Legislature(2009 - 2010)HOUSE FINANCE 519
02/18/2009 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Housing Finance Corporation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 18, 2009
1:35 p.m.
1:35:18 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:35 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas, Jr., Vice-Chair
Representative Allan Austerman
Representative Harry Crawford
Representative Anna Fairclough
Representative Richard Foster
Representative Les Gara
Representative Reggie Joule
Representative Woodie Salmon
MEMBERS ABSENT
Representative Mike Hawker, Co-Chair
Representative Mike Kelly
ALSO PRESENT
Dan Fauske, CEO/Executive Director, Alaska Housing Finance
Corporation, Department of Revenue; Joe Dubler, Director of
Finance, Alaska Housing Finance Corporation; Bryan Butcher,
Legislative Liaison, Alaska Housing Finance Corporation;
Paul Kapansky, Director, Mortgage Operations, Alaska Housing
Finance Corporation; Robert L. Brean, Director, Research &
Rural Development, Alaska Housing Finance Corporation; John
Anderson, Weatherization Officer, Research and Rural
Development.
PRESENT VIA TELECONFERENCE
None.
SUMMARY
^Presentation: Alaska Housing Finance Corporation
1:35:30 PM
Co-Chair Stoltze requested information about the history of
the Alaska Housing Finance Corporation (AHFC).
1:36:31 PM
DAN FAUSKE, CEO/EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, introduced his team.
1:36:58 PM
Mr. Fauske related the genesis of the Alaska Housing Finance
Corporation. The Corporation was created in the 1970's. In
the early 1990's programs from the Division of Community and
Regional Affairs (DCRA) and Public Housing were merged into
AHFC. The primary business of the corporation, aside from
public housing, is to be a mortgage company. He stated that
the department buys bonds from the banks. Profits are used,
in part, to support low income and public housing projects.
1:38:04 PM
Mr. Fauske continued to list AHFC programs. Alaska has the
highest per-capita population of veterans in the country and
is one of five states that issues guaranteed veterans'
bonds. Co-Chair Stoltze referred to a 1982 constitutional
amendment that established veterans' bonds.
Mr. Fauske continued that AHFC has been successful in its
attempt to raise low-cost capital and to create sustainable
programs. He cited a recent slowing down of the AHFA market.
He spoke of President Obama's speech and the reference to
housing finance agencies as a sign that the market would
pick up. He was encouraged by recent conversations with the
new secretary of the U. S. Department of Housing and Urban
Development (HUD).
1:39:55 PM
Mr. Fauske recalled that in 1995 five bills were introduced
to the Senate Finance Committee in order to eliminate the
AHFC. At that time Senator Halford provided an opportunity
for Mr. Fauske, as the new AHFC CEO, to speak to the
committee in support of the corporation. As a result AHFC
was placed under the Executive Budget Act.
Mr. Fauske thought that legislation defining the percentage
of AHFCs net income that would be dedicated to help support
state finances, had been beneficial to both parties. The
biggest concern was with Wall Street rating agencies. AHFC
earns a spread on borrowed funds through business
activities. Concerns about creating obstacles for investors
have been unsubstantiated. Mr. Fauske felt that AHFC has
established a good working relationship with the
administration.
1:41:28 PM
Mr. Fauske highlighted another concern he referred to as the
"piercing of the corporate veil". He emphasized that the
debt of AHFC is not a debt of the state. The fear was that
in the event of a downturn or financial collapse, investors
would attempt to tie losses back to the state. A separate
legal status has been maintained so as to not burden the
state with unintended consequences.
Co-Chair Stoltze asked if AHFC has been impeded by the
Executive Budget Act. He requested information about the
status of AHFC today.
Mr. Fauske clarified that there were those who thought AHFC
would be impeded by the Executive Budget Act, but that did
not happen. He stated that AHFC has grown and that the net
assets are at the same level as they were in 1995 even with
a significant number of transfers to the state.
Mr. Fauske remarked that he could foresee a situation where
more money may need to remain in the corporation in order to
maintain the net asset base-retained earnings. He maintained
that considering today's financial situation, more scrutiny
and a more open dialogue with the public would be
beneficial. He pointed out that AHFC is a state-owned
corporation.
1:44:25 PM
Co-Chair Stoltze wondered if the corporation would pay
dividends sometime in the future. He understood that in the
past, most corporations did not issue dividends. He
expressed appreciation that discussions with AHFC were
always straightforward and that the corporation conducted
its business with and transparency and accountability.
