HB 70
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader
House Bill 70 (Delegate Rogers)
Environment and Transportation Education, Health, and Environmental Affairs
Energy Efficiency - Net-Zero Homes - Contract Preferences
This bill requires the Department of Housing and Community Development (DHCD) to
give preference to applications for funding for a net-zero home from the Energy-Efficient
Homes Construction Fund that will use the services of small and minority-, women-, and
veteran-owned businesses in the State in the clean energy industry, particularly businesses
that provide employment for individuals trained through specified workforce development
programs. The bill takes effect July 1, 2021.
Fiscal Summary
State Effect: The bill is not anticipated to materially affect State operations or finances.
Local Effect: The bill is not anticipated to materially affect local government operations
or finances.
Small Business Effect: Potential meaningful.
Analysis
Current Law: A “net-zero home,” as defined in the Housing and Community
Development Article, means a home that is designed to produce an amount of energy in
one year that is equal to the amount of energy that the same home uses in one year.
Energy-Efficient Homes Construction Loan Program and Fund
Chapter 410 of 2014 established the Energy-Efficient Homes Construction Loan Program
and Fund within DHCD to provide loans to construct low-energy homes and
net-zero homes. The fund consists of (1) money appropriated in the State budget;
(2) repayments or prepayments of principal and payments of interest on loans made under
the program; (3) investment earnings of the fund; and (4) any other money from any other
source. All investment earnings of the fund must be paid into the fund. DHCD must use
the fund to (1) pay expenses of the program; (2) provide credit enhancement under the
program; and (3) make or purchase loans under the program.
Among other things, DHCD must attach to a program loan the terms needed to carry out
the program, establish eligibility standards for program loans, and establish interest rates
that may be as low as 0% or as high as is reasonable to make the project viable. In setting
the terms and interest rates for program loans, DHCD may offer preferred interest rates and
terms for loans used to finance net-zero homes and establish different interest rates based
on the projected energy efficiency of the home to be constructed.
Proceeds of a program loan may only be used for (1) property acquisition and development
costs for the construction of a net-zero home or low-energy home and (2) settlement and
closing costs. A program loan must be secured by a mortgage lien. The mortgage lien may
be subordinate to other mortgage liens and may include terms that DHCD considers
necessary to make the project viable.
To qualify for a loan under the program, a person must submit (1) an application;
(2) information on projected energy usage, project design, and marketing data; and (3) any
other information or documentation DHCD considers necessary to make a determination
on the loan. DHCD may give preference to an application for a net-zero home or a project
that includes financing from other sources in addition to the program loan.
Strategic Energy Investment Fund
Chapters 127 and 128 of 2008 established the Strategic Energy Investment Fund (SEIF)
within the Maryland Energy Administration (MEA) to receive revenue from Regional
Greenhouse Gas Initiative (RGGI) carbon dioxide emission allowance auctions. The Acts
also established an allocation of the revenue from the quarterly RGGI carbon dioxide
emission allowance auctions to be distributed among various categories of spending. Other
revenue in SEIF available from different fund sources is not subject to mandatory
allocation.
Chapter 757 of 2019 requires MEA to use SEIF to provide $7.0 million in funding for
access to capital for small, minority, women, and veteran-owned businesses in the clean
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energy industry under the Small, Minority, and Women-Owned Businesses Account in the
Department of Commerce, subject to specified conditions, including an annual reporting
requirement. The funding must be allocated in annual increments from fiscal 2021 through
2028, as specified.
MEA must also use SEIF to invest in pre-apprenticeship, youth apprenticeship, and
registered apprenticeship programs to establish career paths in the clean energy industry
under the Maryland Employment Advancement Right Now (EARN) program. Subject to
specified requirements, starting in fiscal 2021, (1) $1.25 million must be transferred for
grants to pre-apprenticeship jobs training programs, (2) $6.0 million must be transferred
for grants to youth and registered apprenticeship jobs training programs, and (3) $750,000
must be transferred for the recruitment of individuals (including veterans and formerly
incarcerated individuals) for pre-apprenticeship job training programs and registered
apprenticeship jobs training programs until all amounts are spent.
