Legislature(2001 - 2002)

05/07/2002 08:10 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                            
                       STANDING COMMITTEE                                                                                     
                          May 7, 2002                                                                                           
                           8:10 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Carl Morgan, Co-Chair                                                                                            
Representative Andrew Halcro                                                                                                    
Representative Drew Scalzi                                                                                                      
Representative Lisa Murkowski                                                                                                   
Representative Gretchen Guess                                                                                                   
Representative Beth Kerttula                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 4(RLS) am                                                                                                
"An Act  relating to optional exemptions  from municipal property                                                               
taxes on residential property and  limiting an optional exclusion                                                               
or exemption to the assessed value  of $10,000 for a residence in                                                               
a municipality  with a total  bonded indebtedness that  equals or                                                               
exceeds  $15,000 multiplied  by the  number of  residents in  the                                                               
municipality; and providing for an effective date."                                                                             
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
CS FOR SENATE BILL NO. 181(FIN) am                                                                                              
"An  Act relating  to and  increasing the  interest rate  on that                                                               
portion of  a loan  for a  single-family house  or owner-occupied                                                               
duplex that  exceeds $200,000 where  the loan  is for a  house or                                                               
duplex in  a small community with  a population of 6,500  or less                                                               
that is not connected by road  or rail to Anchorage or Fairbanks,                                                               
or with a  population of 1,600 or less that  is connected by road                                                               
or  rail to  Anchorage or  Fairbanks  for purposes  of the  small                                                               
community  housing   program  of   the  Alaska   Housing  Finance                                                               
Corporation; relating to loans for  teacher housing in which each                                                               
unit that  is not vacant is  occupied by at least  one individual                                                               
who is employed as a  certificated teacher in a public elementary                                                               
or secondary  school in  a small community  with a  population of                                                               
6,500 or less that is not  connected by road or rail to Anchorage                                                               
or  Fairbanks, or  with a  population of  1,600 or  less that  is                                                               
connected  by  road  or  rail  to  Anchorage  or  Fairbanks,  and                                                               
increasing  the interest  rate  on the  loans  if this  occupancy                                                               
requirement is not complied with;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - FAILED TO MOVE HCS CSSB 181(CRA) OUT OF COMMITTEE                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SB 4                                                                                                                    
SHORT TITLE:FIREFIGHTER/EMT MUNI. PROP. TAX EXEMPTION                                                                           
SPONSOR(S): SENATOR(S) THERRIAULT                                                                                               
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
01/08/01     0012       (S)        PREFILE RELEASED - 12/29/00                                                                  
01/08/01     0012       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
01/08/01     0012       (S)        CRA, FIN                                                                                     
02/07/01                (S)        CRA AT 1:30 PM FAHRENKAMP 203                                                                
02/07/01                (S)        Heard & Held                                                                                 
 02/07/01               (S)        MINUTE(CRA)                                                                                  
02/28/01                (S)        CRA AT 1:30 PM FAHRENKAMP 203                                                                
02/28/01                (S)        Moved CSSB 4(CRA) Out of                                                                     
                                   Committee                                                                                    
02/28/01                (S)        MINUTE(CRA)                                                                                  
03/01/01     0554       (S)        CRA RPT CS 1DP 2NR NEW TITLE                                                                 
03/01/01     0555       (S)        DP: TORGERSON; NR: PHILLIPS,                                                                 
                                   AUSTERMAN                                                                                    
03/01/01     0555       (S)        FN1: (REV)                                                                                   
03/01/01     0555       (S)        FN2: ZERO(REV)                                                                               
03/19/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/19/01                (S)        Heard & Held                                                                                 
03/19/01                (S)        MINUTE(FIN)                                                                                  
03/22/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/22/01                (S)        MINUTE(FIN)                                                                                  
03/23/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/23/01                (S)        Scheduled But Not Heard                                                                      
03/27/01                (S)        FIN AT 6:00 PM SENATE FINANCE                                                                
                                   532                                                                                          
03/27/01                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee                                                                                    
03/27/01                (S)        MINUTE(FIN)                                                                                  
04/05/01     0955       (S)        AM: DONLEY, LEMAN;                                                                           
04/05/01     0955       (S)        NR: KELLY, GREEN, AUSTERMAN,                                                                 
                                   HOFFMAN,                                                                                     
04/05/01     0955       (S)        FN3: (REV)                                                                                   
04/05/01     0955       (S)        OLSON; DP: WILKEN                                                                            
04/05/01     0955       (S)        FIN RPT CS 1DP 5NR 2AM SAME                                                                  
                                   TITLE                                                                                        
04/20/01                (S)        RLS AT 10:45 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/20/01                (S)        MINUTE(RLS)                                                                                  
03/01/02     2350       (S)        FIN REFERRAL ADDED (RETURNED                                                                 
                                   TO FIN)                                                                                      
03/21/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/21/02                (S)        Moved Out of Committee                                                                       
03/21/02                (S)        MINUTE(FIN)                                                                                  
03/22/02     2500       (S)        COSPONSOR(S): WILKEN                                                                         
04/08/02     2657       (S)        FIN RPT CS(2DFIN)3DP 1DNP 2NR                                                                
                                   NEW TITLE                                                                                    
04/08/02     2657       (S)        DP: KELLY, WILKEN, AUSTERMAN;                                                                
04/08/02     2657       (S)        DNP: DONLEY; NR: LEMAN, WARD                                                                 
04/08/02     2657       (S)        FN4: (REV)                                                                                   
04/16/02                (S)        RLS AT 10:30 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/16/02                (S)        MINUTE(RLS)                                                                                  
04/18/02                (S)        RLS AT 10:30 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/18/02                (S)        MINUTE(RLS)                                                                                  
04/22/02     2887       (S)        RULES TO CAL W/CS 2OR 4/22                                                                   
                                   SAME TITLE                                                                                   
04/22/02     2887       (S)        FN5: (REV)                                                                                   
04/22/02     2888       (S)        READ THE SECOND TIME                                                                         
04/22/02     2888       (S)        RLS CS ADOPTED UNAN CONSENT                                                                  
04/22/02     2888       (S)        AM NO 1 FAILED Y7 N13                                                                        
04/22/02     2889       (S)        AM NO 2 FAILED Y8 N12                                                                        
04/22/02     2890       (S)        ADVANCED TO 3RD READING FLD                                                                  
                                   Y14 N5 A1                                                                                    
04/22/02     2890       (S)        ADVANCED TO THIRD READING                                                                    
                                   4/23 CALENDAR                                                                                
04/23/02     2905       (S)        READ THE THIRD TIME CSSB                                                                     
                                   4(RLS)                                                                                       
04/23/02     2905       (S)        PASSED Y13 N7                                                                                
04/23/02     2906       (S)        EFFECTIVE DATE(S) ADOPTED Y20                                                                
                                   N-                                                                                           
04/23/02     2906       (S)        OLSON NOTICE OF                                                                              
                                   RECONSIDERATION                                                                              
04/24/02     2925       (S)        RECON TAKEN UP - IN THIRD                                                                    
                                   READING                                                                                      
04/24/02     2925       (S)        RETURN TO SECOND FOR AM 3                                                                    
                                   UNAN CONSENT                                                                                 
04/24/02     2925       (S)        AM NO 3 ADOPTED UNAN CONSENT                                                                 
04/24/02     2926       (S)        AUTOMATICALLY IN THIRD                                                                       
                                   READING                                                                                      
04/24/02     2926       (S)        PASSED ON RECONSIDERATION Y20                                                                
                                   N-                                                                                           
04/24/02     2926       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
04/24/02     2935       (S)        TRANSMITTED TO (H)                                                                           
04/24/02     2935       (S)        VERSION: CSSB 4(RLS) AM                                                                      
04/25/02     3122       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/25/02     3122       (H)        CRA, FIN                                                                                     
05/07/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
                                                                                                                                
