HB 296-ENERGY EFFICIENCY BONDS; LOANS; FUND  3:27:58 PM CO-CHAIR MILLETT announced the next order of business would be HOUSE BILL NO. 296, "An Act authorizing and relating to the issuance of bonds by the Alaska Housing Finance Corporation; establishing the Alaska energy efficiency revolving loan fund and relating to the fund; authorizing municipalities and the State of Alaska to borrow money from the Alaska Housing Finance Corporation for the purposes of the Alaska energy efficiency revolving loan fund; and providing for an effective date." 3:28:15 PM BRYAN BUTCHER, Director, Governmental Affairs & Public Relations, Alaska Housing Finance Corporation (AHFC), Department of Revenue (DOR), reminded the committee that HB 296 would take $18 million AHFC received from the energy program stimulus funds to leverage up to $250 million in bonds which would be used for energy improvements to public and municipal facilities, such as schools. The proposal would work as a revolving loan fund by the hire of a energy performance contractor who estimates the savings from, and cost of, energy efficiency improvements. Subsequently, a loan would be issued by AHFC and, after the work was done, the savings realized from the work would be used to pay back the loan. Mr. Butcher assured the committee that the contractor must compensate for any savings that are less than his or her estimate, thus in all cases, the corporation is repaid and the program continues to revolve. 3:29:48 PM CO-CHAIR EDGMON inquired as to whether any problems are foreseen regarding issuing $250 million in bonds. MR. BUTCHER advised that the bonds are backed by AHFC, and would not be issued all at once. In fact, there are only four energy performance contractors in the state at this time. 3:31:01 PM REPRESENTATIVE TUCK referred to page 2, line 7, and asked whether loans may be made to the University of Alaska (UA) system. 3:31:29 PM MR. BUTCHER said he was unsure. 3:32:01 PM JOHN ANDERSON, Weatherization Program Manager, Alaska Housing Finance Corporation (AHFC), Department of Revenue (DOR), opined the intention was to include [the UA system]. MR. BUTCHER advised that this question and another would be addressed as the bill progresses. 3:33:14 PM CO-CHAIR MILLETT closed public testimony after ascertaining that no one else wished to testify. 3:33:57 PM REPRESENTATIVE PETERSEN moved to adopt Amendment 1, labeled 26- GH2903\A.1, Cook, 2/5/10, which read: Page 1, line 3: Delete "municipalities" Insert "regional educational attendance areas,  municipalities," Page 2, line 7, following "to": Insert "regional educational attendance areas," Page 2, line 9: Delete "the state or by municipalities in" Insert "the regional educational attendance areas, municipalities or their subdivisions, or" Page 2, line 15, following "Before": Insert "a regional educational attendance area, a" Page 2, line 16, following "section, the": Insert "regional educational attendance area" Page 2, line 24, following "All": Insert "regional educational attendance areas and" Page 2, line 25, following "section.": Insert "The corporation shall set out the terms of a loan to a regional educational attendance area in a loan agreement or similar document." Page 3, line 5, following "to": Insert "a regional educational attendance area or to" Page 3, line 7, following "that the": Insert "regional educational attendance area or" Page 3, line 9, following "and": Insert "a regional educational attendance area or" Page 3, line 10, following "from that": Insert "regional educational attendance area or" Page 3, line 19, following "state.": Insert "The superintendent of a regional educational attendance area, at the direction of the regional educational attendance school board, may borrow from the corporation under this section for buildings owned by the regional educational area." Page 3, line 23, following "A": Insert "regional educational attendance area or" Page 4, lines 15 - 16: Delete "for energy efficiency improvements to state and municipal buildings in the state" Page 4, line 16, following "finance the": Delete "other" 3:34:46 PM CO-CHAIR MILLETT objected for the purpose of discussion. REPRESENTATIVE PETERSEN explained that the purpose of the amendment was to include more buildings that might qualify for the loan program by adding "regional educational attendance area" where applicable. MR. BUTCHER, in response to Co-Chair Millett, confirmed that the intent of the bill was to include regional educational attendance areas (REAs). 3:35:22 PM CO-CHAIR MILLETT removed her objection. There being no further objection, Amendment 1 was adopted. 