Legislature(1995 - 1996)
04/11/1995 08:07 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 92 - AHFC SUBJECT TO EXEC. BUDGET ACT Number 019 JOHN BITNEY, Legislative Assistant to Representative Terry Martin, introduced himself as the staff to the Chairman of the Legislative Budget and Audit Committee. As he stated, at their last LBAC meeting a testifier from the Department of Revenue raised some concerns about SB 91. They had some proposed language to submit to the House State Affairs Committee that would address their concerns about exemptions, procedures and financing, and mechanisms that would allow them to take advantage of bonding opportunities in the market, for one. CHAIR JAMES said this bill had a blank committee substitute (CS), and asked if everyone had a copy of it. Number 059 REPRESENTATIVE SCOTT OGAN asked if Mr. Bitney could give an analysis of the CS, and the changes. MR. BITNEY explained that the language of the CS was prepared by the Administration, or a representative of the Governor's office. He said he was not involved in drafting the language, so he encouraged the committee to let the drafters speak on that; they could explain it better. Number 070 CHAIR JAMES noted that she had requested the work draft. The changes to the work draft on page 2, came from the Administration. This was to give an exemption to normal business routines. MR. BITNEY said there are exemptions that begin on line 5, page 2. They defined what is on the outside of the procedures of the Executive Budget Act for the corporation. Line 7 signifies the things the representative from the Department of Revenue had pointed out that would allow them to take advantage of various bonding opportunities in the bond market. The corporation's borrowing of money is exempted from the review procedures of the Executive Budget Act. Line 11 asks basically that the loan programs available for long programs, where no subsidy is provided, be on the outside. Section C is exempted from multi-family projects, where they take advantage of various tax credit opportunities, or arbitrage earnings. Arbitrage earnings are purchases of securities on one market for immediate resale on another market in order to profit from a price discrepancy. REPRESENTATIVE OGAN asked if the sponsor agreed with the amendments. MR. BITNEY answered that the sponsor was there at the pleasure of the Labor and Audit Committee. The concerns brought up there were the concerns that the committee brought up at the last hearing. CHAIR JAMES said for the record, that Representative Caren Robinson arrived at 8:10 a.m. REPRESENTATIVE JOE GREEN said that he moved they adopt the unmarked House CS for SB 92 as the working copy. There being no objections, the unnumbered CS was adopted. Number 160 DAN FAUSKE, Chief Executive Officer, Alaska Housing Finance Corporation, testified in support of SB 92. He said it represented a workable solution for them. The bill considers issues, such as subsidized mortgage programs, that raised such concern. It does not tie their hands in reference to entering the capital market, to continue the bond portfolio in the loan programs. He saw the language as healthy, and said it was a situation that the AHFC could live with. It also met requirements and needs that the legislature stated. REPRESENTATIVE GREEN said when they last met they discussed item "C," which was the $10 million, and his recollection was that Mr. Fauske did not have any problem with that either. MR. FAUSKE concurred that it was not something they couldn't live with. He said the original statement applied to bonded indebtedness. In a bond portfolio $10 million would be rather restrictive. The new language is fine. Number 180 CHAIR JAMES recalled that a resolution was drafted for a title change, but it was not in her folder. Her committee aide questioned if a title change was necessary, and the consensus of the committee was that it was necessary. She asked her aide to check that out. REPRESENTATIVE CAREN ROBINSON wondered if AHFC would prefer that things stay as they are. She asked if operations would be better if things remained as they were, or if this legislation would help their operation. She said Juneau builders were unhappy with this bill originally. MR. FAUSKE said his personal assessment was that the legislation would help to enhance relations with the legislature. It would make his job easier, so he viewed it as a win-win situation. It puts everyone in a situation where healthier dialogue can happen, so that will be good. REPRESENTATIVE ROBINSON brought up that the local Juneau Home Builders Association did not like this bill originally, and wondered if Mr. Fauske would think they would be happy with the changes. MR. FAUSKE said he thought they should like the changes. He felt this legislation allowed a great deal of flexibility. When they get into projects of over $10 million, which are few, so they do not come before them very often. There is a long lead time to give them adequate time to get before their constituency and the legislature for dialogue. It changes the operation style somewhat, but not enough to impede the organization's ability to carry out its missions. Mr. Fauske said it would be all inclusive in the sense that many of the programs fall under the capital budget as representative of the Family Home Loan Program. He thought it would increase the oversight, and also, it would not lead to situations as in the past, such as the 5 percent on the subsidies. It removes the subsidized loan programs. That program created confusion and concern. It strengthens the legislature's oversight activity, or review of projects, so the changes are good. Big bond issues are reviewed and those are not impaired by this. CHAIR JAMES said she would like to move the bill out of committee and asked for a motion. Number 252 REPRESENTATIVE JOE GREEN moved that they pass the House CS for SB 92 as amended out of committee, with individual recommendations and attached fiscal note. He was referring to the CS they adopted as the working draft. Hearing no objections, the motion passed. REPRESENTATIVE PORTER moved to pass HCR unnumbered, 9-LS1029/A, dated 4/3/95. There being no objections, the motion passed. CHAIR JAMES said that the resolution for the title change would also be passed out.