Legislature(2001 - 2002)
05/09/2002 08:35 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 181- SMALL COMMUNITY/TEACHER HOUSING LOANS CO-CHAIR MORGAN announced that the next order of business would be CS FOR SENATE BILL NO. 181(FIN) am, "An Act relating to and increasing the interest rate on that portion of a loan for a single- family house or owner-occupied duplex that exceeds $200,000 where the loan is for a house or duplex in a small community with a population of 6,500 or less that is not connected by road or rail to Anchorage or Fairbanks, or with a population of 1,600 or less that is connected by road or rail to Anchorage or Fairbanks for purposes of the small community housing program of the Alaska Housing Finance Corporation; relating to loans for teacher housing in which each unit that is not vacant is occupied by at least one individual who is employed as a certificated teacher in a public elementary or secondary school in a small community with a population of 6,500 or less that is not connected by road or rail to Anchorage or Fairbanks, or with a population of 1,600 or less that is connected by road or rail to Anchorage or Fairbanks, and increasing the interest rate on the loans if this occupancy requirement is not complied with; and providing for an effective date." [HCS CSSB 181(CRA), Version 22-LS0488\V, Cook, 5/6/02, failed to move from the House Community and Regional Affairs Standing Committee on May 7, 2002.] Number 1784 REPRESENTATIVE SCALZI moved that the committee take up Version 22-LS0488\V, Cook, 5/6/02. There being no objection, Version V was before the committee. Number 1762 BILL LAWRENCE, Staff to Representative Morgan, House Community and Regional Affairs Standing Committee, Alaska State Legislature, explained that before the committee is a title change and a draft HCS [Version 22-LS0488\H, Cook, 5/9/02]. [Version H] removes everything but the teacher loan program and thus a title change will be required. He explained that Section 1 [of Version V] isn't included in Version H. Furthermore, Version H includes an amendment requested by the Alaska Housing Finance Corporation (AHFC); this amendment ensures that the teacher housing loans receive the same interest rates as all other small community housing loans in the program. That language was inadvertently left out. Mr. Lawrence noted that the cap is also taken out of Version H. REPRESENTATIVE MURKOWSKI directed attention to page 3 of [Version H] and pointed out that the definition of teacher housing has been changed such that it refers to a multi-family residence. She inquired as to the definition of multi-family residence. MR. LAWRENCE related his belief that the definition of housing refers to single family homes and duplexes. Number 1612 JOHN BITNEY, Legislative Liaison, Alaska Housing Finance Corporation, echoed earlier testimony that Section 1 [of Version V] is not included in [Version H] and thus there is no longer a threshold level. He explained that initially the bill was a repeal of the entire program. There were concerns of fairness because there are no limitations on the income of the borrower and the size of the loan. There were some loans in excess of $300,000 and $400,000. As a compromise, AHFC proposed a threshold for the 1 percent issue to apply. The idea was that any portion of any loan that was above the threshold wouldn't receive the benefit of the 1 percent discount. In the Senate, AHFC suggested that the $250,000 [threshold] was reasonable with the current housing market. CO-CHAIR MORGAN announced that the committee would recess to the call of the Chair. The committee was in recess at 9:55 a.m. [The recording on Tape 02-26 ends and a new tape was inserted upon reconvening.] TAPE 02-27, SIDE A CO-CHAIR MORGAN reconvened the House Community and Regional Affairs Standing Committee meeting at 11:35 a.m. Representatives Meyer, Morgan, Halcro, Scalzi, Murkowski, Guess, and Kerttula were present at the call to order. The committee returned to discussion of HCS CSSB 181, Version H. Number 0050 MR. BITNEY continued discussion of the threshold. He informed the committee that the Senate discussed not supporting legislation that would repeal the program. "It was felt that a threshold level for the 1 percent was a reasonable approach to try to limit how far up the 1 percent discount can go on some larger loans," he said. He announced that the aforementioned will be an issue for the sponsor. However, [Version H] is a good bill that amends an existing program in order to provide a provision for AHFC to attempt to develop some teacher housing in small communities. He pointed out that the only change in regard to the teacher program can be found on page 2, Section 2 [of Version H], which clarifies that the teacher program receives the 1 percent discount. This