04/23/2002 04:37 PM Senate FIN

     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.