Legislature(2015 - 2016)SENATE FINANCE 532
03/14/2016 09:00 AM Senate FINANCE
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Audio | Topic |
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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.