HB 58-ELIGIBILITY FOR AK ENERGY EFFIC LOANS  4:42:54 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 58,"An Act making an entity that is exempt from federal taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code) and a federally recognized tribe eligible for a loan from the Alaska energy efficiency revolving loan fund; and relating to loans from the Alaska energy efficiency revolving loan fund." [Before the committee was CSHB 58 (ENE)]. 4:42:59 PM REPRESENTATIVE KREISS-TOMKINS, Alaska State Legislature, stated the proposed CSHB 58(ENE) relates to the Alaska Energy Efficiency Revolving Loan Fund (AEERLF) and to the eligibility of the fund. The intent of the bill was to expand the eligibility for the revolving loan fund from public entities such as school districts, municipalities, or universities to nonprofit entities including churches, soup kitchens, American Legion halls, chambers of commerce and similar entities. REPRESENTATIVE KREISS-TOMKINS explained the rationale for this bill. He explained that the Alaska Energy Efficiency Revolving Loan Fund (AEERLF) has been significantly under used since its inception a few years ago. In fact, only one loan application has been filed, but a fully processed and executed loan has not yet been issued from the fund. He said that this loan fund has the authority to bond up to $250 million so significant value and potential is inherent in the AEERLF. He said his goal was to ensure that this fund benefits Alaska, Alaskans, and Alaska's buildings as much as possible. Expanding the AEERLF's eligibility to institutions that that contribute to Alaska communities such as nonprofits can fulfill that goal. He said this is timely and harmonious given the budget climate. Many of these nonprofit organizations have an operational strategy that often revolves around capital grants or "free money" when it comes to making improvements to their physical plant or buildings, but this era is largely coming to an end since limited grant funding is available. This bill would create a viable means for nonprofit entities to become more self- sufficient and independent in terms of maintaining their facilities through low-interest loans. He offered his belief that was the direction the state needs to go to help nonprofits become more independent and self-sufficient when less grant money and capital funding is available. 4:45:48 PM REPRESENTATIVE JOSEPHSON asked for reasons for the underutilization of the fund. REPRESENTATIVE KREISS-TOMKINS explained that two years ago he contacted every municipal government and school district in his legislative district once he became aware of the Alaska Energy Efficiency Revolving Loan Fund (AEERLF). Since his district was rural, he had lots of contacts with school administrators or city administrators to advise them that this program could be helpful, especially given the high energy costs in his district. For example, residents in his district can pay $6 per gallon for heating oil and $.60 per kilowatt hour for electricity. However, there was little interest in the program since in the last two years public entities could reliably turn to the state for capital grants. Therefore, these entities would not apply for low interest loans since they could obtain "free money" from the state. REPRESENTATIVE KREISS-TOMKINS suggested that public and non- profit entities will need to become more self-efficient. He suggested that more entities will look for low-interest loans since the spigot of state funds "has been turned off." Thus this bill could be the vehicle to direct attention to the low- interest loans. VICE CHAIR HUGHES remarked that the free money not going to be available, she might expect that more public entities will step up. She asked how the applications will be prioritized if a big rush of public entities and nonprofit organizations sought the low-interest loans. 4:48:16 PM REPRESENTATIVE KREISS-TOMKINS referred to page 5, lines 10-13 to proposed Section 7, subsection (k), which was language added by the previous committee. This provision would create a two-tier prioritization or preference for applications, for example, if there was a "gold rush" and every nonprofit and public entities applied and the Alaska Housing Finance Corporation had too many applications, subsection (k) would create a priority for public entities. He said that this language was added in the House Special Committee on Energy and he fully endorsed the change. In the event the AHFC did not have enough available capital or administrative capacity to process the barrage of applications, the AHFC would give preference and prioritize public applications over nonprofit applications; however, if funds remained after public entities were served, the nonprofits would also be eligible. 