04/12/2022 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Start | |
| HB227 | |
| Adjourn |
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= bill was previously heard/scheduled
| += | HB 227 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 12, 2022
3:31 p.m.
MEMBERS PRESENT
Senator Shelley Hughes, Chair
Senator Robert Myers, Vice Chair
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Lyman Hoffman
Senator David Wilson
COMMITTEE CALENDAR
HOUSE BILL NO. 227
"An Act relating to municipal energy and resilience improvement
assessment programs; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 227
SHORT TITLE: MUNI ENERGY IMPROVEMNT ASSESSMENT PROGRAM
SPONSOR(s): REPRESENTATIVE(s) SCHRAGE
01/18/22 (H) PREFILE RELEASED 1/7/22
01/18/22 (H) READ THE FIRST TIME - REFERRALS
01/18/22 (H) ENE, CRA
01/20/22 (H) ENE AT 10:15 AM ADAMS 519
01/20/22 (H) Heard & Held
01/20/22 (H) MINUTE(ENE)
01/27/22 (H) ENE AT 10:15 AM ADAMS 519
01/27/22 (H) Moved HB 227 Out of Committee
01/27/22 (H) MINUTE(ENE)
01/31/22 (H) ENE RPT 4DP 2NR
01/31/22 (H) DP: ZULKOSKY, CLAMAN, FIELDS, SCHRAGE
01/31/22 (H) NR: KAUFMAN, RAUSCHER
03/01/22 (H) CRA AT 8:00 AM BARNES 124
03/01/22 (H) Heard & Held
03/01/22 (H) MINUTE(CRA)
03/03/22 (H) CRA AT 8:00 AM BARNES 124
03/03/22 (H) Moved HB 227 Out of Committee
03/03/22 (H) MINUTE(CRA)
03/07/22 (H) CRA RPT 3DP 3NR 1AM
03/07/22 (H) DP: DRUMMOND, HANNAN, SCHRAGE
03/07/22 (H) NR: PATKOTAK, PRAX, MCCABE
03/07/22 (H) AM: MCCARTY
03/24/22 (H) SESSION CANCELED 3/23 - ON 3/24
CALENDAR
03/24/22 (H) TECHNICAL SESSION 3/24 - ON 3/28
CALENDAR
03/28/22 (H) ADJOURNED TO 3/29 CALENDAR
03/29/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
03/29/22 (S) -- MEETING CANCELED --
03/31/22 (H) SESSION CANCELED 3/29 - ON 3/30
CALENDAR
03/31/22 (H) SESSION CANCELED 3/30 - ON 3/31
CALENDAR
03/31/22 (H) TECHNICAL SESSION 3/31 - ON 4/4
CALENDAR
04/04/22 (H) TRANSMITTED TO (S)
04/04/22 (H) VERSION: HB 227
04/05/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/05/22 (S) -- MEETING CANCELED --
04/06/22 (S) READ THE FIRST TIME - REFERRALS
04/06/22 (S) CRA, L&C
04/07/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
04/07/22 (S) -- MEETING CANCELED --
04/12/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
REPRESENTATIVE CALVIN SCHRAGE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of the HB 227.
SHAINA KILKOYNE, Energy and Sustainability Manager
Solid Waste Services;
Co-leader Alaska C-PACE Program
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Presented the slideshow Alaska C-PACE during
the hearing on HB 227.
RYAN JOHNSTON, Staff
Representative Calvin Schrage
Alaska State Legislature
Anchorage, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB 227.
MELANIE LUCAS-CONWELL, Manager
49th State Angel Fund;
Co-leader Alaska C-PACE Program
Municipality of Anchorage
Anchorage, Alaska
POSITION STATEMENT: Provided information during the hearing on
HB 227.
ACTION NARRATIVE
3:31:07 PM
CHAIR SHELLEY HUGHES called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:31 p.m. Present
at the call to order were Senators Gray-Jackson, Myers, and
Chair Hughes.
HB 227-MUNI ENERGY IMPROVEMNT ASSESSMENT PROGRAM
3:31:48 PM
CHAIR HUGHES announced the consideration of HOUSE BILL NO. 227
"An Act relating to municipal energy and resilience improvement
assessment programs; and providing for an effective date."