1:47:01 PM
Mr. Fauske observed that on a national level, AHFC has been
used as an example for other states as to how housing agency
operations should be run. Co-Chair Stoltze opined that
transparency in accounting was a good model for different
agencies throughout the country. Mr. Fauske agreed. He
recalled his experience as treasurer with the North Slope
Borough. He felt that the experience had prepared him for
his current position.
1:49:24 PM
Mr. Fauske began with the Power Point presentation titled
"Alaska Housing Market 2009" (Copy on File). He referred to
Slide 2, "Alaska's Housing Market" which states:
· Interest rates are historically low.
· Prices are stable.
· New construction:
ƒExtremely low.
ƒContractors are busy with remodeling.
Mr. Fauske continued to Slide 3, "What Happened Outside?":
· Collapse of housing market.
ƒEconomy - Loss of jobs.
ƒExcessive speculation:
· Buying.
· Construction.
ƒSubprime mortgages.
ƒDepreciating home values.
1:50:43 PM
Mr.Fauske felt that the federal government should have acted
sooner in helping the failing housing market and that the
current housing debacle was compounded by a lack of
oversight.
Representative Austerman wondered if effects from the recent
federal loan of $75 billion to the mortgage industry would
be seen within the state.
JOE DUBLER, DIRECTOR OF FINANCE, ALASKA HOUSING FINANCE
CORPORATION, answered that there are three key components to
The Homeowner Affordability and Stability Plan proposed by
President Obama, the second of which is the $75 billion
homeowner's stability initiative. The initiative is to help
homeowners keep their homes and is still only a proposal and
is not part of the American Recovery and Reinvestment Act.
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, added that the $75 billion are remaining
Troubled Assets Relief Program (TARP) dollars that have
already been appropriated by Congress. President Obama will
decide where those funds are spent.
Mr. Fauske stated that recently a tightening of lines of
credit by local banks has been observed by the corporation.
He added that this has been seen nationally as well.
1:53:23 PM
Mr. Fauske continued to Slide 4, "The Good News Is…":
· Alaska is different form the lower 48:
ƒAdjustable Rate Mortgages (ARMs) were a very
small proportion of total market.
ƒSmall lending community that did not
participate in riskier loan products.
ƒAHFC did not participate in them.
ƒMinimal speculative development or buying.
ƒContinued moderate growth in economy
expected.
Mr. Fauske continued to Slide 5 titled, "Delinquencies-Are
rd
we in trouble? 3 Quarter 2008":
· Mortgage Bankers Association survey- 6.99 percent
nationally:
ƒIn Alaska our rate was 2.66 percent- the
lowest in the nation.
ƒAHFC delinquencies- 2.29 percent.
· Alaska's delinquency rate reached 5.9 percent in 2000
and 2001.
Representative Joule asked if the 5.9 percent in 2000 and
2001 was due to the dramatic drop in oil prices. Mr. Butcher
replied that it was not.
1:55:12 PM
Representative Gara expressed hope that Alaska is learning
from the housing crisis in the lower 48. He pointed out that
Alaskan's have yet to see the unemployment rates of the
lower 48. He felt that the loss of jobs in the lower 48 had
directly contributed to people losing their homes.
1:56:57 PM
Mr. Fauske answered that Alaska is not immune from what is
happening in the lower 48. He stressed that the bad economy
and loss of jobs in the lower 48 was compounded by bad
lending practices. Alaska has been fortunate to not have had
these out of control lending practices.
Mr. Butcher added that the three main reasons for the
housing situation in the lower 48 were loss of jobs,
speculative buying and selling practices, and irresponsible
lending practices. The situation was made worse by people
trying to purchase homes by any means possible with the
expectation that home values would continue to rise. Mr.
Fauske mentioned that some of the loans that compounded the
problem have been referred to as Ninja Loans which means, no
income, no job, no assets. This means that loans were
granted to people without scrutiny as to whether the loans
could be paid back. He felt this accurately summed up what
happened in the lower 48.
1:59:31 PM
Mr. Fauske spoke more on the housing situation in the lower
48. He felt that the biggest problem Alaskans face at this
time is the amount of time it takes to refinance a home
loan. He pointed out that at least some of those loans are
being refinanced.
2:01:14 PM
Mr. Fauske informed that the mortgage business in the state
has evaporated.
rd
Mr. Fauske presented Slide 6, "Foreclosures: 3 Quarter
2008":
th
· Alaska ranks 47 in foreclosures at 1.64 percent.
