Legislature(1997 - 1998)
04/28/1998 06:20 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 230
"An Act relating to housing assistance provided by the
Alaska Housing Finance Corporation and to its rural
housing programs, to the corporation's supplemental
housing development grants to regional housing
authorities, and to housing programs of regional
housing authorities; permitting regional housing
authorities to make, originate, and service loans for
the purchase and development of residential housing;
and amending definitions relating to various housing
programs; and providing for an effective date."
Co-Chair Therriault MOVED that the work draft #0-LS0871\E,
Cook, 3/30/98, be the version before the Committee. There
being NO OBJECTION, it was adopted.
REPRESENTATIVE IVAN IVAN stated that HB 230 would modify
the rural loan programs in the Alaska Housing Finance
Corporation (AHFC), with regional housing authorities
improving the delivery of housing services. The
legislation recognizes that Alaska's rural areas experience
unique circumstances which must be taken into account to
ensure that housing programs are administered practically
and fairly for all Alaskans. The legislation recognizes
and relies on the role that regional housing authorities
play in the implementation of housing programs.
Representative Ivan explained that enactment of the bill
would greatly improve the quality of life for numerous
Alaskans living in small communities throughout the State.
JOHN BITNEY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOUSING
FINANCE CORPORATION (AHFC), DEPARTMENT OF REVENUE,
ANCHORAGE, stated that AHFC supports the changes in CS HB
230 (FIN). He acknowledged that this is a time-sensitive
issue given the late date and that AHFC would like to keep
the "status quo" in regards to the number of communities
involved in the program. This would guarantee that Bethel
and Haines would qualify to take advantage of the rural
mortgage program. That program was established by statute,
charging a 1% below bond rate interest.
Co-Chair Therriault inquired the benefits of the program.
DWAYNE WISE, (TESTIFIED VIA TELECONFERENCE), RURAL LOAN
PROGRAM MANAGER, ALASKA HOUSING FINANCE CORPORATION,
DEPARTMENT OF REVENUE, ANCHORAGE, noted that the benefits
would be much more flexible than the underwriting and
property criteria, because throughout rural Alaska, many of
the properties are unable to meet the typical standards
required for more transitional type underwriting.
Representative Mulder offered for discussion Amendment #1,
relating to the University of Alaska (UA) student-housing
situation.
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA
RELATIONS, FAIRBANKS, stated that Amendment #1 would
address projects which were not included in the Board of
Regents capital project requests this year. There are four
housing projects, plus deferred maintenance on the housing.
She noted that the AHFC vehicle to help with the projects
has been useful, particularly in Anchorage.
Representative Mulder noted a technical drafting error on
Page 2, Line 5, pointing out that there needs to be an
insertion of "a year" after "$350,000". Ms. Redman stated
that the amendment was an attractive option for the
University with three components in the housing projects:
? Maintenance of the facilities;
? Paying off the debt service; and
? Programming.
Dorm receipts can be used to pay for two of these concerns.
Maintenance of the projects is 100% funded through the life
of the projects, which allows with subsidized debt, to
contribute and pay for the facilities in a reasonable
amount of time.
In response to Co-Chair Hanley, Ms. Redman pointed out that
in terms of housing, it would be necessary to have a
subsidized bond to fully support the cost of a dorm unless
there was money in the operating budget to handle the
maintenance and programming on that facility. Using this
particular mechanism allows the University a subsidy other
than that contained in the regular operating budget.
Co-Chair Hanley inquired the amount of deferred maintenance
remaining on student housing. Ms. Redman replied that
approximately $14 million dollars remained. Co-Chair
Hanley recommended repairing the buildings first, before
building new ones. Ms. Redman pointed out that for four
years, the University had only placed deferred maintenance
projects in the Capital Budget Request (CBR). She stressed
that there comes a time when both needs should be
addressed. Student needs are important as is expanding the
enrollment. She pointed out that there had been a
commitment by the Legislature for the past few years to
attempt to make headway on the deferred maintenance issue.
She advised that this is the top priority, although, at the
same time, the University also has other serious needs.
