Legislature(2013 - 2014)SENATE FINANCE 532

04/12/2013 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSHB 50(FIN) Out of Committee
<Pending Referral>
<Pending Referral>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 12, 2013                                                                                            
                         9:19 a.m.                                                                                              
9:19:38 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 9:19 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Joe  Balash,  Deputy  Commissioner,  Department  of  Natural                                                                    
Resources;  Doniece Gott,  Staff, Senate  Finance Committee;                                                                    
Josh  Walton,  Staff,  Representative Mia  Costello;  Stacey                                                                    
Schubert,  Director,   Governmental  Relations   and  Public                                                                    
Affairs, Alaska  Housing Finance Corporation,  Department of                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
Becky Cruse, Department of Law, Anchorage;                                                                                      
HB 50     MULTI-UNIT HOUSING: COMMERCIAL USE                                                                                    
          CSHB 50(FIN) was REPORTED out of committee with a                                                                     
          "do pass" recommendation and with a previously                                                                        
          published zero fiscal note: FN1(REV).                                                                                 
HB 76     UNEMPLOYMENT; ELEC. FILING OF LABOR INFO                                                                              
          HB 76 was SCHEDULED but not HEARD.                                                                                    
HB 129    OIL & GAS EXPLORATION/DEVELOPMENT AREAS                                                                               
          HB 129 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
CS FOR HOUSE BILL NO. 129(FIN)                                                                                                
     "An Act relating to approval for oil and gas or gas                                                                        
     only exploration and development in a geographical                                                                         
     area; and providing for an effective date."                                                                                
Co-Chair Meyer  noted that the memos  from Legislative Legal                                                                    
and  the Department  of Law  (DOL)  responding to  questions                                                                    
previously  raised  by Senator  Hoffman  could  be found  in                                                                    
member files(copy on file).                                                                                                     
9:21:31 AM                                                                                                                    
Co-Chair Meyer noted that public testimony was CLOSED.                                                                          
JOE  BALASH,  DEPUTY  COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES,  stated  that he  had  reviewed  the legal  memo,                                                                    
written  by Don  Bullock from  Legislative Legal;  April 12,                                                                    
2013.  He disagreed  that  the findings  in  Section 1  were                                                                    
unnecessary  in regard  to the  legislation. He  stated that                                                                    
the findings  in Section 1,  and the substantive  portion in                                                                    
Section 2, would be a  useful tool for Department of Natural                                                                    
Resources   (DNR)  as   it   implemented  the   department's                                                                    
obligations  to  review  and  approve  additional  steps  of                                                                    
exploration  and development  after  the  leasing stage.  He                                                                    
shared  that  when  the REDOIL  decision  was  handed  down,                                                                    
issues were  raised that the  department believed  should be                                                                    
addressed  by the  legislature, and  that the  bill was  the                                                                    
proper vehicle to do so.  He offered that Section 1 provided                                                                    
a way for the legislature to  guide the department in how to                                                                    
implement   the  findings   of  the   REDOIL  decision.   He                                                                    
understood   that  the   DOL  had   filed   a  request   for                                                                    
reconsideration with  the court, but there  was no guarantee                                                                    
that further  clarification on some of  the questions raised                                                                    
by the  conclusions. He  shared that in  the days  after the                                                                    
decision,  DNR  had   received  an  appeal  on   a  plan  of                                                                    
operations  that cited  the  court case.  He  noted for  the                                                                    
committee  that the  Supreme Court  decision  had opened  up                                                                    
uncertainties  that DNR  hoped the  legislature could  speak                                                                    
9:25:54 AM                                                                                                                    
Senator Hoffman  inquired if language could  be written that                                                                    
would make Section 2 clearer.                                                                                                   
Mr.  Balash  responded  that  DNR  was  satisfied  with  the                                                                    
language  in  the section.  He  wondered  which part  needed                                                                    
9:26:23 AM                                                                                                                    
Senator  Hoffman  asked whether  Section  2  was written  as                                                                    
clear as it could be written.                                                                                                   
