Legislature(2009 - 2010)BARNES 124
03/09/2010 03:00 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB305 | |
| HB278 | |
| HB411 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 278 | TELECONFERENCED | |
| += | HB 164 | TELECONFERENCED | |
| *+ | HB 411 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 305 | TELECONFERENCED | |
HB 278-ENERGY EFFICIENT HOME GRANT FUND
3:38:52 PM
CO-CHAIR MILLETT announced that the next order of business would
be HOUSE BILL NO. 278, "An Act relating to the administration of
the Alaska energy efficient home grant fund by the Alaska
Housing Finance Corporation."
3:39:20 PM
REPRESENTATIVE TUCK presented an overview of HB 278, as a prime
co-sponsor. He explained that Alaska Housing Finance
Corporation's (AHFC) energy rebate and weatherization programs
are successfully helping some families by providing energy
efficiency improvements to their homes. These programs are also
creating and sustaining jobs; in fact, orders for doors,
windows, insulation, and other energy saving home improvement
projects are keeping builders and suppliers busy. The energy
rebate program has a 70 percent completion rate for families
that are able to make the initial investment. However, if
homeowners do not have sufficient cash, they cannot take
advantage of the energy rebate program. Representative Tuck
observed that homeowners who may not have cash, or access to a
source for credit at a reasonable interest rate, are those who
need this program the most. Homeowners in this category do not
qualify for low-income weatherization assistance, yet do not
have several thousand dollars to pay for energy efficiency
upgrades, and then wait to be reimbursed. This is especially
true in rural areas, where energy costs are highest, and HB 278
will help solve that problem by putting energy saving
opportunities within the reach of more families. Representative
Tuck re-stated that HB 278 will allow more Alaskan families to
participate in the energy efficiency rebate program and will
continue to keep tradesmen working year around. The bill does
this by allowing the homeowner to receive a voucher for the same
amount of money as the rebate. The voucher can be used by the
homeowner to pay contractors and suppliers, so that work on the
home can begin. He opined HB 278 is a simple authorization for
a voucher concept that can be administered by AHFC to ensure
smooth processing by homeowners, contractors, housing
authorities, and others involved in voucher-based energy
efficiency upgrades. The bill does not change the amount of the
payments, or the state's level of participation in the home
energy efficiency program.
32:41 PM
AURAH LANDAU, staff, Representative Chris Tuck, Alaska State
Legislature, presented additional information about the need for
a voucher-type program. She noted that AHFC surveyed applicants
who did not complete the energy rebate program and found that
about one-fifth of those enrolled will not do the energy
improvements because they do not have the funds. This
percentage is estimated to be 1,600 applicants, not including
those who did not apply because they do not have the cash on
hand. Ms. Landau described HB 278 also as a jobs bill; in fact,
the voucher concept was suggested by a contractor who observed
that the voucher program could keep more contractors working on
energy efficiency projects. She advised that the statute that
created the rebate program simply authorizes home energy
rebates; similarly, HB 278 is a broad authorization that gives
AHFC the discretion to administer a voucher program "however it
would work best for those involved." Ms. Landau began a
sectional analysis of the bill. Page 1, lines 8-11, codifies
the existing home energy rebate program, and the remainder of
the bill adds a voucher capability giving AHFC the discretion to
develop implementing regulations, and grant the voucher in a
manner that assures the energy improvements are completed and
the voucher is fulfilled by the correct party. She further
explained that a voucher is a document that says "that the state
is good for up to a certain amount of money for home energy
efficiency work and outlines for the homeowner and any vendors
they may work with, contractors, lumberyards ... what work is
eligible for payment and it also stipulates the payment is made
once the final energy audit is done." For example, AHFC could
develop language to guarantee that "the right entity is required
to do the right thing at the right time."
