02/19/2002 03:32 PM House MLV

HB 370-GUARANTEED REVENUE BONDS FOR VETERANS                                                                                  
                                                                                                                                
CHAIR CHENAULT announced the final  order of business, HOUSE BILL                                                               
NO. 370,  "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."   He noted  that online from the  Alaska Housing                                                               
Finance Corporation (AHFC) were Judith DeSpain and John Bitney.                                                                 
                                                                                                                                
Number 0098                                                                                                                     
                                                                                                                                
JUDITH  DeSPAIN,   Deputy  Executive  Director,   Alaska  Housing                                                               
Finance  Corporation,   Department  of  Revenue,   testified  via                                                               
teleconference in  support of HB  370.  She explained,  "Over the                                                               
years, the  veterans' mortgage program  and the ability  to issue                                                               
these  tax-exempt  bonds [have]  given  a  lot of  veterans  some                                                               
lower-cost-interest  home loans.   There's  no difference  in the                                                               
program, and it's been how  we've delivered this in the program."                                                               
She stated total support for the bill.                                                                                          
                                                                                                                                
Number 0144                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred to  the transmittal letter from                                                               
Governor Knowles, dated January 29,  2002, which says this is the                                                               
fifth such bond  approval.  She surmised, based  on Ms. DeSpain's                                                               
testimony, that  this is  "the same  as we  have approved  in the                                                               
prior four separate elections on these veterans bonds."                                                                         
                                                                                                                                
MS. DeSPAIN concurred.                                                                                                          
                                                                                                                                
Number 0190                                                                                                                     
                                                                                                                                
REPRESENTATIVE GREEN voiced  support for the bill.   He asked how                                                               
the  default rate  compares generally  to that  for "the  average                                                               
loan."                                                                                                                          
                                                                                                                                
MS. DeSPAIN said  she didn't know that she'd looked  at that data                                                               
specifically regarding  veterans, but offered, "I  would say it's                                                               
about  the same.  ... Our  default rate  right now  is very  low.                                                               
It's about 3 percent."                                                                                                          
                                                                                                                                
Number 0274                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HAYES  noted  that  the  [governor's  transmittal                                                               
letter]  says   the  federal  government  might   be  looking  at                                                               
expanding this program  beyond [those who served  in the military                                                               
before] January  1, 1977.   He asked  whether Ms. DeSpain  or Mr.                                                               
Bitney had information about that.                                                                                              
                                                                                                                                
MS. DeSPAIN explained:                                                                                                          
                                                                                                                                
     When the federal legislation went  through in the early                                                                    
     '80s, there were  five states that went  out, under the                                                                    
     IRS  [Internal  Revenue   Service]  code,  and  created                                                                    
     mortgage  programs that  took  advantage of  tax-exempt                                                                    
     bonds.  ...   About three  years later,  then, the  IRS                                                                    
     changed its mind but grandfathered  in the five states,                                                                    
     which Alaska  is one of.   And the  "qualified veteran"                                                                    
     definition is that you had  to have been in the service                                                                    
     prior to 1977 [and] out of  the service no more than 30                                                                    
     years.  So basically, without  having a sunset date, by                                                                    
     the definition it does sunset.                                                                                             
                                                                                                                                
     So we're  working hard right  now, in Congress,  to get                                                                    
     the  support for  doing away  with that  definition and                                                                    
     allowing all of those people  that were part of wars or                                                                    
     [Desert Storm] ... and others, so that they could take                                                                     
     advantage of these bonds.                                                                                                  
                                                                                                                                
Number 0525                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES moved  to report HB 370  from committee with                                                               
individual recommendations and the  attached fiscal notes.  There                                                               
being no  objection, HB 370  was moved  out of the  House Special                                                               
Committee on Military and Veterans' Affairs.