Mr.  Balash reiterated  that  the  department was  satisfied                                                                    
with Section 2.                                                                                                                 
Senator  Hoffman directed  the committee  to Page  2 of  the                                                                    
legal memo:                                                                                                                     
     In  conclusion,   the  findings   in  sec.  1   may  be                                                                    
     unnecessary. If the language in  the substantive law is                                                                    
     clear, the  findings are  unnecessary. The  language in                                                                    
     the proposed amendment seems to  be consistent with the                                                                    
     court's  finding  of  a constitutional  requirement  to                                                                    
     consider  cumulative   impacts  in  all  phases   of  a                                                                    
Senator Hoffman contended that the  memo clearly stated that                                                                    
the findings were unnecessary.                                                                                                  
Mr. Balash explained that Section  2 was stand alone and had                                                                    
not been  driven by the  REDOIL decision; however  Section 1                                                                    
was in response to the  decision. He added that the findings                                                                    
and  the  substantive  sections  were  not  linked,  as  was                                                                    
generally the case. He stressed  that the  department wanted                                                                    
to  use the  bill  to  define the  parameters  in which  the                                                                    
REDOIL decision would be implemented by the department.                                                                         
9:28:20 AM                                                                                                                    
Senator Hoffman understood that  the department would follow                                                                    
the  legal counsel  of DOL  and that  the legislature  would                                                                    
follow the counsel of Legislative Legal. He pointed to the                                                                      
last sentence of the second paragraph of the memo:                                                                              
     However, I suggest omitting the findings from the bill                                                                     
     under the guidance of the Manual of Legislative                                                                            
     The   Manual   of    Legislative   Drafting   addresses                                                                    
     legislative findings at pages 14 - 15:                                                                                     
          Although  legislative  findings  relevant  to  the                                                                    
          need for  a bill  are presumably contained  in the                                                                    
          record  of committee  hearings and  debate on  the                                                                    
          bill,  there  are  some  instances  in  which  the                                                                    
          findings are  deemed necessary  and should  be set                                                                    
          out  in the  bill and  enacted  as a  part of  the                                                                    
          bill. This  may be  particularly true if  the bill                                                                    
          proposes  to  enact  law  that  is  likely  to  be                                                                    
          challenged   on    constitutional   grounds.   The                                                                    
          findings  enacted  as  a  part  of  that  law  may                                                                    
          provide justification  for upholding  the validity                                                                    
          of the  law. The drafter should  work closely with                                                                    
          the  requester  to  ensure  that  the  legislative                                                                    
          history of  the bill,  particularly the  record of                                                                    
          the committee  hearings, provides a basis  for the                                                                    
          findings.  In cases  where  the  findings are  not                                                                    
          necessary  for placement  in  the  bill text,  the                                                                    
          drafter should work closely  with the requestor to                                                                    
          prepare  intent  text  that  can  be  specifically                                                                    
          entered into the legislative  history of the bill,                                                                    
          particularly   the   record   of   the   committee                                                                    
Senator Hoffman  offered that his  first choice would  be to                                                                    
eliminate the findings  and his second would  be to consider                                                                    
the amendment offered during  public testimony from attorney                                                                    
Lisa Weissler (copy on file).                                                                                                   
9:29:57 AM                                                                                                                    
AT EASE                                                                                                                         
9:33:35 AM                                                                                                                    
9:34:15 AM                                                                                                                    
BECKY   CRUSE,    DEPARTMENT   OF   LAW,    ANCHORAGE   (via                                                                    
teleconference), solicited  questions from the committee.                                                                       
9:34:46 AM                                                                                                                    