3:46:41 PM
MS. LANDAU continued to explain that the mechanism of the
voucher system is nearly identical to the existing rebate system
in that the homeowner pays for the as-is audit and is
reimbursed. The as-is audit gives the homeowner energy
efficiency improvement options, and she referred to sample
energy ratings provided in the committee packet. The voucher
program differs when, along with the audit report, the homeowner
gets a voucher to give to contractors or supply houses that
choose to participate. This saves the homeowner from paying a
down payment, or payment in full "up front." Afterward, the
voucher program works the same as the rebate program as the
homeowner gets the work done, completes the post-improvement
energy rating that certifies the level of energy efficiency
gained, and then the allowable payment is made. Ms. Landau
clarified that the homeowner is responsible for all costs above
those authorized by the post-improvement audit. Furthermore,
the voucher informs contractors that the state will pay for a
certain portion of the cost of improvements. She emphasized
that contractors and supply houses can decide whether or not to
accept vouchers. Finally, the homeowner and lumberyard, or
contractor, will sign off on the reimbursement before AHFC pays
the vendors.
3:49:23 PM
REPRESENTATIVE RAMRAS stated that he loved the intent of the
bill, but will not support it. He gave an example of a
contractor forced into bankruptcy because "dishonest things
happened," and pointed out the bill lacks an oversight function
that will perform the duties of a disbursement officer, and make
sure that the work is done. He described his understanding of
how the present program works, and expressed his empathy for the
homeowner; however, with a voucher, if either the homeowner or
the contractor is not scrupulous, the program will be
compromised.
3:53:01 PM
REPRESENTATIVE TUCK explained that currently the rebate program
withholds payment until after the second audit is done, all the
work is performed, and all of the receipts are turned in to
AHFC. HB 278 retains these same conditions in that no payments
are made until all work is complete, the second audit is
performed, and after the invoices are signed off by the
homeowner and contractor, payments are made by AHFC. He pointed
out that this program is not a payment of "up-front cash," or
progressive payments, but basically lets a contractor know that
AHFC will be reimbursing the project as determined by AHFC.
3:54:00 PM
REPRESENTATIVE RAMRAS described the present process and noted
that Bryan Butcher, who was in the galley, agreed with his
understanding of the program. With the terms of HB 278, if the
contractor's work is deficient and does not qualify for
reimbursement, the program fails, unlike the present program
that requires a fully satisfactory job.
3:55:54 PM
REPRESENTATIVE TUCK advised that the original bill "never
spelled out that there would be an energy rebate program."
However, AHFC determined the methods and checks and balances to
administer the program, and now homeowners could get the needed
energy improvements as the bill intends. He opined that the
scenario presented by Representative Ramras was also possible
with the current program, because the homeowners are ultimately
responsible for the quality of construction. The same standards
apply for either the rebate or the voucher program, and AHFC
will not make a payment until the second audit is done to its
standards. The voucher is simply a document that states for the
homeowner, contractor, or lumberyard, that a certain amount of
money is approved for home energy efficiency work, and that the
payment will be made after the final audit is done to certify
the energy savings.
3:57:44 PM
CO-CHAIR MILLETT expressed her understanding that AHFC could
administer grant funds or vouchers under the current statute.
She acknowledged that there is a need, but asked whether the
bill sponsors determined if AHFC could administer this program
through regulation, or if legislation is required.
3:59:09 PM
REPRESENTATIVE TUCK stated that the bill co-sponsors have been
working with AHFC since November [2009]. In fact, AHFC saw that
the program was missing the needs of a group of homeowners, and
conducted a poll of those who were able to be involved in an
original audit. In December, no action was taken, so the bill
was pre-filed. Representative Tuck spoke of efforts made by
him, and Senator Meyer, to assist a constituent, and pointed out
that this program would fill a need for people who want to take
advantage of reduced utility costs and who "would love to be
part of this program, but just aren't able to come up with that
up-front $10,000."
4:01:46 PM
CO-CHAIR MILLETT re-stated her question.
4:01:50 PM
REPRESENTATIVE TUCK expressed his hope for guiding the agency to
a simple method to accomplish the intent of this bill.
4:02:19 PM
REPRESENTATIVE RAMRAS noted that the [energy rebate] program has
a zero default rate. He gave an example of how the voucher
program could lead to default.
4:03:51 PM
REPRESENTATIVE TUCK responded that as the program is now, the
ultimate responsibility to make up for a shortfall rests with
the homeowner. In fact, the audit indicates the cost of each
improvement, and homeowners can pick and choose what projects to
complete. He assured the committee the intent is for no further
liability to AHFC.
