Legislature(1993 - 1994)
03/15/1994 01:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
March 15, 1994
1:00 p.m.
MEMBERS PRESENT
Representative Harley Olberg, Chairman
Representative Jerry Sanders, Vice-Chair
Representative Con Bunde
Representative Cynthia Toohey
Representative Ed Willis
Representative John Davies
Representative Bill Williams
OTHER LEGISLATORS PRESENT
Representative Joe Green
MEMBERS ABSENT
none
COMMITTEE CALENDAR
*HB 497: "An Act relating to electric and telephone
cooperatives."
PASSED FROM COMMITTEE
HB 467: "An Act relating to housing programs of the Alaska
Housing Finance Corporation and of regional
housing authorities, and permitting regional
housing authorities to make, originate, and
service loans for the purchase and development of
residential housing in the state's small
communities."
PASSED FROM COMMITTEE
WITNESS REGISTER
REPRESENTATIVE JOE GREEN
Alaska State Legislature
Capitol Building, Room 114
Juneau, AK 99801-1182
Phone: 465-4931
Position Statement: Prime Sponsor of SSHB 497
DAVID P. HUTCHENS, Executive Director
Alaska Rural Electric Cooperative Association
703 West Tudor Road #200
Anchorage, AK 99503
Phone: 561-6103
Position Statement: Supported SSHB 497
DAN BLOOMER, Executive Staff Assistant
Chugach Electric
P.O. Box 196300
Anchorage, AK 99519
Phone: 762-4595
Position Statement: Supported SSHB 497
DAVID HARDING, Legislative Staff
Representative Eileen MacLean
Alaska State Legislature
Capitol Building, Room 507
Juneau, AK 99801-1182
Phone: 465-4833
Position Statement: Represented Prime Sponsor of HB 467
KAREN KING
Kodiak Island Housing Authority
Association of Housing Authorities
2815 Woody Way
Kodiak, AK 99615-6991
Phone: 486-8111
Position Statement: Supported HB 467
ROBERT L. BREAN
Director Rural Housing
Alaska Housing Finance Corporation
520 East 34th Avenue
Anchorage, AK 99503-4199
Phone: 561-1900
Position Statement: Supported HB 467
PREVIOUS ACTION
BILL: HB 497
SHORT TITLE: OFFICERS OF UTILITY COOPERATIVES
BILL VERSION: SSHB 497
SPONSOR(S): REPRESENTATIVE(S) GREEN
JRN-DATE JRN-PG ACTION
02/14/94 2381 (H) READ THE FIRST TIME/REFERRAL(S)
02/14/94 2381 (H) CRA, L&C
02/28/94 2550 (H) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
02/28/94 2550 (H) CRA, LABOR & COMMERCE
03/15/94 (H) CRA AT 01:00 PM CAPITOL 124
BILL: HB 467
SHORT TITLE: AHFC HOUSING LOANS
SPONSOR(S): REPRESENTATIVE(S) MACLEAN
JRN-DATE JRN-PG ACTION
02/11/94 2350 (H) READ THE FIRST TIME/REFERRAL(S)
02/11/94 2350 (H) CRA, FINANCE
03/10/94 (H) CRA AT 01:15 PM CAPITOL 124
03/10/94 (H) MINUTE(CRA)
03/15/94 (H) CRA AT 01:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 94-14, SIDE A
Number 000
CHAIRMAN HARLEY OLBERG called the meeting to order at 1:03
p.m. He noted for the record that Representatives Toohey,
Sanders and Willis were present and that a quorum was
present.
HB 497 - OFFICERS OF UTILTIY COOPERATIVES
Number 020
REPRESENTATIVE JOE GREEN, SPONSOR OF SSHB 497, testified
saying, "This is actually a very simple bill. It just
addresses a problem of one of the cooperatives in the state.
It happens to be the one that serves my district. The
problem is: As restricted by current statute, the presiding
officer of a utility board of directors must assume the
title president. Usually the president assumes the
responsibility of day-to-day operations while a chairman or
a chairwomen presides over the board."
(Representatives Davies, Bunde and Williams joined the
committee at 1:04 p.m.)
