Legislature(2007 - 2008)SENATE FINANCE 532

02/19/2008 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 101 GUARDIANSHIP AND CONSERVATORS TELECONFERENCED
Moved CSSB 101(2d L&C)) Out of Committee
+ SB 158 SHIRLEY DEMIENTIEFF MEMORIAL BRIDGE TELECONFERENCED
Moved SB 158 Out of Committee
+ SB 231 LOW-INCOME HOUSING; HOMELESSNESS TELECONFERENCED
Heard & Held
+ SB 233 TEACHERS/HEALTH CARE PROFESS HOUSING LOAN TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 231                                                                                                           
                                                                                                                                
     "An Act relating to the Alaska housing trust fund and                                                                      
     to the Alaska Council on the Homeless; and providing                                                                       
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair  Stedman related  that SB  231 is  sponsored by  the                                                                   
Governor.   He  summarized that  the bill  creates an  Alaska                                                                   
Housing  Trust   Fund  within  the  Alaska   Housing  Finance                                                                   
Corporation  (AHFC).     There  is  a  $10   million  capital                                                                   
expenditure for  FY 09.  The  appropriation is in SB  22, the                                                                   
mental health  budget.   There is $2.5  million from  each of                                                                   
four  sources:  general  funds,  AHFC,  Mental  Health  Trust                                                                   
Authority, and private funds.                                                                                                   
                                                                                                                                
9:17:31 AM                                                                                                                    
                                                                                                                                
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  DEPARTMENT  OF REVENUE,  explained  that he  is                                                                   
also chairman of the Governor's  Council on the Homeless.  He                                                                   
reported  that  it  is  obvious  that  there  is  a  homeless                                                                   
problem.  It  is cheaper to house people than  to incarcerate                                                                   
them.  On  any given day  there are thousands of  homeless in                                                                   
Alaska, some  of which are children.   He reported  that AHFC                                                                   
recognizes  that  the problem  is  worsening.   The  original                                                                   
concept was  the creation of an  endowment to try  to support                                                                   
municipal  governments  and  non-profits   involved  in  this                                                                   
issue.                                                                                                                          
                                                                                                                                
MARK ROMICK,  DIRECTOR, PLANNING  DEPARTMENT, ALASKA  HOUSING                                                                   
FINANCE CORPORATION,  DEPARTMENT  OF REVENUE, explained  that                                                                   
SB  231 makes  changes  to existing  statutes.   The  primary                                                                   
change  is  to  take  the  current   Alaska  Council  on  the                                                                   
Homeless,  which  has  been  operating  under  Administrative                                                                   
Order,  and include  it  within AHFC  statutes.   The  second                                                                   
major portion  of the  bill is to  amend AHFC's authority  to                                                                   
get  involved in  projects not  currently dealt  with.   This                                                                   
would  allow AHFC  to be  more flexible  in participating  in                                                                   
projects  addressing  homelessness and  providing  affordable                                                                   
housing  throughout Alaska.   The  final change  would add  a                                                                   
specific fund  to AHFC's statutes  called the  Alaska Housing                                                                   
Trust Fund,  which is a broad  fund that could be used  for a                                                                   
number of different purposes,  such as affordable housing and                                                                   
housing  for the  homeless called  Supportive  Housing.   The                                                                   
bill limits the  funding to families or individuals  below 80                                                                   
percent of the median income with  a substantial priority for                                                                   
those below 30 percent of the median income.                                                                                    
                                                                                                                                
9:22:12 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  asked if  there  would be  interaction  in                                                                   
rural areas with  regional housing corporations.   Mr. Romick                                                                   
said  there would  be.   One of  the  representatives on  the                                                                   
Council  is  a  representative   from  the  regional  housing                                                                   
authorities.                                                                                                                    
                                                                                                                                