BILL: SB 181                                                                                                                  
SHORT TITLE: SMALL COMMUNITY/TEACHER HOUSING LOANS                                                                              
SPONSOR(S): FINANCE                                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/09/01     1014       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/09/01     1014       (S)        FIN                                                                                          
04/19/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/19/01                (S)        Heard & Held                                                                                 
04/25/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/25/01                (S)        Heard & Held                                                                                 
04/25/01                (S)        MINUTE(FIN)                                                                                  
01/31/02                (S)        FIN AT 9:30 AM SENATE FINANCE                                                                
                                   532                                                                                          
01/31/02                (S)        Heard & Held                                                                                 
01/31/02                (S)        MINUTE(FIN)                                                                                  
03/21/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/21/02                (S)        Heard & Held                                                                                 
03/21/02                (S)        MINUTE(FIN)                                                                                  
04/23/02                (S)        FIN AT 4:00 PM SENATE FINANCE                                                                
                                   532                                                                                          
04/23/02                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee                                                                                    
04/23/02                (S)        MINUTE(FIN)                                                                                  
04/24/02     2920       (S)        FIN RPT CS 6DP 2NR NEW TITLE                                                                 
04/24/02     2920       (S)        DP: DONLEY, KELLY, GREEN,                                                                    
                                   OLSON,                                                                                       
04/24/02     2920       (S)        WILKEN, LEMAN; NR: AUSTERMAN,                                                                
                                   WARD                                                                                         
04/24/02     2920       (S)        FN1: INDETERMINATE(REV)                                                                      
05/01/02                (S)        RLS AT 10:30 AM BELTZ 211                                                                    
05/01/02                (S)        -- Location Change --                                                                        
05/01/02                (S)        MINUTE(RLS)                                                                                  
05/02/02     3129       (S)        READ THE SECOND TIME                                                                         
05/02/02     3129       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
05/02/02     3130       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
05/02/02     3130       (S)        READ THE THIRD TIME CSSB                                                                     
                                   181(FIN)                                                                                     
05/02/02     3130       (S)        PASSED Y18 N- E1 A1                                                                          
05/02/02     3130       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
05/02/02     3130       (S)        HOFFMAN NOTICE OF                                                                            
                                   RECONSIDERATION                                                                              
05/02/02     3102       (S)        RULES TO CALENDAR 5/2/02                                                                     
05/03/02     3147       (S)        RECON TAKEN UP - IN THIRD                                                                    
                                   READING                                                                                      
05/03/02     3147       (S)        RETURN TO SECOND FOR AM 1                                                                    
                                   UNAN CONSENT                                                                                 
05/03/02     3147       (S)        AM NO 1 OFFERED BY HOFFMAN                                                                   
05/03/02     3148       (S)        AM TO AM 1 UNANIMOUS CONSENT                                                                 
05/03/02     3148       (S)        AM NO 1 AS AMENDED ADOPTED                                                                   
                                   UNAN CONSENT                                                                                 
05/03/02     3148       (S)        AUTOMATICALLY IN THIRD                                                                       
                                   READING                                                                                      
05/03/02     3148       (S)        AM NO 2 (TITLE AM) ADOPTED                                                                   
                                   UNAN CONSENT                                                                                 
05/03/02     3149       (S)        PASSED ON RECONSIDERATION Y20                                                                
                                   N-                                                                                           
05/03/02     3149       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
05/03/02     3151       (S)        TRANSMITTED TO (H)                                                                           
05/03/02     3151       (S)        VERSION: CSSB 181(FIN) AM                                                                    
05/06/02     3383       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
05/06/02     3383       (H)        CRA, FIN                                                                                     
05/07/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR GENE THERRIAULT                                                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room 121                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified as the sponsor of SB 4.                                                                          
                                                                                                                                
DAN DICKINSON, Director                                                                                                         
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
550 W 7th Avenue, Suite 500                                                                                                     
Anchorage, Alaska 99501-3566                                                                                                    
POSITION STATEMENT:  Provided information related to the fiscal                                                                 
note for SB 6.                                                                                                                  
                                                                                                                                
WILDA RODMAN, Staff                                                                                                             
to Senator Therriault                                                                                                           
Capitol Building, Room 121                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Provided remarks on behalf of the sponsor.                                                                 
                                                                                                                                
PHILIP CUTLER, Staff                                                                                                            
to Senator Dave Donley                                                                                                          
Senate Finance Committee                                                                                                        
Alaska State Legislature                                                                                                        
Capitol Building, Room 506                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified on behalf of the sponsor of SB                                                                   
181, the Senate Finance Committee.                                                                                              
                                                                                                                                
BILL LAWRENCE, Staff                                                                                                            
to Representative Morgan                                                                                                        
House Community and Regional Affairs Standing Committee                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room                                                                                                          
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Presented HCS CSSB 181, Version V.                                                                         
                                                                                                                                
JOHN BITNEY, Legislative Liaison                                                                                                
Alaska Housing Finance Corporation                                                                                              
Department of Revenue                                                                                                           
PO Box 101020                                                                                                                   
Anchorage, Alaska 99510-1020                                                                                                    
POSITION STATEMENT:  Testified on AHFC's position on SB 181.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-25, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIR  KEVIN MEYER  called the  House  Community and  Regional                                                               
Affairs  Standing  Committee  meeting   to  order  at  8:10  a.m.                                                               
Representatives  Morgan,   Meyer,  Scalzi,  and   Murkowski  were                                                               
present at  the call  to order.   Representatives  Halcro, Guess,                                                               
and Kerttula arrived as the meeting was in progress.                                                                            
                                                                                                                                
SB   4-FIREFIGHTER/EMT MUNI. PROP. TAX EXEMPTION                                                                              
                                                                                                                                
[Contains discussion of HB 6.]                                                                                                  
                                                                                                                                
