Legislature(1993 - 1994)
03/15/1994 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
Chairman Olberg called an at-ease from 1:17 to 1:19 p.m. when HB 467 was brought forth. HB 467 - AHFC HOUSING LOANS Number 287 DAVID HARDING, LEGISLATIVE STAFF FOR REPRESENTATIVE EILEEN MACLEAN, PRIME SPONSOR OF HB 467, testified saying, "HB 467 makes changes to statutes related to certain rural loan and grant programs in AHFC (Alaska Housing Finance Corporation). The bill has three goals that will contribute to greater investment in rural housing. The first is to take advantage of the regional housing authorities already out there to help sell and service AHFC loans. The second is to encourage more private investment in multi-unit housing by doubling the size of complexes that are eligible for loans under AHFC's non-owner-occupied housing program, and allowing owners to live in one of these units to allow closer monitoring and better maintenance of the complex. The third goal is to increase the limit of AHFC's participation in water and sewer hookups to eligible housing projects. This funding is dependent on federal support, and any increase in AHFC's participation will not reduce the federal contribution. Representative MacLean believes these changes will lead to more housing and construction in remote areas, greater availability of rental units, and better servicing of loans. Thank you." Number 308 REPRESENTATIVE TOOHEY asked, "The $4 million fiscal note comes from?" MR. HARDING deferred to someone from AHFC and added, "That comes from their corporate receipts, it's not general fund money." REPRESENTATIVE TOOHEY asked, "Is this fund open to all segments of Alaska?" MR. HARDING replied, "This is specifically a rural program, all rural areas of the state." Number 315 KAREN KING, KODIAK ISLAND HOUSING AUTHORITY AND THE ASSOCIATION OF HOUSING AUTHORITIES, testified via teleconference saying, "I certainly want to speak in strong support of HB 467 which we see increases opportunities for affordable housing in rural Alaska." Number 348 REPRESENTATIVE DAVIES asked how many small communities would fall "under this definition and how many small communities there would be if we dropped this not connected by road restriction." He then referred to "the very end of the bill" and read, "`small community' means a community with a population of 5,500 or less that is not connected by road or rail to Anchorage or Fairbanks, or with a population of 1,400 or less that is connected by road or rail to Anchorage or Fairbanks. In this paragraph, `connected by road' does not include a connection by the Alaska Marine Highway system, so that's, in the bill, the definition of small community replacing rural and I just would like to know, how many such communities there are... I'm just wondering what the numbers are in this case." MR. HARDING said, "This definition of small community is not added by the bill, it is simply reflected in the bill because there is a reference to small community in the bill. That's an existing definition that I believe dates back to when these programs were under DCRA (Department of Community and Regional Affairs)... 5,500 would in rural Alaska that would pretty much cover all of the regional hubs. Pretty much everything out there... other than like the Kodiaks, Sitkas, places like that. Bethel's probably the only community that comes close to hitting that cap. I think it has about 5,000 right now." Number 392 REPRESENTATIVE TOOHEY asked, "How does this fit with the federal matching?" MR. HARDING said, "My understanding is there is a certain amount of funding that comes from federal Housing and Urban Development each year that's specifically for water and sewer extensions to make some of these rural projects possible, and in the law right now AHFC is only able to match up to 20 percent of that. And the intent here is not to reduce the federal share..." Number 420 REPRESENTATIVE BUNDE said, "I'd like them to take a position on the bill (HB 467) and... I'd like someone to comment on the limitation of 16 units." Number 425 ROBERT BREAN, DIRECTOR, RURAL HOUSING, ALASKA HOUSING FINANCE CORPORATION, testified via teleconference saying, "We have submitted a copy of a letter to David Harding which generally outlines our support of the bill. We've been able to work very closely with David and Representative MacLean in putting these features into the bill that would make flexible and considerate piece of legislation for the rural parties. The second question: initially the residential program allows for up to a duplex to be built and a non- owner-occupied allows for up to an eightplex to be built. But what we found is, in some instances we were having requests by individuals that were larger than eightplexes. There were very few larger than fifteenplexes. We felt that simply by doubling the scope with that program, that would sufficiently cover the need out there. Also we increased the residential rural energy of homeowner for occupied program to build up to a fourplex. This would allow an individual to live in the fourplex, have some kind of a local business and maybe rent a couple of rooms out." Number 454 REPRESENTATIVE DAVIES asked, "Can you tell me how this program, as it applies to rural areas, differs from your programs that apply to the rest of the state and what the need for those differences are?" MR. BREAN replied, "The general difference is that we have a lower interest rate out in the rural areas and initially, for example, the rental program was established in the early days basically to build teachers housing, so the teachers had housing after the Molly Hooch case passed. But the primary reason is the interest rate. It's lower for the rural areas than it is for the urban areas." CHAIRMAN OLBERG said, "The obvious question would be, how much?" MR. BREAN said, "I believe on that particular program it's one percent lower than the rate of the most recent bond issue." Number 471 REPRESENTATIVE TOOHEY asked, "Does your rate fluctuate?" MR. BREAN said, "It does fluctuate. Originally, a year or so we had in statute a set rate of ten and a half percent. We found that wasn't working because percentage rates had obviously dropped a lot lower than that. So we had an amendment about a year ago that put a sliding mechanism in there so that it adjusted according to the most recent bond rate." REPRESENTATIVE TOOHEY said, "I assume that you'll always be at least one percent lower than urban areas." MR. BREAN confirmed this. Number 486 REPRESENTATIVE DAVIES said, "I noticed on the fiscal note that the fiscal impact seems to be primarily in the capital side. There are no operating costs anticipated by increasing the number of loans in the rural area." MR. BREAN said, "We would have additional operating costs, but those would all be borne by corporate receipts. The one fiscal note that we have attached there is relative to the match for the supplemental housing program and that's why it's in the capital budget." CHAIRMAN OLBERG asked, "When Alaska Housing is involved in legislation, we're never talking about general funds, are we?" MR. BREAN replied, "No, we are not, Mr. Chairman. We anticipate that all these expenses will be borne by corporate receipts." Number 504 REPRESENTATIVE DAVIES moved that HB 467 be passed out of committee with individual recommendations. There were no objections. CHAIRMAN OLBERG adjourned the meeting at 1:37 p.m.