Legislature(2003 - 2004)

04/30/2004 08:43 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 274                                                                                                           
     An Act relating  to the housing assistance  loan fund in                                                                   
     the  Alaska Housing  Finance  Corporation; creating  the                                                                   
     housing  assistance loan  program;  repealing loans  for                                                                   
     teacher housing and providing for loans for multi-                                                                         
     family housing; making conforming amendments; and                                                                          
     providing for an effective date.                                                                                           
BRIAN BUTCHER,  LEGISLATIVE LIAISON,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION  (AHFC), DEPARTMENT  OF  REVENUE, explained  that                                                                   
the bill  would make two changes  to the rural  loan program.                                                                   
The first of these would change  it from a housing assistance                                                                   
revolving  fund  to  a  program   in  order  to  address  the                                                                   
liquidity concerns of the AHFC.  The current revolving nature                                                                   
of the fund  limits it to  purchases of new loans  under this                                                                   
program. For FY  03, over one third of the AHFC's  net income                                                                   
was in this  fund.  The  Corporation pays a dividend  of $103                                                                   
million  to the  State,  with the  funds  continuing to  come                                                                   
entirely   from   the   working  capital   because   of   the                                                                   
restrictions of  the rural loan  fund. Mr. Butcher  said that                                                                   
this has  resulted in  the liquid  assets of the  Corporation                                                                   
declining at an accelerated rate.  In addition, the revolving                                                                   
fund hasn't really revolved for  several years. The new loans                                                                   
made in the  program have exceeded the cash  available in the                                                                   
fund,  causing  the  AHFC  is  use  its  working  capital  to                                                                   
purchase and hold loans for reimbursement  from the fund. Mr.                                                                   
Butcher explained  that this bill would allow  the program to                                                                   
operate  in the  same way  the  Corporation's other  programs                                                                   
operate. Other  than this  change, he  said that the  program                                                                   
would continue to operate in the same way.                                                                                      
Mr. Butcher  explained  that the second  modification  in the                                                                   
bill  would  change  the  rural   teacher  multi-family  loan                                                                   
program to the  rural multi-family loan program.  In 2002, SB                                                                   
181 passed  and changed the  rural multi-family  loan program                                                                   
to  the rural  teacher  loan  program. This  change  required                                                                   
anyone using the program to fill  their multi-family building                                                                   
with at  least one teacher in  every unit. In the  nearly two                                                                   
years  since  the  change,  there have  been  no  loans  made                                                                   
because it's been  too restrictive. People aren't  willing to                                                                   
take  out  long-term  financing on  a  multi-family  building                                                                   
requiring a teacher  in every unit for the period  of time of                                                                   
the  loan.   This bill  would change  the program  back to  a                                                                   
rural  multi-family program  available  to anyone,  including                                                                   
teachers. It would  also allow an owner to occupy  one of the                                                                   
Representative  Foster commented  that in  the villages,  the                                                                   
Native corporation  or the  IRA owns land  and sells  lots to                                                                   
its members,  but not  on the  open market.  He asked  how to                                                                   
open up new land for teacher housing.                                                                                           
PAUL  KAPANSKY,  DIRECTOR  OF   MORTGAGE  OPERATIONS,  ALASKA                                                                   
HOUSING  FINANCE  CORPORATION,  DEPARTMENT  OF  REVENUE,  VIA                                                                   
TELECONFERENCE,  replied that  it  is difficult  if it  isn't                                                                   
sold  on the  open  market,  because  that indicates  a  deed                                                                   
restriction.  A deed restriction  affects  the value  and the                                                                   
financing of the land, making it basically not financeable.                                                                     
JOE DUBLER,  CHIEF FINANCIAL OFFICER, ALASKA  HOUSING FINANCE                                                                   
CORPORATION,  DEPARTMENT  OF   REVENUE,  argued  that  Native                                                                   
corporations  would not  be excluded  from  this program  and                                                                   
could obtain financing to build  a duplex or triplex on their                                                                   
land.  The Native  corporations  could  obtain financing  for                                                                   
Representative  Foster   MOVED  to  report  SB   274  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
SB  274  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  one  previously  published  zero  fiscal                                                                   
impact note.                                                                                                                    

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