Legislature(1999 - 2000)
04/22/1999 09:07 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 22, 1999
9:07 AM
TAPES
SFC-99 # 104, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:07 AM.
PRESENT
Senator John Torgerson, Senator Sean Parnell, Senator Randy
Phillips, Senator Dave Donley, Senator Loren Leman, Senator
Gary Wilken and Senator Al Adams.
Also Attending:
SENATOR MIKE MILLER; SENATOR JERRY MACKIE; ALISON ALGEE,
Deputy Commissioner, Department of Administration; GINNY
FAY, Legislative Liaison, Office of the Commissioner,
Department of Commerce and Economic Development; CATHERINE
REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development; ELMER
LINDSTROM, Special Assistant, Office of the Commissioner,
Department of Health and Social Services; DAN FAUSKY,
CEO/Executive Director, Alaska Housing Finance Corporation,
Department of Revenue; JOHN BITTNEY, Legislative Liaison,
Alaska Housing Finance Corporation, Department of Revenue;
NANCY SLAGLE; Director, Division of Administrative
Services, Department of Transportation and Public
Utilities; TOM BRIGHAM, Director, Division of Statewide
Planning, Department of Transportation and Public
Facilities; DAVE MILLER, Federal Highway Administration.
Attending via Teleconference: From Anchorage: DWIGHT
BECKER, Program Coordinator, Adult Protective Services,
Division of Senior Services, Department of Administration;
BRUCE KOVARIK, Executive Director, Association of Alaska
Housing Authorities; SUE BENEDETTE, Vice President, First
National Bank of Anchorage and Co-Chair, Alaska Mortgage
Bankers Association; ROBIN WARD; From Dillingham: DAVE
MCCLURE, Executive Director, Bristol Bay Housing Authority,
and Board Member, AHFC; From Homer: ANNE WHITNEY,
President-elect, Katchemak Board of Realtors; ANGIE NEWBY,
President, Katchemak Board of Realtors; From Kodiak: BOB
BRODIE; BONNIE AULABAUGH, Broker, Chelsea Realty; ED
MAHONEY, President, Kodiak Building Industry Association
From Valdez: NANCY LETHCOE.
SUMMARY INFORMATION
SB 107-ABOLISH TOURISM MARKETING COUNCIL
A committee substitute and a fiscal note were adopted. The
committee heard from the sponsor, the House Finance
Committee, Department of Commerce and Economic Development
plus additional public testimony. The bill was reported
from committee.
SB 73-ASSISTED LIVING FACILITIES
The sponsor and the Department of Administration addressed
the committee. The bill was held in committee.
SB 149-TRANSPORT.PLAN/ROAD MONEY
The committee heard from the sponsor, the Department of
Transportation and Public Utilities and the Federal Highway
Administration. The bill was held in committee.
SB 150-SMALL COMMUNITY HOUSING LOANS
The committee heard from the Alaska Housing Finance
Corporation. Public testimony was taken and the bill was
held in committee.
CS FOR SENATE BILL NO. 107(L&C)
"An Act relating to tourism and tourism marketing;
eliminating the Alaska Tourism Marketing Council; and
providing for an effective date."
DARWIN PETERSON, aide to Senator John Torgerson explained
the changes made in the proposed CS before committee
members. Many of the items conformed to changes made by
the House Finance Committee to the companion bill. Some of
the changes were as follows:
Language was deleted that stated, "The tourism related
contract awarded under AS 44.33.125(b) to a qualified trade
association with the right of first refusal or subcontract
by a qualified trade association." This was conforming
changes to those made in the House version.
Language was inserted to clarify the location of a visitor
center in Tok, Alaska. Co-Chair John Torgerson said the
intent was to ensure the location of the only state-
operated visitor center.
Direction was given as to what kind of research could be
conducted in relation to tourism. This provision was not
included in the House bill.
Section 15 was amended to provide for marketing operations.
Instead of stating that the procedures were to be directed
by the department, the language gave the direction. This
also conformed to the House changes.