Vice-Chair  Fairclough  explained  that  the  committee  was                                                                    
considering  two competing  legal opinions  on the  topic of                                                                    
including legislative  intent in  HB 129. She  asked whether                                                                    
the administration  recommended that the findings  remain in                                                                    
the bill.                                                                                                                       
9:36:34 AM                                                                                                                    
Senator   Hoffman   restated   his  question   whether   the                                                                    
substantive law in Section 2  was written clearly enough for                                                                    
the findings to be removed from Section 1.                                                                                      
Ms.   Cruse  expressed   confusion   with  the   committee's                                                                    
9:37:56 AM                                                                                                                    
Mr. Balash  interjected that,  typically, the  findings were                                                                    
directly  connected  to the  substantive  law  in the  later                                                                    
sections of the legislation. He  reiterated that in the case                                                                    
of HB 129, they were  not. He furthered that the substantive                                                                    
section  of  the  bill  stood  independently  and  had  been                                                                    
requested prior to  the REDOIL decision. He  stated that the                                                                    
bill provided a convenient  mechanism for the legislature to                                                                    
address  how DNR  should implement  the courts  findings. He                                                                    
restated that the  uncodified law in Section  1 was distinct                                                                    
from the  substantive action  being taken  in Section  2. He                                                                    
furthered   that   ordinarily   findings   would   accompany                                                                    
substantive law, but not in the case of HB 129.                                                                                 
9:39:39 AM                                                                                                                    
Vice-Chair Fairclough  believed that the  administration was                                                                    
trying  to  lay  out,  for  future  court  action  that  the                                                                    
legislature  agreed  with   the  legislative  findings  that                                                                    
supported  the  implementation  of Section  2  when  talking                                                                    
about  Alaska's  maximum  use, consistent  with  the  public                                                                    
interest. She  offered that the legislative  findings sent a                                                                    
message from the legislature to the courts.                                                                                     
Mr. Balash  replied that  the voice  of the  legislature was                                                                    
embodied in  Section 1. He acknowledged  that the department                                                                    
would  be undergoing  a regulation  process associated  with                                                                    
Section 2, and  that the decisions would  be consistent with                                                                    
the legislative findings in Section 1.                                                                                          
9:41:59 AM                                                                                                                    
Senator  Hoffman   reiterated  that  the   department  could                                                                    
clarify  the language  in Section  2. He  stressed that  the                                                                    
argument could  be made that  the language in Section  2 was                                                                    
not clear.                                                                                                                      
9:43:18 AM                                                                                                                    
Vice-Chair Fairclough  agreed that if Section  2 could stand                                                                    
alone,  then  it  should.  She   countered  that  the  court                                                                    
continued  to  argue  with the  legislature's  authority  to                                                                    
determine what the maximum benefit  for the people of Alaska                                                                    
was. She  thought that the  question remained whether  to go                                                                    
with the court or follow the findings of Legislative Legal.                                                                     
9:45:41 AM                                                                                                                    
Senator Hoffman  understood that  Legislative Legal  and DOL                                                                    
were at  odds concerning the  question. He said that  if the                                                                    
committee   wanted   to   ignore   the   recommendation   of                                                                    
Legislative   Legal   then   the  responsibility   for   any                                                                    
consequences rested with the legislature.                                                                                       
9:46:49 AM                                                                                                                    
AT EASE                                                                                                                         
9:48:53 AM                                                                                                                    
HB  129  was  HEARD  and   HELD  in  committee  for  further                                                                    
9:49:27 AM                                                                                                                    
Vice-Chair  Fairclough queried  whether the  April 12,  2013                                                                    
