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 1An Act to amend 7.33 (1) (c), 13.172 (1), 13.62 (2), 13.94 (4) (a) 1., 13.95 (intro.),
216.002 (2), 16.004 (4), 16.004 (5), 16.004 (12) (a), 16.01 (1), 16.045 (1) (a), 16.41
3(4), 16.417 (1) (b), 16.52 (7), 16.528 (1) (a), 16.53 (2), 16.54 (9) (a) 1., 16.70 (2),
416.75 (1m), 16.765 (1), 16.765 (2), 16.765 (5), 16.765 (6), 16.765 (7) (intro.),
516.765 (7) (d), 16.765 (8), 16.838 (1) (b), 16.85 (2), 16.865 (8), 23.175 (1) (b), 71.26
6(1) (be), 77.54 (9a) (a), 100.45 (1) (dm), 106.16 (2), 106.16 (3), 230.03 (3), 238.10
7(1), 281.75 (4) (b) 3., 285.59 (1) (b) and 706.11 (1) (c) 2.; and to create 13.94 (1)
8(w), 19.42 (10) (qm), 20.498, 25.17 (3) (b) 14., 40.02 (54) (k), 66.0603 (1m) (a) 3v.,
970.11 (38o), 71.05 (1) (c) 7m., 71.26 (1m) (o), 71.45 (1t) (n), 219.09 (1) (h), chapter
10235 and 600.01 (1) (b) 8m. of the statutes; relating to: creating the Wisconsin
11Renewable Energy Development Authority to participate in and guarantee

1certain energy-related loans, implement other energy-related programs, and
2make certain grants and making an appropriation.

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.