Legislature(1993 - 1994)
03/15/1994 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.