REPRESENTATIVE GREEN continued, "I have sponsored this bill
at the request of the electrical cooperative that serves my
district. At that utility, the day-to-day manager is called
the general manager. The problem is there that the banks
and other institutions with whom this person must deal pay
little attention or respect to someone with the title of
general manager. A simple solution to this, especially in
regards to dealing with banks and refinancing institutions
is that the bill would allow, but not require, utilities to
call the presiding officer a chairman, which is the common
title for such a position in today's business world. This
would allow the day-to-day manager to be called a president.
When the president of the utility calls for an appointment,
it is my belief that he or she will be better received than
a general manager. This then would serve the utility well
and the 65,000 cooperative members would benefit."
Number 063
REPRESENTATIVE CYNTHIA TOOHEY asked, "What is the cost of
putting this bill in?"
REPRESENTATIVE GREEN said, "In actual dollars, very
little..."
REPRESENTATIVE TOOHEY asked, "Is it really that important to
do this?"
REPRESENTATIVE GREEN replied, "It is in this particular
cooperative's case because, as I mentioned, as a general
manager he sometimes has difficulty getting appointments
that he wouldn't have difficulty getting if he were called
president."
Number 075
DAVID HUTCHENS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC
COOPERATIVES ASSOCIATION, testified in support of SSHB 497
saying, "We probably never would have raised the issue,
except for the fact that the financing resources available
to electric and telephone cooperatives is rapidly changing.
Chugach Electric, the largest co-op of the state, no longer
borrows from REA (Rural Electrification Administration) and
so they have to go out into the regular commercial banking
market to get their financing. And when they go to Wall
Street for a bond issue, as they have done once and
anticipate doing again before too long, they found that...
it was a handicap for them that they were using, as required
by state statute, titles that are inconsistent with normal
business practices, by others coming before the Wall Street
folks for bond issues. So this would simply make it
permissive with the electric co-ops and telephone co-ops to
change their bylaws if they choose to do so to use the
titles chairman and vice-chairman for their board officers
to free up the title president for the person who is now
known as their general manager. It's a very small item but
would be of significance to the cooperative utilities as
they lose their REA financing. Right now, the only one I
think this appeals to is Chugach Electric Association,
perhaps Matanuska Telephone Association. There will be
others as time goes along."
Number 130
REPRESENTATIVE TOOHEY asked, "What prevents your Board of
Directors from naming you president?"
MR. HUTCHENS said, "The state law says that the president
has to be the chief presiding officer of the board."
CHAIRMAN OLBERG said, "Most commonly, chairman of the board
and president are two distinct terms. And president is
typically chief operating officer."
REPRESENTATIVE GREEN said, "The board takes a very active
part. It's not as if it were the board of General Motors or
the board of most corporations. The board meets weekly and
takes up a significant number of matters that wouldn't be
common to other types of organizations and because of that,
these two people are in a lot of activities that maybe
wouldn't otherwise be the case, so this would certainly ease
that concern."
Number 160
DAN BLOOMER, EXECUTIVE STAFF ASSISTANT, CHUGACH ELECTRIC
ASSOCIATION, testified via teleconference in support of SSHB
497 saying, "Chugach strongly supports the passage of this
bill which will allow the electric and telephone
cooperatives to use the title of chairman and vice-chairman
for the top board officers. ...current statute requires
that the titles of president and vice president be used for
these officers. In the previous years, Chugach and the
other electric cooperatives throughout the state and around
the nation have relied solely on the Rural Electrification
Administration, the REA, to provide capital for the
construction for the construction of plant and other
facilities. In recent years, the REA has decreased the
amount of loan funds available to cooperatives, increased
the interest rates for its loans and has forced many of the
cooperatives to take alternative financing.
"In 1991, Chugach took advantage of federal legislation
which allowed it to prepay its REA debt prior to the
maturity of the loan without penalty. Chugach refinanced
its REA debt through a public bond offering and became the
first electric cooperative in the nation to sell bonds in
the public market to replace REA debt. During the bond sale
preparation, Chugach's organizational structure was reviewed
and scrutinized by a number of financiers and bond rating
agencies. Those organizations were confused with the board
officers titles of president and vice president, which are
different from what they experience in their dealings with
privately owned corporations. The proposed HB 497 offers
electric and telephone cooperatives the option of changing
these titles if they so desire but does not require them to
do so."