4:05:28 PM
REPRESENTATIVE RAMRAS anticipated that the voucher program will
lead to defaults, and problems similar to those that occur when
building a custom home. He gave examples of possible problems.
4:07:57 PM
REPRESENTATIVE TUCK asked the committee to review the sample
home energy voucher language pre-work authorization and sample
post-work payment authorization. He read [original punctuation
provided]:
Alaska Housing and Finance Corporation guarantees up
to $_____ for the home energy efficiency work to be
completed at the property located at _______ and owned
by ______.
The actual amount of payment by Alaska Housing Finance
Corporation is determined by the increase in home
energy ratings by comparing the pre- and post-
improvement energy audits, and capped at $10,000.
If the amount of the expenditures for the improvements
exceeds the amount of the reimbursement authorized by
AHFC, the amount owing shall be the sole
responsibility of the homeowner.
In any case, the vendor's sole remedy is to pursue
payment from the homeowner.
The homeowner and vendor acknowledge their
responsibilities and duties before work is begun by
signing below.
REPRESENTATIVE TUCK acknowledged that some contractors will not
want to take vouchers; however, the vouchers offer the
opportunity to those who wish to provide services.
4:09:32 PM
REPRESENTATIVE JOHANSEN referred to AS 18.56.410. He said,
"[Subsection] (a) says 'the corporation shall administer the
energy efficient home grant under the provisions of this
section.'" He then said, "[Subsection] (c) says the corporation
shall adopt guidelines and procedures ... but in [subsection]
(b), where you're amending it, in the current statute, it says
the corporation, ... AHFC, may grant funds from the grant fund
to agencies, the federal government, individuals, et cetera."
Representative Johansen observed the agency has the ability to
make decisions about its course of action. He agreed with
Representative Ramras about the concept of HB 278; however, he
expressed discomfort at the use of the word "shall" that tells
AHFC "to do something, when they can, and they're not."
4:11:14 PM
CO-CHAIR MILLETT asked the co-sponsor about use of the word
"shall."
4:11:38 PM
REPRESENTATIVE TUCK offered to amend the language.
4:12:20 PM
MS. LANDAU reviewed statements of support for the bill from
regional housing authorities and the Association of Village
Council Presidents in Bethel. She also found weatherization
crews training for work in rural areas. Turning to the question
of whether the loan program offered through AHFC solves the
problem addressed by HB 278, she advised that securing a loan
results in a second mortgage, and only 100 homeowners have
applied for a loan with credit ramifications.
4:14:10 PM
REPRESENTATIVE TUCK noted that AHFC's second mortgage lending
program is good and has a low interest rate; however, HB 278
simplifies the process.
4:14:40 PM
CO-CHAIR MILLETT referred to the fiscal note and questioned the
need to add seven full-time employees to a program that will
help a small portion of residents.
4:15:56 PM
BRYAN BUTCHER, Director, Governmental Affairs & Public
Relations, Alaska Housing Finance Corporation (AHFC), Department
of Revenue (DOR), provided some background on the bill. He
assured the committee AHFC wants to make sure that as many
Alaskans as possible can take advantage of the home energy
rebate program. In fact, AHFC was interested in the
participation rate and why some applicants did not complete the
program, but had no data at the end of the last legislative
session. Gathering data was further delayed by the shortage of
energy raters. Mr. Butcher agreed with Co-Chair Millett that
without sufficient information, the agency could spend more
money trying to solve a problem than the cost of the group
needing help. AHFC has received feedback from only 50
applicants who did not use the program at the end of the 18-
month time limit, and the most popular reason for not completing
the rebate process is that the home is already rated with a 4-
Star Plus energy rate. Another issue is that the second
mortgage weatherization loan program would be more popular, but
has not been advertised sufficiently. Mr. Butcher explained
that the maximum loan amount is $30,000 for 15 years at a rate
of 4.75 percent, and for a loan of $15,000, loan payments would
be about $115 per month. In fact, if a homeowner paid the loan
back with his or her rebate, the resulting energy savings would
pay back the interest within a year or two. Currently, the loan
information is included in mail-outs and statewide advertising,
and a better job of advertising would probably result in more
interest in the loan program. Mr. Butcher opined that in most
cases applicants can afford taking out a small loan to get the
energy efficiency work done, especially if most of the loan was
repaid by the rebate within 18 months.