4:49:37 PM VICE CHAIR HUGHES asked whether the sponsor had been approached by nonprofits or how this bill came about. REPRESENTATIVE KREISS-TOMKINS answered that this came about in part since he was schlepping around the district to point out this great program. He talked to a nonprofit administrator in Sitka, but like most nonprofits, every $500 was very important. This organization had a lot of physical assets, many of which had single pane windows and were built without insulation. The nonprofit organization expressed an interest in insulating the buildings since the return on investment is amazing, but the organization did not have enough access to cash to do so. Thus, the problem was access to capital. He recalled the Alaska Energy Efficiency Revolving Loan Fund (AEERLF) had a $250 million balance for this very purpose. He suggested that it made sense to connect "A" and "B." He researched this issue further by e-mailing the Foraker Group since it tends to be the authority on nonprofit administration. He said he discovered the Foraker Group had been working on a pilot project in Fairbanks connecting a nonprofit entity to low-interest loans. He described the aforementioned project that was a partnership between the Foraker Group, Rasmuson Foundation, Cold Climate Housing Research Center, and the Denali Commission. This led to collaborating and drafting the bill. 4:53:12 PM VICE CHAIR HUGHES opened public testimony on HB 58. 4:53:26 PM DANIEL POWERS, Coordinator, Fairbanks Nonprofit Retrofit Pilot Program, Cold Climate Housing Research Center (CCHRC), stated that he has been the project coordinator for the Fairbanks Nonprofit Retrofit Pilot Program. He explained that this project will retrofit 14 buildings for 10 building owners to assist tribal and nonprofit organizations improve energy efficiency through energy and facility planning, energy auditing, scoping and design. Many elements are necessary to bring an energy efficiency project from an idea through the lending process, which HB 58 addresses, to completion and monitoring. He offered his belief that HB 58 was a great step in direction of helping nonprofits capitalize their own energy efficiency resources, especially since these nonprofits provide essential services for some of the most vulnerable populations in Alaska. He characterized HB 58 as a great idea that can help reduce the state's historical grants to nonprofits and change the culture for energy efficiency improvements. This bill could enable tribal entities and nonprofits an opportunity to reduce operational costs. He concluded by stating he is a strong supporter of HB 58. 4:55:48 PM VICTORIA MOROZOVA, Chair, Alaska Youth for Environmental Action, Anchorage Chapter, stated that she is a student at Stellar Secondary School and would like to testify in support of HB 58. She asked members to consider the importance of energy efficiency to lower the carbon footprint, but to decrease the amount of money going to waste [due to a lack of energy efficiency]. Further, she asked to emphasize the success of Alaska Energy Efficiency Revolving Loan Fund (AEERLF) and the benefits the fund could bring to tribal and nonprofit entities. For example, the faculty at Stellar Secondary School said they could use the loan fund to invest in more efficient LED lighting, replace windows with more energy efficient ones, and could install a better heating system to save money for the Anchorage School District. She suggested that those funds could be better used for education, which as a student she believes is very important. She urged members to please pass HB 58. 4:57:48 PM CARMELA FLYNN, Member, Alaska Youth for Environmental Action (AYFEA), stated that she was a sophomore at Hutchinson High School in Fairbanks. She asked to testify in support of HB 58 since it could upgrade energy systems to many of the buildings she regularly uses, including her church, library, and hospital. She suggested that having the loans to upgrade her school could help them upgrade equipment. She said that the AEERLF loans also help to raise awareness of the more efficient ways to save energy, reduce fuel emissions and aid climate change. She urged members to pass HB 58. 4:58:51 PM VICE CHAIR HUGHES, after first determining no one wished to testify, closed public testimony on HB 58. 4:59:10 PM REPRESENTATIVE TILTON moved to adopt the proposed committee substitute (CS) for HB 58, labeled 29-LS0254\F, Nauman, 3/10/15, as the working document. There being no objection, Version F was before the committee. 4:59:21 PM REPRESENTATIVE TILTON moved the proposed committee substitute (CS) for HB 58, Version F, out of committee with individual recommendations and the accompanying fiscal note. There being no objection, CSHB 58(L&C) was reported from the House Labor and Commerce Standing Committee.