Legislature(2015 - 2016)SENATE FINANCE 532
03/14/2016 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB56 | |
| SB1 | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 56 | TELECONFERENCED | |
| + | SB 1 | TELECONFERENCED | |
| + | TELECONFERENCED |
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 date."
9:00:44 AM
Co-Chair Kelly MOVED to ADOPT the committee substitute for
SB 56, Work Draft 29-GS1021\H (Shutts, 4/15/15).
Co-Chair MacKinnon OBJECTED for DISCUSSION.
GENE TERRIAULT, DEPUTY DIRECTOR, ALASKA ENERGY AUTHORITY,
JUNEAU, explained the committee substitute. He noted the
addition of the first four sections in the committee
substitute, which add the pace mechanism outlined in the
bill to the list of powers for first and second class
municipalities. He explained that it was determined that it
was left out of the original committee substitute when the
bill was heard in the other body.
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO
OBJECTION, the committee substitute was adopted.
9:03:56 AM
AT EASE
9:04:11 AM
RECONVENED
Co-Chair MacKinnon noted that the public hearing was
closed. She looked at the previous version, which may
include "extra-territorial jurisdiction." She stated that
the new committee substitute held that information, but did
not see the language. She queried more information
regarding that issue. She noted the elimination of
"coterminous." She queried a definition of "reporting
regarding assessment." She shared that she had not reviewed
the new committee substitute. She wondered if the types of
qualified projects should be described that were subject to
the contractual assessments. Mr. Terriault looked at page
11, line 8 for the definition of the qualified
improvements.
Co-Chair MacKinnon wondered whether the Fairbanks Natural
Gas Project qualify for the tax assessment proposal. Mr.
Terriault responded that, should the pace mechanism be
allowed for local governments to use, the Fairbanks
Northstar Borough was most likely the first to implement
and work with local lenders in the state. He had identified
federal fund sources that were targeted energy efficiency
improvements. He shared that the Energy Efficiency and
Conservation Loan Program. The federal funds available for
that program were targeted at approximately $250 million.
The money came with a 2 percent interest rate, so it was a
low cost source of capital. He shared that the regulations
for the program specified that it could be used for
replacement of existing fuel consuming equipment, using a
particular fuel with a more efficient fuel consuming
equipment that used another fuel. He stated that switching
from fuel oil to natural gas would qualify.
Co-Chair MacKinnon shared that there would be discussions
regarding how the municipality would ask the general public
to assess their personal property to pay back the
expenditure. Mr. Terriault indicated in the affirmative.
Co-Chair MacKinnon asked whether revenue bonds would
qualify. Mr. Terriault replied in the affirmative. He
stated that general obligation bonds were prohibited.
Senator Dunleavy wondered if the bill was an enabling bill,
as opposed to a compulsory bill. Mr. Terriault replied in
the affirmative. He explained that bill allowed a tool for
local government that issued property tax to assist with
energy efficiency financing.
Senator Olson noted the efficiency of switching to natural
gas. He wondered what would occur should the natural gas
price drastically increase. He queried alternatives to the
program subscribers. Mr. Terriault replied that the person
could utilize funds, should the program still exist. He
shared that the tool was mostly related to energy
efficiency. He remarked that the financing was available
for any energy efficiency improvements to a commercial
building.
9:10:54 AM
Senator Olson noted that the recipient of the financing
would be "stuck" with the change, even with a change in the
commodity price. Mr. Terriault replied in the affirmative.
He shared that, once the improvements were made, the loan
must be paid back.
Co-Chair MacKinnon wondered if the program would access the
municipal bond bank or other areas of the state with debt
or obligation. Mr. Terriault replied that, should the local
governments chose to participate, they would provide low
cost capital to the local commercial property owners. The
local government could choose a revenue bond, but there
were other federal sources available. He did not believe
that the bond would default to a general obligation of the
state.
Co-Chair MacKinnon stressed that she was concerned whether
the Municipal Bond Bank would be used, and whether the debt
would be a moral obligation to the state. Mr. Terriault
agreed to provide that information.
Co-Chair MacKinnon remarked that she was trying to
understand the different types of debt in the state.
Senator Bishop asserted that a small business could use a
private lender to utilize the program. Mr. Terriault
agreed. He noted that the bill allowed for private lenders
to bring a source of money. The repayment was done by the
additional voluntary assessment that would attach to the
property. The local government would collect the money, and
was contractually obligated to take the money to pay back
the bank.
SB 56 was HEARD and HELD in committee for further
consideration.