01/28/2010 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS

          SB 212-MUNICIPAL ENERGY IMPROVEMENTS PROGRAM                                                                      
                                                                                                                              
4:13:18 PM                                                                                                                    
CHAIR OLSON announced the consideration of SB 212.                                                                              
                                                                                                                                
SENATOR EGAN, sponsor  of SB 212, said the bill  creates jobs and                                                               
more  sustainable communities  and  makes  buildings more  energy                                                               
efficient. It  is an innovative  financing mechanism  designed to                                                               
accelerate the energy retrofits  of Alaska's homes and commercial                                                               
buildings. He explained that property  owners borrow money from a                                                               
newly established municipal financing  district to finance energy                                                               
retrofits,  including  efficiency  measures  and  micro-renewable                                                               
energy.  The borrower  repays  over 20  years  through an  annual                                                               
special  tax   on  a  municipality's  property   tax  bill.  This                                                               
financing  model  has been  successful  in  16 other  states  and                                                               
numerous counties.  It is an option  only; SB 212 gives  power to                                                               
the municipalities to opt in or out.                                                                                            
                                                                                                                                
SENATOR KOOKESH  asked if  any money would  be available  for the                                                               
program if a  municipality chose to participate  but the district                                                               
did not issue a bond.                                                                                                           
                                                                                                                                
SENATOR  EGAN   replied  that  SB  212   gives  municipalities  a                                                               
mechanism to opt  in should the municipality choose to  do so. He                                                               
said he  is concerned about  smaller communities and  is assuming                                                               
some  of   the  revolving  energy   money,  funded   through  the                                                               
municipality, could  be used for  this. The municipality  can set                                                               
the rates and the terms.                                                                                                        
                                                                                                                                
4:16:18 PM                                                                                                                    
SENATOR KOOKESH asked if the  bond obligation stays with the home                                                               
if, for  example, a home owner  gets one of these  loans and then                                                               
sells the property.                                                                                                             
                                                                                                                                
SENATOR  EGAN replied  that it  would be  a part  of the  owner's                                                               
property tax.  Just as  municipalities require  now, if  the home                                                               
was sold or foreclosed, the entire debt must be paid.                                                                           
                                                                                                                                
SENATOR KOOKESH said the idea is innovative.                                                                                    
                                                                                                                                
CHAIR OLSON said if someone is  in foreclosure, no bills will get                                                               
paid.                                                                                                                           
                                                                                                                                
SENATOR EGAN replied  that if the municipality  forecloses on the                                                               
building, the municipality will sell it and collect the tax.                                                                    
                                                                                                                                
CHAIR OLSON asked if the municipality  will get back what was put                                                               
into the property.                                                                                                              
                                                                                                                                
SENATOR EGAN said he believed so.                                                                                               
                                                                                                                                
SENATOR MENARD  asked if Senator  Egan was trying to  establish a                                                               
fund that municipalities can choose to be part of or not.                                                                       
                                                                                                                                
SENATOR EGAN replied that was correct.                                                                                          
                                                                                                                                
SENATOR MENARD  asked if  the 16 other  states with  similar laws                                                               
have similar weather conditions.                                                                                                
                                                                                                                                
SENATOR  EGAN  said  the  16  other states  are  all  around  the                                                               
country.  Major  communities  in  California  also  have  similar                                                               
programs.                                                                                                                       
                                                                                                                                
CHAIR OLSON asked about the success of those programs.                                                                          
                                                                                                                                
SENATOR  EGAN said  according to  the National  Council of  State                                                               
Legislatures, the programs have been very successful.                                                                           
                                                                                                                                
SENATOR KOOKESH asked how the  bond obligation is disclosed if an                                                               
owner wants  to sell  his or  her house.  He thought  there would                                                               
have  to be  a disclosure  if an  owner, who  wants to  sell, has                                                               
taken  the  loan, has  made  improvements  on  the house  and  is                                                               
obligated to make additional tax payments to the municipality.                                                                  
                                                                                                                                