clarification was added after discussions with the Attorney General's office. He noted that Section 1 [of Version H] allows current loans in the rural program to have the option to refinance their loans. He explained that because the loan program is a creature of statute, there is no authorization in statute for people to have the option to refinance as afforded to those under bonded programs or conventional programs. Number 0355 CO-CHAIR MEYER related his understanding that [Version H] basically guts the original intent of the bill, which was to eliminate the entire program. He inquired as to the reason the program was started. He also inquired as to the intent of the program. MR. BITNEY explained that the program has been around since 1979 or 1980 and began as a teacher housing program. The program was created under the old Department of Community & Regional Affairs. As the program became more of a home loan program, it was intended to offer a 1 percent interest rate discount for rural communities, where the cost of housing is higher, and to ensure that there were home loans in these communities where conventional underwriting standards don't apply for things such as well and septic. MR. BITNEY recalled the sponsor statement, which discussed the repeal of the program based on the findings of a legislative audit. That audit found that the original intent of the program has changed in that as time has passed, more conventional financing options are available in these communities. Mr. Bitney said that AHFC viewed the audit as good in terms of its basic findings. However, some of the findings didn't seem to take into consideration some factors in cost such as land prices. "But what we pointed out to Senate Finance was is what has also happened at Alaska Housing since this program got started ... is that there's become an expectation, on the part of the state, that Alaska Housing makes money to provide a dividend every year. That's become a very paramount mission statement," he highlighted. In fact, the missions and measures clearly states that the legislature wants AHFC to provide a dividend. Last year this program made $20 million in net income. Therefore, this program has become an important piece in AHFC's ability to generate profit. Mr. Bitney explained that the concern with the repeal was that eliminating the 1 percent discount would result in these loans going to other secondary purchasers that are large national organizations with the conventional taxable mortgage rate. Without having this program in place, AHFC will lose significant amounts of business. CO-CHAIR MEYER referred to a spreadsheet included in the committee packet, which illustrates that for the true rural areas the program seems to work well. However, the larger [rural] communities such as Ketchikan and Kodiak show that the houses are getting into the higher price range, which he surmised was the problem with the Senator [who sponsored the legislation]. He surmised that the Senator feels that the program was never intended for people with an annual income of over $60,000 and who could qualify for houses over $200,000. MR. BITNEY said that the aforementioned is a fair characterization of the sponsor's concern. Number 0785 CO-CHAIR MEYER offered the possibility of capping the population size rather than capping the dollar amount. MR. BITNEY reiterated the concern that limiting the areas that can participate the loan would [essentially] downsize the business activity and volume. Mr. Bitney explained that these loans are funded from a revolving fund that has a limited pool of resources to handle the loan demand. If the program is made larger, then the funds won't be available to handle such demand without some infusion of cash. Moreover, limiting the program disqualifies areas, some of which are where the bulk of the business activity occurs. Although that is a policy call, AHFC would lose business volume with the limitations. CO-CHAIR MEYER pointed out that capping the amount at $200,000 also seems to limit business. Co-Chair Meyer related his belief that AHFC was Okay with Senator Donley's bill when it arrived in the House. MR. BITNEY clarified that AHFC supported a threshold of about $250,000 based on the cost of new construction in Anchorage, which is about $220,000. However, AHFC isn't comfortable with the $200,000 threshold contained in [CSSB 181(FIN)am]. Number 1036 REPRESENTATIVE GUESS inquired as to why the definition of a small community couldn't be determined by whether the community is connected to the rail/road system. She characterized Soldotna and Kenai as some of Alaska's larger communities. Representative Guess requested explanation as to how limiting the program would lose the state money. MR. BITNEY pointed out that a vast majority of activity with this