READ FIRST TIME 03/02/09.   

     AN ACT Relating to achieving greater energy efficiency in buildings; amending RCW 70.164.020, 70.164.040, 70.164.050, and 70.164.060; adding new sections to chapter 43.330 RCW; adding a new section to chapter 43.185 RCW; adding a new section to chapter 43.06 RCW; adding a new chapter to Title 70 RCW; creating new sections; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   FINDINGS. (1) The legislature finds that improving energy efficiency in structures is one of the most cost-effective means to meet energy requirements, and that while there have been significant efficiency savings achieved in the state over the past quarter century, there remains enormous potential to achieve even greater savings. Increased weatherization and more extensive efficiency improvements in residential, commercial, and public buildings achieves many benefits, including reducing energy bills, avoiding the construction of new electricity generating facilities with associated climate change impacts, and creation of family-wage jobs in performing energy audits and improvements.
     (2) It is the intent of the legislature that financial and technical assistance programs be expanded to direct municipal, state, and federal funds, as well as electric and natural gas utility funding, toward greater achievement of energy efficiency improvements. To this end, the legislature establishes a policy goal of assisting in weatherizing twenty thousand homes and businesses in the state in each of the next five years. The legislature also intends to attain this goal in part through supporting programs that rely on community organizations and that there be maximum family-wage job creation in fields related to energy efficiency.

NEW SECTION.  Sec. 101   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Customers" means residents, businesses, and building owners.
     (2) "Direct outreach" means:
     (a) The use of door-to-door contact, community events, and other methods of direct interaction with customers to inform them of energy efficiency and weatherization opportunities; and
     (b) The performance of energy audits.
     (3) "Energy audit" means an assessment of building energy efficiency opportunities, from measures that require very little investment and without any disruption to building operation, normally involving general building operational measures, to low or relatively higher cost investment, such as installing timers to turn off equipment, replacing light bulbs, installing insulation, replacing equipment and appliances with higher efficiency equipment and appliances, and similar measures. The term includes an assessment of alternatives for generation of heat and power from renewable energy resources, including installation of solar water heating and equipment for photovoltaic electricity generation.
     (4) "Energy efficiency and conservation block grant program" means the federal program created under the energy independence and security act of 2007 (P.L. 110-140).
     (5) "Energy efficiency services" means energy audits, weatherization, energy efficiency retrofits, energy management systems as defined in RCW 39.35.030, and other activities to reduce a customer's energy consumption, and includes assistance with paperwork, arranging for financing, program design and development, and other postenergy audit assistance and education to help customers meet their energy savings goals.
     (6) "Low-income individual" means an individual whose annual household income does not exceed eighty percent of the area median income for the metropolitan, micropolitan, or combined statistical area in which that individual resides as determined annually by the United States department of housing and urban development.
     (7) "Sponsor" means any entity or group of entities that submits a proposal under section 102 of this act, including but not limited to any nongovernmental nonprofit organization, local community action agency, tribal nation, community service agency, public service company, county, municipality, publicly owned electric, or natural gas utility.
     (8) "Sponsor match" means the share, if any, of the cost of efficiency improvements to be paid by the sponsor.
     (9) "Weatherization" means making energy and resource conservation and energy efficiency improvements.