legal  memo   from  Donald  Bullock,   Legislative  Counsel,                                                                    
Division  of   Legal  and  Research   Services,  Legislative                                                                    
Affairs  Agency was  in member  files and  available to  the                                                                    
DONIECE GOTT,  STAFF, SENATE  FINANCE COMMITTEE,  replied in                                                                    
the affirmative.                                                                                                                
CS FOR HOUSE BILL NO. 50(FIN)                                                                                                 
     "An   Act  authorizing   the  Alaska   Housing  Finance                                                                    
     Corporation  to  allow  certain commercial  uses  in  a                                                                    
     multi-unit  residential  housing development  owned  or                                                                    
     financed by the corporation  and limiting the Alcoholic                                                                    
     Beverage Control  Board's issuance of  certain licenses                                                                    
     to premises in the residential housing development."                                                                       
9:50:49 AM                                                                                                                    
JOSH WALTON, STAFF,  REPRESENTATIVE MIA COSTELLO, introduced                                                                    
HB 50.  He stated that  the bill spoke to the national trend                                                                    
towards  multi-use,   multi-unit  residential   housing.  He                                                                    
related that the bill would  give the Alaska Housing Finance                                                                    
Corporation (AHFC)  the ability to participate  in financing                                                                    
and owning properties that had  an authorized commercial use                                                                    
space connected  to the multi-use property.  This would give                                                                    
AHFC  the ability  to participate  in  the residential  real                                                                    
estate market  and expanded opportunity for  commercial real                                                                    
estate. He  relayed that  because the  mandate for  AHFC was                                                                    
residential   housing,    several   sideboards    had   been                                                                    
incorporated into the legislation in  an attempt to keep the                                                                    
focus  on   the  residential   market.  He   explained  that                                                                    
particular  types of  businesses would  be excluded  per the                                                                    
sideboards:   adult  entertainment   establishments,  liquor                                                                    
stores,  bars,   substance  abuse  treatment   centers,  and                                                                    
businesses   selling   primarily   cigarette   and   tobacco                                                                    
products.  He specified  that  not  all establishments  with                                                                    
licenses to serve alcohol  would be prohibited; restaurants,                                                                    
for example, would be allowed.                                                                                                  
9:54:44 AM                                                                                                                    
Co-Chair  Meyer wondered  if  the  legislation stemmed  from                                                                    
AHFC  wanting to  incorporate  businesses  into and  already                                                                    
planned housing development.                                                                                                    
Mr.  Walton referred  questions about  specific projects  to                                                                    
9:55:25 AM                                                                                                                    
Vice-Chair  Fairclough  asked  if  AHFC  was  attempting  to                                                                    
purchase Inlet Towers,  which had a restaurant  on the first                                                                    
floor of the building, for affordable housing.                                                                                  
Mr. Walton understood that that was correct.                                                                                    
9:56:21 AM                                                                                                                    
STACEY  SCHUBERT,   DIRECTOR,  GOVERNMENTAL   RELATIONS  AND                                                                    
PUBLIC   AFFAIRS,   ALASKA  HOUSING   FINANCE   CORPORATION,                                                                    
DEPARTMENT OF REVENUE, commented that  the bill was the most                                                                    
important  piece  of  legislation to  the  corporation  this                                                                    
session.  She stated  that as  an independent  state agency.                                                                    
AHFC had worked  with the private sector to lead  the way in                                                                    
quality  construction,   including  energy   efficiency  and                                                                    
providing home  mortgage loans  to qualified  Alaskan's. She                                                                    
relayed  that the  bill  would allow  AHFC  to proceed  with                                                                    
commercial  space  and  that there  were  existing  in-state                                                                    
interest in AHFC financing commercial/residential projects.                                                                     
She responded to  the question about Inlet  Towers. She said                                                                    
that AHFC  had already  financed the project.  She explained                                                                    
that there was a restaurant  on the ground floor with market                                                                    
rate  apartments  above.  She shared  that  questions  about                                                                    
whether the property  was operating within the  terms of the                                                                    
