HB 232-MUNICIPAL TAX CREDITS  10:22:54 AM CHAIR HOPKINS announced that the first order of business would be HOUSE BILL NO. 232, "An Act relating to a municipal air quality improvement tax credit; and relating to a municipal energy efficient new construction tax credit." 10:23:44 AM [Chair Hopkins passed the gavel to Vice Chair Spohnholz.] 10:23:46 AM The committee took an at-ease from 10:23 a.m. to 10:24 a.m. 10:24:34 AM CHAIR HOPKINS, as prime sponsor, presented HB 232. He paraphrased from a prepared statement, an overview of proposed HB 232, which read [original punctuation provided]: Chair Spohnholz thank you for the opportunity to do a quick overview on House Bill 232. This year, the Fairbanks North Star Borough approached the Interior Delegation, seeking to have the option as a second class borough to utilize municipal tax credits to encourage energy efficiency and air quality improvements when private property is newly constructed or renovated. HB 232 is the result of their request. As stated earlier, it is my hope to hear the bill today and take public testimony on the bill during our meetings next week and then look to the will of the committee. HB 232 allows local governments to offer municipal tax credits for home and business owners who invest in property improvements which result in increased energy efficiency or improve local air quality. This bill does not mandate any action by municipalities it offers local governments additional avenues for addressing local challenges and priorities and creates partnerships with local businesses to stimulate and diversify local economies. Relying on the adage that local problems are best solved through local solutions, HB 232 allows municipal tax credits to be targeted towards new construction that results in overall energy efficiency. Additionally, the bill allows municipalities facing chronic air quality issues to offer tax credits to businesses and residents who make investments that will result in a reduction in PM2.5 pollution. It is the hope of the sponsor and the requesting municipality that these tools will result in more Interior Alaskans choosing to convert their home heating systems and connect to the expanding Interior Gas Utility, thereby maximizing the return on the state's investment in the system. An additional benefit of this legislation will be streamlining the efforts of the Fairbanks North Star Borough and the Department of Environmental Conservation to improve air quality in Interior Alaska. CHAIR HOPKINS added that the air quality improvements credit could be utilized by other municipalities that also had a PM2.5 problem. He reported that the Department of Environmental Conservation's state improvement plan to deal with PM2.5 did not "look to get us under the federal level of PM2.5 pollution until 2029," and expressed his hope that this would speed up this process resulting in fewer non-attainment days. He continued with his overview of the proposed bill, which read: The bill allows for maximum flexibility by municipalities who choose to offer these credits, avoiding a "top down" approach to local issues. This simple "no harm" bill will foster new partnerships with local contractors, businesses and homeowners. Unleashing local creativity is critically important, allowing local governments to harness the power of private enterprise and address local challenges and priorities where most effective and appropriate. For the information of the committee, we have provided in the bill packet the following items: • The latest version of the bill. • A sectional analysis • Letters of support from the Alaska State Homebuilders Association, the Alaska Municipal League and the Fairbanks North Star Borough 10:28:08 AM JOE HARDENBROOK, Staff, Representative Grier Hopkins, Alaska State Legislature, on behalf of Representative Hopkins, prime sponsor of HB 232, paraphrased from the sectional analysis, which read [original punctuation provided]: Section 1: Amends 29.45 to reinstate the Air Quality Improvement Tax Credit which sunsetted in 2016. This section applies only to local governments with areas failing to meet federal or state air quality standards. Improvements must have been made in the preceding tax year. The municipality shall be responsible for developing and implementing eligibility standards and other criteria. Section 2: Amends 29.45 to create the Energy Efficient New Construction Tax Credit, allowing municipalities across the state to offer property tax credits to offset the cost of new energy efficient construction in the prior tax year. Municipalities choosing to participate in this tax credit shall be responsible for developing and implementing eligibility standards and other criteria. 10:29:16 AM REPRESENTATIVE FIELDS asked to be added as a sponsor to proposed HB 232. 10:29:37 AM VICE CHAIR SPOHNHOLZ announced that HB 232 would be held over.