Co-Chair Hanley asked the percentage of housed students on
the Fairbanks campus. Ms. Redman noted that the Fairbanks
campus is a residential campus with about 50% student body
beds. The Anchorage campus is not a residential campus and
houses approximately 2% to 3% of their students. The
University would like to bring Anchorage up to about the
10% level which is a typical number for a metropolitan
university.
Representative Martin agreed that the University has
serious needs for capital improvement projects. Co-Chair
Therriault questioned if the proposed amendment would
remove funding from other statewide capital projects. He
asked if the AHFC money was being "counted on" to leverage
bonds. Mr. Bitney replied that the proposed money would be
taken out of the $103 million dollar subsidy portion
provided by AHFC.
Co-Chair Hanley inquired the subsidy portion for current
dorms on the Anchorage campus. Mr. Bitney advised that
amounted to $100 million dollars and would be taken from
the $103 million.
Co-Chair Therriault asked the multiplier used on the money
leveraging for the bonds. Mr. Bitney replied that would
depend on the bonds terms and interest rates.
Representative Mulder noted that it had brought forth
Amendment #1 so that the bill would not be returned to the
Committee for further discussion on that possibility. He
proceeded to WITHDRAW Amendment #1. There being NO
OBJECTION, it was withdrawn.
Representative J. Davies asked how much of the Governors
proposed $7 million dollar capital budget was to be used
for deferred maintenance. Ms. Redman explained that none
of that money at this point would be used for housing
maintenance. Those projects are lower on the priority list
for deferred maintenance and were not included in the first
$50 million dollars.
Co-Chair Therriault commented that he was supportive of the
University's dilemma, although, felt it was important to
see the total picture for the Capital Budget Reserve plan.
Representative Foster MOVED a change to the proposed
legislation on Page 1, Line 5, deleting "6,500" and
inserting "11,000".
REPRESENTATIVE ALAN AUSTERMAN replied that with this
amendment, the Kodiak out-skirts would then be eligible to
receive 1% reduction in the normal loan rate. AHFC would
use 10,300 population base projection from which to work.
(Tape Change HFC 98- 132, Side 2).
Mr. Bitney explained that increasing residency to 11,000
would bring in Ketchikan, Sitka and Kodiak. A concern at
this time, by doubling the number, is that it would require
some fiscal changes. AFHC is not prepared at this time to
release for the record that number because it will cause an
addition to the reserves. The rural program is a self-
sustaining revolving fund and AHFC's concern at this time,
is to maintain the financial integrity of that program.
Co-Chair Hanley asked if those three communities currently
receive these loans. Mr. Wise commented that within the
Sitka, Ketchikan or Kodiak city limits do not receive the
rural loan program. Co-Chair Hanley pointed out that
adopting the amendment would make the program grow,
changing the intent.
Representative J. Davies asked how AHFC would administer
this program. Mr. Bitney explained that the Rural
Revolving Loan Fund would need to be capitalized with
additional general funds. He did not know what effect that
action would have on AHFC's ability to have the $103
million dollars available.
In response to Representative Grussendorf, Mr. Wise
explained that in 1982, a determination was made by the
Attorney General's office noting that outside Kodiak City
limits, because there was not city water or sewer, that
area did not meet the typical financing criteria. A
determination was then made that they would be eligible for
the rural loan program. He continued, the same criteria
has been applied to outside Kechikan City limits.
Representative Grussendorf inquired if Sitka was being
penalized because they were unified. Mr. Wise stated that
it could appear that was true.
Mr. Bitney noted that the Rural Fund was not a subsidized
fund. Representative J. Davies pointed out that there are
many places in the State which have the same situation
being an area surrounding a larger city. Representative
Grussendorf commented that there appears to be a
distinction between the organization of boroughs.
Co-Chair Therriault OBJECTED to adoption of Amendment #2.
A roll call vote was taken on the motion.
IN FAVOR: J. Davies, Grussendorf, Moses
OPPOSED: Mulder, G. Davis, Foster, Kelly, Kohring,
Martin, Hanley, Therriault
The MOTION FAILED (3-8).
Representative Foster MOVED to report CS HB 230 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note.
CS HB 230 (FIN) was reported out of Committee with
"individual recommendations" and with a zero fiscal note by
the Department of Revenue.
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