NEW SECTION.  Sec. 102   The Washington State University extension energy program is authorized to implement grants for pilot programs providing community-wide urban residential and commercial energy efficiency upgrades. The Washington State University extension energy program must coordinate and collaborate with the department of community, trade, and economic development on the design, administration, and implementation elements of the pilot program.
     (1) There must be at least three grants for pilot programs, awarded on a competitive basis to sponsors for conducting direct outreach and delivering energy efficiency services that, to the extent feasible, ensure a balance of participation for: (a) Geographic regions in the state; (b) types of fuel used for heating; (c) owner-occupied and rental residences; (d) small commercial buildings; and (e) single-family and multifamily dwellings.
     (2) The pilot programs must:
     (a) Provide assistance for energy audits and energy efficiency-related improvements to structures owned by or used for residential, commercial, or nonprofit purposes in specified urban neighborhoods where the objective is to achieve a high rate of participation among building owners within the pilot area;
     (b) Utilize volunteer support to reach out to potential customers through the use of community-based institutions;
     (c) Employ qualified energy auditors and energy efficiency service providers to perform the energy audits using recognized energy efficiency and weatherization services that are cost-effective;
     (d) Select and provide oversight of contractors to perform energy efficiency services. Sponsors shall require contractors to participate in quality control and efficiency training, use workers trained from workforce training and apprentice programs established under chapter . . ., Laws of 2009 (Engrossed Second Substitute House Bill No. 2227) if these workers are available, pay prevailing wages under chapter 39.12 RCW, hire from the community in which the program is located, and create employment opportunities for veterans, members of the national guard, and low-income and disadvantaged populations; and
     (e) Work with customers to secure financing for their portion of the project and apply for and administer utility, public, and charitable funding provided for energy audits and retrofits.
     (3) The Washington State University extension energy program must give priority to sponsors that can secure a sponsor match of at least one dollar for each dollar awarded.
     (a) A sponsor may use its own moneys, including corporate or ratepayer moneys, or moneys provided by landlords, charitable groups, government programs, the Bonneville power administration, or other sources to pay the sponsor match.
     (b) A sponsor may meet its match requirement in whole or in part through providing labor, materials, or other in-kind expenditures.
     (4)(a) Pilot programs receiving funding must report compliance with performance metrics for each sponsor receiving a grant award. The performance metrics include:
     (i) Monetary and energy savings achieved;
     (ii) Savings-to-investment ratio achieved for customers;
     (iii) Wage levels of jobs created;
     (iv) Utitilization of preapprentice and apprenticeship programs; and
     (v) Efficiency and speed of delivery of services.
     (b) Pilot programs receiving funding under this section are required to report to the Washington State University energy extension program on compliance with the performance metrics every six months following the receipt of grants, with the last report submitted six months after program completion.
     (c) The Washington State University extension energy program shall review the accuracy of these reports and provide a progress report on all grant pilot programs to the appropriate committees of the legislature by December 1st of each year.
     (5)(a) By December 1, 2009, the Washington State University extension energy program shall provide a report to the governor and appropriate legislative committees on the: Number of grants awarded; number of jobs created or maintained; number and type of individuals trained through workforce training and apprentice programs; number of veterans, members of the national guard, and individuals of low-income and disadvantaged populations employed by pilot programs; and amount of funding provided through the grants as established in subsection (1) of this section and the performance metrics established in subsection (4) of this section.
     (b) By December 1, 2010, the Washington State University extension energy program shall provide a final report to the governor and appropriate legislative committees on the: Number of grants awarded; number of jobs created or maintained; number and type of individuals trained through workforce training and apprentice programs; number of veterans, members of the national guard, and individuals of low-income and disadvantaged populations employed by pilot programs; and amount of funding provided through the grants as established in subsection (1) of this section and the performance metrics established in subsection (4) of this section.

NEW SECTION.  Sec. 103   FARM ENERGY ASSESSMENTS. (1) The legislature finds that increasing energy costs put farm viability and competitiveness at risk and that energy efficiency improvements on the farm are the most cost-effective way to manage these costs. The legislature further finds that current on-farm energy efficiency programs often miss opportunities to evaluate and conserve all types of energy, including fuels and fertilizers.
     (2) The Washington State University extension energy program, in consultation with the department of agriculture, shall form an interdisciplinary team of agricultural and energy extension agencies to develop and offer new methods to help agricultural producers assess their opportunities to increase energy efficiency in all aspects of their operations. The interdisciplinary team must develop and deploy:
     (a) Online energy self-assessment software tools to allow agricultural producers to assess whole-farm energy use and to identify the most cost-effective efficiency opportunities;
     (b) Energy auditor training curricula specific to the agricultural sector and designed for use by agricultural producers, conservation districts, agricultural extensions, and commodity groups;
     (c) An effective infrastructure of trained energy auditors available to assist agricultural producers with on-farm energy audits and identify cost-share assistance for efficiency improvements; and
     (d) Measurement systems for cost savings, energy savings, and carbon emission reduction benefits resulting from efficiency improvements identified by the interdisciplinary team.
     (3) The Washington State University extension energy program shall seek to obtain additional resources for this section from federal and state agricultural assistance programs and from other sources.
     (4) The Washington State University extension energy program shall provide technical assistance for farm energy assessment activities as specified in this section.