CO-CHAIR MEYER announced  that the first order  of business would                                                               
be  CS  FOR SENATE  BILL  NO.  4(RLS)  am,  "An Act  relating  to                                                               
optional exemptions from municipal  property taxes on residential                                                               
property and limiting  an optional exclusion or  exemption to the                                                               
assessed value of $10,000 for  a residence in a municipality with                                                               
a  total  bonded  indebtedness that  equals  or  exceeds  $15,000                                                               
multiplied by  the number of  residents in the  municipality; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0080                                                                                                                     
                                                                                                                                
SENATOR GENE  THERRIAULT, Alaska State Legislature,  testified as                                                               
the sponsor of SB 4.   Senator Therriault explained that SB 4 was                                                               
introduced  in  order  to  offer local  governments  a  tool  for                                                               
dealing with  property tax generated  from the  local residential                                                               
property.   The first section of  the bill allows an  increase in                                                               
the residential  property tax exemption.   The  current statutory                                                               
[residential property tax  exemption] was set at  $10,000 in 1974                                                               
and hasn't  been adjusted  since.   Therefore, the  bill proposes                                                               
raising  [that exemption]  to $15,000  per resident.   Under  the                                                               
bill,  the owner  of a  home valued  at $100,000  would have  the                                                               
first  $15,000 tax  exempt and  thus  the millage  rate would  be                                                               
based on $85,000  worth of value.  Senator  Therriault noted that                                                               
not  all  municipalities  in  the state  take  advantage  of  the                                                               
$10,000 exemption.   Passage of  this bill would allow  the local                                                               
assembly to decide  whether to ask the local people  if they want                                                               
to increase the [residential property  tax exemption] to $15,000.                                                               
He  pointed out  that Senate  Finance restricted  the use  of the                                                               
$15,000  exemption such  that it  isn't available  in communities                                                               
with  a  per  person  bonded indebtedness  that  exceeds  $15,000                                                               
multiplied by the number of residents in the municipality.                                                                      
                                                                                                                                
SENATOR  THERRIAULT moved  on to  the  second part  of the  bill,                                                               
which deals  with the  allowance for  an additional  property tax                                                               
exemption.  This  new section to the statutes  would allow $5,000                                                               
per  person   for  volunteer  emergency  medical   service  (EMS)                                                               
employees and  fire fighters.   There would  be a maximum  of two                                                               
[of these  allowances] per household.   Therefore, a  husband and                                                               
wife  team who  are both  part of  the local  volunteer ambulance                                                               
crew would be  able to receive $5,000 per person,  up to $10,000,                                                               
on  top  of  the  aforementioned   $15,000  exemption.    Senator                                                               
Therriault highlighted  that in the Fairbanks  North Star Borough                                                               
and  most of  his district,  the only  fire service  available is                                                               
through volunteer  stations.   He noted that  over the  years the                                                               
out-of-pocket  training expense  required of  the volunteers  has                                                               
increased.  Limiting language was  added on the Senate floor such                                                               
that in order for an  individual to receive the additional $5,000                                                               
per person, the  individual would have to  meet certain standards                                                               
that  are specified  for EMS  staff  and fire  fighters under  AS                                                               
18.08.082  and  the  Department of  Public  Safety  respectively.                                                               
This provision  could be utilized  by passage of an  ordinance by                                                               
the local assembly.                                                                                                             
                                                                                                                                
Number 0451                                                                                                                     
                                                                                                                                
CO-CHAIR MEYER recalled  that the committee heard HB  6, which is                                                               
similar to  SB 4, a  few weeks ago.   He  cited one of  the major                                                               
differences between  the bills as  the $40,000 exemption in  HB 6                                                               
versus the  $15,000 exemption  in SB  4.  He  asked if  there are                                                               
other differences.                                                                                                              
                                                                                                                                
SENATOR  THERRIAULT  explained  that  originally he  had  a  much                                                               
higher   amount  for   the  general   residential  property   tax                                                               
exemption.   However, the fiscal  note showed a  potential impact                                                               
to the  state treasury in  the amount of  approximately $750,000,                                                               
which was a concern in the  Senate.  Although the number that was                                                               
acceptable for  the Senate was  less than he wanted,  the $15,000                                                               
is an increase of 50 percent over the current exemption.                                                                        
                                                                                                                                
Number 0568                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS  inquired  as  to  which  communities  were                                                               
excluded with the $15,000 multiplied  by the number of residents.                                                               
Why was that included, she asked.                                                                                               
                                                                                                                                
SENATOR THERRIAULT  answered that  the only community  that would                                                               
be  excluded is  the  North  Slope Borough.    He explained  that                                                               
Senator Donley  was concerned  that with  a further  exemption on                                                               
residential property, there would be  a slight revenue loss.  The                                                               
community would probably make up  that revenue loss by increasing                                                               
the  overall  millage   rate,  which  applies  to   oil  and  gas                                                               
properties.   Even a small  increase in the overall  millage rate                                                               
on the North Slope Borough, when  it's applied to all oil and gas                                                               
properties, is a  tremendous amount of revenue  that would accrue                                                               
to  the  borough  rather  than   the  state  treasury.    Senator                                                               
Therriault  mentioned that  currently there  is an  argument that                                                               
the  North  Slope  Borough  is   misapplying  the  current  state                                                               
statutes with regard to the  amount of property tax it generates.                                                               
This is a way in which to exempt the North Slope Borough.                                                                       
                                                                                                                                
REPRESENTATIVE GUESS asked if any  other borough, such as Valdez,                                                               
is in the aforementioned situation with oil and gas property.                                                                   
                                                                                                                                
SENATOR  THERRIAULT acknowledged  that Valdez,  Fairbanks, and  a                                                               
future  borough  in the  Delta  Junction  area have  [a  similar]                                                               
dynamic  [with  oil and  gas  property].   However,  the  overall                                                               
millage  rate is  kept  under control  because  if [the  borough]                                                               
wants to charge the oil and  gas companies, it also has to charge                                                               
the  residential  property  taxpayers   the  same  amount.    The                                                               
mechanism  [in  CSSB  4(RLS)  am]  allows  [boroughs]  to  charge                                                               
general residential property taxpayers a  lower amount.  He noted                                                               
that  in Fairbanks  and Valdez  there are  other businesses  that                                                               
would feel  an increase if  the overall property tax  was raised,                                                               
which also helps keep things "in check."                                                                                        
                                                                                                                                
Number 0776                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI  turned to the  exemption for the  fire and                                                               
EMS  [volunteers].   Representative  Scalzi  recalled  that HB  6                                                               
passed from  this committee with  a $20,000 [exemption]  for fire                                                               
and EMS volunteers.  He  asked if Senator Therriault would object                                                               
to this committee  amending the fire and  EMS volunteer exemption                                                               
to $10,000.                                                                                                                     
                                                                                                                                
SENATOR THERRIAULT related that  the problem would be concurrence                                                               
from the  Senate if the  overall amounts are  increased, although                                                               
he noted  he would like  to see  it higher as  well.  He  said he                                                               
would  be willing  to split  the  difference and  offer a  $7,500                                                               
exemption for fire and EMS volunteers.                                                                                          
                                                                                                                                