· Nearly one-third the national average of 5.17 percent.
Co-Chair Stoltze wondered which states ranked higher on the
list. Mr. Butcher replied that North Dakota, South Dakota
and Wyoming vie with the state for top billing from quarter
to quarter.
2:03:29 PM
Mr. Fauske continued to Slide 7, "Market is cooling":
· 2008 end-of-year numbers of homes for sale in Anchorage
much lower than "90s.
· From 1999 to 2005, market hot for sellers.
· Now more moderate pace.
Mr. Fauske read form Slide 8, "Average Sales Price as of
December 2008":
· Anchorage- $326,000 (stable).
· Mat-Su- $221,000 (stable).
· Fairbanks*- $213,000 (up 1 percent).
· Kenai- $197,000 (up 2 percent).
· Kodiak- $260,000 (up 10 percent).
*as of September 2008.
Mr. Fauske described Slide 9 which is a graph "Average Sales
Price Reported by Lenders". The graph charts a steady trend
of housing prices remaining stable within the state.
2:05:14 PM
Mr. Fauske continued to Slide 10, "Statewide Housing Market-
2008":
Sales Activity:
· Anchorage- down 10 percent.
· Mat-Su- down 20 percent.
· Fairbanks (as of 09/2008)- down 13 percent.
· Kenai- down 17 percent.
· Kodiak- down .05 percent.
Mr. Fauske discussed Slide 11, "Annual Residential Sales
Activity." This graph reflects a 25 percent decline from
2001 to 2008. He felt that the numbers were not dramatic. He
reported that currently it is not a buyer or a sellers
market.
Vice-Chair Thomas understood that the Alaska Housing
Standards did not exist 30 years ago. He questioned whether
a 30 year-old home would qualify under the current
standards.
Mr. Fauske answered that the corporation is bound by statute
that any mortgage that AHFC purchases must meet the energy
standards adopted in the Building Energy Efficiency Standard
(BEES). He pointed out that those standards are not adhered
to on a national level. He noted that this has presented
some problems. Mr. Butcher interjected that homes built
before 1991, when the standards were adopted, are not
subject to BEES.
Representative Salmon wondered about the future of rural
communities. Mr. Fauske answered the rural lending programs
portfolio is filled with unconventional loans. He pointed
out that this is because the areas where the homes are
located are not the status quo. Some areas are very remote
and lack access to items like fire hydrants, which can cause
issues when attempting to qualify for insurance. He noted
that the real estate market in rural Alaska is less
traditional, but it is stable.
PAUL KAPANSKY, DIRECTOR, MORTGAGE OPERATIONS, ALASKA HOUSING
FINANCE CORPORATION, added that historically the delinquency
ratio in the rural portfolio has always been lower than in
urban areas.
2:11:02 PM
Representative Salmon expressed concern with the lack of
rural area representation in the presentation. Mr. Butcher
countered that it was difficult to get information from
smaller communities. He stressed that gathering information
form some of the larger communities had been a challenge. He
furthered that there is not an entity that compiles the
whole housing economy of the entire state. He maintained
that AHFC comprises only 25 percent of the housing market
which limits the available information.
Representative Salmon thought that given the amount of time
AHFC has been in existence, the corporation should have
developed a method of gathering information in rural areas.
He argued that state allocated funds for home weatherization
had not reached rural areas. He stressed that not everyone
lives under the housing authority. He pointed out that
perhaps the funds had gone for funding energy raters but
that there are no energy raters in the rural areas.
2:13:16 PM
Co-Chair Stoltze spoke of his frustrations with Department
of Environmental Conservation programs that people in his
district do not qualify for. This means that some areas of
his district have failed septic systems and no water. He
continued that frustrations with some state programs are
felt across the state in rural and in urban areas.
2:13:58 PM
Mr. Fauske asserted that the corporation had not
intentionally excluded any rural areas. He informed that
committee that a strong effort had been made to get to
districts to gather information. He stressed that every
district in the state received money for the weatherization
program. He hoped next year would be more successful.
2:15:00 PM
Representative Salmon contended that rural issues were not
addressed enough across the board. Representative Foster
suggested discussing more specific rural issues at another
venue.
2:16:14 PM
Representative Gara understood that there had been a problem
with rural communities accessing raters. He asked what
accommodations were being made for small communities who had
a harder time finding raters. Mr. Fauske told of a roving
raters program. He informed that raters are still being
trained in order to accommodate the entire state.
