Legislature(1995 - 1996)
05/05/1995 08:40 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE BILL 281
"An Act ratifying an agreement between the Alaska
Housing Finance Corporation and the commissioner of
revenue and making certain pledges to obliges of the
corporation regarding that agreement; relating to the
authorization for and the issuance of bonds by the
Alaska Housing Finance Corporation to pay for the costs
of repair and rehabilitation of student housing
facilities of the University of Alaska; and providing
for an effective date."
HOUSE BILL 309
"An Act approving the University of Alaska's plans to
enter into long-term obligations to borrow money from
the Alaska Housing Finance Corporation for the
acquisition of student housing facilities; and
providing for an effective date."
Co-Chair Hanley noted that HB 281 and HB 309 would be placed
in Subcommittee with Representative Therriault as Chair and
with members Representative Martin and Representative Brown.
Representative Mulder asked the long term plans for the
University of Alaska Southeast (UAS). He indicated that
campus was not affordable and suggested spending those
requested funds in other locations. Ms. Redman responded
that the Juneau campus has intentionally been kept very
small and focused. It offers only undergraduate degrees in
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four different areas. She pointed out that it was the
strongest campus in terms of student growth.
She added that students from Southeast Alaska do not want to
move to Fairbanks, pointing out the low enrollments of
Southeast students moving to Anchorage or Fairbanks for
school. Ms. Redman noted that most of those students tend
to go "outside" if they do not attend UAS. She emphasized
that the long term plan for Juneau would be to keep it small
and focused.
Representative Mulder asked the number of students that go
to UAS. Ms. Redman noted that there were approximately 2000
students. Representative Kelly asked if there was a loss to
the state by the number of students that leave for school.
Ms. Redman replied that students that leave the state
usually do not return which results in a net loss to the
State.
Representative Mulder asked the total cost per university
student at each of the three campuses. Ms. Redman stated
that the tuition was the same at all campuses. The Juneau
campus does cost the State less than the cost of Anchorage
or Fairbanks. She added that cost was reflective of what
UAS offers, with no laboratory courses, faculty are paid on
a lower wage rate and no graduate programs.
Representative Martin pointed out that last year a detailed
study had been provided on the costs associated with each
campus. Ms. Redman stated that the Southeast campus was the
most efficient campus with the lowest administrative cost.
Representative Therriault questioned the fiscal note. Ms.
Redman explained that the $970.2 thousand dollars was the
appropriation amount and represented the University's share
of the debt service on the dormitories in Anchorage. The
University is required to get authorization to spend any of
their own debt service that exceeds over $1 million dollars
per year on a revenue bond.
Representative Kohring asked if the University supported
combining the two bills. Ms. Redman advised that the
preference would be to leave the pieces of legislation
separate and that HB 309 would be contingent on the passage
of HB 281.
Representative Kohring asked what the bond rate would have
been if it had not been subsidized. Ms. Redman replied that
the rate would be close to 6.7%. Representative Kohring
pointed out that would be an interest rate subsidy.
WILSON CONDON, COMMISSIONER, DEPARTMENT OF REVENUE, spoke in
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support of HB 281. He stated that the bill had been
introduced by the Governor. He provided the Committee
members with a position paper regarding the statewide
system. [Attachment #1]. He also provided members with the
"University of Alaska Deferred Maintenance" brochure. [Copy
on file].
Representative Martin commented on the deferred maintenance
costs of student housing. Commissioner Condon explained
that deferred maintenance would need to be housing related.
DAN FAUSKE, (TESTIFIED VIA TELECONFERENCE), C.E.O., ALASKA
HOUSING FINANCING AUTHORITY, DEPARTMENT OF REVENUE,
ANCHORAGE, stated that deferred maintenance would be
provided under AS 18:56 and that AHFC could be involved with
the deferred maintenance. The key to maintaining financial
stability of the package would be in continuing a good
credit rating. He concluded that a strong AHFC will capture
the capital needed to fund the projects.
Representative Therriault asked how the $30 million dollars
had been determined for the deferred maintenance bond
authorization. Ms. Redman replied that the real number
would be $35 million dollars as recommended in last year's
legislation. Representative Therriault asked if $70 million
dollars would be the transfer amount. Commissioner Condon
replied that the agreement as negotiated between AFHC and
the Department would transfer $70 million dollars in the
next fiscal year and then followed by a $50 million dollar
transfer for each of the following four fiscal years. This
legislation would authorize that agreement.
Representative Martin noted that the Senate had agreed with
that amount. Representative Mulder disagreed with the
proposal. He stated that this would take money "off the
table" away from the Legislature's future use and "give" it
to University priorities. Commissioner Condon countered
that the bill would fund a project and would make a
provision for a long term financial plan in order to protect
the value of AHFC as an asset.
Commissioner Condon continued that AHFC as an asset will
produce roughly $100 million dollars a year in revenue that
the Legislature can use. The legislation would commit those
funds for use in bonding for one project. There would be no
commitment in regards to the transfer plan.
Representative Therriault asked if the legislation would
limit the use to the assets and not the cash. Commissioner
Condon did not know. He stated that the legislation would
represent a policy judgement that roughly half of the net
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available funds coming out of AHFC be reserved to meet the
kinds of needs that have typically been met by AHFC and its
programs.
HB 281 and HB 309 were HELD in Committee for further
consideration in Subcommittee.
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