REPRESENTATIVE SCALZI said he would  support getting this through                                                               
and thus would help work on getting this passed in the Senate.                                                                  
                                                                                                                                
SENATOR THERRIAULT  remarked that once  this statute is  in place                                                               
it would seem  that there would be the potential  to increase the                                                               
exemption once it becomes clear how  the communities use it.  Too                                                               
high of  an increase would endanger  the passage of the  bill, he                                                               
predicted.                                                                                                                      
                                                                                                                                
CO-CHAIR MEYER  recalled that  this general  residential property                                                               
tax  exemption hasn't  been adjusted  since 1974.   He  suggested                                                               
that perhaps these exemptions should be reviewed more often.                                                                    
                                                                                                                                
SENATOR THERRIAULT informed the  committee that Anchorage doesn't                                                               
use  the existing  $10,000 exemption.   He  reiterated that  this                                                               
will be a local option.                                                                                                         
                                                                                                                                
REPRESENTATIVE GUESS  asked how the  fiscal note would  change if                                                               
the North Slope Borough is included.                                                                                            
                                                                                                                                
Number 1000                                                                                                                     
                                                                                                                                
DAN  DICKINSON, Director,  Tax Division,  Department of  Revenue,                                                               
testified via  teleconference.  He  estimated that  including the                                                               
North Slope  Borough would increase  the fiscal note  by $20,000,                                                               
which he characterized as a fairly small increase.                                                                              
                                                                                                                                
REPRESENTATIVE MURKOWSKI  turned to Section  2 of the bill.   She                                                               
recalled  that under  HB 6  there were  no requirements  that the                                                               
fire fighters  or EMS volunteers  had to meet.   The municipality                                                               
was left  to determine whether  these individuals  should qualify                                                               
for the exemption.   She inquired as to how  many individuals may                                                               
qualify or avail themselves of this exemption under SB 4.                                                                       
                                                                                                                                
MR.  DICKINSON answered  that while  there will  be some  effect,                                                               
it's so small  that it's on the border of  the division's ability                                                               
to  estimate it.   In  other words,  he estimated  that it  would                                                               
merely  have the  effect of  several hundreds  of dollars  on the                                                               
state revenues.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GUESS expressed concern  when there is legislation                                                               
that  decides to  include or  exclude certain  communities.   She                                                               
questioned whether the exclusion should be there.                                                                               
                                                                                                                                
CO-CHAIR MEYER  remarked that the  North Slope Borough  is unique                                                               
in regard to the amount of oil  and gas production it has and the                                                               
few people in the area.                                                                                                         
                                                                                                                                
Number 1248                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SCALZI  commented  that   $20,000  seems  like  a                                                               
minimal impact,  although he wasn't  sure that's how he  read it.                                                               
Representative Scalzi noted  his concern with the  second part of                                                               
the  bill.    Therefore,  he proposed  an  amendment  that  would                                                               
increase  the  tax  exemption  for EMS  and  fire  volunteers  to                                                               
$10,000.     Representative   Scalzi  moved   the  aforementioned                                                               
amendment [Amendment 1].                                                                                                        
                                                                                                                                
CO-CHAIR MEYER objected for the purposes of discussion.                                                                         
                                                                                                                                
REPRESENTATIVE  MURKOWSKI said  she didn't  have any  hardship in                                                               
[adopting] the aforementioned amendment.                                                                                        
                                                                                                                                
REPRESENTATIVE SCALZI  clarified that  under HB 6,  the volunteer                                                               
exemption was up to $20,000 per household.                                                                                      
                                                                                                                                
Number 1435                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO pointed  out that the discussion  [on HB 6]                                                               
involved qualifying the primary resident.                                                                                       
                                                                                                                                
CO-CHAIR MEYER withdrew his objection.                                                                                          
                                                                                                                                
CO-CHAIR MORGAN  related his belief that  [House] Finance amended                                                               
HB 6 such that the volunteer exemption was decreased to $10,000.                                                                
                                                                                                                                
CO-CHAIR  MEYER   announced  that   there  being   no  objection,                                                               
[Amendment 1] was adopted.                                                                                                      
                                                                                                                                
Number 1518                                                                                                                     
                                                                                                                                
WILDA  RODMAN,   Staff  to   Senator  Therriault,   Alaska  State                                                               
Legislature, requested  clarification as  to whether  the $10,000                                                               
volunteer exemption was per residence or resident.                                                                              
                                                                                                                                
REPRESENTATIVE GUESS specified that it would be per resident.                                                                   
                                                                                                                                
REPRESENTATIVE  SCALZI clarified  that Amendment  1 would  merely                                                               
change the $5,000 on page 2,  line 10, to $10,000, and everything                                                               
else would stay the same.                                                                                                       
                                                                                                                                
Number 1558                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS moved the following amendment, Amendment 2:                                                                
                                                                                                                                
     Page 1, line 13 - page 2, line 2                                                                                           
          Delete "in a municipality with a level of total                                                                   
     bonded  indebtedness  that  equals or  exceeds  $15,000                                                                
     multiplied   by  the   number  of   residents  in   the                                                                
     municipality."                                                                                                         
                                                                                                                                
REPRESENTATIVE GUESS  said that although she  recognized the need                                                               
to be  careful with the  North Slope Borough, she  also expressed                                                               
the need to be careful when excluding communities.                                                                              
                                                                                                                                
CO-CHAIR MEYER objected for purposes of discussion.                                                                             
                                                                                                                                
MS. RODMAN  pointed out  that Amendment 2  would require  a title                                                               
change.                                                                                                                         
                                                                                                                                
CO-CHAIR MEYER remarked  that [Amendment 2] may be  going into an                                                               
area that may be too complicated for him to explain.                                                                            
                                                                                                                                
REPRESENTATIVE SCALZI  said that he wasn't  very comfortable with                                                               
it either because he didn't understand it well.                                                                                 
                                                                                                                                
MR. DICKINSON  explained that  Kenai includes  approximately $600                                                               
million worth of  oil and gas property with a  total valuation of                                                               
about  $3.5 billion.   Although  it's  a significant  percentage,                                                               
it's no  comparison for the  North Slope Borough which  has $10.2                                                               
billion in  oil and gas  property and  about $200 million  in non                                                               
oil  and gas  property.   The  North  Slope Borough's  percentage                                                               
amounts to  well over 95  percent.  Mr. Dickinson  explained that                                                               
there are  so few residences  on the  North Slope that  are taxed                                                               
that if  there were an  increased exemption, the mill  rate would                                                               
only increase a tiny amount and thus the effect is fairly small.                                                                
                                                                                                                                
The committee took an at-ease from 8:39 a.m. to 8:41 a.m.                                                                       
                                                                                                                                
MS. RODMAN  said that changing  the amount of the  exemption will                                                               
be a  hard sale in  the Senate,  especially because of  the title                                                               
change that would be required.   Therefore, she said she believes                                                               
the sponsor would argue against Amendment 2.                                                                                    
                                                                                                                                