CHAIRMAN OLBERG said, "Representative Toohey, I think your
point is well-taken and if it weren't already in statute I
think one could wonder why it's in statute, but since it is
and it acts as an impediment to an organization that has
guts enough to go out on the bond market and get away from
REA, I think it's a valid piece of legislation."
REPRESENTATIVE DAVIES said, "I would offer a conceptual
amendment which would just add the word `chairwomen' and
`vice-chairwomen' everywhere that it would be appropriate,
in front of chairmen and vice-chairmen."
CHAIRMAN OLBERG objected to the amendment and said, "I
simply think that chairmen and vice-chairmen are generic
terms in everyday business."
REPRESENTATIVE TOOHEY objected to Chairman Olberg's comment.
REPRESENTATIVE DAVIES said, "I think that's the problem that
we, in our language, tend to do that and I think that we
need to make every effort to recognize that we don't erect
glass ceilings and things like that. By our language,
sometimes we imply that somehow if you're a man, you're
better than if you're a woman. And I think that this would
recognize explicitly that we don't do that. We call our
speaker `madame speaker' to reflect that. We don't call her
Mr. Speaker or something like that or some term that implies
a certain gender. So I think that either we have a gender
neutral term or we reflect the appropriate gender. Again
it's an option, they can do whatever they want. It's no
mandate. It's just an option."
Number 260
CHAIRMAN OLBERG said, "The question before us is then:
shall the words chairwoman and vice-chairwoman be added in
all the appropriate places?"
A role call vote was taken. Representatives Willis, Toohey,
Davies and Bunde voted to adopt the amendment.
Representatives Williams, Sanders and Olberg voted no. The
motion to amend SSHB 497 passed.
REPRESENTATIVE WILLIAMS moved that the amended version of
SSHB 497 be moved out of committee. There were no
objections.
Chairman Olberg called an at-ease from 1:17 to 1:19 p.m.
when HB 467 was brought forth.
HB 467 - AHFC HOUSING LOANS
Number 287
DAVID HARDING, LEGISLATIVE STAFF FOR REPRESENTATIVE EILEEN
MACLEAN, PRIME SPONSOR OF HB 467, testified saying, "HB 467
makes changes to statutes related to certain rural loan and
grant programs in AHFC (Alaska Housing Finance Corporation).
The bill has three goals that will contribute to greater
investment in rural housing. The first is to take advantage
of the regional housing authorities already out there to
help sell and service AHFC loans. The second is to
encourage more private investment in multi-unit housing by
doubling the size of complexes that are eligible for loans
under AHFC's non-owner-occupied housing program, and
allowing owners to live in one of these units to allow
closer monitoring and better maintenance of the complex.
The third goal is to increase the limit of AHFC's
participation in water and sewer hookups to eligible housing
projects. This funding is dependent on federal support, and
any increase in AHFC's participation will not reduce the
federal contribution. Representative MacLean believes these
changes will lead to more housing and construction in remote
areas, greater availability of rental units, and better
servicing of loans. Thank you."
Number 308
REPRESENTATIVE TOOHEY asked, "The $4 million fiscal note
comes from?"
MR. HARDING deferred to someone from AHFC and added, "That
comes from their corporate receipts, it's not general fund
money."
REPRESENTATIVE TOOHEY asked, "Is this fund open to all
segments of Alaska?"
MR. HARDING replied, "This is specifically a rural program,
all rural areas of the state."
Number 315
KAREN KING, KODIAK ISLAND HOUSING AUTHORITY AND THE
ASSOCIATION OF HOUSING AUTHORITIES, testified via
teleconference saying, "I certainly want to speak in strong
support of HB 467 which we see increases opportunities for
affordable housing in rural Alaska."
Number 348
REPRESENTATIVE DAVIES asked how many small communities would
fall "under this definition and how many small communities
there would be if we dropped this not connected by road
restriction." He then referred to "the very end of the
bill" and read, "`small community' means a community with a
population of 5,500 or less that is not connected by road or
rail to Anchorage or Fairbanks, or with a population of
1,400 or less that is connected by road or rail to Anchorage
or Fairbanks. In this paragraph, `connected by road' does
not include a connection by the Alaska Marine Highway
system, so that's, in the bill, the definition of small
community replacing rural and I just would like to know, how
many such communities there are... I'm just wondering what
the numbers are in this case."