program is located on the Kenai Peninsula. He explained that the program is applied to qualified loans outside the city limits of Soldotna, Kenai, and Homer. REPRESENTATIVE GUESS surmised, "If we played with the population another way that would lose the state money, but by limiting the amount of money it wouldn't lose the state money." MR. BITNEY answered: If we disqualified those areas ... the threshold that we're suggesting ... is in relationship to how high a loan you can go for the 1 percent discount to apply. So, ... you can still take out, for example in this case, a $300,000 loan but you would lose the benefit of the 1 percent discount for the portion of the loan above $250,000. So, you'd have a blended rate loan .... The interest rate to the borrower is still going to beat our competition in that example. So, we feel that because just in the competitive nature between us and the other secondaries, we'll still get the loan because we'll have a better rate. But in this case, the borrower will pay a little bit more than they otherwise would've because they're getting a higher interest rate for that portion above the threshold. REPRESENTATIVE GUESS inquired as to the limit on the taxable loan program. MR. BITNEY replied that there are limits on the taxable loan. Number 1252 REPRESENTATIVE GUESS pointed out that the current bill has a zero fiscal note. She inquired as to how [AHFC's] dividend would be impacted by the $200,000 cap. MR. BITNEY said that threshold level would probably generate a little more income because any loan above the threshold will pay a little higher rate. In terms of the bill as a whole, there are some offsetting factors to the potential increase. For example, [the rural HALF (housing assistance loan fund) program] would probably experience an increase in income. The teacher housing program will probably experience a drop in activity with some of that activity increasing as people become more aware of the program. REPRESENTATIVE GUESS asked whether the current [HALF] program provides a dividend to the state per statute. MR. BITNEY explained that AHFC's dividend is based on the net income of the corporation, which totaled $96 million, including the $7 million windfall from Bank of America in fiscal year 2001. This [HALF] program amount to $20.3 million. Therefore, [the HALF] program provided $20.3 million of the dividend. Number 1386 REPRESENTATIVE HALCRO remarked that he found the sponsor's letter included in the committee packet as completely insulting. He read the following statement from that letter: "Failure to pass SB 181 sends the message that although you are asking Alaskan workers to pay an income tax, you are not willing to cap housing loan subsidies at reasonable levels." Recalling when SB 181 was in committee last Tuesday, Representative Halcro stressed that the committee didn't like the original version of SB 181 because of the intent. "The intent of the bill was specifically to take a slap at rural Alaska," Representative Halcro charged. Aside from that, this program contributes $20 million to AHFC's annual dividend. This is money the state needs. REPRESENTATIVE HALCRO stressed that AHFC is a business and questioned why the legislature is dabbling in the day-to-day business of AHFC. Representative Halcro said that he didn't see the need to cap populations. He noted his support of the amended Version [H]. Representative Halcro stated, "I'm not going to entertain any discussion or support any measure that puts back in some of the controls or the caps that was in the original version." He questioned what isn't fair about this program. Representative Halcro expressed the need to put on the record what the legislation is: an ideological attack on AHFC. He concluded by reiterating his support of Version H. Number 1557 REPRESENTATIVE SCALZI concurred with Representative Halcro's remarks. He recalled that there was a similar "shot" taken at the Alaska fisheries revolving loan program, which generates between $12-$18 million annually. Representative Scalzi related his belief that there are good reasons for the AHFC program and the revolving loan program. Representative Scalzi informed the committee that he received the following information from a realtor in Anchorage. In Anchorage there is the Anchorage Neighborhood Housing Program for income-driven borrowers to borrow the 20 percent necessary for a good down payment. In Anchorage there is also the Officer Next Door Program and the Teacher Next Door Program that forgives 50 percent of the loan of an officer or teacher that stays at the location under which the loan was taken. He clarified that the Municipality of Anchorage offers such generous programs because its population base affords it the ability to do so. However, rural Alaska doesn't have the population