Legislature(2015 - 2016)HOUSE FINANCE 519
04/11/2016 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB290 | |
| HB375 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 118 | TELECONFERENCED | |
| + | HB 243 | TELECONFERENCED | |
| + | HB 315 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 290 | TELECONFERENCED | |
| += | HB 375 | TELECONFERENCED | |
HOUSE BILL NO. 118
"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."
Vice-Chair Saddler MOVED to ADOPT the proposed committee
substitute for HB 118, Work Draft (29-GH1021\P). There
being NO OBJECTION, it was so ordered.
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,
reviewed the changes to the Committee Substitute by reading
from a prepared statement:
Sec 1: No change
Sec 2: No change
Sec 3: New section allowing second class boroughs to
authorize PACE financing under non area wide powers
Sec 4: Renumbered section with no change
Sec 5: Renumbered section with the following changes:
· Page 3, line 17
Modifies language to allow PACE financing to be
implemented within a region of a municipality
determined by the municipality through a public
process.
· Page 3, lines 30 - 31
Modifies language to allow PACE financing to be
implemented within a region of a municipality
determined by the municipality through a public
process.
· Page 4, line 24 through Page 5, line 3
Replaces proposed AS 29.49.050 with language that
allows a municipality wishing to authorize PACE
financing to do so by designating an area of the
municipality as a region for the program. The
area designated may include the entire
municipality, a single subset, or subsets of the
municipality. However, the entire PACE program
must be contained within the boundary of the
municipality.
· Page 5, line 15
Requires a municipality proposing to implement
PACE financing to provide a description of the
boundaries for the proposed program. Re-letter
the remaining subsections of AS 29.49.060 with no
change.
· Page 6, line 17
Requires that a map of the proposed PACE
financing program boundary be included in the
mandatory report that must be made available to
the public before a PACE program can be
initiated. Renumber the remaining subsections of
proposed AS 29.49.070 with no change.
· Page 10, lines 9 - 10
Adds language to acknowledge that PACE assessment
payments may come in from regions within the
municipality.
· Page 11, line 7, Page 11, line 10 and Page 11,
line 13
Clarifies that the prohibited acts established in
proposed AS 29.49.160 will apply to a PACE
financing program whether it is offered in a
portion of the municipality or the entire
municipality.
Ms. Pierson referred to a legal opinion (copy on file)
dated April 2, 2015 in the member's backup packets. She
indicated the memo explained why the changes in the
Committee Substitute (CS) was necessary.
1:40:59 PM
Representative Guttenberg asked what the term "municipal"
encompassed. He asked whether a borough was included in the
definition. Ms. Pierson believed so but deferred to Mr.
Therriault for the answer.
Representative Kawasaki asked about local improvement
districts. He wondered whether the municipality would
determine a PACE (property assessed clean energy program)
area through a public process or would the municipal
government act on behalf of the property owners.
1:42:28 PM
GENE THERRIAULT, DEPUTY DIRECTOR, STATEWIDE ENERGY POLICY
DEVELOPMENT, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY, ALASKA ENERGY AUTHORITY, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, answered Representative
Kawasaki's question. He explained that the public process
was delineated in the legislation. When a municipality was
considering a PACE program it must pass a resolution
detailing the location and how the program would be run.
The information would be included in a public report and
ultimately, a local government had to adopt an ordinance to
initiate the program.
Representative Guttenberg asked about the term
"municipality" used in the legislation and wondered what
the term encompassed. Mr. Therriault had consulted with the
Department of Law (DOL) and assured that the terminology in
the bill "struck the balance correctly."
1:44:20 PM
Representative Wilson offered that the bill provided
additional power to a second class borough. She wondered
whether the municipality then had the ability to add a tax
to the PACE area. Mr. Therriault responded in the negative.
He explained that the program allowed an individual
property owner to use the financing mechanism and repay the
loan through a voluntary property tax assessment. He noted
that the mechanism was similar to a utility assessment
except that the assessment was only levied for the
individual property owner in the program. He emphasized
that the bill allowed for a contractual arrangement between
a property owner and municipality to levy an extra
assessment on the individual's property in order to repay
the loan. Representative Wilson asked whether the
legislation was expanded to include residents. Mr.
Therriault responded that the bill restricted the PACE
program to businesses rather than residents. He added that
in the Fairbanks North Star Borough the program was
intended to assist businesses convert to natural gas when
an expanded supply was available. He delineated that some
states were attempting to expand the program to residential
properties and experienced problems with the secondary
lending market purchasers of residential property loans.
The authority decided to avoid any issues with residential
property and focused on businesses. Representative Wilson
asked whether the program was a voluntary mechanism rather
than any type of "forceful action." Mr. Therriault replied
that the program was completely voluntary for both the
municipality and the individual businesses.
Representative Gattis communicated that the program applied
to the building owner rather than the business owner unless
they were the same. She viewed the program as advantageous
to both the business and property owner.
Representative Munoz asked whether the municipality was the
entity repaying the lending institution. Mr. Therriault
confirmed that if the source of the loan was a private bank
that entered into a contractual agreement with the
municipality then the local government would pay the bank.
Another mechanism a municipality could employ would be a
revenue bond that would be repaid via the local government.
The program allowed the local government the flexibility to
search for federal sources of money, private lenders, or
revenue bonding at low interest rates and pass the
opportunity on to the business owner.
1:50:16 PM
Co-Chair Thompson OPENED public testimony.
1:50:34 PM
KATHY WASSERMAN, ALASKA MUNICIPAL LEAGUE, spoke in favor of
the legislation. She added that under state law the term
"municipalities" included boroughs and cities. The league
strongly supported the legislation as a tool that helped
businesses and included "safeguards."
1:51:58 PM
KARL KASSEL, MAYOR, FAIRBANKS NORTHSTAR BOROUGH (via
teleconference), urged members to support HB 118. He
strongly endorsed the legislation. He noted the support of
the communities and mayors of Fairbanks and North Pole. He
voiced that the bill helped businesses move forward with
cleaner energy and gas conversions as well as fostering an
economic "boost" for the communities.
Co-Chair Thompson CLOSED public testimony.
Mr. Therriault relayed that in the past year AEA and AIEDEA
had been looking for additional non-state sources of money
that could assist energy conversion in the state. He
relayed that according to Senator Murkowski's office, the
Rural Utility Service (RUS) division of the United States
Department of Agriculture was in the process of writing a
letter of support. The RUS approved the PACE mechanism as
one of the favored programs to access federal loan funds.
He reported that AEA was actively looking and identified a
source of funding with a zero interest rate for a local
government and another that carried a 2 percent to 2.5
percent interest rate.
Vice-Chair Saddler asked who was offering the zero percent
interest rate. Mr. Therriault responded that RUS was
offering a zero percent interest rate loan and the pool of
money nationwide was $70 million to $80 million. He
stressed the importance for municipalities to obtain access
to repayment mechanisms that lowered the default rate on
loans.
Vice-Chair Saddler reviewed the new zero fiscal note from
the Department of Commerce, Community and Economic
Development (DCCED).
Vice-Chair Saddler MOVED to REPORT CSHB 118 (FIN) out of
committee with individual recommendations and the
accompanying fiscal note(s). There being NO OBJECTION, it
was so ordered.
CSHB 118 (FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new zero fiscal note by the
Department of Commerce, Community and Economic Development.
1:56:57 PM
AT EASE
1:59:00 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 118 AEA Graphic.pdf |
HFIN 4/11/2016 1:30:00 PM |
HB 118 |