3:32:19 PM
REPRESENTATIVE CALVIN SCHRAGE, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 227, introduced the legislation speaking
to the sponsor statement that read as follows:
Property Assessed Clean Energy (PACE) is an
innovative financing mechanism that enables owners of
commercial and industrial properties to obtain fixed
rate, long-term financing through private lenders for
energy efficiency and renewable energy projects and
pay the costs back over time through a voluntary
assessment on the property tax. PACE attaches the loan
to the property, rather than the borrower. If the
property is sold, the loan transfers to the new owner.
With lower energy costs, building owners unlock
positive cash flow for their businesses and increase
their buildings' value from day 1.
Passed in 2017, the statute allows local
governments to create and manage C-PACE programs. The
Municipality of Anchorage launched the state's first
program in April 2021. Other regions are interested in
launching a program and are reviewing administration
options. While program administration is offset by
administrative fees, staff capacity is still required
to maintain the program and review applications.
Alaska's statute is based on Texas's C-PACE statute.
Based on the growing success of C-PACE, lawmakers
around the country are adding new eligible uses of C-
PACE. Several statutory clean-ups will ensure
efficient statewide promulgation and will greatly
facilitate investment in our building stock,
especially at a time when economic development is
needed most.
House Bill 227 aims to expand C-PACE in Alaska
by:
1. Allowing new construction financing
2. Allowing Resiliency projects
3. Allowing C-PACE refinancing
4. Considering Market Values rather than assessed
values
5. Eliminating the Savings-to-Investment Ratio
(SIR)
HB 227 changes serve the common goal of creating
a large, thriving and active C-PACE market, which in
turn will benefit Alaskans. These amendments were
developed in coordination with the Municipality of
Anchorage and the Alaska Energy Authority using the
best practices & lessons learned in the Lower 48. In
all cases, C-PACE assists property owners in dealing
with the up-front cost of property upgrades that
create a public benefit.
HB 227 will help municipalities and boroughs
statewide achieve the greatest overall environmental
and economic development benefits at no cost to state
or local governments.
3:35:49 PM
CHAIR HUGHES asked whether wind resistance would be included
under resiliency.
REPRESENTATIVE SCHRAGE said he didn't believe so but he would
check.
RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska
State Legislature, Juneau, Alaska, advised that Shaina Kilkoyne
was the resident expert and she had a presentation that
potentially would answer many of the questions about the
Commercial Property Assessment Clean Energy (C-PACE) program.
3:37:16 PM
SHAINA KILKOYNE, Energy and Sustainability Manager, Solid Waste
Services; Co-leader Alaska C-PACE Program; Municipality of
Anchorage, Anchorage, Alaska, stated that she could talk about
Alaska's existing C-PACE Program, C-PACE at the national level,
and what HB 227 does to improve the program.
MS. KILCOYNE began the presentation by highlighting the
important properties of the C-PACE Program.
Businesses pay an administrative fee to participate, which
offsets the cost to operate and administer the program, so there
is no cost to the taxpayers.
The program is voluntary. Tax-assessing cities and boroughs can
choose to opt in and businesses can choose to participate.
C-PACE is not a subsidy, tax credit or tax incentive. All
financing is private and the municipality serves as a middle man
to help reduce the risk of the project, which serves to activate
projects and investment
MS. KILCOYNE advanced to slide 3 and reviewed the history of C-
PACE. It is a government policy that supports commercial clean
energy projects as a public benefit similar to a sewer or road
extension or the MatSu Borough switching to natural gas. The
enabling statute passed in 2017, allowing taxing jurisdictions
to create a program. The Alaska Energy Authority created the
PACE Advisory Group to get the program started. A Department of
Energy grant made it possible for the advisory group to hire
both McKinley Capital Group to do a market study and PACE
Financial Servicing to help with program design, implementation,
and administration. Together they worked with municipalities and
boroughs to develop the PACE handbook and set the stage for a
single program statewide.
3:40:15 PM
MS. KILCOYNE reviewed the reasons that Alaska needs a PACE
program, as outlined on slide 4:
Priority Lien: Existing mortgage or lienholders must give
written consent to the assessment. Without consent, there is no
project.