base to offer such programs. Representative Scalzi announced his support of [Version H]. Number 1706 CO-CHAIR MEYER related his belief that Senator Donley's intent in introducing SB 181 is due to his belief that the state should review how it spends money before asking for additional money. He pointed out that the spreadsheet specifies that there are nine properties, which can be houses or investment properties, [for which the loan] amounts to over $350,000. One has to have a fairly good income to afford a house of that size. Co-Chair Meyer recalled that AHFC's testimony has explained that the legislation generates more revenue for the state because those buying houses that [are more than the cap] would have to pay a higher rate on the amount over the specified cap. Co-Chair Meyer related his belief that Senator Donley has good intentions [with SB 181] because it will generate more money for the state, and furthermore the legislation seems to bring the program in line with the original intent of the program. Co-Chair Meyer announced that he liked the teacher housing program and expressed concern that sending the legislation back to the Senate with only the provisions dealing with the teacher housing program could [kill] the bill. Therefore, this good bill should be salvaged such that both bodies accept it. CO-CHAIR MORGAN agreed that the intent of the bill is good. Essentially, the bill has been redirected in order to accomplish some movement. He pointed out that this isn't a giveaway but rather a loan. Number 1848 REPRESENTATIVE MURKOWSKI said that she didn't find the cap so offensive, and furthermore she felt that the numbers provide AHFC the justification for setting the cap at $250,000. In attempting to determine the reason one would have to eliminate the program, Representative Murkowski said that she didn't see that much abuse. Although one might expect the smaller communities where the cost of construction is much higher to fall in the $300,000 category, that isn't the case. In the smaller communities where the loan is utilized, it is utilized at the lower end. Representative Murkowski related that she didn't have a problem with a cap so long as it was set at a realistic level, which she indicated would be $250,000. She said that it's important to move out this bill today in order to forward the teacher provisions. REPRESENTATIVE GUESS inquired as to whether other AHFC programs have caps and if so, what is the cap. MR. BITNEY answered that the main program is the tax-exempt first-time homebuyer program that has an interest rate equivalent to that for the rural program. However, the with allowing that program to be available in the same locations as the [HALF program] is problematic because the tax-exempt first- time homebuyer program specifies a limit on the income of the borrower and the price of the home. [These limitations] result in two-thirds of the tax-exempt program money going to the Municipality of Anchorage area. REPRESENTATIVE GUESS commented that perhaps she was remiss in initially attempting to rush this bill through. Furthermore, the teacher part of the bill is very important. Number 2257 DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance Corporation, informed the committee that the two largest and most successful housing programs in America are controlled by the Internal Revenue Service (IRS) not the U.S. Department of Housing and Development (HUD). Furthermore, the caps and limitations are placed on programs by the federal government. He explained that the tax-exempt first-time homebuyer program is a cap that was initiated and is administered by the federal government. If this is a fairness issue, then everyone needs to work together to get things accomplished through Alaska's congressional legislators. He noted that although "we" were successful in having the caps raised, the caps were only raised in Anchorage not rural Alaska. The vast majority of tax-exempt first-time homebuyer loans are in urban Alaska and the rest of the state is basically prohibited due to the [federal] caps and limitations. MR. FAUSKE turned to the rural areas and commented that a $400,000 home [loan in rural Alaska] is an exception. When looking at the list of loans, houses at the $400,000 level are in the minority. Moreover, one must keep in mind the amount of work a [$400,000] house generates in the community and the amount of money spent on that house that returns to the state based on AHFC's dividends. Therefore, Mr. Fauske said he didn't view [the $400,000 house] as bad business but rather someone in a rural area taking advantage of an available program. He commented that an admirable compromise has been worked out on the bill. MR. FAUSKE pointed out that AHFC is held to energy standards by state law. He expressed his belief that