Legislature(2009 - 2010)HOUSE FINANCE 519

03/24/2010 09:00 AM House FINANCE

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Moved Out of Committee
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HOUSE BILL NO. 291                                                                                                            
     "An Act  relating to  the issuance  of state-guaranteed                                                                    
     revenue   bonds   by   the   Alaska   Housing   Finance                                                                    
     Corporation   to  finance   mortgages  for   qualifying                                                                    
     veterans; and providing for an effective date."                                                                            
9:08:22 AM                                                                                                                    
BRYAN  BUTCHER,  PUBLIC  AFFAIRS  DIRECTOR,  ALASKA  HOUSING                                                                    
FINANCE  CORPORATION (AHFC)  reported that  this bill  would                                                                    
allow Alaskans to vote on approving  AHFC to sell up to $600                                                                    
million in bonds to fund  the veteran's mortgage program. He                                                                    
provided  a  history of  the  federal  program that  allowed                                                                    
states  to sell  tax  exempt  debts to  fund  a program  for                                                                    
veterans  that  would  be  one half  to  five-eighths  of  a                                                                    
percentage point  below the normal  taxable rate.  Only five                                                                    
states  signed  up  originally: California,  Texas,  Oregon,                                                                    
Wisconsin and Alaska.  The eligible requirement is  to be in                                                                    
the service 1977  or earlier and not out for  longer than 30                                                                    
years.  There  were  fewer veterans  eligible  as  time  has                                                                    
passed.  There were  efforts to  get Congress  to lift  this                                                                    
time  limit,  but  when the  1977  requirement  was  finally                                                                    
lifted the  federal statute restricted  the selling  of only                                                                    
$10  million in  bonds to  fund  the program  per year.  The                                                                    
number  was lifted  in 2008  to enable  the selling  of $100                                                                    
million in bonds to fund  the program. There was a potential                                                                    
to  run out  of funds  in 2011.  The Alaska  Housing Finance                                                                    
Corporation is  still responsible  for funding  the program;                                                                    
no state money  has had to go into the  program. The goal is                                                                    
to  get it  on the  ballot this  year to  continue with  the                                                                    
9:11:32 AM                                                                                                                    
Representative Doogan believed  the State Guaranteed Revenue                                                                    
Bond is really a General Obligation Bond.                                                                                       
JOE DUBLER, CHIEF FINANCIAL  OFFICER, ALASKA HOUSING FINANCE                                                                    
CORPORATION  (AHFC) answered  that the  Revenue Bond  relies                                                                    
primarily upon some source, in  this case mortgage loans, to                                                                    
make the debt service. The  statute requires that there be a                                                                    
general obligation  pledge behind  that revenue  stream with                                                                    
the state  of Alaska behind  this debt service.  These bonds                                                                    
have never gotten behind at this point.                                                                                         
Representative Doogan wondered why  the voters are not being                                                                    
told  that. He  emphasized that  these are  actually General                                                                    
Obligation Bonds and should not  be called by this new name.                                                                    
Mr. Butcher  replied that in  the question on the  ballot it                                                                    
will state that  it is a general obligation of  the state of                                                                    
Alaska. The  fiscal note is  requesting $150,000  to provide                                                                    
an  education campaign  to all  Alaskans  to further  define                                                                    
what they are voting  on. Representative Doogan relayed that                                                                    
he  wanted  it  on  the   record  that  these  were  General                                                                    
Obligation Bonds.  Mr. Butcher  added that in  January 2010,                                                                    
Standards  and  Poor did  a  study  of thirty  four  housing                                                                    
finance agencies and  the AHFC latest bond  issuance had the                                                                    
lowest delinquency rate in the country.                                                                                         
9:15:39 AM                                                                                                                    
Vice-Chair Thomas  inquired on  how many loans  veterans can                                                                    
receive under this  program. Mr. Dubler replied  one loan at                                                                    
a time and that must be paid off before getting a new loan.                                                                     
Vice-Chair Thomas asked if the  rural rate is lower than the                                                                    
veteran's  rates. Mr.  Dubler answered  that  the rates  are                                                                    
about the same at this time.                                                                                                    
9:17:38 AM                                                                                                                    
Co-Chair   Stoltze  referred   to  the   public  information                                                                    
campaign  and mentioned  the heavy  advertising done  by the                                                                    