Language was inserted to read "or fails to accept the offer
within a reasonable time" and related to the contracting of
services. This was not contained in the House bill but was
inserted here to show the Legislature's intent to the trade
association. Co-Chair John Torgerson clarified this was to
avoid contract delay.
Clarification was given to allow the use of the state seal
and other logos. The use of mailing lists and other data
received as part of the contractual services was also
stipulated.
Conforming technical changes were made to apply to the
substantive amendments.
Senator Sean Parnell offered a motion to adopt the CS
Version "I" as a Workdraft. Senator Al Adams objected. He
wanted the sponsor to testify as to whether or not he
agreed with the changes.
SENATOR JERRY MACKIE, sponsor of the bill, stated he
supported the changes. Many of the changes were technical
and cleaned up the language.
Senator Al Adams removed his objection and Version "I" was
adopted.
GINNY FAY, Legislative Liaison, Department of Commerce and
Economic Development testified. Although she had not had an
opportunity to review the CS, she felt the changes were
fine.
Senator Al Adams asked if new fiscal notes would be
prepared. Co-Chair John Torgerson said the committee would
draft fiscal notes to reflect the changes.
Senator Jerry Mackie stated the changes wouldn't change the
fiscal notes. Co-Chair John Torgerson concurred but noted
he wanted to address the personnel services component of
the note.
Ginny Fay noted there should be an updated fiscal note. The
department had found a mistake and submitted a revised
fiscal note.
NANCY LETHCOE testified via teleconference from Valdez in
support of the bill.
The committee began addressing the fiscal notes. Co-Chair
John Torgerson noted he had requested that the department
provide a breakdown. A House Finance Committee fiscal note
would also be considered for this bill.
Senator Jerry Mackie spoke to the fiscal notes. He
supported the fiscal notes submitted to the committee with
the Senate Resources committee substitute. He spoke to the
location of staff positions, which were agreed upon with
the department. These actually showed a reduction.
Co-Chair John Torgerson said the biggest concern was with
the personnel services line.
Ginny Fay pointed out a misunderstanding in one of the
fiscal notes. The House Finance Committee fiscal note was
based on the millenium plan and was in error. She shared
the same confusion that the reductions weren't happening
more rapidly. She detailed the situation and showed how the
latest fiscal note corrected the error.
JOE BALASH, Staff to Representative Gene Therriault came to
the table at the request of the co-chair. He was asked if
the budget would be increased with the HFC fiscal note. He
clarified that numbers the previous witness referred to
were general funds only and the long-range discussion would
address that. He detailed the fiscal information. There was
discussion between Ginny Fay and Joe Balash on the matter.
Co-Chair John Torgerson understood that the project
development and the project assistance portions would not
be funded through the department. There would be fewer
positions funded. Senator Jerry Mackie affirmed. There was
discussion as the differences of the number of positions
requested in the various fiscal notes.
Senator Jerry Mackie supported the existence of the
Division of Tourism. It provided important functions.
However, he noted that if many of the functions were
removed, the same number of positions could not be
justified. He spoke to the general budget situation. He was
trying to be realistic.
Co-Chair John Torgerson asked if the personnel services
line totaled $890,400. Ginny Fay stated there would be a
reduction from 16 staff to nine.
Joe Balash countered that was not correct. There was a
$100,000 difference in the personnel services line and
$20,000 in the contract line for FY00.
Co-Chair John Torgerson was inclined to recommend the
committee adopts the HFC fiscal note. Senator Jerry Mackie
asked the department to defend their argument that they
needed to maintain the same level of staffing in light of
the intent to scale down the division. Ginny Fay responded
that the fundamental difference was that currently there
was no staff in either the ATMC or the Division of Tourism
to directly do marketing functions. It was contracted out
and overseen by staff. If the bill passed, there would not
actually be a privatization of marketing but rather a
consolidation of marketing. Staff would be reduced in both
agencies and the Division of Tourism would be required to
oversee a contracting level that was four times greater
that the present.