Sec. 201   RCW 70.164.020 and 1995 c 399 s 199 are each amended to read as follows:
     ((Unless the context clearly requires otherwise,)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Credit enhancement" means instruments that enhance the security for the payment of the lender's obligations and includes, but is not limited to insurance, letters of credit, lines of credit, or other similar agreements.
     (2) "Department" means the department of community, trade, and economic development.
     (((2))) (3) "Direct outreach" means:
     (a) The use of door-to-door contact, community events, and other methods of direct interaction with customers to inform them of energy efficiency and weatherization opportunities; and
     (b) The performance of energy audits.
     (4) "Energy ((assessment)) audit" means an analysis of a dwelling unit to determine the need for cost-effective energy conservation measures as determined by the department.
     (((3))) (5) "Energy efficiency services" means energy audits, weatherization, energy efficiency retrofits, energy management systems as defined in RCW 39.35.030, and other activities to reduce a customer's energy consumption, and includes assistance with paperwork, arranging for financing, program design and development, and other postenergy audit assistance and education to help customers meet their energy savings goals.
     (6) "Financial institution" means any person doing business under the laws of this state or the United States relating to banks, bank holding companies, savings banks, trust companies, savings and loan associations, credit unions, consumer loan companies, equipment leasing and project finance and the affiliates, subsidiaries, and service corporations thereof.
     (7) "Household" means an individual or group of individuals living in a dwelling unit as defined by the department.
     (((4))) (8) "Low income" means household income ((that is at or below one hundred twenty-five percent of the federally established poverty level)) as defined by the department, provided that the definition may not exceed eighty percent of median household income, adjusted for household size, for the county in which the dwelling unit to be weatherized is located.
     (((5))) (9) "Nonutility sponsor" means any sponsor other than a public service company, municipality, public utility district, mutual or cooperative, furnishing gas or electricity used to heat low-income residences.
     (((6))) (10) "Residence" means a dwelling unit as defined by the department.
     (((7))) (11) "Sponsor" means any entity that submits a proposal under RCW 70.164.040, including but not limited to any local community action agency, tribal nation, community service agency, or any other participating agency or any public service company, municipality, public utility district, mutual or cooperative, or any combination of such entities that jointly submits a proposal.
     (((8))) (12) "Sponsor match" means the share((, if any,)) of the cost of weatherization to be paid by the sponsor.
     (((9))) (13) "Sustainable residential weatherization" or "weatherization" means ((materials or measures, and their installation, that are used to improve the thermal efficiency of a residence)) activities that use funds administered by the department for one or more of the following: (a) Energy and resource conservation; (b) energy efficiency improvements; (c) repairs, indoor air quality improvements, and health and safety improvements; and (d) client education. Funds administered by the department for activities authorized under this subsection may only be used for the preservation of a dwelling unit occupied by a low-income household and must, to the extent feasible, be used to support and advance sustainable technologies.
     (((10))) (14) "Weatherizing agency" means any approved department grantee, tribal nation, or any public service company, municipality, public utility district, mutual or cooperative, or other entity that bears the responsibility for ensuring the performance of weatherization of residences under this chapter and has been approved by the department.

