Legislature(2017 - 2018)CAPITOL 17
01/31/2017 10:15 AM House ENERGY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB81 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 81 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 81-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY
10:22:01 AM
CHAIR WOOL announced that the only order of business would be
HOUSE BILL NO. 81, "An Act making an entity that is exempt from
federal taxation under 26 U.S.C. 501(c)(3), (4), (6), (12), or
(19) (Internal Revenue Code) and a federally recognized tribe
eligible for a loan from the Alaska energy efficiency revolving
loan fund; relating to loans from the Alaska energy efficiency
revolving loan fund; and relating to the annual report published
by the Alaska Housing Finance Corporation."
10:22:22 AM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, Alaska State
Legislature, explained that this same legislation had, during
the 29th Alaska State Legislature, passed all three committees
of referral with almost unanimous "do-pass" recommendations. He
opined that this was "good, common sense legislation that
promotes energy efficiency in Alaska." He summarized the bill,
stating that it incorporated an existing program "Alaska Energy
Efficiency Revolving Loan Fund" which was authorized under the
Alaska Housing Finance Corporation (AHFC). He detailed that
this loan fund had been created for the public sector, primarily
school districts, municipalities, and state agencies to make
energy efficiency investments. He explained that a public
entity could identify energy efficiency improvements and borrow
money from this revolving loan fund to make those improvements.
The marginal savings would then allow for the repayment of the
borrowed money. He pointed out that, at the end of the loan
term, there was a more energy efficient building and lower
energy costs. He declared that proposed HB 81 was based on the
belief "that energy efficiency is a good, common sense thing,
particularly in Alaska with a climate like ours." The proposed
bill acknowledged that, as many non-profit organizations had a
need for energy efficiency improvements, it made sense to
broaden the eligibility to allow greater access to this
financing.
REPRESENTATIVE JOHNSTON asked about the size of the fund.
REPRESENTATIVE KREISS-TOMKINS explained that this was not a
"sitting pot of money," but was, instead, a bond authorized
program.
10:25:39 AM
BERETT WILBER, Staff, Representative Jonathan Kreiss-Tomkins,
Alaska State Legislature, in response to Representative
Johnston, stated that the program was authorized for up to $250
million in bonding.
REPRESENTATIVE JOHNSTON asked about any current outstanding
loans to the public.
MS. WILBER replied that only one loan had been closed by the
program, a loan to the City of Galena, for about $2.4 million in
December, 2016.
REPRESENTATIVE KREISS-TOMKINS reported that the program was
currently underused by the entities able to access it. He
explained that, for the past decade, there had been "a gravy
train of free money, namely legislative grants, so why would
anyone borrow money when you can get it for free in the form of
grants." He suggested that there would now be more activity,
pointing out that less than 1 percent of the available funding
had been granted. He elaborated on the intent of the proposed
legislation, stating that many non-profit organizations,
although focused on programs and missions, did not have large
cash reserves. He offered an example of a non-profit
organization in Sitka that did not have the cash flow to make
the investment in energy efficiency improvements. He stated
that this would allow cash poor organizations to "make an
existing program do much, much more good than its presently
doing."
10:28:52 AM
CHAIR WOOL, reiterating the premise that the loan would be
repaid by savings realized by the improvements, asked if this
was determined through an audit, and was this an exact
measurement or a best approximation. He asked what would happen
if the conditions changed, and the savings were not the same as
the original calculation.
REPRESENTATIVE KREISS-TOMKINS clarified that, to qualify for
financing, it was necessary to have an audit to approve the
details for the energy efficiency improvement.
MS. WILBER expressed her agreement that it was necessary to have
an energy audit certified by a third party.
10:31:14 AM
REPRESENTATIVE WESTLAKE asked if there were any unintended
consequences, such as an increase in price due to a shift in
electricity use, which could be passed on to the community. He
detailed an example of this to a rural program.
REPRESENTATIVE KREISS-TOMKINS cited this as a paradox of power
cost equalization, as there was not an incentive for
conservation. He suggested that the relative change of energy
consumption within the community would not appreciably change
the cost of energy in the community, although he acknowledged
that this was a cause and consequence.
CHAIR WOOL stated that some of these discussions would be
brought up later during a power cost equalization presentation.