Co-Chair John Torgerson was not convinced.
Senator Loren Leman agreed with Co-Chair John Torgerson's
assumptions on the first year, but looked at the second
year and suggested merging the numbers of the two fiscal
notes as the amount was higher in the house fiscal note
than the division requested.
Joe Balash commented on the contractual line item saying
that the funding would be to fund initial contract
services. After the initial contracts were made, fewer
funds would be needed to oversee the contractors.
Senator Jerry Mackie said the $200,000 was for tourism
related research and had been provided for in the committee
substitute.
Senator Randy Phillips made a motion to direct the co-chair
to write a new fiscal note similar to the house version and
work out the details later. Senator Al Adams objected and
spoke to his objection. By having the co-chair draft the
new fiscal note, the remainder of the committee would not
know the amount and allocation of funds between the
personnel services and contractual services components. Co-
Chair John Torgerson said he would write the fiscal note
using the direction of the discussion held in this hearing.
Senator Loren Leman did not have a problem granting the co-
chair authority to write the fiscal note. He had concerns
with the additional spending allowed in the second year. He
didn't believe sufficient savings were presented.
The motion to create a new fiscal note adopted by a vote of
6-2-2. Senator Loren Leman and Senator Al Adams voted
against the motion. Senator Dave Donley and Senator Sean
Parnell were absent.
Senator Randy Phillips offered a motion to report CS SB 107
(FIN) out of committee with the new fiscal note. There was
no objection and it was so ordered.
[Pause]
CS FOR SENATE BILL NO. 73(HES)
"An Act relating to assisted living homes; and
providing for an effective date."
This was the second hearing for this bill.
Co-Chair John Torgerson explained proposed committee
substitute, Version "G". He commented that he supported the
bill but had concerns about the fiscal note. The CS
addressed those concerns.
Under the proposed CS, the bill would provide for a
reimbursement rate of $50 per day, up from the current $34.
This rate would apply for two years. In FY02, the rate
would increase to $75 per day, where it would remain. The
current version allowed for an additional raise to $100 per
day, which this would eliminate.
He noted an agreement with the Alaska Mental Health Trust
Authority that they would provide $600,000 per year toward
this increase.
Co-Chair John Torgerson asked Senator Mike Miller if he
opposed the drafted CS.
SENATOR MIKE MILLER qualified that he had tried to grant as
much reimbursement to the caregivers as possible. In light
of the current fiscal crisis, he believed this would be an
improvement for the caregivers and would help many assisted
living homes. He told the committee he was making other
efforts to help the assisted living facilities in ways that
would not cost the state any money.
Senator Randy Phillips moved for adoption of the CS Version
"G". There was no objection and it was so ordered.
Senator Mike Miller further commented that he felt this
legislation was a step in the right direction and that it
should not be delayed.
DWIGHT BECKER, Program Coordinator, Adult Protective
Services, Division of Senior Services, Department of
Administration, testified via teleconference from
Anchorage. He asked for clarification of when the $75
reimbursement rate actually began.
Tape: SFC - 99 #104, Side B 9:54 AM
Co-Chair John Torgerson clarified that the program would
begin in the calendar year 2001. However the fiscal year
was 2002.
ALISON ELGEE, Deputy Commissioner, Department of
Administration and ELMER LINDSTROM, Special Assistant,
Office of the Commissioner, Department of Health and Social
Services came to the table to speak to the fiscal notes.
Co-Chair John Torgerson asked why there were two fiscal
notes rather than one. Alison Elgee answered that this
program impacted the clients of the Division of Senior
Services and the clients of the Division of Mental Health
and Developmental Disabilities. The program operated under
one set of statutes and regulations although it serviced
two different client groups.
Co-Chair John Torgerson wanted to know the total general
fund expenditure. Elmer Lindstrom detailed the amounts of
both fiscal notes adjusting for the receipts from the
Alaska Mental Health Trust Authority. Senator Gary Wilken
calculated the general fund component at $1.26 million.
