Legislature(2017 - 2018)BARNES 124

03/28/2017 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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08:02:42 AM Start
08:03:28 AM HB156
08:32:46 AM Presentation by Chris Rose, Reap and Bert Hunter, Connecticut Green Bank
09:42:13 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation by Chris Rose, REAP and Bert TELECONFERENCED
Hunter, Connecticut Green Bank
Heard & Held
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         March 28, 2017                                                                                         
                           8:02 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Justin Parish, Co-Chair                                                                                          
Representative Harriet Drummond                                                                                                 
Representative Dean Westlake                                                                                                    
Representative George Rauscher                                                                                                  
Representative Dan Saddler                                                                                                      
Representative David Talerico                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Zach Fansler, Co-Chair                                                                                           
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative DeLena Johnson                                                                                                   
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 156                                                                                                              
"An Act relating to a municipal tax exemption or deferral for                                                                   
economic development property."                                                                                                 
     - HEARD & HELD                                                                                                             
PRESENTATION: CONNECTICUT GREEN BANK                                                                                            
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 156                                                                                                                  
SHORT TITLE: MUNI TAX EXEMPTION: ECON DEVEL PROPERTY                                                                            
SPONSOR(s): REPRESENTATIVE(s) TILTON                                                                                            
03/06/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/06/17       (H)       CRA                                                                                                    
03/23/17       (H)       CRA AT 8:00 AM CAPITOL 106                                                                             
03/23/17       (H)       Heard & Held                                                                                           
03/23/17       (H)       MINUTE(CRA)                                                                                            
03/28/17       (H)       CRA AT 8:00 AM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
JOHN MOOSEY, Manager                                                                                                            
Matanuska-Susitna (Mat-Su) Borough                                                                                              
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 156.                                                                          
GEORGE PIERCE                                                                                                                   
Kasilof, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 156.                                                                       
JEREMY PRICE, Director                                                                                                          
Americans for Prosperity - Alaska                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 156.                                                                          
KEN SLAUSON                                                                                                                     
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Expressed concern about some aspects of HB
DAN TUCKER                                                                                                                      
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during the hearing on HB 156.                                                                  
MICHAEL SHIELDS                                                                                                                 
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HB 156.                                                                  
CHRIS ROSE, Founder/Executive Director                                                                                          
Renewable Energy Alaska Project (REAP)                                                                                          
POSITION STATEMENT:  Offered opening remarks for the Connecticut                                                              
Green Bank presentation.                                                                                                        
BERT HUNTER, Chief Investment Officer                                                                                           
Connecticut Green Bank                                                                                                          
Rocky Hills, Connecticut                                                                                                        
POSITION STATEMENT:  Gave a presentation regarding the                                                                        
Connecticut Green Bank model and its possible applications for                                                                  
ACTION NARRATIVE                                                                                                              
8:02:42 AM                                                                                                                    
CO-CHAIR JUSTIN  PARISH called the  House Community  and Regional                                                             
Affairs  Standing  Committee  meeting   to  order  at  8:02  a.m.                                                               
Representatives  Talerico, Rauscher,  Westlake,  and Parish  were                                                               
present  at  the call  to  order.   Representatives  Saddler  and                                                               
Drummond arrived as the meeting was in progress.                                                                                
         HB 156-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY                                                                     
8:03:28 AM                                                                                                                    
CO-CHAIR PARISH announced that the  first order of business would                                                               
be  HOUSE BILL  NO.  156, "An  Act relating  to  a municipal  tax                                                               
exemption or deferral for economic development property."                                                                       
CO-CHAIR PARISH opened public testimony on HB 156.                                                                              
8:03:51 AM                                                                                                                    
JOHN   MOOSEY,  Manager,   Matanuska-Susitna  (Mat-Su)   Borough,                                                               
Palmer, Alaska,  testified in  support of HB  156.   He mentioned                                                               
the state's heavy reliance on  oil and municipalities being asked                                                               
"to  share in  that burden."   He  said the  proposed legislation                                                               
would give  municipalities the tools other  states currently have                                                               
to compete in  a world market and have a  part in raising revenue                                                               
to  cover   governmental  costs   and  provide  jobs   for  their                                                               
8:05:11 AM                                                                                                                    
GEORGE  PIERCE  testified in  opposition  to  HB  156.   He  said                                                               
legislators have taken an oath  to represent all Alaskans, but he                                                               
opined that  instead of  doing so,  they instill  exemptions, tax                                                               
breaks, and  incentives for  "special people,"  corporations, and                                                               
non-profit  organizations.   He said  the City  of Soldotna  owns                                                               
prime acreage along the Kenai  River, yet its Chamber of Commerce                                                               
is allowed  extended time to get  enough funding to get  land and                                                               
build a  structure on it.   He questioned why, if  the city needs                                                               
financial support  from the  state every year,  it does  not sell                                                               
its prime  acreage.  Mr.  Pierce emphasized that  everyone should                                                               
pay equally, but  when special interest groups  are exempted, the                                                               
people pay the  price.  He stated, "It's a  revenue killer - it's                                                               
not a helper.  People who want  to invest in Alaska should not be                                                               
getting  special  treatment."   He  urged  the committee  not  to                                                               
support HB 156.                                                                                                                 
8:08:44 AM                                                                                                                    
JEREMY  PRICE,  Director,  Americans  for  Prosperity  -  Alaska,                                                               
testified in  support of HB 156,  which he said would  give local                                                               
governments greater  control over managing  long-term investments                                                               
that would  provide greater tax  revenue for municipalities.   He                                                               
opined that local governments should  have greater flexibility to                                                               
provide property tax  exemptions based on the  knowledge of local                                                               
elected  officials  who  often   have  firsthand  experience  and                                                               
knowledge  of development  projects  within their  jurisdictions.                                                               
He stated that the current  statute of five years seems arbitrary                                                               
and  unnecessary when  local  officials should  be  able to  make                                                               
decisions  at the  local level.   He  concluded, "Flexibility  is                                                               
needed  now more  than ever  for local  governments to  determine                                                               
where scarce resources  should be used and  how public investment                                                               
should be managed."                                                                                                             
8:09:53 AM                                                                                                                    
KEN SLAUSON  said that although he  is the chairman of  the Board                                                               
of  Supervisors  for  the  Central Mat-Su  Fire  Service,  he  is                                                               
testifying on behalf  of himself.  He said he  is concerned about                                                               
certain aspects  of HB 156.   He  stated that the  Central Mat-Su                                                               
Fire Service derives its entire  revenue for fire and life safety                                                               
operations  from  property taxes,  and  every  time a  commercial                                                               
structure  is  exempted, fire  service  is  provided without  any                                                               
revenue to cover  it.  He said, "We already  do this for schools,                                                               
for government  buildings, for  churches, [and]  for a  number of                                                               
other worthy  causes."  He  indicated that  HB 156 does  not have                                                               
sufficient checks  and balances  to accommodate the  fire service                                                               