3:35:30 PM REPRESENTATIVE PETERSEN moved to adopt Amendment 2, labeled 26- GH2903\A.2, Cook, 2/8/10, which read: Page 1, line 3: Delete "municipalities" Insert "Native organizations, municipalities," Page 2, line 7, following "to": Insert "Native organizations," Page 2, line 9: Delete "state or by municipalities in" Insert "Native organizations, municipalities or their subdivisions, or" Page 2, line 15, following "Before": Insert "a Native organization," Page 2, line 16, following the second occurrence of "the": Insert "Native organization or" Page 2, line 24, following "All": Insert "Native organizations and" Page 2, line 25, following "section.": Insert "The corporation shall set out the terms of a loan to a Native organization in a loan agreement or similar document." Page 3, line 5, following "to": Insert "a Native organization or to" Page 3, line 7, following the first occurrence of "the": Insert "Native organization or" Page 3, line 9, following "and": Insert "a Native organization or" Page 3, line 10, following the second occurrence of "that": Insert "Native organization or" Page 3, line 19, following "state.": Insert "The board of directors or council of a Native organization may borrow from the corporation under this section for buildings owned by the Native organization." Page 3, line 23, following "A": Insert "Native organization or" Page 3, line 27, following "section,": Insert "(1)" Page 3, line 28: Delete "(1)" Insert "(A)" Page 3, line 30: Delete "(2)" Insert "(B)" Page 4, line 1: Delete "(3)" Insert "(C)" Page 4, line 2: Delete "(4)" Insert "(D)" Page 4, line 5: Delete "(5)" Insert "(E)" Page 4, lines 4 - 5: Delete "(1) - (4) of this subsection." Insert "(A) - (D) of this paragraph; (2) "council" or "Native council" means a council organized under federal law to represent an Alaska Native community or Indian reserve in the state; (3) "Native organization" means a Native council or nonprofit corporation organized by a Native council." Page 4, lines 15 - 16: Delete "for energy efficiency improvements to state and municipal buildings in the state" REPRESENTATIVE PETERSEN explained that Amendment 2 adds to the loan program Native organizations that in some rural areas serve as the only organization in the community. 3:36:09 PM CO-CHAIR MILLETT objected. She asked Mr. Butcher to define "Native organizations" under statute. 3:36:22 PM MR. BUTCHER said although AHFC supports getting energy efficiency done in as many areas as possible, its concern is that this "goes in a different direction than the legislation has been drafted for." Because the proposed bill was approved by the U.S. Department of Energy (DOE) specifically for public buildings, he cautioned that the amendment could bring some issues that would require further approval from DOE. CO-CHAIR EDGMON understood the purpose of the amendment; however, he said he does not know of any Native organizations that own a public building. He agreed with Mr. Butcher and opposed the amendment. 3:38:20 PM CO-CHAIR MILLETT maintained her objection to Amendment 2. 3:38:25 PM REPRESENTATIVE PETERSEN withdrew Amendment 2. MR. BUTCHER assured the committee that AHFC is very good at working with small communities and will ensure that every community can participate in the program. CO-CHAIR EDGMON asked whether this program would create housing authorities. 3:40:01 PM MR. ANDERSON stated AHFC's position that stock owned by regional housing authorities would not be able to qualify in this program. However, regional housing authorities have the potential to do the work in many communities. CO-CHAIR EDGMON asked whether there are sufficient other funding streams for housing authorities. MR. ANDERSON observed that the weatherization program and federal Housing and Urban Development (HUD) programs provide "a vast amount of money that is going to the regional housing authorities right now." He re-stated that AHFC will do whatever it can to encourage the housing authorities to get trained so they can participate in the work. In fact, much of the building stock in rural Alaska is built on a residential system, and with minimal training most regional housing authorities will be able to participate. 3:41:55 PM CO-CHAIR EDGMON noted the definition of public facilities in other bills may need to be re-visited. 3:42:13 PM REPRESENTATIVE TUCK asked to confirm that the intent is to include the UA system. 3:42:32 PM MR. BUTCHER said yes. He offered to contact the committee after AHFC conducts discussions with the Office of Management and Budget (OMB). He further explained that after AHFC figured out how to leverage this program to $250 million, it began to include more participation by different areas of government, and there was some confusion about what was included. Now, with the revolving aspect of this program, AHFC will be able to include every building that it wants to do, including the UA. In further response to Representative Tuck, Mr. Butcher said, "A qualified yes." REPRESENTATIVE TUCK asked for reasons UA would not be included. MR. BUTCHER offered no reasons. 3:44:17 PM CO-CHAIR MILLETT suggested the committee send a letter of intent to the finance committee with the bill. 3:44:35 PM REPRESENTATIVE TUCK agreed. 3:45:21 PM JACK KREINHEDER, Chief Policy Analyst, Office of Management & Budget, Office of the Governor, informed the committee that the administration supports the inclusion of the UA. However, the UA may have its own program and he suggested contacting the university to assess its interest. REPRESENTATIVE TUCK asked whether the UA was excluded as the bill is now written. 3:47:12 PM MR. KREINHEDER advised that he is not a lawyer, but opined that UA facilities are state facilities and would be included. 3:47:29 PM REPRESENTATIVE TUCK stated he was comfortable sending a letter to the finance committee. MR. KREINHEDER provided written information that was previously requested by the committee. 3:48:28 PM CO-CHAIR EDGMON moved to report HB 296, amended, out of committee with individual recommendations, zero fiscal notes, and the accompanying letter of intent. There being no objection, CSHB 296(ENE) was reported from the House Special Committee on Energy.