CS FOR HOUSE BILL NO. 118(FIN) "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." 3:12:37 PM Co-Chair MacKinnon noted that the companion bill to HB 118 was SB 56. 3:13:14 PM AT EASE 3:14:02 PM RECONVENED 3:14:20 PM GENE THERRIAULT, DEPUTY DIRECTOR, STATEWIDE ENERGY POLICY DEVELOPMENT, ALASKA ENERGY AUTHORITY, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, shared that the committee had adopted the Committee Substitute (cs) for SB 56 on March 14th. He furthered that when the house had decided to adopt and move identical language in HB 118. He said that Section 5 in the current bill version would establish a new program that would allow local governments that levied property tax to work with business communities, local lenders, and potential outside funding sources to loan money for energy improvements to commercial properties. He felt that the strength of this mechanism would be that the repayment of the loans would be done through a voluntary assessment, agreed to by the property owner, added to the yearly tax bill. He stated that the extra assessment would result in low default rates for businesses that used the mechanism. He said that the low default rate would result in low-cost capital because the lending would be low-risk. He continued that Sections 1 through 4 had been added to the bill as clarifying language pertaining to the listing of programs for first and second class boroughs in statute. He said that Section 5 laid out the process that local governments would need to navigate in order to initiate the program at the local level. He relayed that local governments would need to pass a resolution that conveyed to the business community a plan for initiating the process, provide detail of the source of funding that would be used, provide detail of the contractual language that would be used, hold public hearings, and go through the regular local process of introducing an ordinance. He stated that the program was voluntary for local government to use, and is subsequently voluntary for individual property owners to use. He relayed that there were protections built into the bill so that improvements would not be made to properties that did not make economic sense. He said that the bill would require an energy audit that would suggest which improvements would make sense for the property, and once those improvements were done a follow-up audit would need to be performed to show that improvements had been done correctly. He stated that the process was similar to the process that had already been in place for the Alaska Housing Finance Corporation (AHFC) energy rebate program. He related that the bill contained protections related to commercial property mortgages; before PACE financing could be approved, permission from the local lender allowing the PACE financing would be required because the PACE financing would become a superior lean on the property. 3:18:09 PM Mr. Therriault furthered that the local government could not use general obligation bonds to come up with the pool of money, and protections had been included that would keep local government from taking coercive action to force a commercial property owner to use the program. He believed that the bill would help the state and local government to work with business communities to gain federal funds at low interest rates. 3:19:29 PM Vice-Chair Micciche discussed zero fiscal note attached to the bill. 3:20:26 PM Vice-Chair Micciche MOVED to report CSHB 118(FIN) out of Committee with individual recommendations and the accompanying fiscal note. CSHB 118(FIN) was REPORTED out of committee with a "do pass" recommendation and with one new zero fiscal note from Department of Commerce, Community and Economic Development. 3:21:09 PM AT EASE 3:22:46 PM RECONVENED