Senator Elton  asked what the  median income is.   Mr. Romick                                                                   
explained  that the  median income  varies by  region in  the                                                                   
state.   Mr. Romick said the  federal definition is  used and                                                                   
is  based on  family size  and  census area.   Senator  Elton                                                                   
referenced the "Ratio of Average  Home Price to Median Family                                                                   
Income"  chart by  the Alaska  Housing Trust.   He  requested                                                                   
more information  about how often  the census  information is                                                                   
changed.  Mr. Romick said every  year HUD releases new median                                                                   
income figures for Alaska.  Senator  Elton asked if the price                                                                   
of  fuel is  a  factor in  determining  median  income.   Mr.                                                                   
Romick explained that  the cost of housing and  living is not                                                                   
considered.  He explained the American Community Survey.                                                                        
                                                                                                                                
Co-Chair  Stedman asked  about the  median home  price.   Mr.                                                                   
Romick said it  is the average sale price.   Co-Chair Stedman                                                                   
asked if  it were possible to  look at the median  home price                                                                   
rather than  the average.   He  used Sitka  as an example  of                                                                   
higher level  homes that skewer  the statistics.   Mr. Romick                                                                   
offered to  supply those figures.   He said the  median house                                                                   
value  in Sitka  in 2006  was $280,000,  whereas the  average                                                                   
sale price was $450,000.  Co-Chair  Stedman thought that kind                                                                   
of  information  would  be important  for  the  committee  to                                                                   
consider.                                                                                                                       
                                                                                                                                
9:27:58 AM                                                                                                                    
                                                                                                                                
JEFF JESSE,  EXECUTIVE DIRECTOR,  ALASKA MENTAL HEALTH  TRUST                                                                   
AUTHORITY,  DEPARTMENT OF  REVENUE,  expressed surprise  that                                                                   
the vast majority  of housing resources tend to  go to people                                                                   
at 70  percent of the median  income, when the  vast majority                                                                   
of the people who are homeless,  or at risk for homelessness,                                                                   
are  at 30-40  percent  or  less.   One  of the  reasons  the                                                                   
funding is going  to the higher income group is  that all low                                                                   
income housing  developments have  to pencil  out.   They are                                                                   
funded  by many  entities  and programs.    Somewhere in  the                                                                   
business plan is a component for  revenue from the tenant and                                                                   
higher  income  populations  can contribute  more.    Another                                                                   
factor  is that  people  at 40  percent  are  homeless for  a                                                                   
reason: mental health problems,  disability issues, substance                                                                   
abuse issues,  domestic  violence issues,  or other sorts  of                                                                   
difficult situations.   Housing for these people  is not very                                                                   
successful due to these other issues.                                                                                           
                                                                                                                                
Mr.  Jesse  reported  that  housing  developers  are  good  a                                                                   
putting  together the  package, but they  know nothing  about                                                                   
support  services  for their  clientele.   He  named  several                                                                   
programs  available as  support  services, but  that are  not                                                                   
proficient at  providing housing for their  clientele because                                                                   
the housing process is very complex.   The result is that the                                                                   
two sectors have not been integrated.                                                                                           
                                                                                                                                
9:32:24 AM                                                                                                                    
                                                                                                                                
Mr. Jesse reported  that in other areas of  the country there                                                                   
is a  new paradigm  called Housing  First.  Support  services                                                                   
come after housing is found.   Many states have created these                                                                   
housing  trust  models.   He  recalled the  Gates  Foundation                                                                   
strategy  for dealing  with homeless  families.   There is  a                                                                   
three-pronged strategy.  First,  small capital increments are                                                                   
offered to buy  down the costs of the projects.   Second, and                                                                   
most  critical, funding  is  provided for  ancillary  support                                                                   
services  such  as  case  management,  treatment,  employment                                                                   
training and  assistance.  This  connects social  services to                                                                   
the housing projects.  It is important  to commit to multiple                                                                   
years,  5-10, of  social services  funding  up front  because                                                                   
most social services  agencies require more than  one year of                                                                   
funding  before  they  will  commit  to  a  project.    Also,                                                                   
projects  that  are  funded  out   of  this  initial  capital                                                                   
appropriation will  have the social services  component funds                                                                   
obligated even  during falling  oil prices.   The goal  is to                                                                   
ensure self sufficiency  for the homeless with  on-going help                                                                   
from normal community service assistance programs.                                                                              
                                                                                                                                