it isn't appropriate for federal institutions to not adhere to anything but the local building code, especially in this time of heightened awareness with regard to energy consumption. Mr. Fauske noted his support of the program, although he acknowledged the need to reach a compromise. He said he felt that a compromise had been reached with the $250,000 cap. In closing, Mr. Fauske recommended that the cap be set as high as possible, within reason, in order to generate business. Number 2468 CO-CHAIR MEYER moved that the committee adopt conceptual Amendment 1, which reads as follows: Page 1, line 1, following "Act": Insert "relating to and increasing the interest rate on that portion of a loan for a single family house or owner-occupied duplex in a small community that exceeds $250,000;" Page 2, line 16, following "AS 18.56.420.": Insert "However, under this subsection, the interest rate on that portion of a loan for small community housing for a single-family house or owner- occupied duplex that exceeds $250,000 is the same as the interest rate determined under AS 18.56.098(f)(1) - (14)." REPRESENTATIVE SCALZI objected. CO-CHAIR MORGAN mentioned that the amendment may require a title change. CO-CHAIR MEYER explained that he is offering the amendment because he believes that everyone supports the teacher housing provision. However, he said he believes that returning to the Senate without some cap would result in losing the teacher housing provision. Furthermore, AHFC has testified that raising the cap to $250,000 would generate more revenue. REPRESENTATIVE KERTTULA related that she didn't believe the committee had made a mistake when the section being reinserted was originally deleted. For those loans over $250,000, there would be a blended rate. She pointed out that the movement seems to be in the area of $250,000 loans. Furthermore, the cost for construction in rural Alaska is going to continue to rise. Representative Kerttula posed a situation in which the [cap] is set at $250,000. In such a situation, would there be the risk of some of those loans going to other programs, she asked. MR. BITNEY said that AHFC would remain below the rate of the national organizations for quite some time. Therefore, AHFC assumed that it would maintain almost all of the loans AHFC currently receives. However, some loans may choose to go with a national organization in order to avoid dealing with energy efficiency restrictions required with AHFC. Although it's hard to measure the risk, Mr. Bitney acknowledged that some loans will be lost due to the AHFC requirements. Number 2659 REPRESENTATIVE SCALZI specified that just less than 4 percent of the homes on the Kenai Peninsula are above the $250,000 mark. Since 4 percent doesn't amount to much, Representative Scalzi announced that he didn't support the amendment. Furthermore, Representative Scalzi informed the committee that the Kodiak annexation failed largely because those folks [outside of Kodiak] would be exempted from this program. REPRESENTATIVE HALCRO noted his agreement with Representative Scalzi. Representative Halcro inquired as to how the $250,000 cap would affect AHFC's income. MR. FAUSKE answered that he felt that AHFC would continue to capture the majority of the loans based on a 1 percent reduction with a cap of $250,000. Furthermore, those people with persons buying a $300,000-$325,000 home would still find it advantageous to use an AHFC loan. Therefore, the assumption was that [the cap] would enhance the program rather than harm it. REPRESENTATIVE HALCRO asked if there have been any complaints with this loan program. MR. FAUSKE replied no. However, in Kenai AHFC addressed the Kenai City Council because people were moving outside the city limits not only because of the loan program but also because people were getting "more bang for their buck." The tax-exempt first-time homebuyer program is actually [utilized more] than the rural home program in certain areas. The discussion resulted in the city council passing a resolution stating that it wanted to see a [rural home program] as a statewide program. Mr. Fauske related that the industry has not had concerns. Although the Boundary Commission had concerns, AHFC dealt with those issues. In response to Representative Halcro, Mr. Fauske said that those with current loans would not be impacted by a cap. TAPE 02-27, SIDE B REPRESENTATIVE GUESS inquired as to whether a $250,000 threshold would work for awhile or will this have to be revisited soon. MR. FAUSKE answered that he assumed that this threshold will be revisited. He predicted that a $250,000 threshold should be appropriate for the next couple of years unless there is a significant change in the economy. MR. BITNEY pointed out that if this legislation passed, there would be a threshold in statute