2:18:13 PM
Mr. Fauske continued with Slide 12, "Number of Homes for
Sale-Anchorage" which represents a decline of home sales
from 1995 to 2009. He did not think that the numbers were
alarming. Slide 13, "Average Market Days- Statewide Through
December 2008":
· Anchorage: 64-72, up 13 percent.
· Mat-Su: 79-92, up 16 percent.
· Fairbanks*: 50-74, up 48 percent.
· Kenai: 103-116, up 13 percent.
· Kodiak: 68-85, up 25 percent.
*as of September 2008.
Mr. Fauske discussed Slide 14, "How long does it take to
sell?" which charts the average time a home is on the market
in Anchorage. The average for 2008 was 79 days. Slide 15,
"Annual Residential Building Permit Activity" shows that the
building of single family homes in Anchorage has dropped
from 924 in 2001 to 225 in 2008. Again, Mr. Fauske did not
believe the numbers to be alarming.
2:19:27 PM
Mr. Fauske shared Slide 16, "Number of Permits By Area". The
chart represents Juneau and Fairbanks and shows that numbers
are declining. Slide 17, "Apartment Vacancies for February
2009":
· Anchorage- 5.0 percent.
· Juneau- 4.7 percent.
· Fairbanks- 21.2.
· Wasilla/Palmer- 2.1 percent.
· Kenai/Soldotna- 8.6 percent.
Mr. Fauske continued to Slide 18 which is a more detailed
chart of apartment vacancies in Anchorage, Juneau,
Fairbanks, Palmer/Wasilla, and Kenai/Soldotna.
Representative Foster thought that the high cost of heating
vacant apartments would raise rents of full apartments. Mr.
Fauske agreed. Mr. Kapansky added that the national vacancy
rent is at 10 percent. Mr. Fauske explained that the purpose
of the slide was to examine the rental markets and not the
cost of heating.
2:21:35 PM
Mr. Fauske continued with Slides 19 - 24 which are a series
of graphs that examine interest rates and are copyrighted by
Mortgage X Mortgage Information Service. Mr. Fauske
explained that interest rates have been declining over the
last 30 years.
2:23:01 PM AT EASE
2:24:36 PM RECONVENED
Mr. Dubler explained the information on Slide 23. The red
line represents a 30 year municipal market data (MMD), which
gives an indication as to what the interest rates would be
where a municipal entity to enter the current bond market.
The grey line represents a benchmark of 30 years of U.S.
Treasury (UST) bill trading. The blue line represents the
London Interbank Offer Rate (LIBOR). The lines remain steady
until September 2008 when the market dropped. At that time,
as indicated on the chart, the UST and LIBOR drop and MMD
rates rise. This produced a gap between AHFC mortgage rates
and conventional market mortgage rates.
2:26:24 PM
Mr. Dubler stated that this has been the cause of low
mortgage activity in the state. He continued to Slide 24,
"AHFC Tax-Exempt 30-year vs. Conventional 30-year". The red
line on the graph represents the Freddie Mac 30 year fixed
conventional rate and charts its dramatic drop in January
2009. He explained that the federal government intends to
alleviate the housing crisis by allowing Freddie Mac and
Fannie Mae to offer lower interest rates. As a result the
mortgage rate in Alaska has risen. In January the AHFC
received $60 million in pre-paid loans and more pre-payments
are expected.
2:27:46 PM
Mr. Dubler spoke of Obama's plan to increase Fanny Mae and
Freddie Mac loan purchases. He expects the federal interest
rates will remain low. He shared that a representative from
the state housing authority had met with the Federal Housing
Finance Agency in early December 2008. The benefits of the
meeting will be seen in the Obama Administration's support
of state housing finance agencies.
Vice-Chair Thomas wondered if a Freddie Mack loan under the
new federal interest rates, could be used to pay off an AHFC
loan. He pointed out that using a lender other that AHFC
could be less expensive for the Alaska homeowner. Mr. Dubler
relayed that it would depend on how long the homeowner
planned to stay in the home.
Mr. Butcher clarified that eventually it is a possibility
that homeowners doing business with AHFC could refinance
with other lenders.