Co-Chair John Torgerson ordered the bill held in committee
to work on the fiscal notes.
SENATE BILL NO. 149
"An Act relating to awards of federal funds to
municipalities for road projects and to the statewide
transportation improvement program; and providing for
an effective date."
This was the first hearing for this bill.
Co-Chair John Torgerson made general remarks to the bill.
There had been discussion in committee regarding
appropriation to specific transportation projects, which
the department failed to do even after the projects passed
the entire legislative process and was approved by the
Governor. This legislation would address that. It would
also place into statute, under the Community Road Program,
how the funds would be broken down.
MARY JACKSON, staff to Senator John Torgerson came to the
table. The bill contained two things. It would put the
Statewide Transportation Program (STIP) into statute and it
would establish a new program for municipalities.
She gave a sectional analysis of the bill.
Section 1 set the STIP into statute and broke it down into
three components: the National Highway System, the
Community Transportation Program and Trails and Recreation
Access for Alaska. It established a percentage value for
all federal funds. It also set out a process for revising
the STIP to give direction to the department. It made
clear the legislative process was clear when the
Legislature took action on a STIP during the budget
process.
Subsection (b) addressed the CTP and established the
categories and percentages. The Anchorage Metropolitan Area
Transportation Study (AMATS) was identified at 30 percent.
Remote Areas was identified at ten-percent. State Highway
Systems was identified at 15 percent. Gravel Improvement
and Upgrades was identified at 15 percent as well.
Reconstruction and Transfer was identified at ten-percent.
Finally, Statewide Competitive was identified at 20
percent.
Subsection (C) gave direction to the department on how to
rank the projects with priority given to road that would be
upgraded from gravel or asphalt treatment and turned over
to a municipality for maintenance. They intent was to
reduce the cost of maintenance to the department.
Subsection (d) stipulated that if there were not sufficient
projects within a component, a transfer to other categories
was provided.
Subsection (e) gave definitions.
Section 2 provided the Gravel to Pavement was a separate
program that would sunset after four years. The 15 percent
allocation for that category would transfer to the
Statewide Competitive category. It also stipulated that
projects could not be included in this category if they
qualified for either the NHS or TRAAK programs.
Section 3 gave the definitions with reference to the Gravel
and Pavement category and would sunset in four years.
Section 4 was a new program for the award of federal funds
to municipalities. This would allow the municipalities to
come to the department with projects that qualified under
federal program eligibility standards. The municipalities
would undertake construction of the projects and provide
the matching grant requirement.
Sections 5 and 6 were the effective dates for the
components.
Mary Jackson noted that representatives were present from
the department and the National Highway System.
Co-Chair John Torgerson wanted to hear from the
representatives but did not intend to take up amendments at
this meeting.
Senator Al Adams commented that some of the projects would
be passed along to municipalities. He wanted to know if the
bill contained language that shifted liability from the
state to the municipality, once the funds were transferred.
He also commented that the percentages should not be
dictated. While he felt the remote category should be at
least 15 percent, he didn't believe the limitations should
be placed on the department.
Co-Chair John Torgerson felt those were good questions for
the department. He commented that the matter had been
discussed and the proposed percentage amounts closely
mirrored history.
Senator Al Adams noted the available funding amounts
fluctuated.
TOM BRIGHAM, Director, Division of Statewide Planning,
Department of Transportation and Public Facilities was
called to the table to respond to Senator Al Adams's
concerns about local liability. The department believed it
was never completely off the hook, according to Tom
Brigham. Language in the bill would help however.
In addressing Senator Al Adams's concerns about the ten-
percent allocated to rural projects, Tom Brigham said it
would depend on the future of sanitation roads in rural
communities. If you look at the out-years currently
projected for the program, ten-percent was not
unreasonable. However, Public Health Service and Village
Safe Water staff saw additional projects on the horizon and
felt a higher percentage would be needed.