as well as the population caps, which is the issue that is usually revisited frequently. For example, it will probably be another year or two before Bethel reaches the 6,500 population threshold for areas off the road system. Therefore, he predicted that there will be legislation dealing with the population threshold before the loan threshold. Number 2849 CO-CHAIR MEYER said that Representative Guess has a good point and had he thought of it he would have tied the cap to the Consumer Price Index (CPI). However, it's probably better to revisit this every couple of years. REPRESENTATIVE GUESS pointed out that there is only one CPI for the state, the one used for Anchorage. Number 2795 REPRESENTATIVE HALCRO suggested that perhaps the cap should be bumped up so that this issue won't have to be revisited for another 5-6 years. He noted his support of changing the cap from $250,000 to $300,000. CO-CHAIR MORGAN, determining that there was no further discussion on the amendment, asked if Representative Scalzi maintained his objection. REPRESENTATIVE SCALZI replied yes. A roll call vote was taken. Representatives Murkowski, Guess, and Meyer voted for the adoption of conceptual Amendment 1. Representatives Kerttula, Halcro, Scalzi, and Morgan voted against the adoption of conceptual Amendment 1. Therefore, conceptual Amendment 1 failed by a vote of 3:4. Number 2722 REPRESENTATIVE MURKOWSKI moved that the committee adopt conceptual Amendment 2, which is the same as Amendment 1 except that the cap is increased to $300,000. REPRESENTATIVE SCALZI objected. CO-CHAIR MEYER noted his support of conceptual Amendment 2, but reiterated concern that the bill will [die] in the Senate without a cap. REPRESENTATIVE HALCRO said that it's up to the Senate to decide whether or not to act on something that has merit. He expressed an aversion to include something so that the teacher portion of the bill lives. He noted his support of the $300,000 cap, although he stressed that it establishes a bad precedent when the legislature tries to micromanage agencies that are responsible for providing a dividend. REPRESENTATIVE GUESS commented that care should be taken when one body tries to do things solely to please the other body. Differences should be dealt with in conference committees. MR. BITNEY, in response to Co-Chair Meyer, said that whether the cap is $250,000 or $300,000, it enhances the program. REPRESENTATIVE MURKOWSKI agreed with Representative Guess' comments. She explained that she moved conceptual Amendment 2 because of AHFC's testimony that it would enhance the program. A roll call vote was taken. Representatives Halcro, Murkowski, Guess, and Meyer voted for the adoption of conceptual Amendment 2. Representatives Scalzi, Kerttula, and Morgan voted against the adoption of conceptual Amendment 2. Therefore, conceptual Amendment 2 passed by a vote of 4:3. Number 2450 REPRESENTATIVE GUESS moved that the committee adopt the following amendment: Page 2, line 30, after "teacher" Insert "and educational professional" REPRESENTATIVE GUESS recalled testimony during the House Special Committee on Education interim hearings that specified that there is a shortage of counselors and other professionals. In response to Representative Murkowski, Representative Guess said she didn't believe that every other reference to teacher should include "and educational professional" because the other references are related to teacher housing. Number 2346 REPRESENTATIVE SCALZI inquired as to what this would really accomplish for the teachers. REPRESENTATIVE GUESS explained that this language would allow an entity to obtain a break on providing teacher housing, which is a huge problem in rural Alaska. She pointed out that in [rural Alaska] there isn't housing to purchase. REPRESENTATIVE SCALZI related his understanding that any residential property would qualify. He pointed out that only duplexes and residential property qualify. Therefore, he questioned why something specific for teachers is necessary. REPRESENTATIVE GUESS related her understanding that it was for multi-family residences. MR. BITNEY explained that the residential portion of the program is limited to single family homes and duplexes. Therefore, the only difference for the teacher portion is that multi-family homes would qualify for a teacher housing project. In further response to Representative Scalzi, Mr. Bitney pointed out that the definition of "teacher housing" specifies that teacher housing is a multi-family residence that may be nonowner occupied or owner occupied. The [teacher housing provision] is the only provision that can go beyond a duplex. REPRESENTATIVE SCALZI posed a situation in which the teacher moves out of the residence and the remaining residents are not [teachers]. In such a situation, would the loan