EARN Program and Clean Energy Workforce Account
Chapters 1 and 2 of 2013 established the EARN Program to create industry-led partnerships
to advance the skills of the State’s workforce, grow the State’s economy, and increase
sustainable employment for working families. Specifically, the program provides general
fund grants on a competitive basis for industry partnerships, workforce training programs,
and job-readiness and skills training.
Chapter 757 of 2019 established the Clean Energy Workforce Account under the
EARN program to receive and disburse the transfers as grants, subject to specified
requirements.
Minority Business Enterprise Program
The State’s Minority Business Enterprise (MBE) program requires that a statewide goal
for MBE contract participation be established biennially through the regulatory process
under the Administrative Procedure Act. The biennial statewide MBE goal is established
by the Special Secretary for the Governor’s Office of Small, Minority, and Women
Business Affairs, in consultation with the Secretary of Transportation and the
Attorney General. In a year in which there is a delay in establishing the overall goal, the
previous year’s goal applies. The Special Secretary is also required to establish biennial
guidelines for State procurement units to consider in deciding whether to establish subgoals
for different minority groups recognized in statute. In a year in which there is a delay in
issuing the guidelines, the previous year’s guidelines apply.
Current MBE regulations direct State agencies to make every effort to award an overall
minimum goal of 29% of the total dollar value of their procurement contracts directly
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(prime contractors) or indirectly (subcontractors) to certified MBE firms. The Maryland
Department of Transportation certifies MBE firms for participation in State procurement.
An MBE is a legal entity, other than a joint venture, that is:
 organized to engage in commercial transactions;
 at least 51% owned and controlled by one or more individuals who are socially and
economically disadvantaged; and
 managed by, and the daily business operations of which are controlled by, one or
more of the socially and economically disadvantaged individuals who own it.
A socially and economically disadvantaged individual is defined as a citizen or legal
U.S. resident who is African American, Native American, Asian, Hispanic, physically or
mentally disabled, a woman, or otherwise found by the State’s MBE certification agency
to be socially and economically disadvantaged. An MBE owned by a woman who is also
a member of an ethnic or racial minority group is certified as either owned by a woman or
owned by a racial or ethnic minority but not both.
Small Business Effect: Eligible small, minority-owned, women-owned, and
veteran-owned businesses may realize additional funding opportunities when applying to
DHCD for financial assistance from the Energy-Efficient Homes Construction Fund.
Additional Comment: The bill does not require that small, minority-owned,
women-owned, and veteran-owned businesses be certified by the State in order to be
eligible for application preference from DHCD.
Additional Information
Prior Introductions: HB 398 of 2020 passed the House and was referred to the Senate
Education, Health, and Environmental Affairs Committee, but no further action was taken.
Designated Cross File: SB 77 (Senator Griffith) - Education, Health, and Environmental
Affairs.
Information Source(s): Department of Housing and Community Development; Maryland
Energy Administration; Department of Legislative Services
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Fiscal Note History: First Reader - January 13, 2021
rh/mcr Third Reader - February 12, 2021
Analysis by: Thomas S. Elder Direct Inquiries to:
(410) 946-5510
(301) 970-5510
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Statutes affected:
Text - First - Energy Efficiency - Net-Zero Homes - Contract Preferences: 4-2001 State Government, 4-2002 State Government, 4-2003 State Government, 4-2004 State Government, 11-708.1 State Government
Text - Third - Energy Efficiency - Net-Zero Homes - Contract Preferences: 4-2001 Labor and Employment, 4-2002 Labor and Employment, 4-2003 Labor and Employment, 4-2004 Labor and Employment, 11-708.1 Labor and Employment