Senator Al Adams wanted to know if language could be added
to limit the state's liability. Tom Brigham responded that
the Attorney General would be better suited to address the
matter.
Senator Gary Wilken wondered why a particular area of the
state was singled out (Anchorage) and wanted to know if
other areas such as Fairbanks should be considered for
inclusion.
Senator Gary Wilken had a question on what would happen
when the gravel to pavement provision sunset. Mary Jackson
responded that the intent was the percent allocated to that
program would be added to the statewide competitive
category.
Senator Gary Wilken wanted to know the percentage
allocation for the six categories in the past for
comparison.
Co-Chair John Torgerson said there wasn't officially an
FMATS established for Fairbanks even though there was some
money appropriated to it. However, the question was well
taken. Tom Brigham confirmed.
Senator Gary Wilken then asked what was the FMATS if it was
not an official organization. Tom Brigham said it was an
operating agreement between the Department of
Transportation and Public Utilities, the borough, the City
of Fairbanks and the City of North Pole. Once the urban
area of Fairbanks reached 50,000 people, it would then
qualify. At that point, the department would treat it in
the same manner AMATS was treated.
Senator Gary Wilken wanted to make sure the matter was
clear before the bill was moved from committee.
Senator Lyda Green asked how the Gravel to Pavement Upgrade
timeframe was established. Was the intent that all projects
would be completed in four years, or if projects after that
date would not be listed in the separate allotment? Co-
Chair John Torgerson said the target was set by the TEA21.
Mary Jackson confirmed and detailed.
DAVE MILLER, Assistant Division Administrator, Federal
Highway Administration, came before the committee to
address the municipal road project portion of the bill.
Title 23 in itself specifically allowed for states to
contract with municipalities or other governmental agencies
to conduct projects. He read the specific language into the
record.
The same provision stipulated that the state agency was not
relieved under federal law or regulation in the event it
utilized the services of another organization. In his
interpretation, that held the state responsible for
assuring compliance with federal regulation.
Senator Al Adams asked if federal law allowed an
appropriation to rural Alaska or if the funds were granted
in a lump sum to the state for disbursement. Dave Miller
answered that TEA21 provided funds to the state in a number
of general categories. Considerable flexibility was
granted to the State Of Alaska that was not normally
considered for other states. The subcategories proposed in
this bill was a practice done throughout the US and was
acceptable but not necessarily encouraged.
Dan Miller noted that his office did not have an
opportunity to assess the proposed percentages.
Co-Chair John Torgerson ordered the bill held in committee.
He told members that amendments would be distributed by the
time of the next hearing on the bill.
SENATE BILL NO. 150
"An Act relating to interest rates for small community
housing mortgage loans under the housing assistance
program of the Alaska Housing Finance Corporation."
This was the first hearing for this bill.
DAN FAUSKY, CEO/Executive Director, Alaska Housing Finance
Corporation, Department of Revenue, came to the table at
the request of Senator Al Adams. Senator Al Adams wanted to
know how much money would be made in rural Alaska using the
one-percent proposal. In looking at the rural versus urban
situation, he wondered how much money had been spent on
this program in Anchorage.
Senator Al Adams knew it was required that a portion of the
earnings of this program be spent on certain housing
programs. He asked where the proceeds of the one-percent
interest rate went. Did they really go to rural Alaska or
were they spread among communities across the state?
Dan Fauske responded that the majority of the subsidized
loans or enhancement programs went to Anchorage. That was a
condition of the population base. He listed figures showing
that.
Regarding the consideration of removing the one-percent
interest rate provision for rural Alaska, he noted the
corporation could make more money if the percentage was
increased. He anticipated however, that if it were
eliminated there would be about a 16 percent drop in loan
portfolio activity. Therefore, the program would break even
and there would be no gain. He pointed out that in rural
areas, and even less rural areas by Alaska standards,
mortgage insurance could not be obtained. Therefore, if
there were not a subsidy of some sort more down payment
money would have to be required from residents.
