Legislature(2015 - 2016)CAPITOL 17
02/26/2015 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Housing Finance Corporation | |
| HB58 | |
| HB78 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 58 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 78 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 58-ELIGIBILITY FOR AK ENERGY EFFIC LOANS
10:25:37 AM
CO-CHAIR VAZQUEZ announced that the next order of business would
be HOUSE BILL NO. 58, "An Act making an entity that is exempt
from federal taxation under 26 U.S.C. 501(c)(3) (Internal
Revenue Code) and a federally recognized tribe eligible for a
loan from the Alaska energy efficiency revolving loan fund; and
relating to loans from the Alaska energy efficiency revolving
loan fund."
[Before the committee was the committee substitute (CS) for HB
58, labeled 29-LS0254\H, Nauman, 1/27/15, which was adopted by
the committee on 2/24/15.]
10:26:09 AM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, Alaska State
Legislature, sponsor of HB 58, informed the committee the
substantive change between HB 58 and the committee substitute
for HB 58, [29-LS0254\H, Nauman, 1/27/15], was the inclusion of
additional nonprofit entities such as the Veterans of Foreign
Wars (VFW) and American Legion organizations, which qualify for
a separate tax-exempt status.
10:27:13 AM
The committee took a brief at ease.
10:28:15 AM
REPRESENTATIVE KREISS-TOMKINS clarified that before the
committee was the CS for HB 58, Version H.
CO-CHAIR VAZQUEZ asked for a page-by-page explanation of the
changes to the bill.
REPRESENTATIVE KREISS-TOMKINS directed attention to Version H on
page 4, lines 17-18, which read:
(3) "tax-exempt entity" means an entity designated as
tax exempt under 26U.S.C.501(c)(3),(4),(6),(12), or
(19)(Internal Revenue Code).
REPRESENTATIVE KREISS-TOMKINS explained that there are different
kinds of nonprofits under tax code 501(c)(3). In further
response to Co-Chair Vazquez, he said the CS includes additional
nonprofit tax exempt entities such as those that qualify under
501(c)(19).
CO-CHAIR VAZQUEZ asked how the tax code differs.
10:30:39 AM
MIGUEL RORHBACHER, Staff, Representative Jonathan Kreiss-
Tomkins, Alaska State Legislature, speaking on behalf of
Representative Kreiss-Tomkins, sponsor of HB 58, informed the
committee that examples of nonprofits are as follows: (c)(3) -
United Way and food banks; (c)(4) - League of Women Voters and
community softball leagues; (c)(6) - business organizations and
chambers of commerce; (c)(12) - utility and agricultural
cooperatives; (c)(19) - veteran's services.
10:33:03 AM
JOHN ANDERSON, Director, Division of Research and Rural
Development, Alaska Housing Finance Corporation (AHFC),
Department of Revenue (DOR), said he was available for questions
and Alaska Housing Finance Corporation had no position on the
bill.
CO-CHAIR VAZQUEZ asked whether HB 58 would have an impact on the
[Alaska energy efficiency revolving loan program (AEERLP),
Alaska Energy Authority, (AEA), Department of Commerce,
Community & Economic Development (DCCED].
MR. ANDERSON was unsure. There could be an increase of activity
but that is unknown at this time. Alaska Housing Finance
Corporation outreach related to the energy efficiency revolving
loan fund program (AEERLP) has involved many of the nonprofit
entities identified by the proposed legislation. In further
response to Co-Chair Vazquez, he said the program is
administered by AHFC, and the last loan approved was to the
Department of Transportation & Public Facilities (DOT&PF) in the
amount of $3.7 million, at 3.6 percent interest for a 15-year
term.
10:35:17 AM
REPRESENTATIVE TILTON surmised the bill extends eligibility to
some tribal entities, and the CS adds other nonprofits, but
there are no eligible entities that have been awarded funds at
this time.
REPRESENTATIVE KREISS-TOMKINS said the fund has been
underutilized to date.
REPRESENTATIVE TILTON observed that the fund has not been used -
perhaps because grants have been available - and asked if the
fund may not be necessary. She said, "Do you have kind of an
idea ... how many different entities would be, this would be
able to open it up for?"
MR. ANDERSON pointed out that the fund is not "sitting there."
Senate Bill 220 [passed in the 26th Alaska State Legislature]
provided AHFC the authority to bond for $250 million. In fact,
AHFC intends to identify a group of projects and then apply for
bonding. In further response to Representative Tilton, he said
the interest rates are determined through a market-driven
process and AHFC strives to make the best use of the program.
REPRESENTATIVE TILTON asked whether other funds are available to
nonprofit entities for energy efficiency.