Transferable: The assessment is tied to the property, not the
property owner. This reduces the risk for both the borrower and
the lender.
No Upfront Project Cost: A property owner may invest without
using money from out of pocket. Hard and soft costs may be
included in the loan, including engineering and permitting.
Requires Project to Pencil Out: The statute requires the project
to have a savings-to-investment ratio (SIR) of at least one.
This ensures that the investment will pay for itself based on
the savings on the energy bills. Projects are expected to be
cash flow positive from the start.
Increases Property Value: Installing advanced technology
mechanisms improve operations and the value of the building.
Long term, fixed-rate, nonrecourse financing: C-PACE reduces the
risk for lenders. Better interest rates are available for longer
term financing. Longer term means 20 years or the length of the
project, whichever is shorter. This can help a project pencil
out. The financing is nonrecourse meaning it is tied to the real
asset, not the property owner or their assets. Interest rates
are market based, but typically low due to the high security of
repayment attached to the property tax bill. The program is
intended to reduce risk for all parties, which helps to put
downward pressure on rates.
3:42:53 PM
MS. KILCOYNE turned to the map of the US on slide 5 to highlight
C-PACE programs nationwide. She reported that 37 states and
Washington, DC have C-PACE enabling legislation. Nationwide,
more than $2 billion has been invested in 2,560 Commercial PACE
projects, creating 24,000 jobs. She acknowledged that the
numbers were a little outdated. Nevertheless, the programs in
other states have provided many examples throughout the
development process of Alaska C-PACE. She noted that the Alaska
legislation was among the most restrictive in the country.
MS. KILCOYNE advised that the Anchorage C-PACE program launched
April 1, 2021. They have been in touch with Juneau, Sitka, the
Kenai Peninsula Borough, the MatSu Borough, and Fairbanks. She
offered her understanding that the MatSu Borough and Fairbanks
were waiting to move forward pending action on HB 227. She
highlighted that the advisory committee has worked from the
beginning to create a single C-PACE program statewide. This
would avoid a patchwork of programs throughout the state that
lenders, contractors, and engineering companies would have to
learn about individually. When the Anchorage advisory group
created their program guidelines, the idea was to develop a
handbook that could be replicated statewide. The goal was to
keep costs low and provide simple, standard guidelines. She
noted that Anchorage C-PACE had several partial applications,
which is within the expected range, based on programs
nationwide.
3:45:06 PM
MS. KILCOYNE advanced to slide 7, Current C-PACE Eligibility.
She relayed that as the administrator, the municipality's role
is to determine whether the property owner, the property, and
the project are eligible. She highlighted that the property
owner and lender would go through the full underwriting process,
including looking at debt coverage ratio to determine the
applicant's eligibility to pay. In the near term the projects
will be those over $300,000, but the hope is to have C-PACE
projects that are $40,000 and $50,000.
MS. KILCOYNE pointed out that under the Project column, one of
the eligibility bullets was savings to investment ratio (SIR).
She reiterated that over the life of the investment, the savings
to the property owner must be more than the financing for the
project. She noted that an additional requirement is that the
financing may not exceed 20 percent of the assessed value of the
property at the time of the application. She said there is also
a possible waiver to increase the financing cap to 50 percent.
She noted that the Municipality of Anchorage supports those two
provisions.
MS. KILCOYNE advanced to slide 8, What Measures Are Eligible For
C-PACE Financing Today? She pointed to the examples of eligible
improvements and explained that eligible means the installation
or modification of permanent improvements intended to reduce
energy consumption, energy costs, or emissions that affect local
air quality. An LED lamp, for example, would not be eligible
because it is not permanent.
3:47:00 PM
MS. KILCOYNE reviewed delinquency and default as outlined on
slide 9.
C-PACE liens are paramount to all liens except municipal tax
liens and other existing special assessments.
The municipality or borough is responsible for recording the
benefit assessment once the application is complete, billing per
the repayment schedule, processing payments from the borrower,
and remitting payments to the lender per the schedule.
Municipalities or boroughs are not guaranteeing collection of
funds. In the event of delinquency, the municipality or borough
would follow its existing proceedings and is not required to pay
the capital lender. The loan is sold with the property and the
new owner will make any delinquent payments, payments in arrears
or interest. This is non-accelerating so there would only be one
or two back payments if any.