10:34:07 AM
REPRESENTATIVE JOHNSON offered her understanding that the Alaska
Energy Efficiency Revolving Loan Fund Program (AEERLP) was
originally intended for these buildings housing municipal
government and schools to be energy efficient in order to
benefit the taxpayers by not having to pay so much in power
costs. She asked, if this was to be offered to non-profits and
tribal governments, whether all municipal and school buildings
had already been addressed. She suggested that there were still
schools needing work before this money was made available to
other groups.
REPRESENTATIVE KREISS-TOMKINS acknowledged that the loan fund
was created for municipalities and school districts, but, with
the exception of the City of Galena, it had not been used. He
reported that his research had found a universal reluctance to
borrow money instead of using grants. He pointed out that
language had been added to the proposed bill in the prior
legislative session which allowed for the original entities to
have priority for access to financing, "if an avalanche of
interest." He stated that this should never jeopardize public
entities from being financed.
REPRESENTATIVE JOHNSON asked if this could lead to foreclosures
in the community.
REPRESENTATIVE KREISS-TOMKINS opined that audits would offer
protection against this, as they would demonstrate savings to
pay back the loan.
REPRESENTATIVE JOHNSON shared her concern for state financing
and possible defaults by private non-profits.
10:39:48 AM
STACY SCHUBERT, Director, Governmental Affairs & Public
Relations, Alaska Housing Finance Corporation, Department of
Revenue, in response to questions on repayment schedules for
non-profits, asked for clarification as to questions on a
specific project.
CHAIR WOOL replied that the question was not for a particular
project, and asked whether the savings predicted by the audit
for a project would be used for the repayment schedule, and, if
there was a change in the prediction, what was the consequence.
10:41:22 AM
ERIC HAVELOCK, Lending Officer, Alaska Housing Finance
Corporation, Department of Revenue, explained that the Alaska
Housing Finance Corporation (AHFC) had written procedures to
follow in the event of a payment default. He stated that AHFC
relied on the third party professionals who produced the audits,
as well as a review of the data by the departmental internal
resources. He expressed confidence that the energy projections
were accurate as of the date of the report, which allowed the
application to be taken before the board for loan approval. He
said that any future changes would be dealt "with as they came
up."
REPRESENTATIVE RAUSCHER expressed his understanding of the needs
and benefits to realize energy savings, although he questioned
the governmental role in the business of loaning money to non-
profits. He asked where this determination for the parameters
to non-profits would begin and end. He declared that there were
risks involved, noting that the costs to improvements would
vary.
REPRESENTATIVE KREISS-TOMKINS, in response, declared that there
was a "fairly strong precedent in our government and our society
for carving out a role for the non-profit community to play;
foremost, they don't pay taxes to government." He pointed out
that churches and non-profit organizations did not pay taxes to
government because they provided "a service to society that
government might otherwise be compelled to deliver presumably
with less efficiency and greater cost." He suggested that there
was a greater good in supporting non-profits. He offered his
belief that "small potatoes financing" was going to have large
benefits for the non-profits and the communities. He opined
that there was a specialization to this type of financing, as it
reviewed energy audits and was energy specific, and that AHFC
had the necessary background.
REPRESENTATIVE JOHNSTON asked about a limit on the loans. She
suggested that there could be co-ordination between the effects
on the community and on the revolving loan program.
REPRESENTATIVE KREISS-TOMKINS, in response, acknowledging that a
lending limit could have a role, declared that more energy
efficiency was better in Alaska, but was not currently
happening. He offered his belief that, as the aforementioned
behavior was not present, there was "a limited case for us
trying to solve a problem that I don't think exists because none
of these investments are happening on this energy efficiency."
He suggested that parameters might have "the effect of limiting
what I think is a pretty unadulterated, and unqualified good,
which is not wasting energy and money in Alaska." He
acknowledged the origin of the ideological and intellectual
objections and allowed that there could be "some sideboards that
make sense and I'd be happy to consider those."
REPRESENTATIVE SPOHNHOLZ shared that she had some similar
concerns, specifically to retain access for those entities to
which the program had been originally intended as there were
fewer grants now available. She stated that it was important to
meet the core mission, noting that, although the loan fund could
be entirely utilized by the original intended recipients, it
also opened up an opportunity for the non-profit sector to serve
the needs that government did not. She offered an example of
grants and funding for services.