Number 1857                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  announced  that   he  is  supportive  [of                                                               
Amendment  2].     However,  the   bill  will  have   changed  so                                                               
dramatically  that  he  would suggest  that  the  committee  gain                                                               
access to  more information  before the bill  moves forward.   He                                                               
expressed concern that  this bill will allow a "back  door" to be                                                               
left unlocked.   Therefore, he  recommended that Amendment  2 not                                                               
be adopted  and the bill be  put aside until more  information is                                                               
gathered.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  SCALZI indicated  agreement  with  regard to  not                                                               
supporting the  amendment at this  time, but he said  he believes                                                               
the  bill  could   be  forwarded  from  this   committee  with  a                                                               
recommendation to the next committee.   He pointed out that there                                                               
will  be opportunities  in the  next committee  of referral,  the                                                               
House  floor,  and possibly  a  conference  committee to  address                                                               
this.                                                                                                                           
                                                                                                                                
Number 1990                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  related  her   belief  that  when  the                                                               
committee  reported  HB  6  from  committee,  it  made  a  strong                                                               
statement  of support  with regard  to this  issue.   The amounts                                                               
[for  the exemption]  were substantially  higher in  HB 6.   With                                                               
regard  to the  levels for  fire and  EMS volunteers,  the levels                                                               
were twice as  high.  Furthermore, HB 6 didn't  use language that                                                               
singled out one part of the  state.  Although she understood that                                                               
attempting to mirror HB 6 in  SB 4 would create difficulty in the                                                               
Senate,  she said  she  wasn't comfortable  sending  this to  the                                                               
floor  with the  North Slope  Borough exclusion.   Representative                                                               
Murkowski identified  the options  as holding the  bill, changing                                                               
it  to mirror  HB 6,  or moving  it as  is and  trust that  other                                                               
committees  will deal  with it.    She noted  her curiosity  with                                                               
regard to how House Finance dealt with HB 6.                                                                                    
                                                                                                                                
CO-CHAIR MEYER agreed  that he, too, is more  comfortable with HB                                                               
6.  However, SB 4 seems to have the most momentum.                                                                              
                                                                                                                                
Number 2153                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KERTTULA remarked  that the  committee should  do                                                               
what it thinks is right now.                                                                                                    
                                                                                                                                
CO-CHAIR MEYER reminded the committee  that before it is a motion                                                               
to adopt Amendment 2.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GUESS  clarified  that before  the  committee  is                                                               
Amendment  2 with  the necessary  title  change.   Representative                                                               
Guess announced that she wouldn't  mind withdrawing her amendment                                                               
if the  bill is going  to be held.   However,  if the plan  is to                                                               
move this bill from committee  today, then she would maintain her                                                               
motion to adopt Amendment 2.                                                                                                    
                                                                                                                                
CO-CHAIR MEYER said that he wouldn't  mind holding the bill for a                                                               
day, if the committee could meet tomorrow.                                                                                      
                                                                                                                                
REPRESENTATIVE  KERTTULA, in  response to  Representative Halcro,                                                               
informed the committee that HB 6 is in House Finance.                                                                           
                                                                                                                                
The committee took an at-ease from 9:49 a.m. to 9:53 a.m.                                                                       
                                                                                                                                
Number 2253                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS withdrew Amendment 2.                                                                                      
                                                                                                                                
REPRESENTATIVE  HALCRO suggested  that  representatives from  the                                                               
Department   of  Community   &  Economic   Development  and   the                                                               
Department of Law attend the next meeting.                                                                                      
                                                                                                                                
CO-CHAIR MEYER announced  that SB 4 would be held  until the next                                                               
meeting, Thursday, May 9, 2002.                                                                                                 
                                                                                                                                
SB 181- SMALL COMMUNITY/TEACHER HOUSING LOANS                                                                                 
                                                                                                                                
CO-CHAIR MORGAN announced  that the next order  of business would                                                               
be CS  FOR SENATE BILL NO.  181(FIN) am, "An Act  relating to and                                                               
increasing the  interest rate  on that  portion of  a loan  for a                                                               
single-family  house   or  owner-occupied  duplex   that  exceeds                                                               
$200,000  where the  loan is  for a  house or  duplex in  a small                                                               
community  with  a  population  of  6,500 or  less  that  is  not                                                               
connected by  road or rail to  Anchorage or Fairbanks, or  with a                                                               
population of 1,600 or less that  is connected by road or rail to                                                               
Anchorage  or  Fairbanks  for purposes  of  the  small  community                                                               
housing  program  of  the  Alaska  Housing  Finance  Corporation;                                                               
relating to loans for teacher housing  in which each unit that is                                                               
not  vacant  is  occupied  by  at least  one  individual  who  is                                                               
employed  as a  certificated teacher  in a  public elementary  or                                                               
secondary school in a small  community with a population of 6,500                                                               
or less  that is not  connected by road  or rail to  Anchorage or                                                               
Fairbanks,  or  with  a  population  of 1,600  or  less  that  is                                                               
connected  by  road  or  rail  to  Anchorage  or  Fairbanks,  and                                                               
increasing  the interest  rate  on the  loans  if this  occupancy                                                               
requirement is not complied with;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
Number 2286                                                                                                                     
                                                                                                                                
PHILIP  CUTLER,  Staff to  Senator  Dave  Donley, Senate  Finance                                                               
Committee, Alaska  State Legislature, testified on  behalf of the                                                               
sponsor  of   SB  181,  the   Senate  Finance  Committee.     The                                                               
legislation  was  introduced  due  to a  legislative  audit  that                                                               
concluded  the  [housing  assistance loan  fund  (HALF)]  program                                                               
wasn't necessary  because other commercial loan  programs provide                                                               
the necessary  financing for rural  resident housing.   This year                                                               
the bill  has been through  at least  15 versions.   He explained                                                               
that one program  provides a 1 percent reduction  in the interest                                                               
rates  for  those in  small  communities,  and there  wasn't  any                                                               
income  restriction.   Therefore, the  state, through  the Alaska                                                               
Housing Finance Corporation (AHFC),  was subsidizing the interest                                                               
for a couple of $400,000 loans.   This subsidization amounts to a                                                               
$100,000 to AHFC  and the state's profit statements.   There were                                                               
also about  a dozen loans that  were over $300,000.   Many people                                                               
questioned  why the  state would  be subsidizing  loans for  that                                                               
amount of money.                                                                                                                
                                                                                                                                
MR. CUTLER informed the committee  that the bill includes Senator                                                               
Hoffman's request  to subsidize  loans for housing  for teachers.                                                               
This is an incentive to draw  teachers to the Bush where they are                                                               
direly  needed.   The  bill does  not  allow [subsidization]  for                                                               
multi-family housing  or non  owner-occupied housing,  except for                                                               
teachers.   Mr. Cutler  related Senator  Donley's and  the Senate                                                               
Finance  Committee's   belief  that   it  isn't   appropriate  to                                                               
subsidize an investment.  Therefore, someone constructing multi-                                                                
family  units should  be able  to pay  the market  rates for  the                                                               
mortgage.  Also,  the maximum amount of the loan  was adjusted to                                                               
a  $200,000 maximum  on  the  Senate floor.    According to  real                                                               
estate [professionals]  in the  legislature, a  family qualifying                                                               
for  a $200,000  loan  would  have a  monthly  income of  $5,000-                                                               
$6,000.   Therefore, it was  felt that those earning  that amount                                                               
didn't need to be subsidized by the state.                                                                                      
                                                                                                                                
