Legislature(1997 - 1998)
04/28/1998 06:20 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.