10:50:40 AM
REPRESENTATIVE CLAMAN directed attention to the amendment,
labeled 30-LS0353\A.1, Nauman, 1/30/17 [Included in members
packets] and asked if this was going to be proposed.
REPRESENTATIVE KREISS-TOMKINS replied, yes, and explained that
the background to this amendment was a result of conversations
with the Cook Inlet Housing Authority (CIHA).
REPRESENTATIVE CLAMAN asked if CIHA was interested in
participating as a regional housing authority. He questioned
what would be the response to these new applicants, should the
originally intended recipients for the fund have higher priority
and utilize all the funds.
REPRESENTATIVE KREISS-TOMKINS expressed his agreement that these
newer applicants would be denied in favor of those applicants
with higher priority.
REPRESENTATIVE CLAMAN asked if there was a possibility of using
up the lending capacity of this loan fund very quickly.
MR. HAVELOCK, in response, explained that the fund was set up as
a revolving fund, and loan payments would replenish the fund for
future loans.
REPRESENTATIVE CLAMAN asked if there were any issues to lending
capacity with a revolving loan fund.
MR. HAVELOCK, in response, said that the AHFC had not
experienced the situation of loan funds running out of money.
10:54:08 AM
REPRESENTATIVE SPOHNHOLZ moved to adopt Amendment A.1, labeled
30-LS0353\A.1, Nauman, 1/30/17, which read:
Page 1, line 2, following "(Internal Revenue Code)":
Insert ", a regional housing authority,"
Page 2, line 15, following "tribe,":
Insert "a regional housing authority,"
Page 2, line 20, following "tribe,":
Insert "a regional housing authority,"
Page 2, line 29, following "tribe,":
Insert "a regional housing authority,"
Page 3, line 1, following "tribe,":
Insert "regional housing authority,"
Page 3, line 11, following "tribe,":
Insert "a regional housing authority,"
Page 3, line 15, following "tribe,":
Insert "a regional housing authority,"
Page 4, line 1, following "tribe,":
Insert "a regional housing authority,"
Page 4, line 4, following "tribe,":
Insert "regional housing authority,"
Page 4, line 8, following "tribe,":
Insert "a regional housing authority,"
Page 4, line 10, following "tribe,":
Insert "regional housing authority,"
Page 5, line 1, following "tribe"":
Insert "means"
Page 5, line 2:
Delete "means"
Page 5, line 5:
Delete "includes"
Page 5, following line 6:
Insert a new paragraph to read:
"(3) "regional housing authority" means a
regional housing authority established under
AS 18.55.996;"
Renumber the following paragraph accordingly.
CHAIR WOOL objected for discussion.
REPRESENTATIVE SPOHNHOLZ explained that proposed Amendment A.1
explicitly clarified that a regional native housing authority as
established in AS 18.55.996 would be able to apply for loans
under the new guidelines.
10:54:41 AM
The committee took a brief at-ease.
10:55:21 AM
CHAIR WOOL brought the committee back to order. He clarified
that there was not a plan to move the proposed bill out of
committee today. He asked if there was any more discussion on
proposed Amendment A.1.
REPRESENTATIVE RAUSCHER asked if this proposed bill would affect
the amount of money available in the future; although testimony
had indicated that it had not been affected in the past, this
was a piece of legislation for the future.
REPRESENTATIVE CLAMAN said that he had asked about the past
experience based on history, as he could not ask a bank to
predict the future.
REPRESENTATIVE RAUSCHER asked if there was a way to find how
this would affect the availability of future monies.
MR. HAVELOCK, in response, declared that AHFC would support the
policy decisions as determined by the legislature. He offered
his belief that the proposed bill met some of the original
attempts. Regarding any future funding, AHFC had a statutory
cap on a debt of $250 million. He acknowledged that AHFC would
be able to accommodate the legislative intent for a priority to
the originally identified borrowers.
10:58:51 AM
CHAIR WOOL removed his objection to Amendment A.1. There being
no further objection, it was so ordered.
REPRESENTATIVE WESTLAKE asked how many entities had applied for
this loan.
