develop performance
contracts.
She suggested the state confine its audits to preliminary
feasibility studies (qualifier audits) that are inexpensive and
quick to perform. They could confirm potential savings
opportunities for each facility to warrant the expense of an
ESCO investment grade audit. If the state justifies a
performance contracting opportunity, an ESCO would still need to
do its own independent investment grade audits if it is going to
guarantee project savings. This allows ESCOs to validate and
agree to the estimated savings and construction costs generated
by the state delivered audits. There will still be that expense
to the state even if it does a more detailed audit in advance.
CHAIR HUGHES asked what the acronym ESCO stands for.
MS. MCDONOUGH replied it stands for energy service company.
These types of companies develop and deliver performance
contracting services, deliver and distribute energy systems,
provide power purchase agreements for solar and wind, and offer
renewable energy solutions.
4:45:20 PM
MS. MCDONOUGH said her last suggestion relates to energy
retrofit targets in Section 7. The target says that the state
will retrofit approximately 25 percent of all public facilities
no later than January 1, 2026. She said her impression is DOT&PF
has already achieved the target and she would suggest a more
aggressive target like 50 percent of all facilities by January
1, 2026.
CHAIR HUGHES asked the sponsor if he has identified the number
of buildings that the 5,000 square foot target covers.
SENATOR BEGICH deferred the question to Ms. Tobin or DOT&PF.
MR. HODGIN answered his preliminary numbers, not including
school buildings, show 503 state facilities are 5,000 square
feet or greater, and the goal is to get to the 25 percent target
of that number.
4:47:44 PM
CHAIR HUGHES asked him to confirm that 503 buildings is
everything that is 5,000 square feet or greater and not
retrofitted.
MR. HODGIN replied DOT&PF has executed approximately 75
facilities with 18 remaining in state facilities in the broad
portfolio of 503 that are 5,000 square feet or greater.
CHAIR HUGHES asked the sponsor if the definition of "clean
energy" includes natural gas.
SENATOR BEGICH answered he believes the definition includes
natural gas.
MS. TOBIN answered she does not know the specific definition of
"natural gas," but the definition of clean energy includes low
emission, non-toxic biomass from solid, liquid, or organic fuel.
Also, the definition includes digester gas. She said she is not
entirely sure of the specific definition of "natural gas"
located on page 4, lines 19-23.
CHAIR HUGHES stated that is important to know.
CHAIR HUGHES asked Mr. Weitzner and Mr. Thayer to comment on the
legislation.
4:50:04 PM
ALAN WEITZNER, CEO/Executive Director, Alaska Industrial
Development and Export Authority (AIDEA), Anchorage, Alaska,
stated AIDEA has had a preliminary discussion with the sponsor
and would like follow up on some things. He expressed interest
in getting more definition and detail about the Siemens
testimony to better understand the structure of the bundling in
the bill that would possibly impact AIDEA.
4:50:57 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority
(AEA), Anchorage, Alaska, stated AEA has also been working with
the sponsor to clarify parts of the bill.
He said only residential homes up to 550 kilowatts and community
buildings are power cost equalization (PCE) qualified. Schools,
government buildings, and commercial facilities do not qualify
for or receive PCE. If a community building is not a government
facility, then PCE qualifies for that building but not for
schools.
MR. TYAYER stated AEA looks forward to continuing to work with
Senator Begich to clarify AEA's role and providing some of the
information that the bill has indicated to make SB 17 a success.
CHAIR HUGHES thanked Mr. Thayer for addressing which buildings
are PCE qualified.
4:52:12 PM
CHAIR HUGHES held SB 17 in committee.
SB 13-OIL AND GAS PROPERTY TAX
4:52:33 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 13
"An Act relating to oil and gas exploration, production, and
pipeline transportation property taxes; and providing for an
effective date."
4:53:12 PM
SENATOR TOM BEGICH, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 13, stated he received a letter from the Alaska
Oil and Gas Association (AOGA) opposing the bill. He said there
is something in AOGA's letter that he wants to draw the
committee's attention to. The letter described the bill as a 50
percent tax increase.
SENATOR BEGICH explained SB 13 is an oil and gas property tax
bill that would add one percent to the existing oil and gas
property tax assessment. A 50-percent increase sounds massive
but the increase is one percent.
He explained SB 13 emerged from discussions with the oil and gas
industry over the last three years. He noted hearing repeatedly
that building taxes on the volatility of oil and gas prices is
not a good planning process. He noted he crafted the bill in
2020 and reintroduced the legislation in 2021 with a number of
qualifications.
SENATOR BEGICH said what SB 13 proposes to do is increase the
mill rate from 20 mills to 30 mills and make that additional
mill rate available to the State of Alaska. SB 13 would
designate the funds in three ways. First, 50 percent would go to
the Capital Income Fund to help pay down deferred maintenance
backlog. Second, 25 percent would go to the Higher Education
Investment Fund to further endow the merit-based Alaska
performance scholarships and the other items of education
necessities drawn from that fund. Third, 25 percent would go to
municipalities to reimburse the Senior Citizen and Disabled
Veteran Property Tax Exemptions that the legislature has not
reimbursed since 1997. The funds will provide something of a
community dividend.