loan agreement  had arisen and were  being investigated. She                                                                    
urged committee support for the legislation.                                                                                    
9:58:34 AM                                                                                                                    
Senator Dunleavy understood that  under the legislation AHFC                                                                    
could establish different project  models in the future that                                                                    
would be specific to the needs of building residents.                                                                           
Ms. Schubert replied in the affirmative.                                                                                        
9:59:18 AM                                                                                                                    
Co-Chair  Meyer  queried  whether  the  legislation  was  in                                                                    
compliance with Title 21.                                                                                                       
Ms. Schubert  replied no,  she added  that AHFC  worked very                                                                    
closely with community on land use issues.                                                                                      
9:59:42 AM                                                                                                                    
Vice-Chair   Fairclough  inquired   if   the  federal   loan                                                                    
guarantee had  any stipulations concerning the  proximity of                                                                    
the sale of alcohol.                                                                                                            
Ms. Schubert  responded that the  intent of  the corporation                                                                    
was  to have  developers request  money directly  from AHFC,                                                                    
any concerns  about the restriction  of federal  funds based                                                                    
on the projects merits would be discussed.                                                                                      
10:01:33 AM                                                                                                                   
Senator Hoffman  noted that the  sponsor statement  spoke to                                                                    
addressing  affordable  housing  and the  statewide  housing                                                                    
shortage.  He wondered  what the  interest  rates under  the                                                                    
legislation were when compared  to existing rates that could                                                                    
be refinanced.                                                                                                                  
Ms.  Schubert responded  that the  interest rates  on multi-                                                                    
family projects were established  weekly by the corporation.                                                                    
She stated that the taxable  loan amount for over $1 million                                                                    
the  current  week was  6.375  percent.  She said  that  the                                                                    
advantage  to a  developer who  may want  to refinance  with                                                                    
AHFC  was that  the projects  no  longer had  to pencil  out                                                                    
10:03:38 AM                                                                                                                   
Co-Chair Meyer OPENED public testimony.                                                                                         
Co-Chair Meyer CLOSED public testimony.                                                                                         
10:04:14 AM                                                                                                                   
Senator Dunleavy noted that there  were certain parts of the                                                                    
state  where land  was expensive  and  that the  legislation                                                                    
could  be useful  in using  a single  building for  multiple                                                                    
uses, therefore reducing cost for all parties involved.                                                                         
10:04:47 AM                                                                                                                   
Vice-Chair  Fairclough   MOVED  to  REPORT  HB   50  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSHB 50(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and  with a previously published  zero fiscal                                                                    
note: FN1(REV).                                                                                                                 
10:05:18 AM                                                                                                                   
The meeting was adjourned at 10:05 a.m.                                                                                         

Document Name Date/Time Subjects
HB50 Sectional Analysis.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Sponsor Statement.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Summary of Changes - HB 50 to CSHB 50(FIN).pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Supporting Documents - CIHA - Carol Gore.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Supporting Documents - Glenn Gellert 01-22-13.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Supporting Documents - Park Place Resolution.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Supporting Documents - St Vincent de Paul Society - 01-22-13.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
HB50 Supporting Documents - St Vincent de Paul Society - 02-25-13.pdf SFIN 4/12/2013 9:00:00 AM
HB 50
Changes between House Bill 76 and HB 76(L&C) HB 76 (FIN).pdf SFIN 4/12/2013 9:00:00 AM
HB 76
CSHB 76 UI Tax chart 4 9 2013.pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB 76 Letters of Support.pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB76 AkHLA Letter of Suppport .pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB76 Historical UI Tax Rates .pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB76 -Treasury Offset Program .pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB76 -UI STEP TVEP flow chart .pdf SFIN 4/12/2013 9:00:00 AM
HB 76
Sectional Analysis CSHB 76 (FIN) 4 9 13.pdf SFIN 4/12/2013 9:00:00 AM
HB 76
UI Bill FAQ 3-19.pdf SFIN 4/12/2013 9:00:00 AM
HB 76
HB 129 DOL response to Weissler testimony.pdf SFIN 4/12/2013 9:00:00 AM
HB 129
HB 129 Legal Services Memo 4 12 13.pdf SFIN 4/12/2013 9:00:00 AM
HB 129
HB 129 NSOnshore_small.jpg SFIN 4/12/2013 9:00:00 AM
HB 129