He explained that the rate established in statutes was one-
percent of the taxable rate would have been had bonds been
issued. This was a revolving fund and bonds were not sold
to fund it. Generally, once the one-percent was removed,
compared to a tax of the program, the rate was the same on
a thirty-year mortgage. The rural program would exceed the
tax-exempt program by an eight of a point for a fifteen-
year mortgage.
Senator Al Adams asked if the rural communities along the
road system would be affected by this legislation. Dan
Fauske answered that the current program required the
population of communities along the road system had to be
1600 residents or less to qualify. Off the road system, the
population requirement was 6500. The corporation had
discussions with some realtors who would like to see those
limits raised. He noted the program had tripled over the
last three years. He listed the number of loans done in
various rural communities during that period. Another
concern raised was with communities that were annexed into
a borough. Those residents would no longer qualify for the
program. This had happened for areas in the Kodiak Island
Borough and the Haines Borough.
Dan Fauske believed it was a program that was necessary.
Whether it stood up to strict economic standards was
another issue. Charging a higher interest rate could always
make more money. His concern was with the mortgage
insurance.
Senator Randy Phillips asked if the criteria for the
program were the same for every person in Alaska regardless
of where they lived. He noted the different number of loans
given in various communities Dan Fauske said it was the
same. Senator Randy Phillips asked if this applied to all
of the programs the corporation offered. If the criteria
were different, he felt it should be examined. Dan Fauske
agreed. The only differences were found in the urban areas
because of access to amenities such as ease of access or
the quality of the property.
Senator Randy Phillips asked about the mortgage insurance.
Dan Fauske said that under the program, the borrower would
still have to pay a ten-percent down payment. AHFC then
assumed a part of the risk that would normally be covered
under mortgage insurance. Under most programs, more than
ten-percent would be required to obtain mortgage insurance.
That was just the way the industry operated, he stressed.
Senator Dave Donley was entertained by the witness
testimony that if the subsidy was removed, fewer people
would borrow money and the corporation would make the same
amount of money. That seemed to argue for extension of the
one-percent program to all Alaskans. Dan Fauske did not
disagree. He was only trying to make an analogy and he
didn't know how much business would be lost with the
elimination of the one-percent provision.
Senator Dave Donley referred to the comments that the rural
loans were more difficult to make, which was the reason the
AHFC was involved. For that reason, he doubted the private
sector would choose to pick up the estimated sixteen-
percent drop.
Senator Dave Donley then noted the Boundary Commission's
latest report that specifically identified this program as
one of the most problematic and biggest inhibitors of the
formation of local governments. This was because
communities would not qualify for the program if they
joined or formed boroughs. In his opinion, the lack of
formation of local governments was one of the biggest
problems facing the state today. He asked if the witness
could propose a solution. Dan Fauske responded that the
corporation was not trying to advocate a program that was
based on these problems. He hoped to alleviate the problems
associated with the qualifications of some properties based
on which side of the road they were located. He had heard
this concern from realtors.
Senator Dave Donley made further comments on the formation
of local boroughs.
Senator Dave Donley then pointed out that other programs
operated by AHFC applied to all Alaska's regardless of
where they lived. He used veteran, disabled and first time
homebuyer programs. This program was only available to
those people who met a particular discriminatory category,
in his opinion.
Senator Randy Phillips noted he had potential conflict of
interest because he works for a mortgage company. He
offered a motion to be allowed to abstain from voting on
the bill. Senator Dave Donley objected and the motion was
denied.
Senator Loren Leman asked if the intent was to increase the
rate in the rural area market using the one-percent
provision. He wanted to know why the corporation didn't
reduce the rate charged in the rest of the state instead.
Dan Fauske responded that the other programs were bonded
programs that were driven by the rate the bonds could be
sold. This program was established as a revolving fund so
the rates were calculated. The corporation was exploring
other options with regard to universal statewide programs.
He noted that there were limitations under the tax-exempt
programs for income limits that were established by the
federal government.
