Legislature(1997 - 1998)

04/28/1998 06:20 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE BILL NO. 230                                                             
                                                                               
"An Act relating to housing assistance provided by the                         
Alaska Housing Finance Corporation and to its rural                            
housing programs, to the corporation's supplemental                            
housing development grants to regional housing                                 
authorities, and to housing programs of regional                               
housing authorities; permitting regional housing                               
authorities to make, originate, and service loans for                          
the purchase and development of residential housing;                           
and amending definitions relating to various housing                           
programs; and providing for an effective date."                                
                                                                               
Co-Chair Therriault MOVED that the work draft #0-LS0871\E,                     
Cook, 3/30/98, be the version before the Committee.  There                     
being NO OBJECTION, it was adopted.                                            
                                                                               
REPRESENTATIVE IVAN IVAN stated that HB 230 would modify                       
the rural loan programs in the Alaska Housing Finance                          
Corporation (AHFC), with regional housing authorities                          
improving the delivery of housing services.  The                               
legislation recognizes that Alaska's rural areas experience                    
unique circumstances which must be taken into account to                       
ensure that housing programs are administered practically                      
and fairly for all Alaskans.  The legislation recognizes                       
and relies on the role that regional housing authorities                       
play in the implementation of housing programs.                                
Representative Ivan explained that enactment of the bill                       
would greatly improve the quality of life for numerous                         
Alaskans living in small communities throughout the State.                     
                                                                               
JOHN BITNEY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOUSING                    
FINANCE CORPORATION (AHFC), DEPARTMENT OF REVENUE,                             
ANCHORAGE, stated that AHFC supports the changes in CS HB
230 (FIN). He acknowledged that this is a time-sensitive                       
issue given the late date and that AHFC would like to keep                     
the "status quo" in regards to the number of communities                       
involved in the program.  This would guarantee that Bethel                     
and Haines would qualify to take advantage of the rural                        
mortgage program.  That program was established by statute,                    
charging a 1% below bond rate interest.                                        
                                                                               
Co-Chair Therriault inquired the benefits of the program.                      
                                                                               
DWAYNE WISE, (TESTIFIED VIA TELECONFERENCE), RURAL LOAN                        
PROGRAM MANAGER, ALASKA HOUSING FINANCE CORPORATION,                           
DEPARTMENT OF REVENUE, ANCHORAGE, noted that the benefits                      
would be much more flexible than the underwriting and                          
property criteria, because throughout rural Alaska, many of                    
the properties are unable to meet the typical standards                        
required for more transitional type underwriting.                              
                                                                               
Representative Mulder offered for discussion Amendment #1,                     
relating to the University of Alaska (UA) student-housing                      
situation.                                                                     
                                                                               
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA                             
RELATIONS, FAIRBANKS, stated that Amendment #1 would                           
address projects which were not included in the Board of                       
Regents capital project requests this year.  There are four                    
housing projects, plus deferred maintenance on the housing.                    
She noted that the AHFC vehicle to help with the projects                      
has been useful, particularly in Anchorage.                                    
                                                                               
Representative Mulder noted a technical drafting error on                      
Page 2, Line 5, pointing out that there needs to be an                         
insertion of "a year" after "$350,000".  Ms. Redman stated                     
that the amendment was an attractive option for the                            
University with three components in the housing projects:                      
                                                                               
? Maintenance of the facilities;                                               
? Paying off the debt service; and                                             
? Programming.                                                                 
                                                                               
Dorm receipts can be used to pay for two of these concerns.                    
Maintenance of the projects is 100% funded through the life                    
of the projects, which allows with subsidized debt, to                         
contribute and pay for the facilities in a reasonable                          
amount of time.                                                                
                                                                               
In response to Co-Chair Hanley, Ms. Redman pointed out that                    
in terms of housing, it would be necessary to have a                           
subsidized bond to fully support the cost of a dorm unless                     
there was money in the operating budget to handle the                          
maintenance and programming on that facility.  Using this                      
particular mechanism allows the University a subsidy other                     
than that contained in the regular operating budget.                           
                                                                               
Co-Chair Hanley inquired the amount of deferred maintenance                    
remaining on student housing.  Ms. Redman replied that                         
approximately $14 million dollars remained.  Co-Chair                          
Hanley recommended repairing the buildings first, before                       
building new ones.  Ms. Redman pointed out that for four                       
years, the University had only placed deferred maintenance                     
projects in the Capital Budget Request (CBR).  She stressed                    
that there comes a time when both needs should be                              
addressed.  Student needs are important as is expanding the                    
enrollment.  She pointed out that there had been a                             
commitment by the Legislature for the past few years to                        
attempt to make headway on the deferred maintenance issue.                     
She advised that this is the top priority, although, at the                    
same time, the University also has other serious needs.                        
                                                                               