MR. ANDERSON said AHFC was not aware of any other financing
mechanisms within state agencies.
10:39:49 AM
REPRESENTATIVE WOOL asked how the program differs from the
[Alaska Housing Finance Corporation (AHFC) homeowner
weatherization and energy efficiency programs].
MR. ANDERSON advised that residential energy efficient retrofits
are simple when compared to commercial projects. Superficially,
the two programs are similar in concept in that an audit is
done, the improvements are made, and a post-audit shows the
increase in energy efficiency; however, commercial buildings are
more in-depth. In further response to Representative Wool, he
affirmed that the program is intended for public facilities or
commercial operations of any size.
REPRESENTATIVE TILTON asked for an example of a project.
REPRESENTATIVE KREISS-TOMKINS said examples in Fairbanks would
be provided.
CO-CHAIR VAZQUEZ inquired as to pending applications.
10:42:43 AM
MR. ANDERSON said about six applications are in the technical
review process. In further response to Co-Chair Vazquez, he
advised that over the past two years AHFC has provided many
presentations to organizations such as Rotary International, the
Alaska Municipal League, the Institute of Architects, Renewable
Energy Alaska Project, and the Alaska Association of Facility
Administrators. In fact, a large energy efficiency conference
in Anchorage is upcoming that will reach many other
organizations. Although AHFC has no operating funds for the
program, presentation requests are fulfilled by staff, including
contacts with DOT&PF, and the Department of Education and Early
Development (EED).
CO-CHAIR VAZQUEZ asked for an example of the kind of project
that can be financed through the loan program.
MR. ANDERSON noted that the loan program could replace
fluorescent lights with LEDs, replace old boilers with energy-
efficient boilers, remove windows, add insulation, and install
better heating and ventilation systems.
REPRESENTATIVE TILTON asked whether the bill would extend the
loan program to for-profit tribal entities.
REPRESENTATIVE KREISS-TOMKINS expressed his belief that the bill
would do so. He directed attention to page 4, lines 15-16,
which read:
(B) includes a subdivision, subsidiary, or business
enterprise wholly owned by a federally recognized
tribe;
REPRESENTATIVE KREISS-TOMKINS said he would accept an amendment
to exempt business enterprises and limit loan qualification to
the service-delivery entities which make up 98 percent of tribal
activity in Alaska. In response to Co-Chair Vazquez, he said
the bill has a zero fiscal note.
10:48:01 AM
REPRESENTATIVE TALERICO asked whether the sponsor would object
to "a sunset on the eligibility for the nonprofits and tribal
entities."
REPRESENTATIVE KREISS-TOMKINS said he would welcome such an
amendment. He assured the committee the intent of the proposed
legislation was to help public facilities above nonprofits, thus
another possible amendment would be to create a prioritization
so AHFC satisfies the needs of public facilities first. This
may be a different way to accomplish a sunset, or both concepts
may be included in a future CS.
REPRESENTATIVE TALERICO asked the sponsor to provide the
aforementioned concepts to the committee.
REPRESENTATIVE KREISS-TOMKINS agreed.
[The committee treated public comment as open on HB 58.]
10:51:15 AM
CHRIS ROSE, Executive Director, Renewable Energy Alaska Project
(REAP), informed the committee REAP is a coalition of over 80
organizations across the state including electric utilities,
Native corporations, independent power producers (IPPs),
developers, businesses, and non-governmental organizations
(NGOs). He said REAP was very interested in the loan fund when
it was established in 2010. Through [Senate Bill 220, passed in
the 26th Alaska State Legislature], the state mandated that a
certain percentage of the state's public buildings are to be
retrofitted by 2020. Mr. Rose said this is a very important
issue for the state given its current economic situation. He
recalled an AHFC white paper published 10/29/12, entitled,
"Energy Use in Alaska's Public Facilities," which indicated over
5,000 public buildings could be improved by the current loan
program, but unfortunately, no loans have been executed. He
suggested that some potential applicants are waiting for grants,
but said, "Those days are certainly over, at least for now."
Potential applicants should be encouraged because AHFC estimated
the state spends $642 million annually on energy, which is close
to 10 percent of the state's operating budget. A 20 percent
savings is possible, after a retrofit of all of the buildings,
and $125 million could be saved every year. Alaska Renewable
Energy Project supports the expansion of the program so that
qualified entities and tribal organizations may "get some of
these loans executed." Another action that may encourage the
use of the program would be for EED to make it easier for school
districts to participate. In conclusion, REAP supports the
expansion of the program, energy efficiency, and saving money.