Nationally, there have been no foreclosures as a result of a
delinquent C-PACE assessment.
3:48:21 PM
MS. KILCOYNE stated that the provisions proposed in HB 227 are
based on best practices and come directly from project
developers and energy professionals. With these changes the
Alaska C-PACE program will align with C-PACE programs in the
Lower 48. She noted that projects already have been excluded
because of restrictions in the existing program. HB 227 will
ensure municipalities and boroughs start with the best possible
program.
MS. KILCOYNE advanced to slide 11, New Construction. She advised
that new construction is allowed in 25 states in the Lower 48
and has comprised about half the C-PACE transactions in the last
two years. Alaska C-PACE statutes are based on the Texas model
and that state is working to change its statutes to allow new
construction. Alaska C-PACE has had multiple inquiries about new
construction of very large projects. This would offer developers
more opportunities for financing and facilitate more energy
efficient buildings, which would provide a host of benefits for
decades to come.
3:50:48 PM
MS. KILCOYNE discussed resiliency projects that support public
policy goals, speaking to the bullet points on slide 12. In
response to Chair Hughes earlier question, she confirmed that
projects that enhance wind resistance are included. The list
read as follows:
• seismic improvements
• fire hardening, fire or wind resistance
• stormwater management, flood mitigation and
protection
• erosion management
• water or wastewater efficiency including reuse and
energy recovery
• microgrids for energy storage and backup power
generation
• electric vehicle charging infrastructure
• retrofitting that improves the envelope, structure,
or systems of the building, and any other
improvement project approved by a municipality as a
resilience improvement project
MS. KILCOYNE noted that Alaska will receive more than $50
million in the next five years for EV charging infrastructure.
3:52:49 PM
MS. KILCOYNE reviewed refinancing C-PACE projects as outlined on
slide 13:
AS 29.5.160 defines "finance" and "financing" to
include "refinancing" throughout AS 29.55.100 -
29.55.165.
• Explicitly allows traditional refinancing of
loans
• Allows refinancing of completed eligible projects
MS. KILCOYNE reviewed slide 14, Refer to 25% of Market Value. HB
227 amends the current statute to base the loan on the market
value instead of the assessed value and increases the percentage
to 25 percent the market value of the property. Market values
tend to be higher than assessed values so this change will
provide more flexibility to capture the value of the
improvements. This is more in keeping with industry standards.
This change is particularly important for new construction.
MS. KILCOYNE reviewed slide 15, 30 Year Max and No SIR. She
highlighted the following:
Extends the current requirement that the loan does not exceed
20-30 years. This is more in line with the industry standard
because many improvements can have a 30-year useful life.
If new construction and resiliency are allowed, the government-
designed savings-to-investment ratio (SIR) requirements are not
appropriate. They often generate counterproductive results and
the test does not measure a property owner's to pay.
Capital providers are able to employ more appropriate measures
to assess credit worthiness, such as debt service coverage
ratio. Mortgage lenders already use these metrics to decide
whether to lend on a project.
CHAIR HUGHES asked Mr. Johnston to go through the sectional
analysis.
3:57:35 PM
RYAN JOHNSTON, Staff, Representative Calvin Schrage, Alaska
State Legislature, Anchorage, Alaska reviewed the sectional
analysis for HB 227. It read as follows:
Section 1: Adds "resilience" language to AS
29.10.200(64) to conform with the addition of
resilience projects in AS 29.55.100(a).
Section 2:
Adds "resilience" language to AS 29.35.200 (b) to
conform with the addition of resilience projects in AS
29.55.100(a).
Section 3:
Adds "resilience" language to AS 29.35.210(a) to
conform with the addition of resilience projects in AS
29.55.100(a).
Section 4:
Adds "resilience" language to AS 29.35.210(b) to
conform with the addition of resilience projects in AS
29.55.100(a).
Section 5:
Adds new construction and resiliency projects to the
possible projects for a municipal program. Adds a
definition of resilience projects.
Section 6:
Adds "resilience" language to AS 29.55.100(b) to
conform with the addition of resilience projects in AS
29.55.100(a).