Co-Chair Hanley asked the percentage of housed students on                     
the Fairbanks campus.  Ms. Redman noted that the Fairbanks                     
campus is a residential campus with about 50% student body                     
beds.  The Anchorage campus is not a residential campus and                    
houses approximately 2% to 3% of their students.  The                          
University would like to bring Anchorage up to about the                       
10% level which is a typical number for a metropolitan                         
university.                                                                    
                                                                               
Representative Martin agreed that the University has                           
serious needs for capital improvement projects.  Co-Chair                      
Therriault questioned if the proposed amendment would                          
remove funding from other statewide capital projects.  He                      
asked if the AHFC money was being "counted on" to leverage                     
bonds.  Mr. Bitney replied that the proposed money would be                    
taken out of the $103 million dollar subsidy portion                           
provided by AHFC.                                                              
                                                                               
Co-Chair Hanley inquired the subsidy portion for current                       
dorms on the Anchorage campus.  Mr. Bitney advised that                        
amounted to $100 million dollars and would be taken from                       
the $103 million.                                                              
                                                                               
Co-Chair Therriault asked the multiplier used on the money                     
leveraging for the bonds.  Mr. Bitney replied that would                       
depend on the bonds terms and interest rates.                                  
Representative Mulder noted that it had brought forth                          
Amendment #1 so that the bill would not be returned to the                     
Committee for further discussion on that possibility.  He                      
proceeded to WITHDRAW Amendment #1.  There being NO                            
OBJECTION, it was withdrawn.                                                   
                                                                               
Representative J. Davies asked how much of the Governors                       
proposed $7 million dollar capital budget was to be used                       
for deferred maintenance.  Ms. Redman explained that none                      
of that money at this point would be used for housing                          
maintenance.  Those projects are lower on the priority list                    
for deferred maintenance and were not included in the first                    
$50 million dollars.                                                           
                                                                               
Co-Chair Therriault commented that he was supportive of the                    
University's dilemma, although, felt it was important to                       
see the total picture for the Capital Budget Reserve plan.                     
                                                                               
Representative Foster MOVED a change to the proposed                           
legislation on Page 1, Line 5, deleting "6,500" and                            
inserting "11,000".                                                            
                                                                               
REPRESENTATIVE ALAN AUSTERMAN replied that with this                           
amendment, the Kodiak out-skirts would then be eligible to                     
receive 1% reduction in the normal loan rate.  AHFC would                      
use 10,300 population base projection from which to work.                      
                                                                               
(Tape Change HFC 98- 132, Side 2).                                             
                                                                               
Mr. Bitney explained that increasing residency to 11,000                       
would bring in Ketchikan, Sitka and Kodiak.  A concern at                      
this time, by doubling the number, is that it would require                    
some fiscal changes.  AFHC is not prepared at this time to                     
release for the record that number because it will cause an                    
addition to the reserves.  The rural program is a self-                        
sustaining revolving fund and AHFC's concern at this time,                     
is to maintain the financial integrity of that program.                        
                                                                               
Co-Chair Hanley asked if those three communities currently                     
receive these loans.  Mr. Wise commented that within the                       
Sitka, Ketchikan or Kodiak city limits do not receive the                      
rural loan program.  Co-Chair Hanley pointed out that                          
adopting the amendment would make the program grow,                            
changing the intent.                                                           
                                                                               
Representative J. Davies asked how AHFC would administer                       
this program.  Mr. Bitney explained that the Rural                             
Revolving Loan Fund would need to be capitalized with                          
additional general funds.  He did not know what effect that                    
action would have on AHFC's ability to have the $103                           
million dollars available.                                                     
                                                                               
In response to Representative Grussendorf, Mr. Wise                            
explained that in 1982, a determination was made by the                        
Attorney General's office noting that outside Kodiak City                      
limits, because there was not city water or sewer, that                        
area did not meet the typical financing criteria.  A                           
determination was then made that they would be eligible for                    
the rural loan program.  He continued, the same criteria                       
has been applied to outside Kechikan City limits.                              
Representative Grussendorf inquired if Sitka was being                         
penalized because they were unified.  Mr. Wise stated that                     
it could appear that was true.                                                 
                                                                               
Mr. Bitney noted that the Rural Fund was not a subsidized                      
fund.  Representative J. Davies pointed out that there are                     
many places in the State which have the same situation                         
being an area surrounding a larger city.  Representative                       
Grussendorf commented that there appears to be a                               
distinction between the organization of boroughs.                              
                                                                               
Co-Chair Therriault OBJECTED to adoption of Amendment #2.                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  J. Davies, Grussendorf, Moses                                       
OPPOSED: Mulder, G. Davis, Foster, Kelly, Kohring,                             
Martin, Hanley, Therriault                                                     
                                                                               
The MOTION FAILED (3-8).                                                       
                                                                               
Representative Foster MOVED to report CS HB 230 (FIN) out                      
of Committee with individual recommendations and with the                      
accompanying fiscal note.                                                      
                                                                               
CS HB 230 (FIN) was reported out of Committee with                             
"individual recommendations" and with a zero fiscal note by                    
the Department of Revenue.                                                     

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