He said SB 13 creates a predictable source because the industry
understands its depreciation values, so the tax is a predictable
source for their planning processes.
SENATOR BEGICH noted the President of the Senate has indicated
that there needs to be an all-in approach to how the legislature
addresses its efforts and he has consistently said that includes
the industry, which is what the bill does. It fills one element
of that all-in approach.
CHAIR HUGHES announced invited testimony on SB 13.
4:56:52 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
Juneau, Alaska, said AML has not taken a position on SB 13, but
he will provide a summary of municipal impacts.
MR. ANDREASSEN said of the 165 local governments that AML
serves, 24 have a property tax and this includes all boroughs
except the Aleutians East Borough, Denali Borough, Northwest
Arctic Borough, and Lake and Peninsula Borough. Those rely on
fish taxes, bed tax, and a payment in lieu of tax formula. Nine
of the 15 home rule and first class cities within the
Unorganized Borough have a property tax as well.
He noted the 24 local governments with a property tax all have
required minimum contributions to their municipal school
districts. This is a state mandate for all boroughs and home
rule and first class cities outside the organized borough.
MR. ANDREASSEN said 7 of those 24 local governments also have
their property tax applied to oil and gas property within their
jurisdiction. The total assessed value of this property is about
$25.9 billion. The 7 local governments then apply their property
tax. The state take is the difference between the local
governments' mill rate set out in statute which is currently at
20 mills. Oil and gas property extends into the Unorganized
Borough (valued at approximately $3.1 billion) and the state's
take on that is 100 percent or the full 20 mills.
He noted the local property tax has applied since 1997 but the
mill rate has fallen for local governments an average of 1.6375
mills by jurisdiction. That means the state's take has actually
increased over that same period, and overall property taxes have
stayed stable, so the decrease is meaningful for property
owners.
4:59:45 PM
MR. ANDREASSEN said extending the state's current tax of this
property to a higher level does not negatively impact the rates
of local governments, as long as there is no further tax change
or amendment that extends down to change current local tax rates
or preempts their rightful ability to collect the property tax
within municipal boundaries, or negatively impact investment
decisions by property owners.
MR. ANDREASSEN noted there are strong arguments for maintaining
the property tax as it applies to oil and gas property within
municipal boundaries. This includes the ability for those local
governments to pay for school bond debt, to construct and
maintain schools on behalf of the state, to continue to pay into
the state managed pension system. to contribute to the state's
obligation to provide a system of public education, and to
choose investments in road, port and harbor maintenance, police
departments, emergency medical services (EMS), search and
rescue, and health.
MR. ANDREASSEN explained AML has a longstanding position that
the state should fulfill its statutory responsibilities by
appropriating the funds necessary to reimburse for the state's
mandatory property tax exemptions. Local governments have seen
applications for the state exemption increase by 20,000 since
2010. The value of that exemption has increase by $45 million in
that same timeframe. The important takeaway is it does not mean
there is less tax or less tax needed overall, only that it is
other taxpayers in that jurisdiction that make up the difference
for each local government to continue to meet the demands of
residents.
MR. ANDREASSEN said he hopes his comments provide a more
complete picture of how local governments currently apply the
property tax, and the potential impacts from the bill on local
governments.
5:02:13 PM
SENATOR GRAY-JACKSON said she appreciates the bill forward,
particularly that it provides revenue for the unfunded mandate
in terms of the Senior Citizens and Disabled Veteran Property
Taxes. It has been a priority for the Municipality of Anchorage
and other communities to receive relief.
CHAIR HUGHES asked Ms. Colbert to provide a sectional analysis
for SB 13.
5:03:12 PM
MERCEDES COLBERT, Staff, Senator Begich, Alaska State
Legislature, Juneau, Alaska, provided the following sectional
analysis for SB 13:
Section 1
Amends AS 43.56.010(a) to include a new subsection (2)
that increases the maximum mill rate an additional 10
mills. This only applies to taxable property as
defined under AS 43.56.210.
Section 2
Amends AS 43.56.010(d) with conforming language. This
clarifies the municipal property tax under (a)(1) of
the bill can only be credited to the taxpayer.
Section 3
The estimated balance of the taxes collected under
Section 1 of this bill may be appropriated by the
legislature as follows:
1. 50 percent to the Alaska Capital Income Fund;
2. 25 percent to reimburse municipalities for real
property tax revenue lost due to the Senior
Citizen/Disabled Veteran Property Tax Exemption
provided under AS 29.45.090(g); and
3. 25 percent to the Alaska Higher Education
Investment Fund.
Section 4
Establishes an effective date of January 1, 2022.
5:05:01 PM
CHAIR HUGHES encouraged the members to review the fiscal notes
for SB 13, the second page of which provides a recap and
positions on possible needs to carry out the bill.
CHAIR HUGHES held SB 13 in committee.
5:06:01 PM
There being no further business to come before the committee,
Chair Hughes adjourned the Senate Community and Regional Affairs
Standing Committee meeting at 5:06 p.m.