MR. HAVELOCK, in response, reported that there had been about
two applications annually under this program, although these
loan were not always approved. He stated that only one loan, to
the City of Galena, had been approved. He shared that the loan
regulations were placed in effect in October, 2010, and the
first set of applications were made in 2012.
REPRESENTATIVE JOHNSON opined that municipalities would now
begin looking toward these loans as previously there had been
grant money available. She expressed her concern that loans
would go to any buildings, including private buildings. She
asked who had to own the building.
REPRESENTATIVE KREISS-TOMKINS offered his belief that an
organization would need to own the building in order to receive
any financing for energy efficiency improvements.
REPRESENTATIVE JOHNSON expressed her concern that these loans
would go to private buildings. She directed attention to page
5, line 5 of the proposed bill, and read: "includes a
subdivision, subsidiary, or business enterprise wholly owned by
a federally recognized tribe." She asked if there was any
contradiction with page 5, lines 14 - 15, which read: "the
recipient of a loan under this section may not be a for-profit
enterprise."
REPRESENTATIVE KREISS-TOMKINS directed attention to page 2, line
20 of the proposed bill, which read: "owned by a tax-exempt
entity." He elaborated that there should be a worry for the
private organizations, including private non-profits, as in the
past, state governments had given money to these organizations.
He offered his belief that the loan program offered a consistent
support to these organizations.
11:05:20 AM
MS. WILBER offered her belief that this concern had been raised
during the last session, and that retro fits were not allowed by
for profit business enterprises. She allowed that, as state law
and federal law sometimes created grey areas regarding tribal
entities, Amendment 1 would explicitly allow regional housing
authorities to borrow. She opined that, although the language
for business enterprise could be removed, lines 14 - 15 on page
5 of the bill were added for clarity.
REPRESENTATIVE CLAMAN, reflecting on the role of for profit
tribes, relayed that there were tribes in the Lower 48 that had
made quite a lot of money on gambling casinos and hotels on
reservation lands. He offered his understanding that a casino
could not apply for the energy efficiency loan as it was an
entity that was making money on a for profit basis, even though
the profits would go to the tribe; however, a tribal community
center would be allowed to take out a loan for energy efficiency
in its facility. He asked if this was the intent of the
language.
REPRESENTATIVE KREISS-TOMKINS expressed his agreement that this
did align with his intent and thinking. He declared that, as
the intent was not that for-profit business entities
participate, he was open to "tweaks to the language to get to
that end."
CHAIR WOOL asked if clarification regarding any for profit
component within tribal entities could be presented at the next
bill hearing.
REPRESENTATIVE KREISS-TOMKINS expressed his agreement to "bring
clarity to those questions."
REPRESENTATIVE JOHNSON asked if a legal opinion could be
obtained.
CHAIR WOOL expressed his agreement.
REPRESENTATIVE WESTLAKE asked Alaska Housing Finance Corporation
if there was a different rate for loans to non-profit or for
profit entities.
MR. HAVELOCK reported that the structure of the program did not
differentiate between the two entities.
CHAIR WOOL asked about the majority of loans, other than this
program, which AHFC processed.
MR. HAVELOCK replied that the majority of the business was
financing for residential housing through the tax-exempt first
time home buyers program. He reiterated that only one loan had
been made through this authority.
CHAIR WOOL declared that, as AHFC was in the business of loaning
money to individual homeowners, making a loan to non-profits and
tribal entities was in line with this. He pointed out that the
fund was underutilized, and that many municipalities could use
these energy efficient loans. He noted that the proposed bill
had a zero fiscal note from the Department of Revenue, and that
there was no impact fiscal.
REPRESENTATIVE KREISS-TOMKINS said that he would follow-up.
[HB 81 was held over]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB081 Sectional Analysis 1.27.2017.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB081 Sponsor Statement 1.27.2017.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB081 Supporting Documents Memo Leg Legal 1.27.2017.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB081 Supporting Documents Report Rural Retrofits 1.27.2017.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB081 Supporting Documents Letters of Support.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB 81 - Fiscal Note - AHFC - Zero.PDF |
HENE 1/31/2017 10:15:00 AM |
HB 81 |
| HB 81 - Amendment #1.pdf |
HENE 1/31/2017 10:15:00 AM |
HB 81 |