Section 7:
Clarifies language allowing for the municipality to
collect fees for the administration of the program.
Section 8:
Adds "resilience" language to AS 29.55.105(a) to
conform with the addition of resilience projects in AS
29.55.100(a).
Section 9:
Adds "resilience" language to AS 29.55.105(c) to
[conform] with the addition of resilience projects in
AS 29.55.100(a).
Adds capitalized interest, interest reserves, escrow
for prepaid property tax or insurance and capitalized
extended manufacturer's warranty or maintenance
agreement costs during the period of the assessment,
to the list of costs that could be repaid by the
assessment.
3:58:43 PM
REPRESENTATIVE SCHRAGE interjected that this section adds
clarity so municipalities are assured of cost recovery in the
administration of the program.
3:59:03 PM
MR. JOHNSTON resumed paraphrasing the Sectional Analysis:
Section 10:
Amends the assessment maximum period from 20 years to
30 years.
Section 11:
Amends the total financing for a project from 20% of
the assessed value of the property to 25% of the
market value of the property.
Section 12:
Adds language so that an assessment may repay
financing for costs of a project completed within the
past two years.
Section 13:
Adds "resilience" language to AS 29.55.110(a) to
confirm with the addition of resilience projects in AS
29.55.100(a).
Amends the ratio between the amount of the assessment
and the value of the property, to use the "Market
Value" of the property instead of the "Assessed
Value".
Section 14:
Adds "resilience" language to AS 29.55.115 to confirm
with the addition of resilience projects in AS
29.55.100(a).
Makes a technical change for the correction of "days'"
Section 15:
Adds "resilience" language to AS 29.55.120 to confirm
with the addition of resilience projects in AS
29.55.100(a).
Section 16:
Adds "resilience" language to AS 29.55.125 to confirm
with the addition of resilience projects in AS
29.55.100(a).
Section 17:
Adds "or a lien for an assessment" to ensure that a
lien on an assessment is not removed from a property
in the case of foreclosure.
Section 18:
Adds "resilience" language to AS 29.55.140 (a) to
confirm with the addition of resilience projects in AS
29.55.100(a).
Section 19:
Adds "resilience" language to AS 29.55.140(d) to
confirm with the addition of resilience projects in AS
29.55.100(a).
Section 20:
Adds "resilience" language to AS 29.55.150 to confirm
with the addition of resilience projects in AS
29.55.100(a).
Section 21:
Adds to the Definitions section, AS 29.55.160, that
"finance" and "financing" includes refinancing of an
existing project.
Section 22:
Adds "resilience" language to AS 29.55.165 to confirm
with the addition of resilience projects in AS
29.55.100(a).
Section 23:
Repeals AS 29.55.105(d)(1) and AS 29.55.105(h).
Section 24:
Gives the bill an immediate effective date.
4:01:11 PM
CHAIR HUGHES asked what Section 23 repeals.
MR. JOHNSTON answered HB 227 proposes to repeal AS
29.55.105(d)(1) to conform with allowing new construction. HB
227 proposes to repeal AS 29.55.105(h) to conform with the SRI
change from a 20 percent to 25 percent value.
4:02:21 PM
SENATOR MYERS noted that with the change from 20 percent to 25
percent, there is also a change from assessed value to market
value. He asked whether a market appraisal would be required for
projects, and if so, would that value have to be disclosed to
the municipality.
REPRESENTATIVE SCHRAGE responded that there is flexibility as to
whether an appraisal would be required. Using the assessed value
would still be an option, but using the fair market value for
new construction would qualify the project for a higher level of
financing. If a market value assessment is done and used to
support the financing, the information would need to be
submitted to the municipality because the municipality manages
the financing.
4:03:37 PM
CHAIR HUGHES asked Ms. Kilcoyne if she would like to comment
because the property taxes might go up if market values are used
to support the financing.
MS. KILCOYNE agreed with Representative Schrage that the
assessed value could still be be used, but if the market value
or as-built value is used it would have to be submitted to the
municipality to verify compliance with the eligibility
requirements.
REPRESENTATIVE SCHRAGE pointed out that a property owner could
get a market assessment done privately to determine which
valuation to use for the financing. The fair market valuation
would not have to be disclosed unless the owner decided to base
the financing on that valuation. Regardless, the assessed value
of the property would also go up once the property is developed.