Number 2519                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  noted  that   she  liked  the  teacher                                                               
provision.   She posed a  situation in which a  certified teacher                                                               
who  is  teaching receives  the  loan  but takes  retirement  the                                                               
following year.   She inquired as  to how such a  situation would                                                               
work.                                                                                                                           
                                                                                                                                
MR. CUTLER  explained that as  the bill is currently  written the                                                               
loan would be available to the  homeowner as a teacher as well as                                                               
to  the  community/investor  to  build  a home  so  long  as  the                                                               
resident  is  a certified  teacher.    If  the resident  isn't  a                                                               
certified teacher, the loan rate reverts  to the market rate.  In                                                               
further response  to Representative Murkowski, he  confirmed that                                                               
the [loan rate] would be  retroactive.  Mr. Cutler clarified that                                                               
for a 15  year loan, the teacher  would have to be  a teacher for                                                               
the life of the loan.                                                                                                           
                                                                                                                                
REPRESENTATIVE  MURKOWSKI surmised  then that  for a  teacher who                                                               
receives  one of  these loans  and decides  to retire  before the                                                               
loan is paid off, the entire amount would have to be paid back.                                                                 
                                                                                                                                
MR. CUTLER replied yes, under the current bill.                                                                                 
                                                                                                                                
Number 2633                                                                                                                     
                                                                                                                                
CO-CHAIR MORGAN  informed the committee  that he has  a committee                                                               
substitute (CS) that addresses that.                                                                                            
                                                                                                                                
REPRESENTATIVE MURKOWSKI  turned to  the anticipated  shortage of                                                               
administrators.  She, after hearing  from the sponsors, that high                                                               
school principals would be covered under this bill.                                                                             
                                                                                                                                
MR. CUTLER, in response to  Representative Scalzi, explained that                                                               
the subsidy is 1 percent of the market rate.                                                                                    
                                                                                                                                
REPRESENTATIVE  SCALZI  commented  that this  seems  inconsistent                                                               
with the Senate's  view with SB 4, which excludes  one borough in                                                               
that SB 181 doesn't exclude small villages.                                                                                     
                                                                                                                                
MR. CUTLER pointed out that  there had been some high-value loans                                                               
to  persons making  over $100,000  a year.   It  is difficult  to                                                               
justify  subsidizing loans  to people  making the  aforementioned                                                               
income, especially  when some  of the  loans were  for investment                                                               
property.  He  clarified that now the loan  program is restricted                                                               
to residents, save  multi-family homes for teachers.   In further                                                               
response to Representative Scalzi,  Mr. Cutler confirmed that the                                                               
current  statute applies  to single-family  dwellings as  well as                                                               
investment properties.                                                                                                          
                                                                                                                                
Number 2772                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS commented  that one can purchase  a house as                                                               
a first time homebuyer and  although the homebuyer's income could                                                               
change, the homebuyer  would still [benefit] from  the first time                                                               
homebuyer.  Representative Guess related  her desire to see other                                                               
professionals  in the  school system  included  as are  certified                                                               
teachers.     She   noted  the   difficulties  recruiting   other                                                               
professionals in  the school system  such as  speech pathologists                                                               
and counselors.                                                                                                                 
                                                                                                                                
MR.  CUTLER  specified that  that  portion  of  the bill  was  an                                                               
amendment submitted by Senator Hoffman.                                                                                         
                                                                                                                                
REPRESENTATIVE  HALCRO pointed  out  that  the sponsor  statement                                                               
says that  74 percent of the  loans made during this  period were                                                               
to borrowers where home construction  costs were less than in the                                                               
Anchorage  area.    He  inquired   as  to  the  location  of  the                                                               
construction.                                                                                                                   
                                                                                                                                
MR. CUTLER  answered that these  [borrowers] were  throughout the                                                               
Interior.  He said that the  basic difference is the value of the                                                               
land.  Sometimes  the low cost of the land  more than offsets the                                                               
increased  cost of  bringing in  the materials  and building  the                                                               
house.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  HALCRO  asked,  "Is this  just  Senate  Finance's                                                               
feeling that these people in rural Alaska are building homes?"                                                                  
                                                                                                                                
MR.  CUTLER recalled  that  it's part  of  the legislative  audit                                                               
report.    In  further  response to  Representative  Halcro,  Mr.                                                               
Cutler specified  that the AHFC  dividend was about  $103 million                                                               
last year.                                                                                                                      
                                                                                                                                
Number 2928                                                                                                                     
                                                                                                                                
CO-CHAIR MEYER  inquired as  to what  $200,000 would  purchase in                                                               
rural Alaska.                                                                                                                   
                                                                                                                                
TAPE 02-25, SIDE B                                                                                                              
                                                                                                                                
MR. CUTLER mentioned  the multiple listing service  and noted the                                                               
he didn't  know how many homes  in rural Alaska would  go through                                                               
the multiple  listing service.   He  informed the  committee that                                                               
for  the  third quarter  of  2001  the  average  cost of  a  home                                                               
statewide was $187,000.                                                                                                         
                                                                                                                                
CO-CHAIR  MEYER  suggested  that nurses,  paramedics,  EMTs,  and                                                               
Village Public  Safety Officers  (VPSO) are  also in  shortage in                                                               
rural Alaska and those groups seem to be missing from this.                                                                     
                                                                                                                                
Number 2850                                                                                                                     
                                                                                                                                
BILL LAWRENCE,  Staff to  Representative Morgan,  House Community                                                               
and   Regional   Affairs   Standing   Committee,   Alaska   State                                                               
Legislature, informed the  committee that on page 2,  line 29, of                                                               
HCS CSSB 181  the words "entire original" were  replaced with the                                                           
words "remaining  balance".  He  noted that this  language change                                                           
is  related   to  Representative  Murkowski's   earlier  comments                                                               
[regarding the retroactivity of CSSB 181(FIN)am].                                                                               
                                                                                                                                
Number 2775                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA moved to adopt  HCS CSSB 181, Version 22-                                                               
LS0488\V, Cook, 5/6/02, as the  working document.  There being no                                                               
objection, Version V was before the committee.                                                                                  
                                                                                                                                
