HB 118-MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS  12:00:11 PM CO-CHAIR VAZQUEZ announced that the final order of business would be HOUSE BILL NO. 118, "An Act adopting the Municipal Property Assessed Clean Energy Act; authorizing municipalities to establish programs to impose assessments for energy improvements in regions designated by municipalities; imposing fees; and providing for an effective date." 12:00:19 PM EMILY FORD, Energy Policy and Outreach Manager, Alaska Energy Authority (AEA), Department of Commerce, Community & Economic Development (DCCED), provided a PowerPoint presentation entitled "HB 118 Property Assessed Clean Energy (PACE)," and dated 3/5/15. Ms. Ford informed the committee HB 118 creates a property-assessed clean energy program known as Commercial PACE. The program applies to commercial property, and allows property owners to finance qualifying energy efficiency improvements over time through a voluntary assessment on their property tax bill. The legislation provides: voluntary participation by municipalities and commercial business owners; mortgage holder consent required before applications are approved and assessments are placed; improvements can include energy efficiency upgrades, renewable energy, conversion to natural gas, high-efficiency boilers, and more. The repayment obligation transfers with the sale of the property (slide 2). Energy efficiency upgrades are financed by capital secured by a primary lien on the property, and lower-interest capital and favorable repayment terms can be raised from the private sector. Ms. Ford said the goal is to lower energy costs, thus PACE would allow for longer repayment periods and for the use of traditional lending sources. In Alaska, PACE provides consistency with state energy goals, including energy efficiency and renewable energy targets (slide 3). Thirty-one states have authorized PACE programs, and state legislatures must provide authority for local governments to expand their taxing authority. Municipalities are to create the program and select financing models, using resources available from the U.S. Department of Energy (slide 4). The bill includes statutory language that provides consistency statewide for municipalities that choose to opt-in to the program, which can be done through municipal bonds, a private sector model, or a hybrid model that would identify all funding sources (slide 5). Further, HB 118 is authorizing legislation for local governments that collect property taxes and choose to create a PACE program and allow commercial property owners to opt-in to the program; there are 24 eligible local communities in Alaska representing a total population of 639,314 (slide 6). Turning to the sectional analysis of the bill, she highlighted the following: section 1 amends AS 29 by a new proposed chapter AS 29.49: Municipal Property Assessed Clean Energy Act, which would allow for property tax assessments to be added for financing of qualified projects on real property, and would require a written contract between the local government and the record owner of the real property (slide 7). Proposed AS 29.49.040: Establishes the program, and directs agreements related to financing, assessments, and other costs (slide 8). Proposed AS 29.49.060: Defines the Procedure to Create the Program, and requires that the governing body of the municipality adopt a resolution containing certain elements (slide 9). Proposed AS 29.49.060 also requires the municipality to hold a public hearing with public comment, adopt a resolution, hire and set compensation for an administrator, and impose fees to offset the costs of administering the program (slide 10). 12:05:38 PM MS. FORD further advised proposed AS 29.49.070 details the requirements for a publically available report including a description of qualified projects, sample forms and contracts, a plan to ensure sufficient capital, and guidelines for bonding and repayment (slide 11). The report must also include a description of the application process, a method to ensure that qualified applicants can demonstrate financial ability, the collection process, lender notice requirements, review requirements, marketing and education services, quality assurance and antifraud measures, collection procedures, and the report must be available to the pubic online and by hardcopy (slide 12). Proposed AS 29.49.080: Notice to Mortgage Holder Required, requires proper notice, proposed AS 29.49.090: Review Required, requires a third-party baseline energy audit and projected energy savings and that, after completion, the municipality shall obtain third-party verification (slide 13). Proposed AS 29.49.110: Contractual Assessment must be Noticed, requires further notice, and proposed AS 29.49.210: Contractual Assessments and any Interest or Penalties are Primary Liens on the Property, requires liens stay with the land and are not eliminated by foreclosure, penalties and interest may be added to delinquent installments, and municipalities may recover cost and expenses to collect delinquent installments. Proposed AS 29.49.130: Collection of Assessments, allows municipalities to contract with other governing bodies of another taxing unit to perform assessments and collections (slide 14). Proposed AS 24.49.140: Municipalities may Issue Bonds or Notes to Finance Qualified Projects, allows municipalities to issue bonds or notes to finance qualified projects, but they may not be general obligation bonds and must be secured by payments from the contractual assessments, municipal reserves, municipal bond insurance, and any other fund lawfully available for purposes consistent with this chapter (slide 15). Proposed AS 29.49.150: Joint Implementation, allows any combination of municipalities to agree to jointly implement or administer a program or contract with a third party, and further proposed statutes in the bill are related to definitions, the short title, and the effective date. 12:08:51 PM HB 118 was held over.