Co-Chair John Torgerson introduced Alex Grundmann, age 13,
who was visiting the committee as a participant of Take
Your Child to Work Day. He was serving in the capacity of
co-chair.
Senator Al Adams asked if of the money earned from by the
corporation how much was spent on this program. He also
wanted to know if this money could be used to match the
supplemental housing project in the capital budget. Dan
Fauske answered that in terms what was spent on the total
program, he only knew of only $200,000 that was spent on
this subprogram. He would find out the actual figures and
supply them to the committee.
To answer the question on whether the arbitrage could be
used for the CIP, he told Senator Al Adams that the
arbitrage could only be used for a loan that met the same
perimeters of what the bond was issued for. It had to be
used for a loan with a reasonable expectation of repayment.
Co-Chair John Torgerson noted the bill would not be
reported out of committee this meeting.
Tape: SFC - 99 #105, Side A
BRUCE KOVARIK, Executive Director, Association of Alaska
Housing Authorities, testified via teleconference from
Anchorage. He had submitted written testimony. The
association opposed the bill. It was clear to them that it
would focus significant and adverse impact on the
availability of affordable mortgage loans in rural Alaska.
The bill would not save money and would further discourage
private lending activities in rural Alaska. It would
increase the cost of housing and lessen the economic
development in areas of the state that needed it the most.
He disagreed with Senator Dave Donley's assumption that
this program was a special discriminatory subsidy.
SUE BENEDETTE, Vice President, First National Bank of
Anchorage and Co-Chair, Alaska Mortgage Bankers
Association, testified via teleconference from Anchorage.
FNBA lends on a statewide basis and found this program to
be very successful in allowing it to lend to rural Alaska.
It helped offset the higher cost of housing in rural areas.
ROBIN WARD testified via teleconference from Anchorage. She
stated that the bankers associations, the homebuilders and
affiliated businesses viewed the AHFC as their own
permanent fund. She would submit further testimony in
writing.
DAVE MCCLURE, Executive Director, Bristol Bay Housing
Authority, and Board Member, AHFC, testified via
teleconference from Dillingham. He had submitted a policy
brief from HUD to the committee. It stated that home equity
was the largest single source of household wealth for most
Americans. A decrease in the interest rate exemption would
have a negative affect on the number of loans made. He
urged the committee to maintain the current program as a
method of maintaining economic stability in rural areas.
ANNE WHITNEY, President-elect, Katchemak Board of Realtors,
testified via teleconference from Homer. The cost of
living and the cost of construction was much higher in
rural areas and that was one reason the one-percent
provision was put into place. It did not cost AHFC any
money. First-time homebuyers in urban areas were able to
take advantage of other interest rate reduction programs.
Therefore, this was not a fairness issue.
ANGIE NEWBY, President, Katchemak Board of Realtors,
testified via teleconference from Homer. This program had
made home ownership possible for many people on the Kenai
Peninsula. She listed the figures.
BOB BRODIE, Assoc. Realty, testified via teleconference
from Kodiak. He felt the committee missed the point. The
object of AHFC was to make housing affordable for all
Alaskans. When the interest rate was raised only one point
many people were eliminated from qualification for home
ownership. Instead of taking the program from rural Alaska,
he supported Senator Dave Donley's suggestion to make all
the AHFC loans one-percent lower than the market rate.
That would pick up the revenue from those loans that
typically went to FHA and Fanny Mae programs.
BONNIE AULABAUGH, Broker, Chelsea Realty, testified via
teleconference from Kodiak in opposition to the bill. She
believed the program was set up to allow for loan programs
in rural areas. She attested to the higher cost of home
ownership in rural Alaska.
ED MAHONEY, President, Kodiak Building Industry
Association, testified via teleconference from Kodiak. The
association opposed the legislation. The impact to the
community would be substantial.
Co-Chair John Torgerson ordered the bill held in committee.
ADJOURNED
Senator Torgerson with the assistance of Alex Grundmann
recessed the meeting at 10:52 AM.
SFC-99 (18) 4/22/99
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