AB270: Bill Text

LRB-0294/1

MDK:emw

2019 - 2020 LEGISLATURE

2019 Assembly BILL 270

June 7, 2019 - Introduced by Representatives Shankland, Neubauer, Brostoff, Cabrera, Considine, Doyle, Kolste, McGuire, B. Meyers, Milroy, Ohnstad, Pope, Sargent, Sinicki, Stubbs, Subeck, C. Taylor and Zamarripa, cosponsored by Senators Miller, Larson, Risser, Smith and L. Taylor. Referred to Committee on Energy and Utilities.

AB270,2,2 An Act to amend 7.33 (1) (c), 13.172 (1), 13.62 (2), 13.94 (4) (a) 1., 13.95 (intro.), 16.002 (2), 16.004 (4), 16.004 (5), 16.004 (12) (a), 16.01 (1), 16.045 (1) (a), 16.41 (4), 16.417 (1) (b), 16.52 (7), 16.528 (1) (a), 16.53 (2), 16.54 (9) (a) 1., 16.70 (2), 16.75 (1m), 16.765 (1), 16.765 (2), 16.765 (5), 16.765 (6), 16.765 (7) (intro.), 16.765 (7) (d), 16.765 (8), 16.838 (1) (b), 16.85 (2), 16.865 (8), 23.175 (1) (b), 71.26 (1) (be), 77.54 (9a) (a), 100.45 (1) (dm), 106.16 (2), 106.16 (3), 230.03 (3), 238.10 (1), 281.75 (4) (b) 3., 285.59 (1) (b) and 706.11 (1) (c) 2.; and to create 13.94 (1) (w), 19.42 (10) (qm), 20.498, 25.17 (3) (b) 14., 40.02 (54) (k), 66.0603 (1m) (a) 3v., 70.11 (38o), 71.05 (1) (c) 7m., 71.26 (1m) (o), 71.45 (1t) (n), 219.09 (1) (h), chapter 235 and 600.01 (1) (b) 8m. of the statutes; relating to: creating the Wisconsin Renewable Energy Development Authority to participate in and guarantee certain energy-related loans, implement other energy-related programs, and make certain grants and making an appropriation.

Analysis by the Legislative Reference Bureau

This bill creates the Wisconsin Renewable Energy Development Authority and authorizes WREDA to implement programs for developing renewable resources, reducing energy consumption, and improving energy efficiency. An authority is a public body created by state law that is not a state agency. Under this bill, the board of directors of WREDA consists of 11 members. Five members of the board are appointed by the governor with the advice and consent of the senate to four-year terms. One of those members must be a commercial lender and four must represent “eligible businesses," as defined in the bill and discussed below. The other members are the following or their designees: the secretary of natural resources; the secretary of agriculture, trade and consumer protection; the chief executive officer of the Wisconsin Economic Development Corporation; the chair of the public service commission; the dean of the University of Wisconsin-Madison College of Agriculture and Life Sciences; and the director of the Wisconsin Alumni Research Foundation. The board must appoint an executive director and, subject to a maximum limit, determine the executive director's compensation.

The bill authorizes WREDA to issue bonds to carry out its functions, except that WREDA may generally have no more than $500,000,000 in outstanding bonds at any time. WREDA's bonds are not state debt. The bill creates an individual and corporate income tax exemption for interest on bonds issued by WREDA. Also, WREDA's purchases are exempt from sales tax. The bill also makes an appropriation from the general fund to WREDA and requires WREDA to enter into an agreement with the secretary of administration for repaying the appropriation from any surpluses.

Because WREDA is not a state agency, numerous requirements that apply to state agencies do not apply to WREDA. However, the bill treats WREDA like a state agency for the purpose of specified requirements, including the following: 1) WREDA is subject to the open meetings laws; 2) WREDA is subject to auditing by the Legislative Audit Bureau; 3) WREDA is treated like a state agency for purposes of requirements regarding lobbying; 4) the code of ethics for public officials and employees applies to WREDA; and 5) employees of WREDA are considered state employees for the purposes of state retirement benefits and health insurance coverage. WREDA is also subject to the open records law, except that personal and financial information provided by a person seeking financial assistance from WREDA is confidential.

As discussed below, the bill allows WREDA to implement programs for participating in loans, guaranteeing loans, and making grants. The bill also allows WREDA to implement other programs.