in  dealing with  large gas  facilities or  warehouses that  have                                                               
"substantial fire  exposure."  He  said while Mat-Su has  a large                                                               
service area,  he suspects that  the impact  [of HB 156]  on even                                                               
smaller service areas  would be worse, and he  warned that giving                                                               
exemptions to large  property operations would shift  the cost to                                                               
homeowners, which he said gives him concern.                                                                                    
8:12:34 AM                                                                                                                    
CO-CHAIR PARISH asked  if Mr. Slauson's concern is  shared by his                                                               
MR. SLAUSON  reminded Co-Chair Parish  that he was  testifying on                                                               
behalf of himself, but surmised the answer is yes.                                                                              
8:13:41 AM                                                                                                                    
DAN TUCKER testified that he is  a member of two local boards but                                                               
is testifying  on behalf of himself.   He said HB  156 has "snuck                                                               
up" in  such a  manner that  he and [Mr.  Clausen] have  not been                                                               
able to get  together to discuss its possible  ramifications.  He                                                               
indicated that  they had  spoken about  the legislation  that was                                                               
introduced during the Twenty-Ninth  Alaska State Legislature.  He                                                               
said  he  would  "speak  with the  same  knowledge  and  relative                                                               
awareness as  Mr. Clausen."  He  stated that he is  familiar with                                                               
efforts required to  maintain adequate roads.  He  opined that HB
156 does  not "take this into  consideration."  He said  there is                                                               
great potential  for increased  traffic, for  example, on  a road                                                               
that  carries  numerous vehicles  to  a  new facility,  but  [the                                                               
proposed   legislation   makes]   "no   consideration   for   the                                                               
maintenance of that road."                                                                                                      
MR. TUCKER  stated that he has  worked over 35 years  as a career                                                               
fire fighter  - 29 of  those years in  Anchorage.  He  noted that                                                               
Mr. Clausen  had made note of  structures that are tax  exempt or                                                               
tax-free,  such as  churches  and large  public  facilities.   He                                                               
added that those are the  buildings that demand the highest level                                                               
of fire service  response and for which  insurance companies deem                                                               
the  fire  stations  must be  adequately  equipped,  manned,  and                                                               
within close proximity.   He said, "That takes money."   He said,                                                               
"We're talking  about adding potential structures  that would tax                                                               
the limits  of the services  available without giving  any credit                                                               
to responding to that from a fiscal standpoint."                                                                                
MR.  TUCKER said  he does  not  know if  there is  much room  for                                                               
development in  the road service  area number nine  (RSA9), which                                                               
includes Wasilla,  but the upgrade  of the meridian in  that area                                                               
has cost his residential service  area $37,000 a year to maintain                                                               
a Seward  meridian.   He said he  does not view  that as  a local                                                               
road, and  if any more  structure or  "load" was added  onto that                                                               
road,  the maintenance  cost of  it would  rise.   He said  he is                                                               
familiar with the infrastructure  services pertaining to fire and                                                               
roads and realizes that "the fire  insurance rates for all of the                                                               
residents and  commercial structures are  based on being  able to                                                               
provide the  required, adequate  fire protection  - but  again it                                                               
costs money to keep that adequate."   Mr. Tucker stated that road                                                               
maintenance has a  significant effect on the ability  of fire and                                                               
emergency medical services (EMS) to respond.                                                                                    
8:18:01 AM                                                                                                                    
CO-CHAIR  PARISH asked  Mr. Tucker  what changes  would make  the                                                               
bill more palatable.                                                                                                            
MR.  TUCKER first  suggested a  time limit  of five  years on  an                                                               
exemption should allow the developer  a solid start on a project,                                                               
and  he opined  that after  five  years the  developer should  be                                                               
paying  taxes  like  everyone  else.   Second,  Mr.  Tucker  said                                                               
essential infrastructure services  - fire and EMS -  are not paid                                                               
for out  of the general  fund but solely by  taxes.  He  said, "I                                                               
believe  those should  be exempted  from the  tax and  that those                                                               
services  should  be  covered  and  taxed  as  if  there  was  no                                                               
exemption at all."                                                                                                              
8:19:34 AM                                                                                                                    
MICHAEL SHIELDS  testified that  although he  is a  supervisor of                                                               
the Butte road service area  in Palmer, Alaska, and the secretary                                                               
of the  borough-wide local road  service area advisory  board, he                                                               
is testifying  on behalf of  himself.   He echoed the  comment of                                                               
Mr.  Tucker  that [HB  156]  "snuck  up on  us."    He said  road                                                               
service,  life/fire service,  and  emergency medical  technicians                                                               
(EMTs) are  funded by  property taxes  specific to  those defined                                                               
services areas.   He said HB  156 would add road  miles, which he                                                               
said  would probably  increase  traffic  and related  maintenance                                                               
costs, but it  would eliminate the funding source.   He said that                                                               
would  leave raising  the mil  rate on  residents in  the service                                                               
area as  the only option.   He said he would  like a cost/benefit                                                               
analysis   done   on  that   scenario   to   better  inform   the                                                               
legislature's discussion on HB 156.                                                                                             
MR. SHIELDS  posited that service  areas should be exempted.   He                                                               
concurred  with Mr.  Tucker that  a  time limit  on property  tax                                                               
exemption  should be  made;  he stated  his  preference that  the                                                               
limit be set at  5 years - at the most 10 years.   He opined that                                                               
if a  developer cannot afford  property taxes, which is  a normal                                                               
cost  of  doing business,  then  he/she  should  not be  in  that                                                               
business.   Mr. Shields  concluded that  Alaska is  notorious for                                                               
building "new  stuff" and not being  able to maintain it,  and he                                                               
expressed concern  that HB 156  would accelerate that trend.   He                                                               
added that  he does not  think the intent  of HB 156  could "pass                                                               
the red-face test."                                                                                                             
8:21:36 AM                                                                                                                    
REPRESENTATIVE SADDLER asked Mr. Shields  what the trend has been                                                               
in the assessed valuation in the Mat-Su Borough.                                                                                
MR. SHIELDS answered  that it has been "pretty flat"  in the last                                                               
few years.   He  explained that  raising the  mil rate  above the                                                               
existing tax  cap takes  a vote of  the people.   He said  he has                                                               
attempted that  twice with  no success.   He said,  "We're barely                                                               
holding  our  own  with  our   current  maintenance  load."    He                                                               
indicated that an attempt to  raise the mil rate could counteract                                                               
HB 156 but,  based on past history, he questioned  the success of                                                               
asking people to pay more taxes.                                                                                                
REPRESENTATIVE SADDLER  indicated that  he has heard  that Mat-Su                                                               
Borough  has been  growing  at  a rate  that  necessitates a  new                                                               
school  built every  year.    He said  he  assumes that  reflects                                                               
increased  residential construction.    He asked  Mr. Shields  to                                                               
confirm  that  he  had  said the  total  assessed  valuation  has                                                               
remained flat in recent years.                                                                                                  
MR. SHIELDS answered yes, but suggested  part of that may have to                                                               
do with how often the existing property can be reassessed.                                                                      
REPRESENTATIVE  SADDLER  said he  would  like  to hear  from  the                                                               
borough  about  this  issue, because  the  information  from  Mr.                                                               
Shields  seems to  run  counter  to the  basis  for the  proposed                                                               
MR.  SHIELDS added  that new  homes  are "going  for good  price"                                                               
while existing homes don't seem to be going for much.                                                                           
8:24:15 AM                                                                                                                    