Number 2745                                                                                                                     
                                                                                                                                
JOHN   BITNEY,  Legislative   Liaison,  Alaska   Housing  Finance                                                               
Corporation, Department of Revenue,  began by thanking Mr. Cutler                                                               
for his  work on this  bill.   Mr. Bitney informed  the committee                                                               
that the  rural program  began in  1980 and  was moved  under the                                                               
purview  of AHFC  in 1992.   The  loan program  is funded  from a                                                               
revolving fund known as HALF.   During the merger [in 1992], AHFC                                                               
purchased HALF  from the  state for about  $190 million  in cash.                                                               
Since 1992  AHFC has run HALF.   Mr. Bitney pointed  out that the                                                               
qualifications for  loans under the  program are set  in statute,                                                               
which  is unlike  any other  AHFC  program.   Normally, all  loan                                                               
programs are driven by cost of  funds; for [AHFC's] ability to go                                                               
out into the  capital markets and issue bonds that  are backed by                                                               
the  mortgages that  AHFC makes  from those  bond proceeds.   The                                                               
interest rate  is set at 1  percent below the taxable  bond rate,                                                               
which he  referred to  not as  a subsidy but  as a  lost earnings                                                               
potential.  However,  there are other interest  rates besides the                                                               
tax-exempt  interest  rate  such   as  the  rate  for  first-time                                                               
homebuyers.   The  first-time homebuyer's  program  is driven  by                                                               
income limits  of the borrower and  the price of the  home.  Most                                                               
of those  funds [are used]  in Anchorage and  Southcentral Alaska                                                               
where  cost construction  and homes  fit  within the  acquisition                                                               
limits of that  tax-exempt program.  Mr. Bitney  said that having                                                               
a 1 percent discounted loan  program wasn't necessarily unfair in                                                               
terms  of  opportunities for  people  across  the state  to  have                                                               
access to buying a home.   The only other limitation on the rural                                                               
program  is  related to  people  living  within a  defined  small                                                               
community.   Statute  defines a  defined small  community as  one                                                               
with a population of less than  1,600 on the road system and less                                                               
than  6,500 off  the road  system.   Therefore, the  districts of                                                               
Representative Scalzi and  Morgan would qualify.   He pointed out                                                               
that the vast  majority of the loans under this  program occur in                                                               
the areas of Ketchikan, Kodiak, and the Kenai Peninsula.                                                                        
                                                                                                                                
Number 2528                                                                                                                     
                                                                                                                                
MR.  BITNEY  highlighted  that  the bill  specifies  that  the  1                                                               
percent discount only  applies up to the  first $200,000 purchase                                                               
price of the  home.  The portion of the  loan above $200,000 will                                                               
pay that 1  percent extra.  Therefore, loans  above $200,000 will                                                               
have  a  blended rate  loan.    Mr.  Bitney explained  that  when                                                               
Senator  Donley  originally wished  to  repeal  the program,  the                                                               
concern was that  without the 1 percent discount  AHFC would lose                                                               
business  to  other  major  secondary   purchasers.    Since  the                                                               
legislative audit was released, AHFC's  stance has been that AHFC                                                               
has  become a  business entity  that the  state relies  on for  a                                                               
dividend every year.  For  example, this revolving fund generated                                                               
$20 million in net income to AHFC  in fiscal year 2001.  That $20                                                               
million is  a substantial portion  of the funds that  AHFC relies                                                               
upon to make available to the state each year.                                                                                  
                                                                                                                                
MR.  BITNEY  turned  to  the  discussion  regarding  whether  the                                                               
$200,000  limitation  is  appropriate  and  said  it's  a  guess.                                                               
However, when looking  at things in terms of a  blended rate, the                                                               
price of  a home  has to  increase before  crossing the  line and                                                               
becoming   competitive   with   other   secondary   [purchasers].                                                               
Therefore, AHFC  continues to  feel that it  will continue  to be                                                               
competitive.  Over  the last 17 quarters of  activity, 12 percent                                                               
volume  was in  excess of  $200,000.   Mr. Bitney  related AHFC's                                                               
belief that  it will  earn a  bit more  in terms  of the  rise in                                                               
interest  rates.    However,  all  things  aren't  equal  because                                                               
raising the  rates could result in  the borrower losing a  bit in                                                               
terms of their qualifications.                                                                                                  
                                                                                                                                
Number 2380                                                                                                                     
                                                                                                                                
MR.  BITNEY  directed  attention  to the  teacher  provision  and                                                               
informed  the  committee that  it's  a  rewrite of  the  nonowner                                                               
occupied portion.   Mr. Bitney  explained that under  the regular                                                               
program for the 1 percent discount,  one can borrow for a single-                                                               
family  or  duplex.    However,   if  the  property  isn't  owner                                                               
occupied,  then  a  multi-family  loan,  which  receives  a  half                                                               
percent discount,  can be used.   Section 2 of the  bill rewrites                                                               
the  nonowner  occupied  portion  such  that  units  have  to  be                                                               
occupied  by   a  certified  teacher.     The   language  doesn't                                                               
necessarily speak to  who the borrower is.  If  the person living                                                               
in the  unit isn't  a certified teacher,  [Version V]  would have                                                               
the interest  rate increase by 1  percent up to the  full taxable                                                               
rate  for  the  remaining  portion  versus  returning  that  full                                                               
taxable rate  to the date  of origin of  the loan, which  was the                                                               
case under  CSSB 181(FIN)am.   Under CSSB 181(FIN)am,  Mr. Bitney                                                               
said he  wasn't sure  anyone would  take out a  loan with  such a                                                               
potential penalty over the life of a 15-30 year note.                                                                           
                                                                                                                                
Number 2266                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO pointed out that  the bill has an immediate                                                               
effective date and  inquired as to what happens  with those folks                                                               
in the loan approval process.                                                                                                   
                                                                                                                                
MR. BITNEY  explained that a  borrower obtains a  commitment from                                                               
AHFC  at  some  point  during the  application.    Therefore,  he                                                               
related his belief that AHFC's intent  would apply to the date of                                                               
commitment versus  the effective  date of the  bill.   In further                                                               
response  to Representative  Halcro,  Mr.  Bitney clarified  that                                                               
from 1998 to  the first quarter of 2002 were  loans that exceeded                                                               
$200,000 amounted to 12 percent by volume.                                                                                      
                                                                                                                                
Number 2190                                                                                                                     
                                                                                                                                
MR. BITNEY,  in response to Representative  Guess, specified that                                                               
the definition of  small community is in  the definitions Section                                                               
of AS  18.56.600.  In  further response to  Representative Guess,                                                               
Mr. Bitney read the provision  relating to teachers as allowing a                                                               
teacher  to  purchase a  home  with  this [discount]  or  someone                                                               
[other than  a teacher]  could build  a multi-unit  dwelling [and                                                               
house teachers].                                                                                                                
                                                                                                                                
REPRESENTATIVE GUESS inquired  as to why this bill  is limited to                                                               
small  communities.   She  likened  this  [provision relating  to                                                               
teachers]  to Representative  Rokeberg's  bill  that attempts  to                                                               
help recruit  and retain teachers  by giving a break  on [buying]                                                               
homes.  Therefore, she questioned  whether this "break" should be                                                               
given to  all teachers  in the  state rather  than just  those in                                                               
small communities.                                                                                                              
                                                                                                                                