2:30:14 PM
Mr. Fauske continued to slide 25. This slide states what 250
mortgage experts predict will happen within the next 30 to
90 days. The slide is supposed to provide comic relief in a
tough situation. The "Mortgage Rate Trend Survey Predictions
as of 02/09/2009" are:
Over the next 30 days:
Rates will rise significantly: 0.0 percent.
Rates will rise slightly: 17.9 percent.
Rates will remain unchanged: 14.3 percent.
Rates will decline slightly: 64.3 percent.
Rates will decline significantly: 3.6 percent.
Over the next 90 days:
Rates will rise significantly: 0.0 percent.
Rates will rise slightly: 17.9 percent.
Rates will remain unchanged: 25.0 percent.
Rates will decline slightly: 42.9 percent.
Rates will decline significantly: 14.3 percent.
Mr. Fauske hoped that an economic boost from the federal
stimulus package would help to revive consumer confidence.
2:31:24 PM
Mr. Fauske continued to Slide 26, "Low Interest Rates- What
has changed?" which states:
· Eligible borrowers have diminished 30-40 percent.
-Loan investors and mortgage insurance companies
tightened credit standards.
ƒHigher down payment required.
ƒHigher Fair Isaac Corporation(FICO)score
required.
ƒJumbo loan financing limited.
ƒNo more exotic loans.
-No income; no jobs; no assets; interest
rate teaser; payment option (interest-
only, half-interest, ect., payments).
· FHA
ƒIncreased fees.
ƒNo seller-financed down payment assistance.
· People do not qualify to refinance.
ƒDecrease in property values.
ƒShould not have gotten the loan in the first
place and do not qualify.
Representative Fairclough wondered if AHFC offered reverse
mortgages. Mr. Fauske replied no.
Mr. Fauske communicated that in certain areas of the country
where the housing market crashed most significantly, the
monthly mortgage payments have remained the same even as the
worth of the home has plummeted. Homes have decreased in
market value, but monthly mortgage payments remain high.
Representative Foster thought that it had been too easy for
people to qualify for exotic loans.
2:35:09 PM
Mr. Butcher agreed. He stated that AHFC had not participated
in exotic loans. He cited California as an example where
exotic loans had been generously distributed. Essentially,
applicants had been approved for home loans they really
could not afford with adjustable mortgage rates that gambled
on the housing market not only remaining stable, but
thriving. Mr. Kapansky added that some, desperate enough to
own a home, misrepresented assets and employment income in
order to dupe loan agents who were less than thorough in
verifying the facts. Currently, not only can recipients of
those exotic loans not make their rising mortgage payments,
but the market value of their homes are worth less than the
balance owed on the original home loan.
Mr. Fauske stated that when the mortgages were pulled, the
major firms had billions in their portfolio invested in
market backed securities, which now had no back-up. Alaska
home ownership is about 70%. He felt that the current
economic problems in the United States began in the housing
industry and stressed that the housing loan problem needs to
be stabilized in order to experience economic improvement.
Co-Chair Stoltze wondered if in the major housing markets
could devise a chart that would break down the cost of
owning a home, both the monthly mortgage payment and the
overall cost of the home, in a way that would explain where
each dollar is being spent.
2:40:45 PM
Co-Chair Stoltze hoped a breakdown of costs and was it
possible. Mr. Fauske replied that many factors make up the
equation in determining affordability for potential
homeowners.
Co-Chair Stoltze suggested two charts, one charting mortgage
payments and another for the overall cost of the home. Mr.
Fauske replied that similar charts are currently used in
classes for new homeowners.
2:42:51 PM
Co-Chair Stoltze worried that barriers for potential
homeowners were inadvertently being created.
2:43:50 PM
Mr. Kapansky attempted to clarify the question raised by Co-
Chair Stoltze. He stated that the mortgage components for
homeowner ship are the principal interest, taxes and
insurance, and the cost of mortgage insurance. The costs for
a newly constructed home are more complicated and involve
the cost of government regulation, land, materials, and
labor. Co-Chair Stoltze understood the costs to be
complicated. He thought that it would be beneficial to the
general public to have a table that, in a simple format,
charts the flow of costs.
2:45:14 PM
Mr. Fauske stated that affordable housing is a difficult
issue. He cited Juneau as an example. He thought that
affordable housing in Juneau was growing less and less
possible given the cost of land. He pointed out that most of
the land is owned by the city. He felt that the Juneau
housing market had recently improved slightly.