CO-CHAIR PARISH,  after ascertaining that  there was no  one else                                                               
who wished to testify, closed public testimony on HB 156.                                                                       
[HB 156 was held over.]                                                                                                         
8:24:33 AM                                                                                                                    
The committee took an at-ease from 8:25 a.m. to 8:32 a.m.                                                                       
^PRESENTATION BY  CHRIS ROSE, REAP  AND BERT  HUNTER, CONNECTICUT                                                               
GREEN BANK                                                                                                                      
              PRESENTATION: CONNECTICUT GREEN BANK                                                                          
8:32:46 AM                                                                                                                    
CO-CHAIR PARISH announced that the  final order of business would                                                               
be a presentation by Connecticut Green Bank.                                                                                    
8:33:12 AM                                                                                                                    
CHRIS ROSE,  Founder/Executive Director, Renewable  Energy Alaska                                                               
Project (REAP) offered opening remarks  for the Connecticut Green                                                               
Bank  presentation.   He  stated that  Alaska has  had  a lot  of                                                               
success in energy efficiency and  renewable energy in the last 10                                                               
years.    For example,  since  2008  the Alaska  Housing  Finance                                                               
Corporation (AHFC)  - through its  weatherization programs  - has                                                               
helped over  40,000 households retrofit [energy  saving devices],                                                               
which has resulted in an average  savings of 30 percent on energy                                                               
bills.  He  noted that the legislature  appropriated $600 million                                                               
to  help low-income  people get  their homes  weatherized and  to                                                               
offer rebates to higher-income households.   He reported that the                                                               
collective  savings is  an estimated  25 million  gallons heating                                                               
oil, which if set  at $2 a gallon is a savings  of $50 million in                                                               
savings each year.                                                                                                              
MR.  ROSE  noted  that  in  2010  the  legislature  directed  the                                                               
Department  of Transportation  &  Public  Facilities (DOT&PF)  to                                                               
start retrofitting the  public buildings.  He said  the state has                                                               
over  5,000  public  buildings,  many of  which  are  not  energy                                                               
efficient.  He said the cost  to the state to provide electricity                                                               
and heat to  those buildings was estimated a few  years ago, when                                                               
oil prices were  a bit higher, at  $125 million a year.   Even 20                                                               
percent of  that is a tremendous  savings to the state,  he said.                                                               
Mr.  Rose stated  that  AHFC  has been  directed  to use  bonding                                                               
authority to help public  buildings [increase energy efficiency],                                                               
but the  corporation has fun into  barriers.  He said  there is a                                                               
bill  being considered  currently  that would  create a  property                                                               
assessed clean  energy (PACE) program  in Alaska; it would  be an                                                               
additional financing tool to energy retrofit.                                                                                   
MR.   ROSE  stated   that   the   legislature  had   appropriated                                                               
approximately $259  million to the  renewable energy  fund, which                                                               
leveraged another  $200 million in  federal and private  money to                                                               
build projects  around the state.   He reported there are  now 60                                                               
projects that  have been  constructed through  that fund  and the                                                               
Alaska Energy Authority  (AEA) estimates it is  saving 30 million                                                               
gallons of  diesel a year,  which at $2  a gallon equates  to $60                                                               
million a year that communities are saving.                                                                                     
MR.  ROSE  stated   that  Alaska  now  has  a   track  record  of                                                               
functioning  renewable  energy  and energy  efficiency;  however,                                                               
most  of  the  funding  has   been  from  grants.    The  current                                                               
restricted state  budget does not  allow for as many  grants, and                                                               
Mr. Rose expressed his hope that  grants that are given now would                                                               
be small  grants for feasibility  studies, for example,  where it                                                               
would otherwise be difficult to borrow money.                                                                                   
MR. ROSE said other states have  looked for other ways to get the                                                               
private  sector  to  finance  projects.     He  said  the  Alaska                                                               
Project's attention  turned to "the  Green Bank  concept" because                                                               
of the  success of  the Connecticut  Green Bank,  which -  as the                                                               
first green bank in  the United States - is held as  a model.  He                                                               
said the  Connecticut Green  Bank has had  an exceptional  run in                                                               
its  first five  years, and  he indicated  that Mr.  Hunter, from                                                               
Connecticut Green  Bank, has been  sought after around  the globe                                                               
to  consult governments  in the  process  of setting  up a  green                                                               
bank.  Mr. Rose continued:                                                                                                      
     This is an  opportunity, I think, for  Alaska to figure                                                                    
     out a  way for  us to ...  continue the  momentum we've                                                                    
     got  in  energy  efficiency  and  renewable  energy  by                                                                    
     getting  the  private sector  to  come  in and  develop                                                                    
     these  deals.   The  green  bank's  role really  is  to                                                                    
     catalyze and educate  the private sector, not  to use a                                                                    
     bunch  of state  money,  so we're  really hopeful  that                                                                    
     developing this  idea for  the state --   if  you will,                                                                    
     it's kind  like ... [the Alaska  Industrial Development                                                                    
     and Export  Authority] (AIDEA),  only for  clean energy                                                                    
     investment.  So,  you ... would have  a state authority                                                                    
     that would  really be focused  on these kinds  of clean                                                                    
     energy  investments.     So,  the   banking  community,                                                                    
     frankly,  just doesn't  have  as  much knowledge  about                                                                    
     [it] as  they need.   And so,  a green bank  uses their                                                                    
     expertise  to ...  talk  with these  banks  and to  ...                                                                    
     bring them  in and  to make  them understand  how these                                                                    
     fields  are  good  for  both  them  and  also  for  the                                                                    
MR. ROSE noted  that Mr. Hunter had met with  investors in Alaska                                                               
in January,  as well  as the commissioner  of DOT&PF,  and during                                                               
this  trip meets  with  the commissioners  of  the Department  of                                                               
Revenue  (DOR)  and  the  Department  of  Commerce,  Community  &                                                               
Economic Development  (DCCED), as well as  other committees, with                                                               
the goal  of giving  people "an  idea of  what this  option might                                                               
8:38:31 AM                                                                                                                    
BERT HUNTER,  Chief Investment  Officer, Connecticut  Green Bank,                                                               
related that  Connecticut Green  Bank was formed  in 2011  by the                                                               
state's Governor  Dan Malloy and  legislature; it passed  by many                                                               
votes - unanimous  in the Senate and supported by  all but six in                                                               
the House.   He said  the bill  was supported because  its energy                                                               
policy  spoke to  reducing the  energy burden  on businesses  and                                                               
residents,  as  well  as  benefits to  the  state's  economy  and                                                               
environment.   Mr. Hunter said throughout  the 2000s, Connecticut                                                               
had  a clean  energy fund  similar to  Alaska's renewable  energy                                                               
fund,  and  it was  responsible  for  encouraging investments  in                                                               
energy-saving technologies, using rebates  and incentives but not                                                               
MR.  HUNTER said  the  focus  of the  green  bank  is to  attract                                                               
further   private   investment   for  clean   energy   deployment                                                               
including:      energy   efficiency,  solar   photovoltaic   (PV)                                                               
[systems], oil  to gas conversions  for space  heating, renewable                                                               
thermal, electric  vehicle charging networks, wind,  small hydro,                                                               
fuel cells  - everything related  to clean  energy.  He  said the                                                               
Connecticut  Green Bank  does  this by  using  public dollars  to                                                               
attract local banks, credit unions,  national lenders, and global                                                               
financial   institutions   in   order  to   provide   businesses,                                                               
consumers,  municipalities,  and  schools access  to  capital  to                                                               
solve their clean energy needs.                                                                                                 
8:41:45 AM                                                                                                                    