9:36:59 AM                                                                                                                    
                                                                                                                                
Mr.  Jesse shared  statistics regarding  the population  from                                                                   
the Department of  Corrections.  About 42 percent  of inmates                                                                   
are   trust   beneficiaries.     The   recidivism   rate   is                                                                   
substantially  higher   than  that  of  the   non-beneficiary                                                                   
population.   One  of the  primary  problems is  the lack  of                                                                   
safe, affordable  housing.   The rate  of recidivism  is very                                                                   
high due to this problem.  He  reported that in 1995-6, there                                                                   
were  1,000 homeless  children  and  youth in  Anchorage;  in                                                                   
2006,  there were  2,900.  The  impact on  these children  is                                                                   
great.   He  shared  statistics  about homeless  children  in                                                                   
Anchorage schools.   The Housing  Trust addressed  this issue                                                                   
in  the  Gates  Foundation  Sound   Families  Initiative  and                                                                   
reduced the homeless  children rate by anchoring  the kids in                                                                   
a home with support  services.  This is a very  critical step                                                                   
toward addressing the problem.                                                                                                  
                                                                                                                                
9:40:20 AM                                                                                                                    
                                                                                                                                
Senator  Elton  inquired about  the  Council's  duty to  make                                                                   
recommendations to the corporation.   He asked what power the                                                                   
recommendations  entailed.    Mr.  Romick  replied  that  the                                                                   
Council has a  very important, active role.   It includes six                                                                   
public members.   He said that  AHFC is comfortable  with the                                                                   
role of  listening to  the Council.   Many of their  programs                                                                   
operate this  way.  The  intent is to  listen closely  to the                                                                   
Council, especially in allocating funds.                                                                                        
                                                                                                                                
9:43:56 AM                                                                                                                    
                                                                                                                                
Mr.  Jesse  said  there  was   discussion  about  creating  a                                                                   
separate entity, but it was not  cost effective.  The Housing                                                                   
Authority in  AHFC is very  efficient and effective  already.                                                                   
The key  to success  will be to  blend support services  into                                                                   
that mechanism.   The Council  is seen as having  an on-going                                                                   
role due to  the make up of  its membership.  This  group can                                                                   
be strategic  in how to use  a relatively small pot  of money                                                                   
that is  designed to focus  much larger resources  where they                                                                   
are needed.                                                                                                                     
                                                                                                                                
Mr. Romick added  that the other aspect of  the Council's job                                                                   
is to make  broader public policy recommendations  on the use                                                                   
of  other  state resources  made  available  by  departments.                                                                   
Members from  the Department of  Health and Social  Services,                                                                   
the Department  of Corrections, and the Department  of Public                                                                   
Safety are  on the Council.   Senator Elton pointed  out that                                                                   
the power comes from the ability  to use resources.  He noted                                                                   
he  was still  having  difficulty with  the  Council and  its                                                                   
power to recommend.                                                                                                             
                                                                                                                                
9:47:19 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  asked about  the 3,500 homeless  in Alaska.                                                                   
He said there was a reference  to an AHFC homeless survey and                                                                   
he  requested a  copy.   Mr. Romick  replied that  it can  be                                                                   
found on AHFC's web site.                                                                                                       
                                                                                                                                
Senator  Thomas  said  he was  sympathetic  to  the  homeless                                                                   
issue.   He opined  that it is  a complex  problem and  it is                                                                   
hard to  imagine a  solution.  He  requested data  that would                                                                   
show  a positive  impact  from  programs such  as  this.   He                                                                   
thought the issue was not being  addressed in education or in                                                                   
corrections.  He asked how the  project could be demonstrated                                                                   
as successful.                                                                                                                  
                                                                                                                                
9:50:14 AM                                                                                                                    
                                                                                                                                
Mr. Romick  reported  that there  are a lot  of studies  that                                                                   
attest to  the success of  the Housing  First model.   It has                                                                   
been  successful  in  reducing   admissions  to  prisons  and                                                                   
emergency rooms and  has had substantial cost  savings to the                                                                   
public.  That  data is being used to craft  Alaska's program.                                                                   
The other component of addressing  the effectiveness issue is                                                                   
the evaluation  process.  The  Sound Families Program  is one                                                                   
of the  best examples of  how an evaluation process  provides                                                                   
feedback as to the effectiveness of the program.                                                                                
                                                                                                                                