2:47:17 PM
Mr. Fauske continued to Slide 28, "The Demand for Housing
Isn't Likely to Subside." State demographers forecast
population growth in the state which would likely increase
the demand for housing. The senior population is the fastest
growing population of homeowners in the state. This includes
seniors already residing in Alaska and new residents.
Mr. Fauske discussed Slide 29, "Alaska Affordability Index,"
which shows that it takes 1.62 wage earners per household to
afford a home based on median sales costs. Maintaining a
single income home is only possible if the single income is
high.
2:48:57 PM
Mr. Fauske discussed Slide 30, "The AHFCs Loan Volume":
· FY2007: 2,808 loans, $565.7 million.
· FY2008: 2,012 loans, $493.5 million.
· Projected through FY 2009: 1,500 loans, $368 million
(down 25 percent).
Mr. Fauske reported that one of the areas of debate is where
the cash from pre-pays is invested while interest earnings
are down. The corporation has been discussing the situation
with local banks. Many of the larger builders throughout the
state have had access to capital severely restricted.
Mr. Fauske turned to Slide 31, "Construction Spending 2009
Forecast":
· Total spending: $7.1 billion, down 3 percent.
· Private-sector spending: $4.3 billion, down 12 percent.
· Public-sector spending: $2.7 billion, up 16 percent.
2:50:52 PM
Mr. Fauske continued to Slide 32, "How Did Alaska Compare?":
· Nationwide: Median home values fell for ninth straight
quarter, 15.3 percent for the year.
· Anchorage: Median home values up 3 percent.
· Nationwide: Existing home sales down 3.5 percent.
· Western States: Existing home sales down 31.6 percent.
· Alaska: Existing home sales down 9 percent.
Mr. Fauske maintained that the downturn in home sales in the
state is no reason for alarm.
Co-Chair Stoltze asked if sales were down because people
could not sell homes for their asking price, or if homes
were not selling even at lowered prices. Mr. Fauske
responded that there has been a slowdown in all home sales.
2:52:17 PM
Vice-Chair Thomas asked if home sales were tracked as the
values rise and fall. Mr. Kapansky answered that AHFC does
not track the listing price compared to the actual sales
price. He shared that the data is available. Vice-Chair
Thomas felt that people might complain if they cannot get
the price they want for their home. Mr. Fauske interjected
that there is generally a difference between the assessed
value and the appraised value of a home.
2:53:44 PM
Representative Austerman asked how the increased population
of seniors is affecting the corporation. Mr. Fauske replied
that the corporation is currently focusing more on assisted
living homes, seniors living in public housing, and the need
for affordable housing.
2:55:06 PM
Mr. Butcher added that more money has been requested from
the legislature for senior housing because of increasing
senior population; a $2 million program four or five years
ago is now $5 million, and the request for FY10 will be $7.5
million.
2:56:18 PM
Mr. Fauske called upon Robert Brean, Director, Research and
Rural Development, Alaska Housing Finance Corporation, and
John Anderson, Weatherization Officer, Research and Rural
Development, to assist in discussing the department's
energy-efficiency programs.
Representative Fairclough declared a conflict of interest.
She stated that she has been on a wait list for six months
to have her home rated for the program. She worried that her
line of questioning might sound personal. Mr. Fauske shared
that he was on the same list. Representative Fairclough
hoped that the corporation would provide a way for residents
to determine their status on the wait list.
Representative Foster stated for the record that he felt
Representative Fairclough's conflict of interest should not
exempt her from voting on possible legislation concerning
any aspects of the energy-efficiency programs.
Representative Gara reported that he has been on the list
for six months.
Mr. Fauske held that the list is greatly improved. A firm is
helping people track through a toll-free number on the
website. Mr. Butcher informed the committee that the
telephone number was 1-877-AKREBATE [1-877-257-3228], and
the website is akrebate.com. The person requesting the
information can put in their phone number, and their number
on the wait list will appear. The number zero indicates that
the person's name and phone number have been dispatched to a
rater, and the person could expect to be called within two
weeks to set up an appointment. Any Alaskan can watch their
progression up the list using the system. Mr. Fauske added
that the entire database was at hand and at the committee's
disposal.
Representative Fairclough pointed out difficulties for
residents with multiple phone numbers. Mr. Fauske replied
that the technology exists to assist with those challenges.
3:00:16 PM
Representative Austerman told of his conversation with a
rater who claimed that applications were no longer being
accepted. Mr. Fauske contended that the rater he spoke to
was mistaken.