MR.  HUNTER  said because  Connecticut  was  the first  state  to                                                               
establish a green bank, it had to  go "knocking on a lot of doors                                                               
to  get the  attention of  lenders  and investors."   Five  years                                                               
later,  he said,  after a  billion dollars  of investment  in the                                                               
small state  of Connecticut, those  same lenders,  investors, and                                                               
banks all  around the world are  now "knocking on our  door."  He                                                               
said this is the type of activity that could happen for Alaska.                                                                 
MR. HUNTER  stated that the  Connecticut Green Bank has  a number                                                               
of programs and  financial products that are  helping the state's                                                               
residents attain their own energy  conservation and energy choice                                                               
goals while  helping the state  meet its  ambitious environmental                                                               
goals.   He said  such improvements  help the  state's industrial                                                               
manufacturers become  more competitive  by lowering  their energy                                                               
cost.    The  Connecticut  Green  Bank  provides  incentives  and                                                               
financing to homeowners that want  to install solar PV or upgrade                                                               
to cleaner  and more  efficient boilers for  space heating.   The                                                               
Connecticut  Green Bank  also  helps  businesses and  communities                                                               
invest in micro  grids, which he offered his  understanding is "a                                                               
big activity" in Alaska.   Mr. Hunter stated that the Connecticut                                                               
Green Bank  has a  devotion to  its most  economically challenged                                                               
communities  where  energy  costs to  residents  represent  15-25                                                               
percent of  their incomes.   There are  many residents  "aging in                                                               
place" and many  on fixed incomes, so the  Connecticut Green Bank                                                               
works  with social  service agencies  that focus  on housing  and                                                               
community development,  as well  as with  financial institutions,                                                               
to help these families lower the energy costs they bear.                                                                        
MR. HUNTER stated:                                                                                                              
     All of  this has not  only had benefits  for businesses                                                                    
     and families,  but it also  has had an  enormous impact                                                                    
     on economic development of the  state.  As I mentioned,                                                                    
     we've  driven  over $1  billion  of  investment in  the                                                                    
     first five years - over  12,500 direct and indirect job                                                                    
     years - and  this in a state that over  the same period                                                                    
     generated 60,000 net new jobs.                                                                                             
MR. HUNTER  said reducing  energy costs,  which are  dollars that                                                               
for  the most  part go  to other  states, saves  money, and  that                                                               
money can  be spent  locally, invested  in more  goods, services,                                                               
and  capital equipment  to grow  the local  economy.   He stated,                                                               
"So,  the  businesses  of  clean  energy  investment  is  a  real                                                               
economic shot in  the arm for our state's economy;  it just makes                                                               
good sense."                                                                                                                    
8:44:46 AM                                                                                                                    
REPRESENTATIVE  RAUSCHER  noted  that   the  AHFC  has  run  into                                                               
barriers  that have  precluded it  from making  loans.   He asked                                                               
what those barriers are.                                                                                                        
MR ROSE  answered that  one of  the issues  with doing  an energy                                                               
efficiency project  is the  need for someone  "on the  ground" to                                                               
develop the project, including the  logistics of how it will work                                                               
and  how  to  secure  a  loan.     He  said  unless  the  upfront                                                               
development costs can be rolled into  a loan, it is difficult for                                                               
people to make the first move.   He clarified that he was talking                                                               
about the government  and public retrofits.  He  said, "Making it                                                               
easier for folks  in these agencies to develop  these projects up                                                               
front  and  then get  the  loan  is  really  one of  the  biggest                                                               
barriers."   He offered  his understanding  that there  have been                                                               
50-60 buildings that have used  energy performance contracts - at                                                               
the state  ... agency level  - to  retrofit, but there  are 5,000                                                               
old buildings.   He said there is a bonding  authority agency, so                                                               
clearly there  is something preventing  people from  "getting out                                                               
in front  of these loans and  getting the benefit."   He ventured                                                               
one reason for  having a green bank in Alaska  is to identify the                                                               
barriers and alleviate them.                                                                                                    
8:47:10 AM                                                                                                                    
The committee took a brief at-ease at 8:47 a.m.                                                                                 
8:47:34 AM                                                                                                                    
MR. HUNTER  began a PowerPoint Presentation,  titled "Connecticut                                                               
Green  Bank Incentivizing  Private  Investment  in Clean  Energy,                                                               
Energy Efficiency &  Resiliency with Public Capital."   He turned                                                               
to slide 3, entitled "About Us."   He echoed Mr. Rose's statement                                                               
that  the  Connecticut  Green  Bank   was  created  in  2011  and                                                               
succeeded the  Connecticut Clean  Energy Fund,  which had  in its                                                               
coffers  approximately  $60 million.    He  said the  Connecticut                                                               
Green Bank focuses  on clean energy, which he said  covers a wide                                                               
range, as he  had stated in his introduction.   Mr. Hunter stated                                                               
that the Connecticut Green Bank's  balance sheet over a five-year                                                               
period  has  grown to  $175  million  in  assets.   He  said  the                                                               
Connecticut Green  Bank is  supported by  a minimal  surcharge on                                                               
electric  bills, which  he explained  equates to  one-tenth of  a                                                               
cent  per kilowatt  hour ($0.001/kWh),  which generates  a stable                                                               
income  of [$27-$30  million] a  year.   He  said regionally  the                                                               
Connecticut Green  Bank participates  in a  cap and  trade system                                                               
called "regional greenhouse  gas initiative," and that  is a cost                                                               
that is  on emitters of carbon;  it generates about $5  million a                                                               
year.      He  said   the   Connecticut   Green  Bank   generates                                                               
approximately $2-$3 million  a year in its portfolio  income.  It                                                               
also avails itself of contributions  from private foundations and                                                               
the U.S. Government, which has proved successful.                                                                               
MR. HUNTER pointed  to slide 4, entitled "Microcosm  of the U.S."                                                               
He noted  that Connecticut is  quite small, with a  population of                                                               
about  3.6  million and  $225  billion  in state  gross  domestic                                                               
products - number 3  in per capita terms.  He  said the state has                                                               
some  of the  oldest buildings,  one of  the highest  electricity                                                               
costs in the U.S., and  grid reliability issues, with superstorms                                                               
that  affect the  state.   He  next drew  attention  to slide  4,                                                               
entitled "Connecticut & Alaska:  2  of the 'Top 10 Most Expensive                                                               
States for Electricity.'"  He  offered his understanding that the                                                               
information  on the  slide  was provided  by  "the United  States                                                               
Energy  Information people"  in  2011.   Alaska  ranks third  and                                                               
Connecticut  ranks fourth.   He  offered  his understanding  that                                                               
there  are many  places [in  Alaska] where  electrical costs  top                                                               
those anywhere else in the U.S.                                                                                                 
MR. HUNTER next  pointed to slide 5, entitled  "Five Macro Energy                                                               
Challenges,"  which lists  the challenges  as high  energy costs,                                                               
old  buildings,  a  need  for cleaner  energy  sources  and  grid                                                               
reliability, and  diminished government spending.   Regarding the                                                               
clean energy, Mr.  Hunter said the state is  heavily dependent on                                                               
natural  gas and  half its  energy comes  from Millstone  Nuclear                                                               
Plant, and  it is trying "to  look ahead to the  future when some                                                               
of  those  sources  will  not   be  available."    Regarding  the                                                               
government  spending constraint,  he  explained that  Connecticut                                                               
has  large  state  deficits  linked  to  some  unfunded  historic                                                               
pension obligations.                                                                                                            
8:49:40 AM                                                                                                                    