Sec. 202   RCW 70.164.040 and 1987 c 36 s 4 are each amended to read as follows:
     (1) The department shall solicit proposals for low-income weatherization programs from potential sponsors. A proposal shall state the amount of the sponsor match, the amount requested ((from the low-income weatherization assistance account)), the name of the weatherizing agency, and any other information required by the department.
     (2)(a) A sponsor may use its own moneys, including corporate or ratepayer moneys, or moneys provided by landlords, charitable groups, government programs, the Bonneville power administration, or other sources to pay the sponsor match.
     (b) Moneys provided by a sponsor pursuant to requirements in this section shall be in addition to and shall not supplant any funding for low-income weatherization that would otherwise have been provided by the sponsor or any other entity enumerated in (a) of this subsection.
     (c) No proposal may require any contribution as a condition of weatherization from any household whose residence is weatherized under the proposal.
     (d) Proposals shall provide that full levels of all cost-effective, structurally feasible, sustainable residential weatherization materials, measures, and practices, as determined by the department, shall be installed when a low-income residence is weatherized.
     (3)(a) The department may in its discretion accept, accept in part, or reject proposals submitted. The department shall allocate funds appropriated from the low-income weatherization assistance account among proposals accepted or accepted in part so as to:
     (i) Achieve the greatest possible expected monetary and energy savings by low-income households and other energy consumers ((and)) over the longest period of time;
     (ii) Identify and correct, to the extent practical, health and safety problems for residents of low-income households, including asbestos, lead, and mold hazards;
     (iii) Create family-wage jobs that may lead to careers in the construction trades or in the energy efficiency sectors; and
     (iv) Leverage, to the extent feasible, environmentally friendly sustainable technologies, practices, and designs.
     (b) The department shall, to the extent feasible, ensure a balance of participation in proportion to population among low-income households for: (((a))) (i) Geographic regions in the state; (((b))) (ii) types of fuel used for heating, except that the department shall encourage the use of energy efficient sustainable technologies; (((c))) (iii) owner-occupied and rental residences; and (((d))) (iv) single-family and multifamily dwellings.
     (c) The department shall give priority to the weatherization of dwelling units occupied by low-income households with incomes at or below one hundred twenty-five percent of the federally established poverty level.
     (d) The department may allocate funds to a nonutility sponsor without requiring a sponsor match if the department determines that such an allocation is necessary to provide the greatest benefits to low-income residents of the state.
     (e) The department shall require sponsors to employ individuals trained from workforce training and apprentice programs established under chapter . . ., Laws of 2009 (Engrossed Second Substitute House Bill No. 2227) if these workers are available, pay prevailing wages under chapter 39.12 RCW, hire from the community in which the program is located, and create employment opportunities for veterans, members of the national guard, and low-income and disadvantaged populations.
     (4)(a) A sponsor may elect to: (i) Pay a sponsor match as a lump sum at the time of weatherization, or (ii) make yearly payments to the low-income weatherization assistance account over a period not to exceed ten years. If a sponsor elects to make yearly payments, the value of the payments shall not be less than the value of the lump sum payment that would have been made under (a)(i) of this subsection.
     (b) The department may permit a sponsor to meet its match requirement in whole or in part through providing labor, materials, or other in-kind expenditures.
     (5) Programs receiving funding under this section must report to the department every six months following the receipt of a grant regarding the number of dwelling units weatherized, the number of jobs created or maintained, and the number of individuals trained through workforce training and apprentice programs, with the last report submitted six months after program completion. The director of the department shall review the accuracy of these reports.
     (6) The department shall adopt rules to carry out this section.

Sec. 203   RCW 70.164.050 and 1987 c 36 s 5 are each amended to read as follows:
     (1) The department is responsible for ensuring that sponsors and weatherizing agencies comply with the state laws, the department's rules, and the sponsor's proposal in carrying out proposals.
     (2) Before a residence is weatherized, the department shall require that an energy ((assessment)) audit be conducted.
     (3) To the greatest extent practicable and allowable under federal rules and regulations, the department shall maximize available federal low-income home energy assistance program funding for weatherization projects.

Sec. 204   RCW 70.164.060 and 1987 c 36 s 6 are each amended to read as follows:
     Before a leased or rented residence is weatherized, written permission shall be obtained from the owner of the residence for the weatherization. The department shall adopt rules to ensure that: (1) The benefits of weatherization assistance ((in connection with a leased or rented residence)), including utility bill reduction and preservation of affordable housing stock, accrue primarily to low-income tenants occupying a leased or rented residence; (2) as a result of weatherization provided under this chapter, the rent on the residence is not increased and the tenant is not evicted; and (3) as a result of weatherization provided under this chapter, no undue or excessive enhancement occurs in the value of the residence. This section is in the public interest and any violation by a landlord of the rules adopted under this section shall be an act in trade or commerce violating chapter 19.86 RCW, the consumer protection act.