4:05:14 PM
SENATOR MYERS voiced support for the notion that the property
owner would be able to make the decision about which valuation
to use for financing the project and therefore what is disclosed
to the municipality.
CHAIR HUGHES questioned the reason that the municipality, which
is acting as the middle man, needed information about the market
value when it is the private lender that is taking all the risk.
REPRESENTATIVE SCHRAGE said it's a good question because it
speaks to the core of what the bill seeks to achieve. It isn't a
loan that the property owner is getting from the lending
institution. It is a lien that is placed on the property and
repaid through property taxes. That lien travels with the
property not the property owner so the financial institution
doesn't have to worry about default or bankruptcy. If the
property is sold or lost, the new owner picks up the assessed
property tax payments. That is part of what allows the financial
institution to de-risk their lien and provide the money at a
lower interest rate, thus lowering the cost of capital.
REPRESENTATIVE SCHRAGE explained that because the program is
using the municipal property tax authority, it is important for
the municipality to be able to vet the financial arrangements to
ensure they fall within the municipality's objectives. The
reason HB 227 removes the savings to investment ratio and some
of the other restrictions is to give municipalities the
flexibility to establish sideboards on their custom programs to
achieve their specific objectives. The bill doesn't prevent a
municipality from adding restrictions but the requirements in
the original bill were too restrictive.
4:09:02 PM
SENATOR GRAY-JACKSON sought clarity on how the program works and
if the lien payment is in addition to the note payment.
REPRESENTATIVE SCHRAGE confirmed that it is a voluntary
additional property tax assessment that is added to the regular
property tax. The municipality remits the voluntary assessment
to the financial institution.
4:10:14 PM
SENATOR GRAY-JACKSON asked what benefit the municipality
receives by collecting a note on behalf of the lender.
REPRESENTATIVE SCHRAGE answered that the financial institution's
investment is de-risked; that lowers the cost of capital in the
municipality, which encourages the developer to make further
investments.
CHAIR HUGHES recounted three additional benefits to
municipalities: 1) the property values will increase, so
municipalities will be able to collect more taxes; 2) some
improvements will also increase safety; and 3) the savings frees
money for future economic growth for a business, which benefits
the economy and thus the municipality.
CHAIR HUGHES asked whether the bills would be combined or
separate.
REPRESENTATIVE SCHRAGE said his understanding was it would be
one bill, but Ms. Kilcoyne might know for certain.
MS. KILCOYNE answered that it is up to the jurisdiction, but the
Municipality of Anchorage has chosen to separate the bills.
4:13:42 PM
CHAIR HUGHES asked whether HB 227 covers improvements to prevent
a roof from collapsing due to snow load.
MS. KILCOYNE answered that is not explicitly listed under
resiliency, but it could be added. She relayed that her
understanding is that the definition of resiliency in statute is
not limited to the items listed. She thought that it would be
covered if the improvement was within the scope of the
resiliency definition. It would be up to the jurisdiction to add
that.
REPRESENTATIVE SCHRAGE highlighted that the last bullet about
resiliency on slide 12 was taken directly from page 3, line 26
of the bill. It read:
...retrofitting that improves the envelope, structure,
or systems of the building, and any other improvement
project approved by a municipality as a resilience
improvement project.
REPRESENTATIVE SCHRAGE stated that improving a roof to hold a
snow load is absolutely within the scope of HB 227 and a
municipality that stands up this program could include that as a
resiliency project.
4:15:13 PM
SENATOR GRAY-JACKSON asked whether the note includes the
interest and whether the client receives a lower interest rate
than through traditional financing.
REPRESENTATIVE SCHRAGE answered yes, that is the intent. A
person may get either a larger loan or the same amount of money
at a lower interest rate.
SENATOR GRAY-JACKSON asked for the basis of the interest rate.
REPRESENTATIVE SCHRAGE answered that it is up to the financial
institution to determine the parameters of a given loan. It
would depend on a number of factors like the cost of capital and
federal interest rates. He pointed out that if the same lender
and the same property owner were looking at a conventional loan,
the interest rate would be lower with the property assessed lien
nearly every time.
