04/16/2016 03:00 PM Senate FINANCE

CS FOR HOUSE BILL NO. 118(FIN)                                                                                                
                                                                                                                                
     "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 date."                                                                                
                                                                                                                                
3:12:37 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon noted  that the companion bill  to HB 118                                                                    
was SB 56.                                                                                                                      
                                                                                                                                
3:13:14 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:14:02 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
3:14:20 PM                                                                                                                    
                                                                                                                                
GENE  THERRIAULT, DEPUTY  DIRECTOR, STATEWIDE  ENERGY POLICY                                                                    
DEVELOPMENT,   ALASKA   ENERGY  AUTHORITY,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY AND  ECONOMIC DEVELOPMENT,  shared that                                                                    
the committee had adopted the  Committee Substitute (cs) for                                                                    
SB 56  on March 14th. He  furthered that when the  house had                                                                    
decided to adopt  and move identical language in  HB 118. He                                                                    
said  that  Section 5  in  the  current bill  version  would                                                                    
establish a  new program that would  allow local governments                                                                    
that levied property tax to  work with business communities,                                                                    
local  lenders, and  potential  outside  funding sources  to                                                                    
loan   money   for   energy   improvements   to   commercial                                                                    
properties.  He felt  that the  strength  of this  mechanism                                                                    
would  be that  the repayment  of  the loans  would be  done                                                                    
through a  voluntary assessment,  agreed to by  the property                                                                    
owner,  added to  the yearly  tax bill.  He stated  that the                                                                    
extra  assessment  would result  in  low  default rates  for                                                                    
businesses that  used the mechanism.   He said that  the low                                                                    
default rate  would result in  low-cost capital  because the                                                                    
lending  would be  low-risk. He  continued  that Sections  1                                                                    
through 4 had been added  to the bill as clarifying language                                                                    
pertaining to the  listing of programs for  first and second                                                                    
class boroughs in  statute. He said that Section  5 laid out                                                                    
the process  that local governments  would need  to navigate                                                                    
in  order to  initiate the  program at  the local  level. He                                                                    
relayed  that  local  governments   would  need  to  pass  a                                                                    
resolution that  conveyed to the  business community  a plan                                                                    
for initiating the process, provide  detail of the source of                                                                    
funding  that   would  be  used,   provide  detail   of  the                                                                    
contractual  language  that  would   be  used,  hold  public                                                                    
hearings,  and  go  through the  regular  local  process  of                                                                    
introducing  an ordinance.  He stated  that the  program was                                                                    
voluntary for  local government to use,  and is subsequently                                                                    
voluntary for individual property  owners to use. He relayed                                                                    
that  there were  protections built  into the  bill so  that                                                                    
improvements would  not be made  to properties that  did not                                                                    
make economic sense. He said  that the bill would require an                                                                    
energy  audit that  would suggest  which improvements  would                                                                    
make  sense for  the property,  and once  those improvements                                                                    
were done  a follow-up audit  would need to be  performed to                                                                    
show that  improvements had been  done correctly.  He stated                                                                    
that  the  process  was  similar to  the  process  that  had                                                                    
already  been  in  place  for  the  Alaska  Housing  Finance                                                                    
Corporation (AHFC)  energy rebate  program. He  related that                                                                    
the  bill   contained  protections  related   to  commercial                                                                    
property   mortgages;  before   PACE   financing  could   be                                                                    
approved,  permission from  the  local  lender allowing  the                                                                    
PACE financing would be required  because the PACE financing                                                                    
would become a superior lean on the property.                                                                                   
                                                                                                                                
3:18:09 PM                                                                                                                    
                                                                                                                                
Mr.  Therriault furthered  that the  local government  could                                                                    
not use  general obligation bonds  to come up with  the pool                                                                    
of money, and protections had  been included that would keep                                                                    
local  government from  taking  coercive action  to force  a                                                                    
commercial property  owner to use  the program.  He believed                                                                    
that the bill  would help the state and  local government to                                                                    
work with business communities to  gain federal funds at low                                                                    
interest rates.                                                                                                                 
                                                                                                                                
3:19:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair Micciche  discussed zero fiscal note  attached to                                                                    
the bill.                                                                                                                       
                                                                                                                                
3:20:26 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Micciche MOVED  to report  CSHB 118(FIN)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSHB  118(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with one  new zero fiscal note from                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
3:21:09 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:22:46 PM                                                                                                                    
RECONVENED