NEW SECTION.  Sec. 205   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The department must: (a) Establish a process to award grants on a competitive basis to provide grants to financial institutions for the purpose of creating credit enhancements, such as loan loss reserve funds as specified in sections 206 and 208 of this act, and consumer financial products and services that will be used to obtain energy efficiency services; and (b) develop criteria, in consultation with the department of financial institutions, regarding the extent to which funds will be provided for the purposes of credit enhancements and set forth principles for accountability for financial institutions receiving funding for credit enhancements.
     (2) The department must:
     (a) Give priority to financial institutions that provide both consumer financial products or services and direct outreach;
     (b) Approve any financing mechanisms offered by local municipalities under section 208 of this act; and
     (c) Require any financial institution or other entity receiving funding for credit enhancements to:
     (i) Provide books, accounts, and other records in such a form and manner as the department may require;
     (ii) Provide an estimate of projected loan losses; and
     (iii) Provide the financial institution's plan to manage loan loss risks, including the rationale for sizing a loan loss reserve and the use of other credit enhancements, as applicable.

NEW SECTION.  Sec. 206   A new section is added to chapter 43.330 RCW to read as follows:
     PROMOTING THE INVOLVEMENT OF FINANCIAL INSTITUTIONS IN FINANCING ENERGY EFFICIENCY PROJECTS--FINDINGS AND INTENT. (1) The legislature finds that the creation and use of risk reduction mechanisms will promote greater involvement of local financial institutions and other financing mechanisms in funding energy efficiency improvements and will achieve greater leverage of state and federal dollars. Risk reduction mechanisms will allow financial institutions to lend to a broader pool of applicants on more attractive terms, such as potentially lower rates and longer loan terms. Placing a portion of funds in long-term risk reduction mechanisms will support a sustained level of energy efficiency investment by financial institutions while providing funding to projects quickly.
     (2) It is the intent of the legislature to leverage new federal funding aimed at promoting energy efficiency projects, improving energy efficiency, and increasing family-wage jobs. To this end, the legislature intends to invest a portion of all federal funding, subject to federal requirements, for energy efficiency projects in financial mechanisms that will provide for maximum leverage of financing.

NEW SECTION.  Sec. 207   A new section is added to chapter 43.330 RCW to read as follows:
     The department may create an appliance efficiency rebate program with available funds from the energy efficient appliances rebate program authorized under the federal energy policy act of 2005 (P.L. 109-58).

NEW SECTION.  Sec. 208   A new section is added to chapter 43.330 RCW to read as follows:
     PROMOTING THE INVOLVEMENT OF FINANCIAL INSTITUTIONS IN FINANCING ENERGY EFFICIENCY PROJECTS. (1) Local municipalities receiving federal stimulus moneys through the federal energy efficiency and conservation block grant program or state energy program are authorized to use those funds, subject to federal requirements, to establish loan loss reserves or toward risk reduction mechanisms, such as loan loss reserves, to leverage financing for energy efficiency projects.
     (2) Interest rate subsidies, financing transaction cost subsidies, capital grants to energy users, and other forms of grants and incentives that support financing energy efficiency projects are authorized uses of federal energy efficiency funding.
     (3) Financing mechanisms offered by local municipalities under this section must conform to all applicable state and federal rules and regulations.

