03/31/1998 09:10 AM Senate FIN

                                                                               
CS FOR SENATE BILL NO. 223(RLS)                                                
"An Act lowering the age requirement from 60 years to                          
55 years for purposes of senior housing programs;                              
relating to the senior housing revolving fund; relating                        
to bonds to fund senior housing loans; repealing                               
provisions establishing the senior housing bond account                        
of the Alaska Housing Finance Corporation; and                                 
repealing a provision relating to the interest rate on                         
senior housing loans made by the Alaska Housing Finance                        
Corporation."                                                                  
                                                                               
                                                                               
Co-Chair Sharp noted the committee had a Workdraft CS "P                       
Version" before them.  He wanted his staff member to speak                     
to the CS.  TOM WILLIAMS came to the table and testified as                    
followed.                                                                      
                                                                               
"The principle changes to the bill - as you'll notice the                      
title has lengthened to be very specific as to what we are                     
doing and it is very descriptive of what is going on in the                    
bill.  The principle changes in the bill were on page 3 in                     
lines 1-13.  Basically, it added the language to say that                      
what was left in the Senior Housing Bond Account was to                        
include not only the amount of money appropriated to the                       
account but to the interest earned on that money was                           
appropriated to the account.  As you may recall in previous                    
testimony there was an appropriation of $10 million to the                     
account and that the interest that had accrued on that over                    
the years had amounted to about $4.2 million.  So that was                     
to remain in the account.  Then on line 12 to make sure that                   
the intent on those monies were only to be used in                             
accordance with an appropriation of that money."                               
                                                                               
"In addition, on page 4 lines 7 and 8 the repealer of AS                       
18.56.790(d) - that repealer was delayed until June 30, 1999                   
as opposed to being repealed immediately.  Simply because                      
there is that $14.2 million to be left in that account                         
subject to appropriation and giving the opportunity for that                   
money to be - for the Legislature to make a decision on how                    
to appropriate those funds.  That would ultimately go away                     
on June 30, 1999."                                                             
                                                                               
"The changes made by the bill would still allow the senior                     
citizen revolving fund to receive and expend bond money and                    
to move ahead as the original intent of the bill."                             
                                                                               
Senator Adams referred to the issue of lowering the age                        
eligibility and asked if there was a need to bring the age                     
requirement down to 55.  He wondered if there was not enough                   
clientele to spend the money for senior citizen housing.  He                   
wanted to know if he would now qualify and would it be OK to                   
build a house in Palm Springs since he plans to retire                         
there.  Mr. Williams deferred the questions to the sponsor                     
of the bill.  He pointed out that the changes made in the                      
Workdraft did not affect the age requirements, only the                        
bonds account.                                                                 
                                                                               
Senator Phillips moved for adoption of the CS, version "P".                    
Without objection, it was adopted.                                             
                                                                               
The committee invited JOHN BITTNEY of the Alaska Housing                       
Finance Corporation to speak to the bill.  His comments were                   
as follows.                                                                    
                                                                               
"I'm not able to comment on the CS, I haven't seen it at                       
this point.  My only comment, Mr. Chairman, at our last                        
meeting, there was a request before the AHFC's board to                        
declare the funds within the bond account as available for                     
appropriation by the Legislature or make them available to                     
the state's general fund.  The board did consider that                         
request the same day as the meeting and passed a resolution                    
opposed to making those funds available to appropriation for                   
other capital projects or as a dividend.  That's based upon                    
our needs assessment report and requests of the corporation                    
for some review of projects.  Our indications are that we                      
are getting requests for projects for seniors that don't                       
qualify for low income housing that are either middle-                         
moderate or upper income and this is the program that's                        
intended for that use.  It's their desire to see that these                    
funds are made available through the loan program for those                    
kinds of projects."                                                            
                                                                               
Senator Adams said that under the present statutes, the                        
intent was to take care of everybody up to 60 years old.                       
Was the intention to take care of everybody up to 55 because                   
there was adequate extra money for that, he asked.  He                         
wanted to know if there had been a study to show a need for                    
those between the ages of 55 and 60.  Mr. Bittney responded                    
that AHFC had done a study in 1996, which was focused on age                   
60 and over.  He did have indications there was some need                      
for the younger age group and he gave widows as an example.                    
                                                                               
Mr. Bittney told the committee some of the senior housing                      
projects had problems filling up their units and came to                       
AHFC in hopes of opening up the requirements to recruit more                   
residents.  The federal law threshold was age 55, and this                     
would align the state's requirements and allow the expansion                   
of the requirements and hopefully fill some of the vacant                      
units.                                                                         
                                                                               
Senator Adams asked if the construction loan funds had to be                   
spent in Alaska.  Mr. Bittney reaffirmed that.                                 
                                                                               
Co-Chair Sharp inquired about the initial Legislative                          
appropriation of $10 million that was not spent.  The                          
additional $4 million was interest that accumulated on the                     
balance, he asked.  Mr. Bittney agreed and noted AHFC                          
separately accounted for that as noted in the new CS.  Co-                     
Chair Sharp said the only thing the CS would add, would be                     
an assurance that the Legislature would be involved through                    
appropriation of the $14.2 million in the future.  He spoke                    
further of the intention of getting the revolving and bond                     
funds up and running and to start dispersing funds.                            
                                                                               
He asked if the program would allow funding for middle and                     
low income seniors, or would the funding for low-income                        
senior house be part of the capital budget appropriations as                   
in the past.  Mr. Bittney replied he would need to get some                    
input from his technical staff on the CS.  He had concerns                     
because he didn't know to what extent the assets of that                       
account would be necessary to go out and bond.  His                            
understanding was that the intent of the original $10                          
million was not only to have immediate funds on hand for                       
loans but to also have assets that could be pledged as                         
collateral in order to do a dept issuance.  Normally what                      
they would do is have mortgage loans already in an account                     
and go out and do a debt issuance to recapitalize the funds                    
for new loans.  This being a new program, there are no loans                   
to use as collateral, he explained.                                            
                                                                               
In reference to the question on the capital projects, Mr.                      
Bittney continued telling the committee those were usually                     
just strait grants for a project.  He called it the subsidy                    
piece of a project.  Usually on those projects they didn't                     
pencil out as a full loan because of a desire to keep the                      
rents down.  What the parties would then do, is apply to                       
AHFC for a grant for the difference of what could be                           
financed and paid for with an affordable rent and the                          
construction costs.  The request for the grant would be made                   
first, and once secured, the party would then request the                      
loan for the remainder of the project costs.  There were two                   
separate stages of the funding, he summarized.                                 
                                                                               
Co-Chair Sharp held SB 223 in committee until the next                         
Senate Finance Committee meeting.