remain in tact or would it lose the 1 percent reduction rate. MR. BITNEY answered that under the current language, the loan would stay in tact, but the 1 percent discount would be lost from that point forward. Number 2184 REPRESENTATIVE MURKOWSKI related her understanding that teacher housing under [Version H] would mean that only a multi-family residence could qualify [for this teacher housing loan]. MR. BITNEY explained that a teacher buying a single-family house would do so under the regular portion of the program, and therefore there wouldn't be any limitation on the resale with the interest rate. The benefit of the teacher [housing program] is if it's for a tri-plex or above, but each unit has to be occupied by a certified teacher. He pointed out that language to that effect is on page 2, lines 28-31. REPRESENTATIVE MURKOWSKI posed a situation in which a six-plex owner who isn't a teacher wanted to live in one of the units [of a building that had a teacher housing loan]. MR. BITNEY answered that the owner couldn't live in one of the units [if the six-plex was under a teacher housing loan]. Therefore, if this owner was to move in the entire complex would lose eligibility for the teacher housing loan. The committee took an at-ease from 12:40 p.m. to 12:42 p.m. Number 2026 REPRESENTATIVE GUESS moved to adopt HCS CSSB 181, Version 22- LS0488\H, Cook, 5/9/02, as the working document. There being no objection, Version H was before the committee. Number 1991 REPRESENTATIVE MURKOWSKI moved that the committee adopt new Amendment 1, which reads as follows: Page 1, line 1, following "Act": Insert "relating to and increasing the interest rate on that portion of a loan for a single family house or owner-occupied duplex in a small community that exceeds $300,000;" Page 2, line 16, following "AS 18.56.420.": Insert "However, under this subsection, the interest rate on that portion of a loan for small community housing for a single-family house or owner- occupied duplex that exceeds $300,000 is the same as the interest rate determined under AS 18.56.098(f)(1) - (14)." [This was formerly conceptual Amendment 2 moved and adopted by Representative Murkowski before the HCS was adopted.] A roll call vote was taken. Representatives Murkowski, Guess, Halcro, and Meyer voted for the adoption of new Amendment 1. Representatives Scalzi, Kerttula, and Morgan voted against the adoption of new Amendment 1. Therefore, new Amendment passed by a vote of 4:3. Number 1894 REPRESENTATIVE GUESS moved that the committee adopt the following amendment, Amendment 2: Page 2, line 30, after "teacher" Insert "or educational professional" There being no objection, Amendment 2 was adopted. Number 1730 REPRESENTATIVE MURKOWSKI moved to report HCS CSSB 181, Version 22-LS0488\H, Cook, 5/9/02, as amended out of committee with individual recommendations and the accompanying fiscal note. REPRESENTATIVE HALCRO objected for the purposes of discussion. Representative Halcro expressed concern with regard to the immediate effective date and suggested giving AHFC time to change. He proposed an effective date of January 1, 2003. MR. BITNEY related his experience that when there is an effective date on a change to a program, there is generally a run on business when the word gets out about the effective date. Therefore, extending the effective date provides more time for people to be informed about the effective date and thus there might be more of a push for some of the upper-end loans that might be impacted by the threshold. MR. BITNEY, in response to Co-Chair Meyer, agreed that upon adjournment there would be approximately a month of time [before the bill is signed]. REPRESENTATIVE MURKOWSKI pointed out that eliminating the reference to the effective date would mean that the legislation would become effective 90 days after the governor signs it. Perhaps, this would be the best solution. Number 1612 REPRESENTATIVE MURKOWSKI withdrew her motion to move Version H as amended from committee. There being no objection, it was so ordered. REPRESENTATIVE MURKOWSKI moved that the committee adopt Amendment 3, which reads as follows: Page 3, line 22, Delete Section 4 There being no objection, Amendment 3 was adopted. Number 1580 REPRESENTATIVE MURKOWSKI moved to report HCS CSSB 181, Version 22-LS0488\H, Cook, 5/9/02, as amended out of committee with individual recommendations and the accompanying fiscal note. REPRESENTATIVE SCALZI objected. A roll call vote was taken. Representatives Murkowski, Guess, Kerttula, Halcro, Meyer, and Morgan voted to report HCS CSSB 181 as amended from committee. Representative Scalzi voted against to report HCS CSSB 181 as amended from committee. Therefore, HCS CSSB 181(CRA) was reported out of the House Community and Regional Affairs Standing Committee by a vote of 6:1.