MR. HARDING said, "This definition of small community is not
added by the bill, it is simply reflected in the bill
because there is a reference to small community in the bill.
That's an existing definition that I believe dates back to
when these programs were under DCRA (Department of Community
and Regional Affairs)... 5,500 would in rural Alaska that
would pretty much cover all of the regional hubs. Pretty
much everything out there... other than like the Kodiaks,
Sitkas, places like that. Bethel's probably the only
community that comes close to hitting that cap. I think it
has about 5,000 right now."
Number 392
REPRESENTATIVE TOOHEY asked, "How does this fit with the
federal matching?"
MR. HARDING said, "My understanding is there is a certain
amount of funding that comes from federal Housing and Urban
Development each year that's specifically for water and
sewer extensions to make some of these rural projects
possible, and in the law right now AHFC is only able to
match up to 20 percent of that. And the intent here is not
to reduce the federal share..."
Number 420
REPRESENTATIVE BUNDE said, "I'd like them to take a position
on the bill (HB 467) and... I'd like someone to comment on
the limitation of 16 units."
Number 425
ROBERT BREAN, DIRECTOR, RURAL HOUSING, ALASKA HOUSING
FINANCE CORPORATION, testified via teleconference saying,
"We have submitted a copy of a letter to David Harding which
generally outlines our support of the bill. We've been able
to work very closely with David and Representative MacLean
in putting these features into the bill that would make
flexible and considerate piece of legislation for the rural
parties. The second question: initially the residential
program allows for up to a duplex to be built and a non-
owner-occupied allows for up to an eightplex to be built.
But what we found is, in some instances we were having
requests by individuals that were larger than eightplexes.
There were very few larger than fifteenplexes. We felt that
simply by doubling the scope with that program, that would
sufficiently cover the need out there. Also we increased
the residential rural energy of homeowner for occupied
program to build up to a fourplex. This would allow an
individual to live in the fourplex, have some kind of a
local business and maybe rent a couple of rooms out."
Number 454
REPRESENTATIVE DAVIES asked, "Can you tell me how this
program, as it applies to rural areas, differs from your
programs that apply to the rest of the state and what the
need for those differences are?"
MR. BREAN replied, "The general difference is that we have a
lower interest rate out in the rural areas and initially,
for example, the rental program was established in the early
days basically to build teachers housing, so the teachers
had housing after the Molly Hooch case passed. But the
primary reason is the interest rate. It's lower for the
rural areas than it is for the urban areas."
CHAIRMAN OLBERG said, "The obvious question would be, how
much?"
MR. BREAN said, "I believe on that particular program it's
one percent lower than the rate of the most recent bond
issue."
Number 471
REPRESENTATIVE TOOHEY asked, "Does your rate fluctuate?"
MR. BREAN said, "It does fluctuate. Originally, a year or
so we had in statute a set rate of ten and a half percent.
We found that wasn't working because percentage rates had
obviously dropped a lot lower than that. So we had an
amendment about a year ago that put a sliding mechanism in
there so that it adjusted according to the most recent bond
rate."
REPRESENTATIVE TOOHEY said, "I assume that you'll always be
at least one percent lower than urban areas."
MR. BREAN confirmed this.
Number 486
REPRESENTATIVE DAVIES said, "I noticed on the fiscal note
that the fiscal impact seems to be primarily in the capital
side. There are no operating costs anticipated by
increasing the number of loans in the rural area."
MR. BREAN said, "We would have additional operating costs,
but those would all be borne by corporate receipts. The one
fiscal note that we have attached there is relative to the
match for the supplemental housing program and that's why
it's in the capital budget."
CHAIRMAN OLBERG asked, "When Alaska Housing is involved in
legislation, we're never talking about general funds, are
we?"
MR. BREAN replied, "No, we are not, Mr. Chairman. We
anticipate that all these expenses will be borne by
corporate receipts."
Number 504
REPRESENTATIVE DAVIES moved that HB 467 be passed out of
committee with individual recommendations. There were no
objections.
CHAIRMAN OLBERG adjourned the meeting at 1:37 p.m.
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