4:18:52 PM                                                                                                                    
SENATOR  EGAN replied  that it  would  be part  of the  mortgage.                                                               
There is  some concern from  lending organizations because  it is                                                               
unprecedented. In other municipalities,  additional tax is tacked                                                               
on to the owner's property tax bill.                                                                                            
                                                                                                                                
SENATOR  KOOKESH corrected  Senator Egan  that it  is not  on the                                                               
mortgage then, but on the tax bill.                                                                                             
                                                                                                                                
SENATOR EGAN said absolutely.                                                                                                   
                                                                                                                                
SENATOR KOOKESH said  the municipality would show  the home owner                                                               
and borrower of the loan has a  tax obligation to pay. So a buyer                                                               
would have  to be  informed about  the tax  obligation associated                                                               
with the home.                                                                                                                  
                                                                                                                                
SENATOR EGAN said that is correct,  a new buyer would assume that                                                               
obligation.                                                                                                                     
                                                                                                                                
SENATOR THOMAS asked about Section  (b) on page two: "In addition                                                               
the municipality may  require any other security for  a loan that                                                               
the  municipality determines  to be  reasonable" [Section  1 (b),                                                               
lines 10  and 11.] He asked  what that language implied  and what                                                               
other instruments other states have used.                                                                                       
                                                                                                                                
SENATOR EGAN said  it would be up to the  municipality to set the                                                               
terms,  the  amount  and  the interest  rate.  He  assumed  other                                                               
municipalities' requirements varied.                                                                                            
                                                                                                                                
4:21:54 PM                                                                                                                    
SENATOR  THOMAS said  he was  curious what  other collateral  has                                                               
been considered by other municipalities.                                                                                        
                                                                                                                                
SENATOR EGAN said he would get that information.                                                                                
                                                                                                                                
CHAIR OLSON asked if anyone was opposed to SB 212.                                                                              
                                                                                                                                
SENATOR EGAN replied no.                                                                                                        
                                                                                                                                
CHAIR OLSON asked if Senator Egan was anticipating opposition.                                                                  
                                                                                                                                
SENATOR EGAN said he spoke with  the state assessor who is not in                                                               
opposition to SB 212.                                                                                                           
                                                                                                                                
CHAIR OLSON asked about any municipalities.                                                                                     
                                                                                                                                
SENATOR EGAN  said that the  City and  Borough of Juneau  and the                                                               
Alaska Municipal League have not opposed it.                                                                                    
                                                                                                                                
SENATOR  KOOKESH  asked  about   Tamara  Cook's  [Legal  Services                                                               
Director,   Alaska  State   Legislature]   statement  that   "the                                                               
municipality  must  provide  an  explanation of  the  program  to                                                               
electric and natural  gas utilities operating in the  area of the                                                               
proposed   program  at   least  30   days  before   adopting  the                                                               
ordinance." He said he has never  heard of having to tell a local                                                               
utility that  an ordinance is  going to  be adopted. He  asked if                                                               
Senator Egan  could find out  why that  would be necessary  or if                                                               
the next committee would possibly take that up.                                                                                 
                                                                                                                                
4:23:39 PM                                                                                                                    
SENATOR KOOKESH said SB 212  is very innovative and could develop                                                               
some energy savings in the  state. Not everyone qualifies for the                                                               
energy  program that  started last  year and  this program  could                                                               
pick up some of that slack.                                                                                                     
                                                                                                                                
CHAIR OLSON  asked why it  was not put in  place years ago  if it                                                               
was  such a  good bill.  He was  impressed. [SB  212 was  held in                                                               
committee.]                                                                                                                     
                                                                                                                                
4:24:52 PM                                                                                                                    
CHAIR OLSON  thanked everyone for  their comments and  finding no                                                               
further  business to  come before  the  committee, adjourned  the                                                               
meeting at 4:24 p.m.