MR.  CUTTER remarked  that Representative  Rokeberg's  bill is  a                                                               
fine  bill,  save its  lack  of  a  funding  source.   This  bill                                                               
provides a way to fund those loans.                                                                                             
                                                                                                                                
MR. BITNEY interjected  that the loans are from  a revolving fund                                                               
and thus  there is a limited  pool of funds available  since it's                                                               
not tied  to a bonded  program like all other  mortgage programs.                                                               
The  funds  aren't available  to  handle  expanding this  program                                                               
statewide.  That is also  the issue with adding other professions                                                               
to the program.                                                                                                                 
                                                                                                                                
REPRESENTATIVE GUESS  asked if Mr.  Bitney reviewed  [the entire]                                                               
community of educators.   That is, was there  review of narrowing                                                               
the scope to  only provide this [discount] to  places where there                                                               
is a shortage of teachers or  areas in education where there is a                                                               
shortage,  she  asked.   Therefore,  an  elementary in  Anchorage                                                               
wouldn't [qualify  for the discount] while  the special education                                                               
teacher would due to the shortage in that area of education.                                                                    
                                                                                                                                
MR. BITNEY  replied no and  noted that the teacher  issue arrived                                                               
fairly late.  He mentioned that  AHFC is working on another piece                                                               
of  legislation  with Representative  Rokeberg.    He echoed  Mr.                                                               
Cutler's  indications that  AHFC  hasn't identified  a source  of                                                               
funds  for [Representative  Rokeberg's bill]  such that  AHFC can                                                               
lower the rate lower than what other programs already offer.                                                                    
                                                                                                                                
Number 1938                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KERTTULA  inquired as  to  how  the loss  of  the                                                               
nonowner program impacted AHFC.                                                                                                 
                                                                                                                                
MR.  BITNEY answered  that from  [1998  to the  first quarter  of                                                               
2002] the loan volume for  the nonowner program amounted to about                                                               
3 percent.   Because it is multi-family, it may  increase in some                                                               
years due  to the [development]  of one project.   Therefore, the                                                               
hope would  be to offset  that 3 percent  loss with some  gain in                                                               
the teacher activity.   Mr. Bitney said that the  increase in the                                                               
interest rate  on the  single family home  with the  blended rate                                                               
should balance the situation.  Still, this is a best guess.                                                                     
                                                                                                                                
REPRESENTATIVE  KERTTULA  inquired  as  to  the  number  of  loan                                                               
programs that have a professional preference.                                                                                   
                                                                                                                                
MR.  BITNEY said  that in  working  on Representative  Rokeberg's                                                               
bill, he reviewed what other states  do.  The teacher shortage is                                                               
a national shortage.   He found down  payment assistance programs                                                               
[for teachers] and foreclosed properties  that are made available                                                               
to  teachers and  police.    Currently, he  wasn't  aware of  any                                                               
programs in Alaska that [target] professionals.                                                                                 
                                                                                                                                
Number 1710                                                                                                                     
                                                                                                                                
MR. BITNEY, in response to  Representative Halcro, explained that                                                               
the delinquency rate on the  rural program is generally below the                                                               
urban  [delinquency   rate].     He  recalled  that   the  [rural                                                               
delinquency] rate averaged less than 3 percent.                                                                                 
                                                                                                                                
REPRESENTATIVE HALCRO  surmised then  that the  existing business                                                               
practices  clearly illustrate  that  when  AHFC makes  exceptions                                                               
they  are  good  credit  risks  and  contribute  $20  million  in                                                               
revenue.                                                                                                                        
                                                                                                                                
MR. BITNEY agreed.                                                                                                              
                                                                                                                                
Number 1636                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI  related his  understanding that  this bill                                                               
merely  eliminates  the 1  percent  discount  on any  loans  over                                                               
$200,000.                                                                                                                       
                                                                                                                                
MR.  BITNEY  agreed,  and  clarified that  for  loans  above  the                                                               
$200,000  that  amount  above $200,000  wouldn't  receive  the  1                                                               
percent discount.  In further  response to Representative Scalzi,                                                               
the $200,000 cap doesn't apply to a teacher.                                                                                    
                                                                                                                                
REPRESENTATIVE  SCALZI   commented  that  the  loan   program  is                                                               
supported in [the Homer] area and  the Kodiak area.  He noted his                                                               
support  of the  program, although  he mentioned  that he  wasn't                                                               
sure  that the  $200,000  [cap] is  appropriate.   Representative                                                               
Scalzi turned to the fist-time  homebuyer program and related his                                                               
belief  that if  a first-time  homebuyer's income  increases, the                                                               
interest rate would rise.                                                                                                       
                                                                                                                                
MR. BITNEY replied no.                                                                                                          
                                                                                                                                
CO-CHAIR MORGAN announced that public testimony would be closed.                                                                
                                                                                                                                
Number 1545                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO moved to report HCS CSSB 181, Version 22-                                                                 
LS0488\V,  Cook,   5/6/02,  out  of  committee   with  individual                                                               
recommendations and the accompanying fiscal note.                                                                               
                                                                                                                                
REPRESENTATIVE KERTTULA objected.   She said that  she didn't she                                                               
a reason to  do this.  She  related that she likes  the 1 percent                                                               
discount, but didn't like the $200,000 cap.                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO recalled  testimony from  Mr. Bitney  that                                                               
this bill  is part of sound  business practices.  "I  say that we                                                               
should not look  ... a $103 million  gift horse in the  mouth.  I                                                               
think this  is far over-reaching  and I don't support  the bill,"                                                               
he said.                                                                                                                        
                                                                                                                                
CO-CHAIR  MEYER  expressed  the  need to  hear  from  the  people                                                               
affected, Co-Chair Morgan and Representative Scalzi.                                                                            
                                                                                                                                
Number 1463                                                                                                                     
                                                                                                                                
CO-CHAIR MORGAN  related his  belief that the  $200,000 cap  is a                                                               
little low.   He noted  that he was  disturbed to hear  that it's                                                               
cheaper to build a house off  the road system in Bush Alaska when                                                               
he   also  hears   that   it's  too   expensive   to  build   the                                                               
infrastructure necessary in these same areas.                                                                                   
                                                                                                                                
A  roll call  vote was  taken.   Representative  Meyer voted  for                                                               
reporting Version  V from  committee.   Representatives Kerttula,                                                               
Halcro,  Scalzi,  Guess,  and   Morgan  voted  against  reporting                                                               
Version  V from  committee.   Therefore, Version  V failed  to be                                                               
reported out of the House Community and Regional Affairs                                                                        
Standing Committee by a vote of 1-5.                                                                                            
                                                                                                                                
REPRESENTATIVE SCALZI noted that he would like to hear SB 181 at                                                                
the next meeting, after speaking with the realtors in his area.                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Community and Regional Affairs Standing Committee meeting was                                                                   
adjourned at 9:40 a.m.                                                                                                          
                                                                                                                                

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