Alaska  Housing Finance  Committee promoting  various things                                                                    
and wondered if educating the  public on this bond could fit                                                                    
into  their existing  program.   Mr. Butcher  contended that                                                                    
most  of  the  cost  would  go for  mail  outs  to  get  the                                                                    
information to  all Alaskans.  Co-Chair Stoltze  stated that                                                                    
this  bill  is  well  supported  and  wondered  if  spending                                                                    
$150,000 was necessary.                                                                                                         
9:18:58 AM                                                                                                                    
Representative Austerman asked if  the Alaska National Guard                                                                    
would be eligible.  Mr. Dubler declared that  if they served                                                                    
any  tour of  duty  and have  an  honorable discharge,  they                                                                    
would qualify.  If they only  served in the  Alaska National                                                                    
Guard without  being call  up, then  they would  not qualify                                                                    
for this program.                                                                                                               
Representative  Foster  referred  to the  Sponsor  Statement                                                                    
where  it mentioned  serving as  a cadet  in one  the United                                                                    
States  military  academies.  He questioned  if  that  would                                                                    
9:20:20 AM                                                                                                                    
LAURIE  HOLTE,  ALASKA   HOUSING  FINANCE  CORPORATION  (via                                                                    
teleconference) responded  that the  veteran must  have full                                                                    
time duty other than training.                                                                                                  
9:20:49 AM                                                                                                                    
Co-Chair Hawker  stressed that $150,000  was a lot  of money                                                                    
and under  this fiscal note  AHFC could spend the  money any                                                                    
way they wanted.  He asked for assurance that  all the money                                                                    
would  be  spent on  this  specific  purpose and  not  other                                                                    
things.  Mr. Butcher  emphasized that  this fiscal  note was                                                                    
prepared  before  the  operating  budget.  He  expected  the                                                                    
actual dollar amount will be  more than $150,000. He assured                                                                    
that AHFC can  follow up on information on how  the money is                                                                    
Co-Chair Hawker  assured that  he did not  want to  create a                                                                    
larger  burden,  but thought  this  might  be overkill.  Mr.                                                                    
Butcher  remarked that  this is  different  from the  normal                                                                    
marketing of their programs. This  will not be promoted, but                                                                    
only used to provide education on the bill.                                                                                     
Co-Chair  Stoltze   remarked  that   AHFC  does  a   lot  of                                                                    
communication through  various means  and wondered  if these                                                                    
materials  can  be  used to  communicate  the  informational                                                                    
aspects of this bond package.  Mr. Butcher indicated that he                                                                    
would have  to get  back regarding how  much is  spent every                                                                    
year, but  remarked an estimate  would be about  $200,000 to                                                                    
$300,000.   Co-Chair   Stoltze    communicated   that   many                                                                    
legislators  might use  this in  their  election bids  since                                                                    
veteran's issues are popular in the state.                                                                                      
9:24:40 AM                                                                                                                    
Vice-Chair Thomas  noted that the qualified  veterans in the                                                                    
bill  eliminate the  Vietnam veterans.  Mr. Butcher  replied                                                                    
that when  the 1977 year  was lifted,  it was reduced  to 25                                                                    
years.   Vice-Chair  Thomas   believed   there  was   unfair                                                                    
discrimination against Vietnam  veterans since WWII veterans                                                                    
were still eligible.                                                                                                            
9:27:30 AM                                                                                                                    
Co-Chair  Stoltze closed  public testimony  and referred  to                                                                    
the fiscal note.                                                                                                                
Co-Chair  Hawker MOVED  to report  HB 291  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
HB  291 was  REPORTED  out  of Committee  with  a "do  pass"                                                                    
recommendation and  with previously published  fiscal notes:                                                                    
FH1 (OOG) and FN2 (REV)                                                                                                         
9:29:23 AM                                                                                                                    

Document Name Date/Time Subjects
02 HB 291 Vets Bonds Sponsor Statement[1].pdf HFIN 3/24/2010 9:00:00 AM
HB 291
Federal Veteran DefinitionL.pdf HFIN 3/24/2010 9:00:00 AM
HB 291
HB 291 Updated AHFC Vets Loan Activity[1].pdf HFIN 3/24/2010 9:00:00 AM
HB 291
HB 291 VetsL Sec Analysis.pdf HFIN 3/24/2010 9:00:00 AM
HB 291
HB292 Gov letter hb 292[1].pdf HFIN 3/24/2010 9:00:00 AM
HB 292
Hb 292 Statute history[1].pdf HFIN 3/24/2010 9:00:00 AM
HB 292
HB 292 NEW FN DMVA 03242010.pdf HFIN 3/24/2010 9:00:00 AM
HB 292