Legislature(2021 - 2022)BELTZ 105 (TSBldg)
02/24/2021 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB54 | |
| SB86 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 54 | TELECONFERENCED | |
| *+ | SB 86 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 54-AHFC WATER & SEWER BONDS/TRANSPORTATION
1:32:28 PM
CHAIR COSTELLO announced the consideration of SENATE BILL NO.
54, "An Act authorizing and relating to the issuance of bonds by
the Alaska Housing Finance Corporation for safe and clean water
and hygienic sewage disposal facility capital projects and
transportation projects; providing for the repayment of the
bonds and bond costs; relating to the dividend paid to the state
by the Alaska Housing Finance Corporation; and providing for an
effective date."
1:32:54 PM
BRYAN BUTCHER, CEO/Executive Director, Alaska Housing Finance
Corporation (AHFC), Department of Revenue (DOR), Anchorage,
Alaska, introduced himself and advised that he had a short
PowerPoint to introduce SB 54 if someone in the room could
change the slides.
1:33:27 PM
At ease
1:34:37 PM
CHAIR COSTELLO reconvened the meeting and asked Mr. Butcher to
begin the presentation.
MR. BUTCHER explained that SB 54 would authorize AHFC to sell
$101.63 million of tax-exempt capital project bonds to fund
projects in the capital budget. The debt service would be paid
through AHFC's dividend to the state.
MR. BUTCHER began the presentation stating that AHFC's mission
is "To provide Alaskans access to safe, quality, affordable
housing."
MR. BUTCHER reported that AHFC holds approximately 20 percent of
the home mortgages in the state, primarily for first-time
homebuyers, veterans, and rural residents. The corporation also
runs the state's approximately 1,600 public housing units in 15
communities as well as 5,000 to 6,000 housing choice vouchers
for apartment rentals. He noted that AHFC runs all public
housing for the U.S. Department of Housing and Urban Development
(HUD). AHFC also oversees energy efficiency and energy codes for
the state and administers grants and federal tax credits that
help in building affordable housing for the homeless, seniors,
and other programs that benefit the state. He clarified that
AHFC is legally separate from the state so the corporation's
debt is not state debt. AHFC has its own credit rating, which is
currently A+, and issues its own bonds.
1:37:17 PM
SENATOR STEVENS asked if the 1,600 housing units were
apartments.
MR. BUTCHER replied those are apartments primarily built in the
1970s and 1980s when HUD addressed public housing needs by
building large multi-story buildings. AHFC still runs and owns
those units as well as the housing choice vouchers. He explained
that HUD changed the way it administered public housing
nationwide about 30 years ago to put people in apartments run by
private landlords as a way of addressing the stigma of living in
public housing.
SENATOR STEVENS asked if assisting private enterprise to build
low-cost housing was also under AHFC's purview.
MR. BUTCHER answered yes; most of those funds come from federal
low-income housing tax credits that the corporation administers
for the state.
1:39:02 PM
MR. BUTCHER advised that slide 4 provides a snapshot of the
dividend payments over the last decade. He noted that the
dividend plan is set in statute and the annual dividend payment
to the state represents 75 percent of the corporation's net
income. He related that the large dividends 20 years ago dropped
after the 2008-2009 recession when artificially low interest
rates reduced AHFC's portfolio. The $7.4 million dividend in
FY2015 was the record low, but it has built up to over $40
million the last two fiscal years. He highlighted that
cumulative dividends paid to the state over the last 25 years
exceed $2 billion.
1:40:04 PM
MR. BUTCHER directed attention to the list on slide 5 of
previous legislation that authorized AHFC to sell bonds to
support state capital projects. He pointed out that the bond
authorizations in the late '90s and early 2000 are similar to
the current request in SB 54 for capital project bonds. The
funds would be for such things as roads, buildings, ports,
harbors, and village safe water projects that the IRS says
qualify for tax-exempt debt.
Slide 6 lists four proposed capital projects that the Department
of Environmental Conservation (DEC) and the Department of
Transportation and Public Facilities (DOTPF) would administer.
He highlighted that these projects are in the state capital
budget and as the bill moves through the process, the names of
the projects and each total must match to ensure that what AHFC
sells in bonds and finances is authorized and spent through the
capital budget.