MR.  HUNTER  drew attention  to  slide  6, entitled  "Give  Macro                                                               
Energy  Challenges."   In terms  of rates  per kilowatt  hour, he                                                               
said,  Alaska  ranks  third in  the  country;  Connecticut  ranks                                                               
fourth.  He offered his  understanding that there are many places                                                               
where power cost equalization (PCE) is  in effect and the cost of                                                               
energy  is much  higher and  tops  any electricity  costs in  the                                                               
United  States.   As  shown  on slide  6,  Mr.  Hunter named  the                                                               
following  energy challenges:    high energy  costs; old,  energy                                                               
inefficient buildings built  prior to 1970; the  need for diverse                                                               
and economical energy sources;  grid reliability; and constrained                                                               
government  spending  related  to  large  state  budget  deficits                                                               
linked  to some  unfunded pension  obligations.   He stated  that                                                               
Connecticut  is not  looking to  ask for  funds from  the federal                                                               
government,  but  rather  to  access   existing  pools  of  funds                                                               
available and redirect them into the Green Bank.                                                                                
MR.  HUNTER continued  to slide  7, entitled,  "Basic Green  Bank                                                               
Model."     It   shows  that   the  government   provides  public                                                               
capitalization  and/or  ongoing  revenue streams  [to  the  Green                                                               
Bank], which mitigates  risks to private investors,  so that low-                                                               
carbon projects  related to energy  efficiency or  renewal energy                                                               
can move forward.  There is  a focus on getting private investors                                                               
more comfortable with the idea of  investing in the projects.  He                                                               
said  throughout the  U.S. there  is no  problem with  grid scale                                                               
activity; it  is not difficult  to attract private  investment in                                                               
big wind and big solar energy.   When that effort is moved to the                                                               
state level,  there becomes concern  on the part of  investors as                                                               
to  how they  will get  a return  on their  investment.   He said                                                               
there are  mechanisms that the  Green Bank  puts in place  to get                                                               
those investors much more comfortable with their investments.                                                                   
8:52:50 AM                                                                                                                    
MR. HUNTER  turned to slide  8, entitled "How Green  Bank's [sic]                                                               
Leverage Public  Capital with  More Private  Capital."   He named                                                               
the ways  the Green Bank  deals with  risk are by:   co-investing                                                               
with private  capital; investing side-by-side on  a senior basis;                                                               
or by acting  as a subordinated lender.  The  Green Bank can also                                                               
act  as credit  support  by  offering a  partial  guarantee.   He                                                               
explained that  the Green  Bank has  not and  will never  offer a                                                               
hundred  percent guarantee,  because  "it's not  necessary."   He                                                               
explained that  the investments illustrate  that there  is plenty                                                               
of cash flow, with benefits, available to support the loans.                                                                    
8:53:43 AM                                                                                                                    
CO-CHAIR  PARISH  asked  for an  explanation  of  senior  private                                                               
MR. HUNTER answered that when more  than one lender comes in to a                                                               
project, they can either be  on equal terms specific to "priority                                                               
to the cash flow" or one  party will choose to subordinate itself                                                               
to the  other lender  and become  second in  priority to  all the                                                               
cash flow.   He explained that the benefit of  that to the senior                                                               
lender is having more coverage on  its loan from the collateral -                                                               
the cash flow that is available from the project.                                                                               
MR.  HUNTER talked  about financial  warehousing.   He said  that                                                               
smaller projects are  more time intensive until a  program can be                                                               
set up, and  banks are not willing  to make that step  to come in                                                               
to  the market,  because they  just  don't have  the interest  or                                                               
resources.  If a Green Bank  can come forward and do the projects                                                               
and the aggregation  of these projects, then the  banks will step                                                               
in behind them  and fund the project.   He said this  is what has                                                               
happened in Connecticut and other states.                                                                                       
8:55:27 AM                                                                                                                    
REPRESENTATIVE WESTLAKE  expressed an interest in  talking to Mr.                                                               
Hunter after the meeting.                                                                                                       
8:55:59 AM                                                                                                                    
MR. HUNTER  continued to  the next  portion of  the presentation,                                                               
bringing  attention to  slide 9,  which asks,  "What Impacts  are                                                               
Being Achieved through the Connecticut  Green Bank?"  He directed                                                               
attention  to  slide   10,  to  a  table  that   shows  that  the                                                               
Connecticut  Clean  Energy  Fund  (CCEF) operated  for  11  years                                                               
through the  2000s and put together  investments totaling roughly                                                               
$350  million at  a  ratio of  1:1, clean  energy  fund money  to                                                               
private sector money.  Then  in five years, the Connecticut Green                                                               
Bank has  done $1 billion  in capital investment.   That increase                                                               
is because  of Connecticut Green  Bank's ability to  leverage the                                                               
private  sector's investment  at ratios  ranging from  3:1 up  to                                                               
11:1, sometimes  through a guarantee  program, which as  he noted                                                               
before is not at 100 percent  but offers just enough guarantee to                                                               
take the risk out of the market.                                                                                                
8:57:05 AM                                                                                                                    
MR. HUNTER  highlighted slide  11, which  offers a  table showing                                                               
that as  a result of  its activities, the Connecticut  Green Bank                                                               
has eliminated  over 2 million tons  of carbon dioxide.   He said                                                               
slide 12 shows the half  a billion dollar impact that Connecticut                                                               
Green  Bank   has  had  with  its   public-private  partnerships,                                                               
including U.S. Bank,  Key Bank, Bank of America,  and Onyx, which                                                               
is a  subsidiary of  a private  equity company  called Gladstone.                                                               
He said the  slide also shows a progression.   The bottom-left of                                                               
the slide shows  that Connecticut now has a  facility with Hannon                                                               
Armstrong  to  provide  financing for  commercial  PACE  (C-PACE)                                                               
activities.   He said, "This  is an industry ...  that's maturing                                                               
rapidly,  and lenders  and investors  throughout the  country are                                                               
seeing the value of C-PACE."   He applauded Alaska for doing what                                                               
it can to move forward in C-PACE.                                                                                               
MR.  HUNTER  noted  that  slide  13 recaps  the  results  he  had                                                               
previously  mentioned, including  the  reduced  energy burden  on                                                               
over 20,000 households and businesses  and the deployment of over                                                               
200  megawatts of  renewable  energy, which  has  reduced over  2                                                               
million tons of greenhouse gas emissions.                                                                                       
8:59:40 AM                                                                                                                    
MR.  HUNTER guided  the  committee  to the  next  section of  the                                                               
presentation,  on  slides  14-18,  which  addresses  project  and                                                               
program  examples.   As shown  on slide  15, he  said one  of the                                                               
first  programs  launched  was  the  Smart-E  Loan,  which  is  a                                                               
flexible,  unsecured loan  for homeowners.   He  said Connecticut                                                               
Green Bank asked  credit unions to make loans  to homeowners with                                                               
lower interest rates.   The loans could be higher  than a typical                                                               
car loan,  for example,  but the  interest rate  must not  be the                                                               
typical  10-12  percent   for  the  unsecured  loan.     He  said                                                               
Connecticut Green  Bank meant  to prove that  these loans  are as                                                               
good as all the other loans made  by credit unions, and it did so                                                               
by providing  "excess loss protection  to a certain extent."   He                                                               
reported that the Connecticut Green  Bank has done $16 million of                                                               
these transactions through  the groups of lenders  in about three                                                               
years and has experienced no loss in the loss reserve.                                                                          
9:01:25 AM                                                                                                                    
