SENATE BILL NO. 181 "An Act making the interest rate for the Alaska Housing Finance Corporation's small community housing mortgage loans the same as the interest rate on mortgage loans purchased under the corporation's special mortgage loan purchase program from the proceeds of the most recent applicable issue of taxable bonds before the origination or purchase of the small community housing mortgage loans." This was the fifth hearing for this bill in the Senate Finance Committee. Co-Chair Kelly noted this is the second year of hearings on this bill and that several Committee members have been working with the Alaska Housing Finance Corporation (AHFC) to address the rural housing loan program concerns raised by Committee members. Co-Chair Donley stated the bill addresses the two following issues: the first regarding loans used to build "very very expensive houses" by limiting the subsidized portion of the loan to that portion up to the statewide housing average; and the second issue expanding the non-owner occupied language to allow the Rural Housing Assistance Loan Fund program (HALF) to be "utilized for low cost loans for teacher housing" in rural and small communities. Co-Chair Donley moved to adopt CS SB 181, 22-LS0488\G as a working draft. There being no objection, Version "G" was ADOPTED. Senator Green inquired if the language allowing for teacher-housing loans applies to houses owned by one party but rented or leased to teachers. Co-Chair Donley responded if a certified teacher occupies the home, the home would qualify for financing under the loan program. Senator Green asked if this language includes "classified" school employees. Co-Chair Donley clarified it only applies to teachers. Senator Green asked if a person in the process of acquiring teacher certification would qualify. Co-Chair Kelly believed this scenario would be a subject-need certification and voiced support for their inclusion. Senator Green voiced this would be an important provision. Co-Chair Kelly concurred. JOHN BITNEY, Legislative Liaison, Alaska Housing Finance Corporation, Department of Revenue suggested adding language to the owner-occupied portion of the program on page one, line 13. He informed the Committee "that definitions and subsequent parts of statutes allow for up to a duplex;" therefore, wording the section to allow for a "single-family or a duplex would have that same cut- off level." Co-Chair Donley qualified this would be acceptable as long as it specifies owner-occupied duplex. Mr. Bitney responded this is addressed in subsequent statute that defines the term "housing" under this section. Co-Chair Donley stated he would support this change if it would generate AHFC's support for the bill. Mr. Bitney stated this change would further define the bill and allow AHFC "to apply the same threshold level for a duplex as we would for a single family" home. Amendment #4: This amendment further defines the types of qualifying housing for AHFC small community loans by inserting "or owner occupied duplex" following "single-family house" on page one, Section 1, lines 13 and 14. Co-Chair Donley moved for adoption of Amendment #4. There being no objection, Amendment #4 was ADOPTED. Mr. Bitney stated AHFC has been working with the Department of Labor and Workforce Development to develop a "working number" for the subsidized loan program, and the Department of Labor and Workforce Development has provided an estimate of $185,000 as the statewide average sales price of a single family home. Senator Olson inquired how the transient nature of teachers in small communities would affect the provision for teacher occupied housing. Co-Chair Donley responded Section 2 of the bill allows for non- owner occupancy of a house if a teacher occupies it. He elaborated that a community, a private individual, or a teacher could build the house as long as a teacher occupies it. Mr. Bitney explained to the Committee that the intent of this program is to offer to the borrower a commitment for a period of time, usually 160 to 180 days, during which they could secure construction financing from a commercial bank. He stated, "once the terms of the commitment have been met, the construction has been done, then the takeout on the loan." He remarked this commitment practice is the industry standard for new home construction. Co-Chair Donley offered a motion to move "CS SB 181 as amended and the accompanying zero fiscal note from Committee with individual recommendations." There being no objections, CS SB 181 (FIN) was REPORTED from Committee with a new zero fiscal note dated 1/28/02 from the Department of Revenue.