04/30/2002 03:08 PM House FIN

HOUSE BILL NO. 370                                                                                                            
                                                                                                                                
     "An  Act relating  to the  issuance of  state-guaranteed                                                                   
     revenue bonds by the Alaska  Housing Finance Corporation                                                                   
     to  finance  mortgages  for   qualifying  veterans;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
JOHN  BITNEY,  LEGISLATIVE LIAISON,  ALASKA  HOUSING  FINANCE                                                                   
CORPORATION, DEPARTMENT  OF REVENUE, spoke in  support of the                                                                   
legislation. He explained that  the legislation would provide                                                                   
authorization  on  the  general   election  ballot  for  $500                                                                   
million dollars in mortgage-backed,  guaranteed revenue bonds                                                                   
through  the  Alaska  Housing   Finance  Corporation  (AHFC).                                                                   
Alaska is one of five states that  are able to take advantage                                                                   
of these tax-exempt  bonds. The requirement for  the state to                                                                   
capture  the tax exemption  is  that the bonds  must have  an                                                                   
unconditional guarantee by the  state in which the program is                                                                   
administered.   The  state  Constitution   requires   that  a                                                                   
guarantee  of that  nature have  a  vote of  the people.  The                                                                   
bonds are  structured to  only relate  to the mortgages  that                                                                   
the bond proceeds  are used to purchase. The  state's general                                                                   
obligation   capacity  would   not   be  affected.   Congress                                                                   
authorized  the tax exemption  in 1978  and 1979. Alaska  was                                                                   
one of  five states  that issued bonds  when the  program was                                                                   
first  made  available.  Congress   subsequently  closed  the                                                                   
window in  the early  1980's; those states  that were  in the                                                                   
program were grandfathered.  The bond proceeds  would be used                                                                   
to fund the  Veterans Mortgage Program. To  qualify, veterans                                                                   
would  have to  have been  in  active duty  service prior  to                                                                   
January 1,  1977 and not been  discharged more than  30 years                                                                   
prior to the  application date of their loan.  There would be                                                                   
a diminishing pool  of qualified veterans. This  would be the                                                                   
fifth and last time that AHFC  would anticipate coming before                                                                   
the  legislature  for this  type  of bond  authorization.  He                                                                   
pointed out that the bonds are  well supported by the general                                                                   
public.                                                                                                                         
                                                                                                                                
Co-Chair Mulder  questioned what  would happen if  the ballot                                                                   
issue  did not  pass. Mr.  Bitney explained  that AHFC  would                                                                   
finish with  the authorization from  1986, which is  close to                                                                   
$50 million dollars; this would  allow them to finish out the                                                                   
year.                                                                                                                           
                                                                                                                                
Co-Chair  Mulder questioned  if they  would need  to be  on a                                                                   
statewide  general election  or could  they be  on a  primary                                                                   
election. Mr. Bitney did not know.                                                                                              
                                                                                                                                
Co-Chair  Mulder  stressed that  too  many questions  on  the                                                                   
ballot may lead  to the downfall of one of the  questions and                                                                   
suggested that it  may behooved the legislation to  be on the                                                                   
primary ballot.  Mr. Bitney clarified that  the authorization                                                                   
is needed in the current year.                                                                                                  
                                                                                                                                
In response  to a question  by Representative  Lancaster, Mr.                                                                   
Bitney  observed that  there is  a generous  cap. He did  not                                                                   
think  that  all  of the  authorization  beyond  the  30-year                                                                   
timeframe  would  be  needed.  There  are  bills  pending  in                                                                   
Congress,  which could  require  additional authorization  if                                                                   
passed.                                                                                                                         
                                                                                                                                
Co-Chair Mulder stressed  that the ballot issue  should be on                                                                   
the primary election where it  would not be confused with any                                                                   
other ballot question.                                                                                                          
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   370  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
HB  370  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  with  two  previously  published  fiscal                                                                   
notes: REV #1 and GOV #2.                                                                                                       
                                                                                                                                
RECESSED:                                                                                                                     
                                                                                                                                
The Committee Recessed at 4:00 p.m.                                                                                             
                                                                                                                                
TAPE HFC 02 - 99, Side A                                                                                                      
                                                                                                                                
RECONVENED:                                                                                                                   
                                                                                                                                
The Committee Reconvened at 4:45 p.m.