Loan participation. The bill allows WREDA to participate in loans made by lenders to eligible borrowers. The bill defines “eligible borrower" as an individual residing in this state, or a partnership or corporation operating in this state, who demonstrates a need for a loan for one of the following: 1) capital or operating expenses of an eligible business or 2) any expenses of an eligible project. An “eligible business" is defined as a commercial entity that either 1) produces energy, fuels, chemicals, or products primarily from renewable resources or agricultural, forestry, plant, or other biological materials or 2) provides services related to reducing energy consumption or improving energy efficiency. “Eligible project" is defined as a project for reducing energy consumption or improving energy efficiency of a commercial entity. In addition, the project must involve constructing any new plant, equipment, property, or facilities or extending, improving, or adding to an existing plant, equipment, property, or facilities. To qualify as an “eligible borrower," a person must demonstrate the ability to repay a loan. In addition, if the borrower is an individual, he or she must be in compliance with any applicable child support and related requirements.

The bill limits WREDA's participation in a loan to financing not more than 50 percent or $25,000,000, whichever is less, of the principal of the loan. In addition, the lender must apply to WREDA for approval and enter into a participation agreement with WREDA. Also, WREDA must ensure that it obtains a security interest for the loan. The bill specifies other requirements, including requirements for collateral, length of terms, and fees, and allows WREDA to adopt guidelines and policies for loan participation.

Loan guarantees. The bill allows WREDA to establish programs with lenders for guaranteeing repayment of loans for financing either 1) capital or operating expenses of eligible businesses or 2) expenses of eligible projects. “Eligible business" and “eligible project" are defined as described above. A loan is eligible for guarantee if the borrower does not meet the lender's minimum standards of creditworthiness. Also, new or expanded business must result for the commercial entity whose eligible business or project is the subject of the loan. In addition, if the borrower is an individual, he or she must be in compliance with any applicable child support and related requirements. The bill allows WREDA to guarantee repayment of not more than 90 percent of the principal of a loan. Other requirements apply to interest rates, security interests, length and extension of terms, business insurance, origination fees, refinancing, and guarantee agreements between WREDA and lenders. Also, the total outstanding amount of all loans to a borrower may not exceed $25,000,000 or a lesser amount determined by WREDA.

The bill establishes a Wisconsin clean and renewable energy reserve fund under WREDA's control, which is used for the guarantees described above. The bill prohibits WREDA from using any other moneys for the guarantees. WREDA may deposit into the reserve fund an amount that it determines from the appropriation the bill makes to WREDA from the general fund. The reserve fund also consists of income from WREDA's investment of reserve fund moneys, loan guarantee origination fees, and moneys received from other sources. In addition, the bill expresses the legislature's expectation that it will make appropriations to meet demands for funds guaranteed by the reserve fund. The bill generally limits WREDA to guaranteeing no more than $25,000,000 in total loans, except that the bill allows the Joint Committee on Finance to increase or decrease that limit. The bill also requires WREDA to ensure that the cash balance in the reserve fund is sufficient for the following purposes: 1) paying outstanding claims and 2) maintaining a ratio of $1 of reserve funding to $4.50 of total outstanding guarantees. If the cash balance exceeds the amount required for those purposes, the bill requires WREDA annually to transfer the excess to the general fund.

Grant program. The bill authorizes WREDA to make grants to eligible businesses and projects, as defined above, as well as to persons engaged in the commercialization of biological fuel, power, or products. WREDA must adopt guidelines for making the grants. The guidelines must provide for a committee to make determinations regarding grants, and the committee must consist of the secretary of agriculture, trade and consumer protection, the secretary of natural resources, and the chief executive officer of the Wisconsin Economic Development Corporation. The guidelines may also allow the committee to make the grants on behalf of WREDA.

Other programs. The bill allows WREDA to implement the following to promote eligible businesses and projects, as defined above: 1) a revolving loan fund program to finance eligible businesses or projects; 2) an equity financing program for renewable energy generation businesses of agricultural producers; 3) a trading program for environmental credits related to clean and renewable energy production; 4) a technical assistance program for eligible businesses and certain community-based projects; and 5) a program for WREDA to obtain licenses and royalties on technologies developed with the assistance of WREDA.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB270,1 Section 1. 7.33 (1) (c) of the statutes is amended to read:

AB270,4,4 7.33 (1) (c) “State agency" has the meaning given under s. 20.001 (1) and includes an authority created under subch. II of ch. 114 or ch. 231, 232, 233, 234, 235, or 237.

AB270,2 Section 2 . 13.172 (1) of the statutes is amended to read:

AB270,5,4 13.172 (1) In this section, “agency" means an office, department, agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, and any authority created in subch. II of ch. 114 or in ch. 231, 233, 234, 235, 238, or 279.

AB270,3 Section 3 . 13.62 (2) of the statutes is amended to read:

AB270,5,9 13.62 (2) “Agency" means any board, commission, department, office, society, institution of higher education, council, or committee in the state government, or any authority created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 235, 237, 238, or 279, except that the term does not include a council or committee of the legislature.