4:20:12 PM
CO-CHAIR MILLETT referred to the fiscal note and questioned the
need for seven full-time employees to administer this program.
4:20:30 PM
MR. BUTCHER explained AHFC's biggest concern is about possible
fraud investigation. For example, if an applicant receives a
voucher for $10,000 and the post-rater allows only $6,000, the
homeowner may turn to AHFC. Currently, the program is simple in
that AHFC does not have to be concerned about whether a
homeowner has sufficient assets to cover his/her obligation to
the contractor. The fiscal note includes employees to
administer this program while minimally affecting the
corporation. In further response to Co-Chair Millett, he said
there are six full-time employees and some temps presently
administering the program. AHFC certifies the energy raters, so
all it has do is look at the pre- and post-ratings and check for
receipts.
4:22:55 PM
CO-CHAIR MILLETT assumed HB 278 would double the size of the
organization to help one-fifth of the applicants.
4:23:24 PM
MR. BUTCHER said AHFC will not have statistics on the number of
homeowners who need this program until summer.
4:23:37 PM
CO-CHAIR EDGMON based his support of the bill on the merits and
on AHFC's stance. He asked whether AHFC supports the bill.
4:24:32 PM
MR. BUTCHER said AHFC is neutral on the bill. He said AHFC
agrees with the idea of the bill, and will implement it, but
does not have sufficient information to recommend the passage of
the bill at this time.
4:25:15 PM
CO-CHAIR EDGMON further asked about the need for more
information and time. The questions that were raised today are
not new to AHFC; for example, this program has come up short in
rural areas, and he inquired whether AHFC has analyzed the
problems, or the remedies attempted by the co-sponsors of the
bill. He encouraged a close look at the program, although he
said this vehicle does not work.
4:27:04 PM
MR. BUTCHER re-stated AHFC's concerns: (1) how to define the
size of the problem; (2) how to prevent AHFC from becoming a
bill collector. He declined to give a definitive answer.
4:28:08 PM
CO-CHAIR EDGMON assumed moving the bill will get ahead of the
corporation's process.
4:28:25 PM
MR. BUTCHER agreed.
4:28:31 PM
REPRESENTATIVE PETERSEN pointed out that the number of people
who do not apply because they do not have the money to pay for
repairs, and wait to be reimbursed, is impossible to know. He
gave his personal experience with the program and questioned the
need for seven additional staff members.
4:30:30 PM
MR. BUTCHER explained that AHFC believes if the voucher system
is offered, the majority of applicants will choose that system.
He described energy performance contracting, in which the
contractor is responsible for the improvement in energy
efficiency, and for the improvement work that is done. This
differs with the home energy rebate program, in which the rater
and the contractor may be two separate businesses and are not
"tied together." His personal experience is that the work done
may not be of the highest level, thus AHFC would be involved in
a lot of paperwork regarding the difference between the voucher
to the contractor, and the rebate to the homeowner.
4:32:52 PM
REPRESENTATIVE JOHANSEN asked whether AHFC is authorized to do
this under its existing authority.
MR. BUTCHER said yes, and added that he hoped AHFC will be able
to make changes for the benefit of Alaskans as the program
progresses.
4:33:31 PM
REPRESENTATIVE JOHANSEN further asked whether the idea of a
voucher system had been discussed within AHFC prior to the
introduction of HB 278.
MR. BUTCHER indicated that AHFC is always interested in helping
Alaskans, but must ensure there is no harm to the corporation.
4:34:43 PM
REPRESENTATIVE JOHANSEN inquired again as to whether the voucher
system idea had been broached.
MR. BUTCHER advised that vouchers were discussed for the first
time with Representative Tuck; however, AHFC was aware of the
issue.
4:35:41 PM
CO-CHAIR EDGMON recalled that AHFC indicated it will return to
the committee with more data and asked when the data could be
expected.