Mr.  Romick  noted  that  costs   to  society  from  homeless                                                                   
families are  already known.   He gave an example  in Seattle                                                                   
where $6 million  was invested in two Housing  First projects                                                                   
resulting  in  a savings  over  a  year  of $3.5  million  in                                                                   
emergency room visits, ambulance  services, and police calls.                                                                   
                                                                                                                                
9:53:21 AM                                                                                                                    
                                                                                                                                
Mr. Jesse  shared data from New  York City two years  after a                                                                   
supportive housing  project.  The  result was a  reduced rate                                                                   
of   shelter  use,   psychiatric   hospitalization,   medical                                                                   
hospitalization, and  a reduction in  jail days.  In  a pilot                                                                   
program  in California,  the number  of  days in  psychiatric                                                                   
hospitals,  incarceration, and  days  homeless were  reduced,                                                                   
and 42  percent were  still housed in  the program  after two                                                                   
years.   In Alaska there  have been pilot  programs.   In the                                                                   
Bridge Home Program  there was a decreased rate  of offending                                                                   
and hospitalization at API.  Pilot  programs are taking place                                                                   
now in Alaska on a small scale and are working.                                                                                 
                                                                                                                                
Senator Thomas  wondered about  consideration in  the program                                                                   
for the indigent  population.  Mr. Jesse said  the preference                                                                   
in the  bill is  for those  people below  the median  income.                                                                   
Someone at zero  would have preference; however,  the program                                                                   
is not exclusive to this population.                                                                                            
                                                                                                                                
Senator Elton  commented that the  priority is for  people at                                                                   
30 percent  of the  median income  for the  economic area  in                                                                   
which they reside.   He opined that the problem  with that is                                                                   
expenses  might  vary  depending  on which  census  area  the                                                                   
person lives  in.  He  asked if the  funds could be  used for                                                                   
counseling services and if that  is a requirement in order to                                                                   
receive housing  support.  He  requested a definition  of the                                                                   
mandate in the bill.                                                                                                            
                                                                                                                                
Mr. Romick said the mandate is  fairly broad and includes the                                                                   
development  of actual units,  but it  is targeted  for long-                                                                   
term  prevention  which  includes  having  an  income.    The                                                                   
mandate is not  only to construct housing units,  but to also                                                                   
provide  support services  such  as life  skills  counseling.                                                                   
AHFC and  the Council will decide  how the programs  would be                                                                   
structure.  Additional requirements could be added.                                                                             
                                                                                                                                
10:00:16 AM                                                                                                                   
                                                                                                                                
Senator Olson  inquired how  to prevent  those at 70  percent                                                                   
from slipping  down to  40 percent  due to decreased  funding                                                                   
and lack  of resources.   Mr. Romick explained  that existing                                                                   
federal  resources would  not be  taken from  the 70  percent                                                                   
population.  New  resources will be made available  to the 40                                                                   
percent group.   Mr. Jesse agreed  that there are  not enough                                                                   
resources to  go around.   There may  be a need  to rebalance                                                                   
the resources  and a  more careful analysis  of the  needs of                                                                   
the 70 percent group.  Now, the  resources are going there by                                                                   
default  and  there  is  no systematic  method.    Mr.  Jesse                                                                   
emphasized that homelessness is  not free.  He listed some of                                                                   
the expenses:  emergency room care, criminal  justice issues,                                                                   
mental health issues, and other emergency needs.                                                                                
                                                                                                                                
Senator Olson asked  how many on the waiting  list might come                                                                   
off.   Mr.  Romick  said  as many  as  possible.   There  are                                                                   
currently 4,000  waiting for rental  assistance.  He  gave an                                                                   
example of  how 33 families could  come off the  waiting list                                                                   
for 5  years with  an investment of  $800,000 to  $1 million.                                                                   
Mr. Jesse related  that the 10-year plan to  end homelessness                                                                   
is very popular  nationwide.  There is a projection  that $15                                                                   
million  over  10  years  would  take  care  of  the  current                                                                   
homeless population in Alaska.   There are many variables and                                                                   
possible changes in economic conditions.                                                                                        
                                                                                                                                