AB270,4 Section 4 . 13.94 (1) (w) of the statutes is created to read:

AB270,5,13 13.94 (1) (w) Annually conduct a financial audit of the Wisconsin Renewable Energy Development Authority. The legislative audit bureau shall file a copy of each audit report under this paragraph with the distributees specified in par. (b).

AB270,5 Section 5 . 13.94 (4) (a) 1. of the statutes is amended to read:

AB270,6,6 13.94 (4) (a) 1. Every state department, board, examining board, affiliated credentialing board, commission, independent agency, council or office in the executive branch of state government; all bodies created by the legislature in the legislative or judicial branch of state government; any public body corporate and politic created by the legislature including specifically the Fox River Navigational System Authority, the Lower Fox River Remediation Authority, the Wisconsin Aerospace Authority, the Wisconsin Renewable Energy Development Authority, the Wisconsin Economic Development Corporation, a professional baseball park district, a local professional football stadium district, a local cultural arts district and a long-term care district under s. 46.2895; every Wisconsin works agency under subch. III of ch. 49; every provider of medical assistance under subch. IV of ch. 49; technical college district boards; every county department under s. 51.42 or 51.437; every nonprofit corporation or cooperative or unincorporated cooperative association to which moneys are specifically appropriated by state law; and every corporation, institution, association or other organization which receives more than 50 percent of its annual budget from appropriations made by state law, including subgrantee or subcontractor recipients of such funds.

AB270,6 Section 6 . 13.95 (intro.) of the statutes is amended to read:

AB270,6,20 13.95 Legislative fiscal bureau. (intro.) There is created a bureau to be known as the “Legislative Fiscal Bureau" headed by a director. The fiscal bureau shall be strictly nonpartisan and shall at all times observe the confidential nature of the research requests received by it; however, with the prior approval of the requester in each instance, the bureau may duplicate the results of its research for distribution. Subject to s. 230.35 (4) (a) and (f), the director or the director's designated employees shall at all times, with or without notice, have access to all state agencies, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Renewable Energy Development Authority, the Lower Fox River Remediation Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority, and to any books, records, or other documents maintained by such agencies or authorities and relating to their expenditures, revenues, operations, and structure.

AB270,7 Section 7 . 16.002 (2) of the statutes is amended to read:

AB270,7,2 16.002 (2) “Departments" means constitutional offices, departments, and independent agencies and includes all societies, associations, and other agencies of state government for which appropriations are made by law, but not including authorities created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 235, 237, 238, or 279.

AB270,8 Section 8 . 16.004 (4) of the statutes is amended to read:

AB270,7,9 16.004 (4) Freedom of access. The secretary and such employees of the department as the secretary designates may enter into the offices of state agencies and authorities created under subch. II of ch. 114 and under chs. 231, 233, 234, 235, 237, 238, and 279, and may examine their books and accounts and any other matter that in the secretary's judgment should be examined and may interrogate the agency's employees publicly or privately relative thereto.

AB270,9 Section 9 . 16.004 (5) of the statutes is amended to read:

AB270,7,14 16.004 (5) Agencies and employees to cooperate. All state agencies and authorities created under subch. II of ch. 114 and under chs. 231, 233, 234, 235, 237, 238, and 279, and their officers and employees, shall cooperate with the secretary and shall comply with every request of the secretary relating to his or her functions.

AB270,10 Section 10 . 16.004 (12) (a) of the statutes is amended to read:

AB270,7,23 16.004 (12) (a) In this subsection, “state agency" means an association, authority, board, department, commission, independent agency, institution, office, society, or other body in state government created or authorized to be created by the constitution or any law, including the legislature, the office of the governor, and the courts, but excluding the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Renewable Energy Development Authority, the Lower Fox River Remediation Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority.

AB270,11 Section 11. 16.01 (1) of the statutes is amended to read:

AB270,8,6 16.01 (1) In this section, “agency" means any office, department, agency, institution of higher education, association, society or other body in state government created or authorized to be created by the constitution or any law which is entitled to expend moneys appropriated by law, including the legislature and the courts, and any authority created under subch. II of ch. 114 or ch. 231, 233 or, 234, or 235.

AB270,12 Section 12 . 16.045 (1) (a) of the statutes is amended to read:

AB270,8,13 16.045 (1) (a) “Agency" means an office, department, independent agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, but not including an authority created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 235, 237, 238, or 279.

AB270,13 Section 13 . 16.41 (4) of the statutes is amended to read:

AB270,8,16 16.41 (4) In this section, “authority" means a body created under subch. II of ch. 114 or under ch. 231, 233, 234, 235, 237, 238, or 279.

AB270,14 Section 14 . 16.417 (1) (b) of the statutes is amended to read:

AB270,8,19 16.417 (1) (b) “Authority" means a body created under subch. II of ch. 114 or ch. 231, 232, 233, 234, 235, 237, 238, or 279.