MR. BUTCHER indicated he was unsure, but expected information in
April, 2010.
4:37:14 PM
MR. BUTCHER, in further response to Co-Chair Edgmon, explained
that the time limit on the program was expanded from 12 months
to 18 months. Most complaints about insufficient time to
complete improvements are unfounded, with exceptions for
applicants serving in the military, or those with serious health
emergencies. He acknowledged that as more rural applicants
approach the deadline, the shortage of materials may be more of
a factor, and AHFC is willing to consider extensions.
4:38:21 PM
CO-CHAIR EDGMON further recalled AHFC officials will consider
extensions to 24 months.
4:38:38 PM
REPRESENTATIVE TUCK pointed out that the amount of the fiscal
note attached to the bill was a surprise to the co-sponsors.
Initially, the co-sponsors were told to expect the addition of
only one position. He opined that the additional positions were
added because the program is mistakenly identified as a grant,
or loan, program. Representative Tuck said:
There's not going to be any investigations just like
there's no investigations now taking place for people
getting their rebate.... There is potential fraud, but
... I think everything has been running pretty smooth
and pretty clean and ... if there was fraud going on
in the program, who's to say that the auditor isn't
misrepresenting the work that's being performed now?
REPRESENTATIVE TUCK stressed that there is no expectation for
AHFC to become a bill collector; in fact, it is up to the
contractor to collect from the homeowner only. He clarified
that the statute authorizes AHFC to administer a grant program
if it chooses.
4:41:33 PM
CO-CHAIR MILLETT assumed there is a limited amount of liability
to AHFC if the contractor does not get paid.
4:42:11 PM
REPRESENTATIVE TUCK pointed out that the homeowner makes a
decision at the time of the pre-audit whether to get the work
done.
4:42:27 PM
MR. BUTCHER, regarding the fiscal note, said that "grants
administrator" is the name of the positions in the energy
department. In dealing with potential fraud, no less that 5
percent of the post-audits are done by a different rater than
the pre-audit. A few raters have been removed, and he concluded
that Alaskans are protected from fraud in this way.
4:43:22 PM
CO-CHAIR MILLETT expressed her intent to hold HB 278 for further
testimony from AHFC.
REPRESENTATIVE TUCK encouraged AHFC to conduct a poll to find
out how many people do not participate in the program because of
the conditions addressed in the bill.
4:44:09 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB411-CED-AEA-3-2-10.pdf |
HENE 3/9/2010 3:00:00 PM HENE 3/16/2010 3:00:00 PM |
HB 411 |
| HB411-CED-AIDEA-3-2-10.pdf |
HENE 3/9/2010 3:00:00 PM HENE 3/16/2010 3:00:00 PM |
HB 411 |
| Sectional for HB 411 and SB 301.pdf |
HENE 3/9/2010 3:00:00 PM HENE 3/16/2010 3:00:00 PM |
HB 411 SB 301 |
| 2-17-2010_MOU_AIDEA_AEA.pdf |
HENE 3/9/2010 3:00:00 PM |
|
| FINAL House Transmittal Letter LL0974.pdf |
HENE 3/9/2010 3:00:00 PM |
|
| HB0411A.pdf |
HENE 3/9/2010 3:00:00 PM HENE 3/16/2010 3:00:00 PM |
HB 411 |
| Energy Committee Agenda 03092010.pdf |
HENE 3/9/2010 3:00:00 PM |
|
| HB0278A.pdf |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB 278 Kawerak Letter.PDF |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB 278 Sectional.PDF |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB 278 Sponsor Statement.PDF |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB278-REV-AHFC-3-8-10 Energy Efficiency Loans.pdf |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB 278 Q&A.PDF |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| HB 278 letters of Support.PDF |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| MOU AEA-AIDEA HB 411.PDF |
HENE 3/9/2010 3:00:00 PM HENE 3/16/2010 3:00:00 PM |
HB 411 |
| Sample Home Energy Voucher Language for HB 278.pdf |
HENE 3/9/2010 3:00:00 PM |
HB 278 |
| Tuck Energy Committtee Hearing Testimony 030910.pdf |
HENE 3/9/2010 3:00:00 PM |