Mr. Butcher spoke of past issues involving raters, including
raters who charged very high rates. He emphasized that the
centralized list takes the power out of the raters' control.
3:01:30 PM
Representative Fairclough asked if rates for raters are
standardized. Mr. Butcher replied that the rate is $500
total, $325 for the pre-rating and $175 for the post-rating.
The challenge has been pricing for larger homes. Alaskans
have been informed that they can report rates if they seem
excessively high. This has reduced rates.
Representative Fairclough asked if there is a complaint
section for people who feel they are being taken advantage
of.
ROBERT L. BREAN, DIRECTOR, RESEARCH & RURAL DEVELOPMENT,
ALASKA HOUSING FINANCE CORPORATION, answered that phone
calls are fielded each day regarding the question. He
reported the history of raters; early on, some charged more
because of availability. As a result, AHFC centralized the
rater list. Consumers asked if the price quoted was fair.
The corporation told consumers what the reimbursement would
be as well the spread for rates so consumers could shop
around.
3:05:04 PM
Representative Fairclough asked if raters are certified by
AHFC. Mr. Brean answered that the raters are trained and
certified by AHFC based on the training. Raters are required
to do five field audits with a master auditor double-
checking their work before they are certified.
Representative Fairclough wondered how many energy raters
are in the state and queried access to energy raters in
rural areas. Mr. Brean answered that there are currently
approximately 100 raters, and 20 in training. He revealed
that AHFC had anticipated that the affluent communities
would benefit from the rater program earlier than the rural
communities, and responded by implementing a roving rater
program. Raters are sent to rural areas at AHFC expense
through the program. He told of a rater sent to McGrath as
an example of fair and equitable access to the program.
Representative Fairclough wondered if energy ratings were
being done on state-owned facilities to make sure they are
energy efficient. Mr. Brean responded that all aspects of
energy use are being examined. The central focus currently
is on residential, but there has been a great deal of
discussion about the broader community. Mr. Fauske added
that the corporation would be working with all possible
parties involved, including the Denali Commission and the
Alaska Energy Authority (AEA). He noted discussions
regarding larger buildings, especially state-own facilities.
3:09:36 PM
Representative Foster spoke of a rater that visited his home
in 1988. He shared a personal story of the benefits of the
program.
3:10:45 PM
Representative Fairclough referred to work regarding long-
term solutions to reduce the carbon footprint in
communities. She thought the first approach was
weatherization.
Representative Gara asked if there was a periodic energy
audit for state facilities. Mr. Fauske responded that AHFC
does not do those audits. Mr. Butcher added that the
corporation is restricted by statute to private residences.
3:12:28 PM
Representative Gara referred to money available for
renewable energy upgrades and weatherization in the economic
stimulus package. He queried the issue of adopting a
statewide energy code for new construction. Mr. Brean
described a component of the stimulus bill called the Energy
Efficiency and Conservation Block Grant program, which
refers to the building code issue. Weatherization is a
separate line item in the stimulus bill. He thought the
state would receive about $18 million through the
weatherization program. The building code issue is more
relative to the grant program operated and run out of the
office of the Secretary of Energy. Of the grants, part goes
to municipalities, part to tribal entities; about 28% of the
fund is available to Alaska. He referred to discussion about
whether there had to be an existing code in place in order
to qualify for the money. He reported that Senator
Murkowski's office was advocating for Alaska.
3:13:54 PM
Co-Chair Stoltze pointed to research being done on the
stimulus package and how the money will benefit Alaska. He
hoped the committee could pool their findings in order to
collectively benefit from the information.
Representative Gara assumed that most energy raters live in
urban Alaska. He wanted to know if energy raters were being
sent to all rural communities as a matter of course, or if
communities needed to request raters.
3:16:31 PM
Mr. Butcher pointed out that the centralized waiting list
enabled people to immediately see exactly where raters are.
There are 20 raters in Fairbanks who have worked through
their waiting list and are available immediately for rural
communities. He stated that the funding is there to send
roving raters to rural communities.
Representative Gara asked what was required to have a rater
sent to a community.
3:18:05 PM
Mr. Brean clarified the difference between the
weatherization program and energy rebates. Weatherization is
an income-qualified program for which 90 to 95 percent of
rural occupants qualify. The number for the rebate program
will be small in rural Alaska. The two programs are set up
together so that no one slips through the cracks. Any
individual that does not qualify for the weatherization
program is immediate moved to the rebate program. He felt
most rebates would go to urban areas. In McGrath, for
example, although a dozen homes qualified for the rebate
program, between 80 and 90 qualified for the weatherization
program. Weatherization contractors are also trained to do
assessments, which are similar to home energy ratings. The
contractors guide home owners to the program most suitable
to the assessment.