10:06:01 AM                                                                                                                   
                                                                                                                                
Senator Huggins  requested clarification  on page 2,  line 9,                                                                   
of the bill.  Mr. Romick explained  that one of the best ways                                                                   
to stem  the flow of people  entering the homeless  system is                                                                   
to  prevent homelessness  in the  first  place.   He gave  an                                                                   
example of someone close to eviction  due to the inability to                                                                   
pay rent.   In such a situation,  the clause on page  2, line                                                                   
9,  would   allow  AHFC   to  become   involved  to   prevent                                                                   
homelessness from happening due  to an economic event.  There                                                                   
was a  study in New  York that showed  a small investment  of                                                                   
$2,000 per  person, help with  a monthly payment,  saved many                                                                   
from homelessness.  "One paycheck  away from homelessness" is                                                                   
a real issue for many people.                                                                                                   
                                                                                                                                
Mr. Jesse  gave another  example of  beneficiaries in  Alaska                                                                   
who needed  a short stay at  API and were evicted  from their                                                                   
apartments during  that time.   The process of looking  for a                                                                   
new apartment  was expensive.   In this type of  situation, a                                                                   
short-term loan could have help.                                                                                                
                                                                                                                                
Senator  Huggins commented  on the  national mortgage  crisis                                                                   
and wondered  if the bill applies  as a remedy to that.   Mr.                                                                   
Romick  thought   it  would  not  target   subprime  mortgage                                                                   
situations.   There are limits to  how far the fund  would go                                                                   
to forestall foreclosure.  The  intent of that section is not                                                                   
to  keep people  who make  poor  decisions in  housing.   Mr.                                                                   
Jesse agreed that this mechanism  cannot address the subprime                                                                   
issue.   The  nature of  the sidebars  in the  bill looks  at                                                                   
people 80  percent below the  median income, targeting  those                                                                   
at 30 percent or below.                                                                                                         
                                                                                                                                
10:12:28 AM                                                                                                                   
                                                                                                                                
Senator Huggins asked for clarification  about subsection (4)                                                                   
on  page  2.   Mr.  Romick  responded  that ATIA  would  have                                                                   
flexibility in working with a  specific organization that had                                                                   
a  skill in  a particular  area.   He  gave an  example of  a                                                                   
mental health provider  who has the capacity to  enter into a                                                                   
partnership with a housing provider.                                                                                            
                                                                                                                                
Senator  Thomas  asked  about  page  2, line  20,  (e).    He                                                                   
wondered if  it was  limited to  public or private  nonprofit                                                                   
corporations  or if  there was  any  opportunity for  private                                                                   
corporations.  Mr.  Romick replied that it is  limited to tax                                                                   
exempt  organizations.    The   only  way  for  a  for-profit                                                                   
organization  to participate  is  in partnership  with a  tax                                                                   
exempt organization.                                                                                                            
                                                                                                                                
10:14:45 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman noted  four fiscal  notes accompanying  the                                                                   
bill.   He  asked  if the  $2.5  million from  other  revenue                                                                   
sources  had  been secured.    Mr.  Jesse  said it  had  not.                                                                   
Currently,  the  trust has  contributed  $1 million  and  the                                                                   
Rasmussen Foundation  has also contributed $1  million, so $2                                                                   
million  of the  $5  million has  been  raised.   The  Mental                                                                   
Health Authority trustees have  the authority to commit their                                                                   
resources  should the  legislature elect  to go forward  with                                                                   
this  initiative.   He voiced  confidence  about raising  the                                                                   
remaining $1.5 million.                                                                                                         
                                                                                                                                
10:15:56 AM                                                                                                                   
                                                                                                                                
PAT LUBY,  ADVOCACY DIRECTOR,  ALASKA ASSOCIATION  OF RETIRED                                                                   
PERSONS  (AARP),  ANCHORAGE,  testified  that  AARP  strongly                                                                   
supports the  legislation.   Many older  renters are  at risk                                                                   
for homelessness.  There are many  children who are homeless.                                                                   
SB 231 will make a difference.                                                                                                  
                                                                                                                                
SB  231  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
10:17:33 AM                                                                                                                   
                                                                                                                                

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