REPRESENTATIVE RAUSCHER asked what "to a certain extent" meant.                                                                 
9:01:40 AM                                                                                                                    
MR. HUNTER explained that the  Connecticut Green Bank contributes                                                               
7.5 percent of  the loan value to  an account that it  holds on a                                                               
balance sheet  and which is available  for the lender to  call on                                                               
if its  portfolio losses exceed a  certain amount.  If  that loss                                                               
reserve is  exhausted, the lender  cannot come back to  the green                                                               
bank and asked  for more unless the lender issues  more loans and                                                               
builds its portfolio.   For example, if a lender  does $1 million                                                               
in  loans, the  Connecticut Green  Bank would  put $75,000  in an                                                               
account from  which the lender could  call only if its  losses in                                                               
the green bank program exceed $15,000.   If the lender had $5,000                                                               
in  losses, it  could  just  consider that  there  would be  some                                                               
losses; if  it had $30,000 in  losses, then it could  come to the                                                               
Connecticut  Green Bank  for compensation  on those  losses.   He                                                               
said the  Connecticut Green  Bank has  had no  trouble attracting                                                               
its 11 lenders into its program.                                                                                                
9:03:43 AM                                                                                                                    
REPRESENTATIVE WESTLAKE asked about  the qualifications to become                                                               
a lender working with a green bank.                                                                                             
MR. HUNTER  answered that  it is  an opt-in  program open  to any                                                               
community bank or  credit union in the state.   The lenders enter                                                               
into  a financing  program agreement  with the  Connecticut Green                                                               
Bank that  has been vetted  by community banks and  credit unions                                                               
to  be  in  compliance  with national  credit  union  association                                                               
constraints and restrictions.   The agreement spells  out how the                                                               
Connecticut  Green  Bank will  put  the  loss reserve  aside  and                                                               
compensate  the lenders  for losses.   It  also explains  how the                                                               
Connecticut Green  Bank will provide marketing  and other program                                                               
9:05:34 AM                                                                                                                    
CO-CHAIR  PARISH offered  a  scenario wherein  a  bank in  Alaska                                                               
makes $1  million in loans and  then has a bad  year with losses.                                                               
He said  [the hypothetical Alaska  Green Bank]  essentially would                                                               
have an  escrow account  of $75,000  to cover  losses on  that $1                                                               
million investment.   He asked  for clarification that  after the                                                               
bank covered  the first $15,000  in loss, the Alaska  Green Banks                                                               
would cover the next [$75,000],  and beyond that the lender would                                                               
be responsible, but  if there were that much loss,  the lender is                                                               
probably in the wrong business.                                                                                                 
9:06:36 AM                                                                                                                    
MR. HUNTER added that if, in  that scenario, that bank had put in                                                               
another $1  million in loans,  now totaling $2 million,  and [the                                                               
hypothetical  Alaska  Green  Bank]  would  have  put  in  another                                                               
$75,000, then the program agreement  allows the lender to recover                                                               
excess loss,  because the  lender is growing  the portfolio.   In                                                               
response to  Co-Chair Parish,  he recapped  that there  have been                                                               
$16,000  in loans  over  three years.   He  said  there were  two                                                               
defaults  absorbed by  lenders that  did not  rise above  the 1.5                                                               
percent loss limit for their  portfolio, so the $2.5 million loss                                                               
reserve that  the Connecticut Green  Bank had established  on its                                                               
books for the lenders' benefit was not impaired.                                                                                
CO-CHAIR PARISH  summarized that  the Connecticut Green  Bank had                                                               
done  $16 million  in loans,  which  were an  incentive given  by                                                               
offering to  cover catastrophic losses,  had resulted in  no cost                                                               
to  the  Connecticut Green  Bank,  and  he said,  "That's  pretty                                                               
cool."   He asked Mr. Hunter  how much of that  $16 million would                                                               
have been loaned in the absence of such underwriting.                                                                           
MR.  HUNTER explained  that this  type  of lending  is a  choice.                                                               
There are other  options for people, including using  cash out of                                                               
personal accounts or refinancing a  mortgage; however, the key in                                                               
the system  offered by the Connecticut  Green Bank is that  it is                                                               
easy.  Typically a lender will  approve a transaction in two days                                                               
-  some in  as little  as two  hours.   He said  this has  become                                                               
commonplace.   He said  contractors like  the system,  because it                                                               
makes their customers  happy to have more  energy efficient homes                                                               
and they  have another  sale without the  red tape  of financing.                                                               
He said  the key  is to figure  out how to  scale the  market and                                                               
provide the access  in a cookie cutter way that  is repeated over                                                               
and over.   Mr.  Hunter said the  Connecticut Green  Bank started                                                               
with two ranges of  credit scores:  680 and up, as  well as a 640                                                               
to 679, which  is riskier.  Lenders have asked  for permission to                                                               
lower their  credit limit  to 580  to accommodate  customers whom                                                               
they  know well,  and the  Connecticut Green  Bank has  said yes,                                                               
because  "these are  mission-driven financial  institutions" that                                                               
know their  communities -  not predatory  lenders.   He indicated                                                               
that accepting the lower credit score has expanded the market.                                                                  
MR.  HUNTER,   in  response  to  questions   from  Representative                                                               
Rauscher, said  the interest rate  is not changed based  on risk,                                                               
but the interest rate does slope  based on the term length of the                                                               
loan.  He  said the interest rate ranges from  4.49 percent for a                                                               
five-year loan  up to 6.99  percent for  a twelve-year loan.   He                                                               
directed  attention to  slide 18,  which shows  a Smart-E  Bundle                                                               
interest  rate  of  2.99  percent  at  5,  7,  or  10  years  for                                                               
combination projects  such as solar  plus insulation,  solar plus                                                               
energy  efficient   windows,  and  solar  plus   high  efficiency                                                               
heating, ventilation, and  air conditioning (HVAC).   He said the                                                               
Connecticut Green Bank  has to "buy that interest  rate down" and                                                               
does  so  by  using  the U.S.  Department  of  Energy's  American                                                               
Recovery  and  Reinvestment Act  (ARRA)  funds,  which have  been                                                               
available to a number of states starting 2009.                                                                                  
9:13:46 AM                                                                                                                    
MR. HUNTER  returned to the  presentation, to slide  19, entitled                                                               
"Residential 1-4 Owner  Occupied Low Income Portfolio."   He said                                                               
the  far right  information on  the slide  shows what  he already                                                               
covered regarding  the drop in  credit score requirement.   Shown                                                               
at the middle  of the slide is the company  called PosiGen, which                                                               
he said  is based out  of Louisiana and  got its start  about the                                                               
time of  Hurricane Katrina  in relation to  solar hot  water that                                                               
was  being  put  in  many  reconstructed houses.    He  said  the                                                               
Connecticut Green  Bank invited  PosiGen to Connecticut,  and the                                                               
company is now operating programs in  six cities - all focused on                                                               
lower  income communities  -  where it  brings  solar and  energy                                                               
efficiency savings agreements for the benefit of homes.                                                                         
MR. HUNTER  noted key players in  a photo on slide  20, including                                                               
the governor of Connecticut and  the president of PosiGen, and he                                                               
pointed  out the  average homes  shown  in the  bottom photo  all                                                               
taking advantage of  solar energy efficiency.  He  said U.S. Bank                                                               
provided  the  tax incentive  money  in  this structure  and  the                                                               
Connecticut Green Bank provided the  debt financing in the amount                                                               
of $5 million to start.                                                                                                         
9:15:45 AM                                                                                                                    
MR.  HUNTER,   in  response  to  questions   from  Representative                                                               
Westlake regarding  a line on  slide 20  that says 71  percent of                                                               