MR. BUTCHER turned to slide 7 that emphasizes that the bonds
that AHFC sells will not affect the state's credit and will not
be a financial obligation on the state. AHFC would be obligated
to pay once it sells the bonds and repayment would be offset by
future AHVC dividends as required by AS 18.56.089(c). AHFC
currently estimates that the interest rates for the bonds would
be between 2 and 3 percent and the term is likely to be 20
years.
He directed attention to the fiscal note that estimates the
payback of $6-7 million. While interest rates are expected to
remain low, the rate will not be established until the bill
passes and the bonds are sold sometime in the summer. At that
time, AHFC would be able to report the structure of the bond
deal, the interest rate, and the annual debt service payments
that will come out of the dividend.
1:43:07 PM
SENATOR GRAY-JACKSON asked if he said the debt service will be
$6 million for 20 years.
MR. BUTCHER answered that the estimate is $6-7 million a year.
VICE-CHAIR HOLLAND found no further questions and thanked Mr.
Butcher for the presentation.
1:43:50 PM
At ease
1:45:14 PM
CHAIR COSTELLO reconvened the meeting. She referenced slide 6
and asked for a breakdown if there were individual projects
associated with each of the four listings. She also asked if
other capital projects could be included in the list.
MR. BUTCHER said the governor's office decided on the particular
projects based on their definition of what qualifies as capital
projects. AHFC's role is to check with its tax counsel to ensure
that what the state identifies does qualify so AHFC can sell
tax-exempt debt according to IRS guidelines. He deferred to the
representatives from DOTPF and DEC to provide more detail on
specific projects.
1:47:26 PM
ROB CARPENTER, Deputy Commissioner, Department of Transportation
and Public Facilities (DOTPF), Juneau, Alaska, explained that
the projects listed in SB 54 are the match components for the
Federal Highway Administration and Federal Aviation
Administration programs that are in the capital budget. DOTPF
receives approximately $600 million annually from the Federal
Highway Administration and approximately $200 million annually
from the Federal Aviation Administration. The match for the
federal highway program is approximately 9 percent and the match
for the federal aviation program is about 6.25 percent. The
projects themselves in those programs are supported by the
planning documents that are required by the federal government.
The federally required Statewide Transportation Improvement Plan
(STIP) maps out the projects that are planned for the next four
years and the phases of each highway construction project.
Similarly, the Airport Improvement Plan (AIP) lists the projects
and timelines. He agreed to provide the details of the projects
for both but cautioned that they were extensive and not easy to
read.
CHAIR COSTELLO said she has constituents who are familiar with
rural airports in Alaska and there is concern about maintenance
and safety at some of these airports. She asked if he or another
DOTPF representative could meet with her to provide an update on
the airport contracts in local communities and the measures to
ensure that those airports are safe.
1:50:08 PM
SENATOR GRAY-JACKSON asked for more detail on what projects are
included in the match for both the STIP and the AIP.
MR. CARPENTER agreed to provide the documents that support the
projects in the bill.
CHAIR COSTELLO noted that $101.63 million would come out of the
capital budget if SB 54 were to pass. She asked if it matters if
the capital budget passes before the bill.
1:52:07 PM
RUTH KOSTIK, Director, Division of Administrative Services,
Office of Management and Budget, Office of the Governor, Juneau,
Alaska, offered her understanding that the funds do not come out
of the capital budget until the bond bill passes.
SENATOR GRAY-JACKSON asked if any of the projects were shovel
ready and when they were anticipated to go out to bid.
MR. CARPENTER responded that the STIP has projects in many
phases many of which are shovel ready and will go out to bid
this summer. He reiterated that more details were forthcoming.
SENATOR GRAY-JACKSON said she particularly wanted to see the
projects that are shovel ready
1:54:47 PM
CHAIR COSTELLO held SB 54 for future consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 54 v. A.PDF |
SL&C 2/24/2021 1:30:00 PM |
SB 54 |
| SB 54 Transmittal Letter.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 54 |
| SB 54 Sponsor Statement.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 54 |
| SB 54 Fiscal Note 1.PDF |
SL&C 2/24/2021 1:30:00 PM |
SB 54 |
| SB 54 AHFC Presentation 2.24.21.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 54 |
| SB 86 v. A.PDF |
SL&C 2/24/2021 1:30:00 PM |
SB 86 |
| SB 86 Sponsor Statement.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 86 |
| SB 86 Sectional Analysis.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 86 |
| SB 86 Fiscal Note DCCED.pdf |
SL&C 2/24/2021 1:30:00 PM |
SB 86 |