4:16:46 PM
SENATOR MYERS commented that based on Alaska's history, this
program could prove helpful to avoid the boom-and-bust
construction cycles of the past. Especially during the pipeline
boom buildings were constructed with speed in mind, not energy
efficiency and resiliency. It seems the idea behind this program
is largely to increase confidence among lenders. He asked about
adding a 20-30 year sunset date to HB 227 on the theory that the
private sector will have taken it over by then so government
involvement would not be required.
REPRESENTATIVE SCHRAGE pointed out that the program simply
establishes a new financing mechanism that eventually may become
the conventional mechanism with the municipality just
facilitating the transaction. He said he didn't believe that the
bill introduced much risk, but he was open to discussing a
sunset date if it helped build consensus about the bill.
4:20:38 PM
SENATOR GRAY-JACKSON asked whether the municipality's
administrative fees would be attached to the note.
CHAIR HUGHES commented that it could be a little tricky if the
sunset date is in 30 years and somebody takes advantage of the
program 15 years from now and the term of the loan is set for 20
years.
CHAIR HUGHES asked whether a property owner who has taken
advantage of the program would be required to disclose the
voluntary tax lien if they decided to sell the property.
REPRESENTATIVE SCHRAGE answered yes, the seller would have to
disclose the lien on the property.
CHAIR HUGHES mentioned the possibility of a waiver for the total
financing to be up to 50 percent. She asked if that would be
based on assessed or market value of the property and whether
that would be the private lender's decision or a joint decision
between the municipality and the lender. She also asked what
factors would be considered to grant that high percentage.
REPRESENTATIVE SCHRAGE said he believes that it's 50 percent of
the assessed value, but he would defer to Ms. Kilcoyne.
4:22:23 PM
MS. KILCOYNE answered that she didn't see the waiver mentioned
in the bill, but it wouldn't be needed if market value is used.
She said she would get back to the committee with a definitive
answer or defer to Ms. Lucas-Conwell.
REPRESENTATIVE SCHRAGE clarified that Section 23 repeals AS
29.55.105(h), and that removes the 50 percent waiver.
CHAIR HUGHES asked Ms. Lucas-Conwell if she had any information
that the committee should know.
4:23:43 PM
MELANIE LUCAS-CONWELL, Manager, 49th State Angel Fund,
Municipality of Anchorage, Anchorage, Alaska, stated that she
and Shaina Kilkoyne were the co-leaders of the C-PACE Program.
She said she was taking notes as Ms. Kilkoyne answered the
committee's questions so that they could be added to the FAQs.
She added that the municipality had been in discussions with the
representatives from programs nationwide and that it was her
hope that passage of HB 227 would result in C-PACE having
increased impact in Alaska.
4:24:40 PM
CHAIR HUGHES asked whether the word "resilience" was defined in
statute.
REPRESENTATIVE SCHRAGE directed attention to the language
[starting on] page 3, line 21 of the bill that defines what is
included under "building resilience."
4:25:21 PM
CHAIR HUGHES acknowledged that the resilience improvement
projects listed in the bill included the phrase "any other
improvement project" but she wondered about specifically adding
language about the weight of snow being a bona fide resilience
improvement project.
CHAIR HUGHES asked Representative Schrage if he had any closing
remarks.
REPRESENTATIVE SCHRAGE said his office would be happy to work
with the committee to ensure that snow weight resiliency is
included in the bill. He thanked the chair for the opportunity
to present the bill, which enhances the existing program that
has broad support.
4:26:49 PM
CHAIR HUGHES held HB 227 in committee.
4:27:14 PM
There being no further business to come before the committee,
CHAIR HUGHES adjourned the Senate Community and Regional Affairs
Standing Committee meeting at 4:27 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 227 Sponsor Statement 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Sectional Analysis version I 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Fiscal Note - DCCED 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Presentation - MOA CPACE.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Supporting Document - Matsu-Susitna Borough Ordinance 2022-OR-008 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Supporting Document - MOA White Paper 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |
| HB 227 Testimony - Letters of Support received as 3.23.22.pdf |
SCRA 4/12/2022 3:30:00 PM |
HB 227 |