solar projects  are with low  to moderate income  (LMI) families,                                                               
indicated that LMI  status can be designated on  "a [U.S.] Census                                                               
track  basis,"  and that  would  be  beneficial to  lenders  that                                                               
provide the funding  for these programs, because  they would then                                                               
receive Community  Reinvestment Act credits.   As shown  on slide                                                               
21, he  stated that  the Connecticut  Green Bank  offers unbiased                                                               
information about  solar PV and energy  efficiency to homeowners,                                                               
businesses, and municipalities.                                                                                                 
9:17:20 AM                                                                                                                    
MR.  HUNTER next  addressed slides  22-26, regarding  multifamily                                                               
properties.   He said  multifamily properties  are where  many of                                                               
Connecticut's lower income families reside.   He said, "It's very                                                               
difficult to  get these  properties to move,  because you  have a                                                               
landlord  that owns  the building  but you  have all  the renters                                                               
that are  really bearing  the burden  of the  energy costs."   He                                                               
related that the Connecticut  Green Bank provides pre-development                                                               
resources  to assist  [landlords]  in  comparing their  buildings                                                               
against others  in the area.   He said  the program in  which the                                                               
Connecticut Green  Bank does "everything"  is called  "The Sherpa                                                               
Loan  Program,"  while the  program  in  which it  offers  merely                                                               
guidance  is called  "The Navigator  Program."   The  Connecticut                                                               
Green Bank  has a program for  every need.  It  also will finance                                                               
the project by  working with the financial  institutions and with                                                               
C-PACE.    He   said  the  PACE  program  is   not  available  to                                                               
"residential 1-4" but is available to multi-family properties.                                                                  
MR.  HUNTER   said  sometimes  there  is   financing  for  energy                                                               
efficiency, but  not necessarily for moving  asbestos or changing                                                               
out poor  wiring; the  Connecticut Green  Bank will  provide "gap                                                               
financing"  - incremental  financing  for those  activities.   He                                                               
said the  Connecticut Green  Bank has  partnered to  help support                                                               
1,300  rental units  [in Bristol,  Brookfield, Colchester,  Gales                                                               
Ferry,    Manchester,     Middlefield,    Newington,    Trumbull,                                                               
Wethersfield, and Windsor Locks]  and another approximately 1,300                                                               
rental  units  [in  Bridgeport,   Chester,  East  Hartford,  East                                                               
Windsor,  Farmington, Granby,  Hartford, Manchester,  Middletown,                                                               
Milford,   New  Haven,   Stamford,   Thompson,  Waterbury,   West                                                               
Hartford, and West Haven] - all in about 18 months.                                                                             
9:19:41 AM                                                                                                                    
MR. HUNTER  skipped slides 27 and  28, because he said  he thinks                                                               
people  understand how  C-PACE works.    He noted  that slide  29                                                               
shows commercial buildings.  One  photo is of an office building,                                                               
whose owners had been trying  to figure out which retrofitting to                                                               
do first, but  were able to 100 percent financing  of the project                                                               
through C-PACE while saving over $250,000  a year on a $2 million                                                               
project.  Another photo shows  a not-for-profit building that was                                                               
able to  get its HVAC  system fixed  for a minor  assessment each                                                               
year [through  C-PACE].  Referring  to slide 30, Mr.  Hunter said                                                               
the  Connecticut  Green  Bank also  provides  solar  leasing  for                                                               
commercial, industrial, municipalities,  public schools, not-for-                                                               
profit  organizations, and  middle market  commercial entities  -                                                               
"everything that's necessary to finance  all sorts of projects in                                                               
clean energy."   Referring to  slide 31, he said  the Connecticut                                                               
Green Bank also  works with utilities, which  affects everyone in                                                               
the  state.   He  said the  utilities  contacted the  Connecticut                                                               
Green Bank  to say that  it has  a small business  energy program                                                               
that loans  for up  to four  years and  it was  out of  money and                                                               
looking for a source of funding.   The Connecticut Green Bank ran                                                               
a  request  for  proposals  (RFP)   from  capital  providers  and                                                               
received  over  $300 million  in  proposals  for a  program  that                                                               
needed $75 million.  He  said JP Morgan/Chase is stepping forward                                                               
to provide a financial facility for this program.                                                                               
MR. HUNTER turned to slide  32, entitled "Lead by Example," which                                                               
he said  is what the  Connecticut Green Bank  is trying to  do by                                                               
working  on state  facilities  and looking  at  geo bonds,  green                                                               
bonds, and  energy savings agreements.   He noted that  an energy                                                               
savings agreement can often be  "off balance sheet," meaning that                                                               
it  does  not  affect  the state's  credit  rating,  because  the                                                               
savings pays for  the performance contract.   He next highlighted                                                               
slide 33, which  shows the "Bridgeport Fuel Cell  Park," which is                                                               
a the largest fuel cell power  plant in the country built on land                                                               
that had  spills cleaned up  using a grant  from the state.   The                                                               
Connecticut  Green Bank  provided the  co-financing to  make this                                                               
project possible.  He noted  that slide 34 addresses micro grids.                                                               
He  said the  Connecticut Green  Bank does  a lot  of micro  grid                                                               
financing  because resiliency  and power  backup is  important to                                                               
the state.                                                                                                                      
MR. HUNTER,  referring to  slide 35,  said the  Connecticut Green                                                               
Bank  is also  involved in  small hydro  projects.   He said  the                                                               
illustration on the slide shows  an Archimedes screw [generator],                                                               
widely  used in  Europe, used  in the  U.S. to  move waste  water                                                               
through water  treatment facilities,  but in this  instance being                                                               
used next to a flowing river and  dam where it spins the screw to                                                               
generate electricity with low impact on  fish and eels.  He noted                                                               
that slide  36 pertains to  how the Connecticut Green  Bank looks                                                               
to  the "Grid  of  the  Future" in  terms  of  working on  solar,                                                               
electric, and grid planning.                                                                                                    
9:24:36 AM                                                                                                                    
MR.  HUNTER   addressed  slides   36-37,  entitled   "Green  Bank                                                               
Movement."   He  said the  Connecticut Green  Bank is  seen as  a                                                               
model for  the Green Bank  Act of  2016, which was  introduced by                                                               
Connecticut legislators  in Congress.   He stated, "I'm  not sure                                                               
where that's going  to go with the present  administration, but I                                                               
would say  that with the  infrastructure plan that  the President                                                               
is  talking  about, there's  certainly  an  intersection of  that                                                               
infrastructure plan with investment  ... in energy efficiency and                                                               
clean  energy  and  transportation,  which  is  where  a  lot  of                                                               
emissions come from."                                                                                                           
9:25:16 AM                                                                                                                    
MR.  HUNTER  announced  he had  concluded  his  presentation  and                                                               
offered to entertain further questions.                                                                                         
9:25:41 AM                                                                                                                    
CO-CHAIR PARISH  suggested that energy savings  agreements can be                                                               
"off-balancing" and noted that Alaska  is in [financial] trouble.                                                               
He asked  Mr. Hunter  to share  any advice he  could give  to the                                                               
State of Alaska in instigating its own green bank.                                                                              
MR. HUNTER  illustrated one option wherein  the Connecticut Green                                                               
Bank is  the provider  of the energy  service arrangement  to the                                                               
state.   He explained  that in this  operating arrangement:   the                                                               
state  would enter  into a  contract with  the Connecticut  Green                                                               
Bank and receive all the benefits  of the energy savings; a major                                                               
financial   institution   would    provide   the   capital;   the                                                               
improvements would  be "on  the books"  of the  Connecticut Green                                                               
Bank, which  would administer the  capital; and there would  be a                                                               
