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. (FE)

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 (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 the WREDA to make grants to eligible business 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 the 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.