3:20:14 PM
Mr. Fauske added that the needs assessment identified and
prioritized villages based on their standing against other
villages in similar districts. He emphasized the quality of
information and the method used.
3:21:03 PM
Mr. Fauske continued to Slide 33, Energy Programs:
· $200 million for weatherization.
· $100 million for rebates.
· $60 million addition for rebates (September 2008).
· Big training components for both programs.
Mr. Fauske explained that 600 homes were weatherized. This
year the number will triple to 1,800; year 2 will be 4,000;
and year 3 will be 7,500. Statewide weatherization providers
and housing authorities continue to ramp-up.
3:22:05 PM
Mr. Fauske presented Slide 35 "Home Energy Rebate Program
Ratings Processed":
• Estimate: More than 8,000 ratings performed by raters.
• 6,212 ratings processed.
• Approximately $58.9 million committed.
• 150 - 200 applications received per day.
• More than 200 inquiries per day.
• 349 Post-Improvement rebates paid average: $5,941.
• 162 New 5 Star Plus rebates paid totaling $1.2 million.
Mr. Fauske recognized the number on the waiting lists, but
stressed that progress is being made. He stressed the fine
line between too many raters and not enough. He assured
members that they would work to reduce the list.
3:23:12 PM
Mr. Brean stressed consumer awareness. There is a 30 to 35
percent return on investment. Consumers are able to see
where their resources should be put in order to maximize
their investments.
3:24:34 PM
Mr. Fauske referred to a report AHFC compiled for the Energy
Committee. A sample of 200 homes found 12,500 pounds of
reduced CO2 emissions per home, per year with an average
utility savings of $1,353. The life and quality of homes
have been improved. Consumers know that the money will not
run out before they are rated.
Representative Fairclough referred to the testing facility
in Fairbanks. She questioned if the general consumer had
access to the findings at the testing facility. She pointed
out that factors for weatherization are very different
throughout the state.
3:27:14 PM
Mr. Brean commented that there are 5 different regions to
take into account when discussing the weatherization issue.
Heating degree days, climate type, cost of fuel and cost of
construction are taken into account. A study by Information
Insights and Cold Climate Housing Research Center
recommended that the energy conservation measures that AHFC
is doing through weatherization and energy rebate programs
are the first, foremost, and quickest return on Alaska's
investment. Alternative energy and other capital investments
for power generation are long term issues to be addressed.
3:28:28 PM
Mr. Butcher projected that no additional funds would be
requested in FY10 for weatherization and energy rebate. He
estimated the federal stimulus package would provide
assistance to the state of Alaska: $18 million for
weatherization assistance program; $28 million for state
energy program, which would come through AHFC; $3.3 million
for the public housing the capital fund; $4.3 million in
home funding administered in partnership with non-profits
and community based organization; $1.9 million for homeless
prevention; and $8 thousand tax credit for first time home
buyers.
3:31:00 PM
Representative Gara noted that there is a long waiting list
for section 8, low income housing subsidies. Mr. Butcher
stated that the program is supported 100 percent by federal
funds. He gave that the need for housing outweighed the
vouchers available across the country.
3:33:47 PM
Mr. Fauske added that the federal government has ceased
production of new low income housing units but increased
subsidies to landlords. He declared that new units need to
be built within the state in order to accommodate the
growing need for section 8 housing. The waiting list is
currently at 5,000. He elaborated on the increasing
difficulties of building low income housing. He declared
that it takes a lot of financing to make things work and
that tax credits are non existent.
Co-Chair Stoltze compared the low income housing issue to
building schools in rural areas.
3:36:25 PM
Representative Gara remarked that if funding was not
increased for low income housing, the waiting list will
remain at 5,000 indeterminately.
Mr. Fauske maintained that the corporation was dedicated to
working toward a solution to the problem.
3:37:08 PM
Representative Foster expressed his appreciation for the
testifiers.
ADJOURNMENT
The meeting was adjourned at 3:39 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AHF-022_Housing_Trends_'09.ppt |
HFIN 2/18/2009 1:30:00 PM |
|
| AHF058 Weatherization-HomeEnergy.ppt |
HFIN 2/18/2009 1:30:00 PM |