NEW SECTION.  Sec. 209   A new section is added to chapter 43.330 RCW to read as follows:
     PROMOTING THE INVOLVEMENT OF STATE-CHARTERED BOND AUTHORITIES IN FINANCING ENERGY EFFICIENCY PROJECTS. (1) The legislature finds that the state bond authorities have capacities that can be applied to financing energy efficiency projects for their respective eligible borrowers: Washington economic development finance authority for industry; Washington state housing finance commission for single-family and multifamily housing, commercial properties, agricultural properties, and nonprofit facilities; Washington higher education facilities authority for private, nonprofit higher education; and Washington health care facilities authority for hospitals and all types of health clinics.
     (2)(a) Subject to federal requirements, the state bond authorities may accept and administer an allocation of the state's share of the federal energy efficiency funding for designing energy efficiency finance loan products and for developing and operating energy efficiency finance programs. The state bond authorities shall coordinate with the department on the design of the bond authorities' program.
     (b) The department may make allocations of the federal funding to the state bond authorities and may direct and administer funding for outreach, marketing, and delivery of energy services to support the programs by the state bond authorities.
     (c) The legislature authorizes a portion of the federal energy efficiency funds to be used by the state bond authorities for credit enhancements and reserves for such programs.
     (3) The Washington state housing finance commission may:
     (a) Issue revenue bonds as the term "bond" is defined in RCW 43.180.020 for the purpose of financing loans for energy efficiency and renewable energy improvement projects in accordance with RCW 43.180.150;
     (b) Establish eligibility criteria for financing that will enable it to choose applicants who are likely to repay loans made or acquired by the commission and funded from the proceeds of federal funds or commission bonds; and
     (c) Participate fully in federal and other governmental programs and take such actions as are necessary and consistent with chapter 43.180 RCW to secure to itself and the people of the state the benefits of programs to promote energy efficiency and renewable energy technologies.

NEW SECTION.  Sec. 301   A new section is added to chapter 43.185 RCW to read as follows:
     ENERGY AUDITS AND RETROFITS IN PUBLICLY FUNDED HOUSING. (1) The legislature finds that growing preservation and rehabilitation needs in the housing trust fund property portfolio provide opportunities to advance energy efficiency and weatherization efforts for low-income individuals in Washington state while protecting the state's six hundred million dollars in affordable housing investments. Preservation of existing affordable housing, when done in conjunction with weatherization activities, is a cost-effective, prudent, and environmentally friendly strategy to ensure that low-income housing remains durable, safe, and affordable. Therefore, the legislature intends that where federal funds are available for increasing and improving energy efficiency of low-income housing that these funds must be utilized, subject to federal requirements, for energy audits and implementing energy efficiency measures in the state housing trust fund real estate portfolio.
     (2) The department shall review all housing properties in the housing trust fund real estate portfolio and identify those in need of major renovation or rehabilitation. In its review, the department shall survey property owners for information including, but not limited to, the age of the building and the type of heating, cooling, plumbing, and electrical systems contained in the property. The department shall prioritize all renovation or rehabilitation projects identified in the review by the department's ability to:
     (a) Achieve the greatest possible expected monetary and energy savings by low-income households and other energy consumers over the greatest period of time;
     (b) Promote the greatest possible health and safety improvements for residents of low-income households; and
     (c) Leverage, to the extent feasible, technologically advanced and environmentally friendly sustainable technologies, practices, and designs.
     (3) Subject to the availability of amounts appropriated for this specific purpose, the department shall use the prioritization of potential energy efficiency needs and opportunities in subsection (2) of this section to make offers of energy audit services to project owners and operators. The department shall use all practicable means to achieve the completion of energy audits in at least twenty-five percent of the properties in its portfolio that exceed twenty-five years in age, by June 30, 2011. Where the energy audits identify cost-effective weatherization and other energy efficiency measures, the department shall accord a priority within appropriated funding levels to include funding for energy efficiency improvements when the department allocates funding for renovation or rehabilitation of the property.

NEW SECTION.  Sec. 401   Sections 101 through 103 of this act constitute a new chapter in Title 70 RCW.

NEW SECTION.  Sec. 402   Captions and part headings used in this act are not any part of the law.

     *NEW SECTION.  Sec. 403   A new section is added to chapter 43.06 RCW to read as follows:
     The governor shall designate an existing full-time equivalent position within state government as the single point of accountability for all energy and climate change initiatives within state agencies. All agencies, councils, or work groups with energy or climate initiatives must coordinate with the person in this designated position.
     *Sec. 403 was vetoed. See message at end of chapter.

NEW SECTION.  Sec. 404   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 405   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.