service contract  between the Connecticut Green  Bank and another                                                               
provider wherein the  other provider would act as  a guarantor of                                                               
any shortfall benefit  to the Connecticut Green Bank  in case the                                                               
state  does  not achieve  the  savings  named under  the  savings                                                               
9:28:46 AM                                                                                                                    
MR.  ROSE offered  a correction  to his  previous testimony.   He                                                               
explained that he had meant to  the say the cost of utilities for                                                               
the State of Alaska is $642  million a year, and the $125 million                                                               
he had  mentioned is  actually the potential  savings.   He noted                                                               
that the savings is 20 percent of the cost.                                                                                     
CO-CHAIR PARISH indicated  that [Alaska] has set  aside money for                                                               
a lot  of these  programs, but  he questioned  how the  state can                                                               
"leverage it for maximum gain."                                                                                                 
MR. HUNTER suggested the State  of Alaska would need to establish                                                               
an   institution   such   as    the   Connecticut   Green   Bank.                                                               
Alternatively, the  state could utilize a  quasi-public entity of                                                               
the  state.   He noted  that  in Montgomery  County, Maryland,  a                                                               
green bank  was established on  which Mr. Hunter serves  as chair                                                               
of the board.  The county  designated a 501(c)(3) to be its green                                                               
bank and  used settlement funds  from a Pepco/Exelon merger.   He                                                               
said  there  are  many ways  to  do  it,  as  long as  there  are                                                               
protections on  how the  money is  kept or  advanced so  that the                                                               
money benefits  the state  and is  recovered at  the end  of time                                                               
when, perhaps,  the green bank does  not exist and all  the money                                                               
comes back to the state's coffers.                                                                                              
9:32:41 AM                                                                                                                    
CO-CHAIR  PARISH  asked  if there  is  a  minimum  capitalization                                                               
MR. HUNTER  answered that  the Connecticut  Green Bank  has found                                                               
that it  takes a certain amount  of capital to get  the attention                                                               
of  private capital  and demonstrate  that the  state is  serious                                                               
about "this  business activity."   He estimated that  $50 million                                                               
would  be sufficient  for the  State of  Alaska.   He noted  that                                                               
Connecticut started  with $60  million.  He  said the  money does                                                               
not have to be placed upfront  all at once but through a periodic                                                               
and  consistent advancement  of funds  that establishes  a policy                                                               
that shows the  state's commitment to the idea.   The money could                                                               
come from  other program funds that  are not being utilized.   He                                                               
reminded  the committee  that the  issue being  discussed is  one                                                               
about  investments that  are repaid  over time;  it is  not about                                                               
giving away money.                                                                                                              
CO-CHAIR PARISH asked  Mr. Hunter for an estimate of  the time it                                                               
would take for the  State of Alaska to get such  a program up and                                                               
running and  whether the Connecticut  Green Bank would  share its                                                               
notes on how it operates.                                                                                                       
MR.  HUNTER  answered  that  the  Connecticut  Green  Bank  is  a                                                               
"totally  open  source"  that makes  everything  available.    He                                                               
suggested  that  his  presence for  the  presentation  shows  the                                                               
Connecticut  Green Bank's  willingness and  to help  other states                                                               
establish  their  own green  banks  and  its commitment  to  this                                                               
activity.    He  emphasized  that  in the  early  years,  it  was                                                               
difficult  for the  Connecticut  Green Bank,  because  it had  to                                                               
"write the playbook" and experience  some stumbling while finding                                                               
out what  works.  If  Alaska were to  use the playbook,  it could                                                               
avoid the pitfalls.  He estimated  that a staff of seven would be                                                               
sufficient to  get this program  going, including people  who can                                                               
underwrite  transactions   and  administer   the  program.     He                                                               
suggested   that   the   program  could   benefit   from   shared                                                               
9:37:09 AM                                                                                                                    
REPRESENTATIVE   WESTLAKE    expressed   excitement    over   the                                                               
information that had been provided thus far.                                                                                    
9:37:18 AM                                                                                                                    
CO-CHAIR PARISH  indicated that he was  sponsoring legislation to                                                               
"encourage one  of our  local energy authorities  to look  at the                                                               
prospect  of  on  bill  financing   for  home  energy  efficiency                                                               
improvements."   He  asked Mr.  Hunter, "Is  that something  that                                                               
you're in the business of lowering the interest rates on?"                                                                      
MR. HUNTER  answered, "Absolutely."  He  said utilities generally                                                               
don't like  to be in the  loan making business, because  they see                                                               
their activity  as providing energy service  for their community.                                                               
However,  he  reminded the  committee  of  his previous  comments                                                               
regarding the  small business energy advantage  program, which is                                                               
an  on bill  program in  which [the  utility] actually  makes the                                                               
loans.  He said  one of the benefits of the  new program that the                                                               
Connecticut  Green Bank  is moving  to is  that it  will actually                                                               
make the  loans while the  utility will, through the  reliable on                                                               
bill   payments  mechanism,   continue  to   be  the   collection                                                               
mechanism, but will send the funds  to the green bank, which will                                                               
have the  duty of administering the  loans.  He said  it gets the                                                               
loans  off  the  balance  sheet   of  the  utility  and  into  an                                                               
institution  designed   for  making   loans,  but  it   uses  the                                                               
collection  of the  utility to  actually  make the  payment.   He                                                               
emphasized that  the loss  rate for  these small  business loans,                                                               
over a 10-year period, is less than 1 percent.                                                                                  
CO-CHAIR  PARISH remarked  that that  is exceptionally  low, even                                                               
for on bill financing.  He questioned the reason.                                                                               
MR.  HUNTER answered  that in  this particular  program, all  the                                                               
investments -  the improvements - pay  back in a three-  to five-                                                               
year  period.    He  stated, "So,  these  are  generally  [light-                                                               
emitting diode] (LED)  lighting - ... the  so-called 'low hanging                                                               
fruit' -  so, that really  accounts for  the benefit here.   What                                                               
happens is  ... when  the business  makes the  improvements, they                                                               
actually  see their  bill  go down.   So,  even  though the  loan                                                               
payment is  on the bill,  their next month's payment  is actually                                                               
lower than  when they  started.  So,  that really  encourages the                                                               
business  to  keep ...  making  those  payments, because  they're                                                               
seeing a direct benefit -  immediate benefit."  He indicated that                                                               
the savings  was prevalent even through  the [economy's] downturn                                                               
of 2008-2009.                                                                                                                   
CO-CHAIR  PARISH surmised  this could  be a  huge economic  boon,                                                               
especially to those in the building  trades, as well as to people                                                               
who pay  utility bills.   He asked if  Mr. Hunter could  warn the                                                               
committee of any potential pitfalls.                                                                                            
MR. HUNTER  answered that  a pitfall  would be  inaction, because                                                               
the Connecticut  Green Bank has seen  no downside to what  it has                                                               
done  other than  getting parties  to  move more  quickly in  the                                                               
direction of realizing  the savings that could be had.   He said,                                                               
"The waste is happening every day,  so, by not acting, you're not                                                               
making anything  any better."   He encouraged Alaska  to continue                                                               
in  its  exploration, and  he  reiterated  the Connecticut  Green                                                               
Bank's  willingness  to  be  a  resource  for  the  Alaska  State                                                               
9:42:13 AM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 9:42 a.m.                                                                                                          

Document Name Date/Time Subjects
HB 156 Legal Memo 17-271dls.pdf HCRA 3/28/2017 8:00:00 AM
HB 156
Bert Hunter - Green Bank Presentation.pdf HCRA 3/28/2017 8:00:00 AM
GreenBankWhitePaper .pdf HCRA 3/28/2017 8:00:00 AM