Legislature(1993 - 1994)

03/15/1994 01:00 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                                   
  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                   
  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                                                                   
  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                                                                   
  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                    
  MR. BREAN said, "I believe on that particular program it's                   
  one percent lower than the rate of the most recent bond                      
  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                  
  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                    
  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                    
  CHAIRMAN OLBERG adjourned the meeting at 1:37 p.m.                           

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