CO-CHAIR VAZQUEZ said she had made the acting commissioner of
the Department of Administration aware of the program and asked
Mr. Rose to provide him with further information.
10:55:30 AM
JOEL NEIMEYER, Federal Co-Chair, Denali Commission, informed the
committee the Denali Commission, the Rasmuson Foundation, and
the Cold Climate Housing Research Center (CCHRC), have embarked
on a pilot effort in Fairbanks in order to demonstrate the
validity of energy audits followed by a loan program. The
intent is to move the program to rural Alaska, where energy
costs are very high. The Denali Commission regards the loan
program as a potential tool for rural Alaska and supports
expanding the number of eligible applicants. Mr. Neimeyer said
work done on a community scale is more efficient as contracts
for the energy audits, the construction of improvements, and the
post-construction monitoring would be bundled. The program is
an important tool for rural and urban Alaska.
10:57:42 AM
DANIEL POWERS, Coordinator, Fairbanks Nonprofit Retrofit Pilot,
CCHRC, informed the committee he is working on the Fairbanks
Nonprofit Retrofit Pilot project, one of the principles of which
is that Alaska is stronger when nonprofits and tribal
organizations spend less money on energy. The project is trying
to solve the statewide issue of energy efficiency for nonprofits
and has fourteen nonprofit and tribal participants that are
getting energy audits, having initial meetings with contractors,
studying the technical documents, and developing five-year plans
and strategies for building owners, whenever possible. He said
the expansion of the loan program offers advantages such as
reduced requests for capital from nonprofits and tribal
organizations, changes in the grant-based culture for energy
efficiency projects, and reduced operating costs for nonprofits
and tribal organizations. The project is collecting information
from each participant about barriers to lending, and the
barriers seen by auditors and funders. The bill expands state
resources to the organizations that provide essential services
to citizens. Mr. Powers stated his support for HB 58.
11:01:36 AM
REPRESENTATIVE WOOL asked for the status of the projects.
MR. POWERS answered that the audits were completed last year and
quotes from contractors are being collected. The Fairbanks
Resource Agency office building is completed with boilers
installed and energy monitoring in place. Using a loan, the
agency installed energy efficient boilers and smart pumps to
reduce its electrical load. Other recommendations include
adding insulation and extending a hot water line to an adjacent
property to save energy and cost. Out of the fourteen
nonprofits, about seven nonprofits are still in the decision-
making process to determine if they can accept the payback
schedule and follow the recommendations of the audit. He said
he expected a busy construction season to complete the projects
that have financing through the Denali Commission and Rasmuson
Foundation. In further response to Representative Wool, he said
he did not have sufficient information to support the estimate
of 20 percent savings made by a previous speaker because each
building and audit are different; also, there is the question
of whether nonprofits can afford to make improvements that are
paid back from the cash flow of energy savings. The pilot
project was tasked to find the point of economy for the retrofit
marketplace so as not to overinvest.
11:06:54 AM
DAVE MESSIER, Rural Energy Coordinator, Tanana Chiefs Conference
(TCC), informed the committee TCC is a nonprofit tribal
consortium that works with 42 federally recognized tribes in the
Interior. He said he is in strong support of the modifications
to the Alaska energy efficiency revolving loan fund proposed in
HB 58. The electricity rates in the region are high and energy
efficiency projects have saved school districts, clinics,
tribes, and cities tens of thousands of dollars in energy costs.
Expanding access to the program would assure entities have
access to funding for retrofitting facilities in rural Alaska,
Fairbanks, and across the state. The Tanana Chiefs Conference
is a nonprofit that would benefit from the proposed legislation
in that it operates more than 200,000 square feet of clinic and
office space in Fairbanks, and it supports any legislation that
makes energy efficiency funding easier to access for nonprofits.
Spending money wisely for energy means money can be used to
better serve Alaskans who are in need of help. Mr. Messier
added that from his experience in the energy field, he knows
that technology change takes time and successful projects will
lead to more success.
CO-CHAIR VAZQUEZ stated her concerns about whether there is
sufficient staffing to administer the program and if there are
safeguards to minimize loan defaults.
11:11:44 AM
REPRESENTATIVE KREISS-TOMKINS reviewed the committee's
suggestions for a new proposed CS: create a structure that
guarantees public facilities have first priority access to the
revolving loan fund; clarify the line between for-profit tribal
enterprises and nonprofit tribal organizations that deliver
services to Alaskans; default safeguards; address the staffing
issue.
CO-CHAIR VAZQUEZ closed public testimony on HB 58.
HB 58 was held over.
11:13:17 AM
The committee took an at ease from 11:13 a.m. to 11:20 a.m.
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