Legislature(2001 - 2002)
05/12/2002 04:10 PM House RLS
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 268-GUARANTEED REVENUE BONDS FOR VETERANS CHAIR KOTT announced that the first order of business would be SENATE BILL NO. 268, "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." Number 0067 JOHN BITNEY, Legislative Liaison, Alaska Housing Finance Corporation, Department of Revenue, explained that SB 268 would authorize a vote of the people with regard to whether or not to authorize $500 million in state-guaranteed revenue bonds to fund the Alaska veterans mortgage program within the Alaska Housing Finance Corporation (AHFC). He noted that Alaska is one of five states that has the veterans mortgage program, which was a tax exemption that was provided by Congress in 1979. Those veterans qualifing for this program are those who have served in the military prior to January 1, 1977, or have not been discharged more than 30 years prior to the date of the loan application. Therefore, the number of qualified veterans is beginning to diminish. Mr. Bitney said this would be last time that AHFC would anticipate having such a ballot measure for these type of bonds. There have been four previous ballot questions when the program was more heavily used and each of those questions passed with good public support. Mr. Bitney noted that [AHFC] supports measures in Congress relating to an expansion of the definition of a qualified veteran. In fact, the legislature unanimously supported SJR 31 to support some of those measures. Mr. Bitney noted that the companion House bill moved through three committees and is currently in the House Rules Standing Committee while the Senate bill had two Senate committee hearings. Number 0313 CHAIR KOTT requested that Mr. Bitney expand on the reasoning behind the thought that this will be the last time that AHFC will come forward with such a bond measure. MR. BITNEY reiterated the federal definition of a qualified veteran. Due to those federal qualifications, there are small numbers of qualifying veterans. Therefore, this $500 million should be more than enough to deal with all of the qualifying veterans. In further response to Chair Kott, Mr. Bitney explained that the net benefit to a veteran is the tax exempt bond rate for the qualifying veteran's mortgage rate. This exemption results in about a 1 percent discount. Furthermore, the veterans have the benefit of a higher loan to value ratio. A qualifying veteran can take out as much as a 95:97 loan to value ratio, which means that the veteran has a smaller down payment. Number 0444 REPRESENTATIVE McGUIRE inquired as to the rationale behind limiting the qualified veteran to those who have served prior to January 1, 1977. MS. BITNEY answered that when the program was established in 1979 it was intended to be a benefit to Vietnam veterans. Although there have been other national conflicts since that time, there has been difficulty in expanding the definition because only five states have this program. However, with the current mood of the country, there may be more sympathy with an expansion of the program. Number 0500 REPRESENTATIVE BERKOWITZ inquired as to the number of veterans in Alaska that qualify. MR. BITNEY informed the committee that currently AHFC does about $70 million worth of business [for this program], which equates to roughly a little less than 100 loans. REPRESENTATIVE BERKOWITZ inquired as to what would happen with the extra authorization. MR. BITNEY explained that AHFC only uses the authorization to issue bonds at times and in amounts that are necessary to meet ongoing demands. Therefore, [the authorization] would essentially be unused authority. REPRESENTATIVE BERKOWITZ surmised then that AHFC would have unused bonding authority. MR. BITNEY specified that such would be correct for these [veteran] mortgages. CHAIR KOTT announced a conflict of interest because he benefits from this program now. REPRESENTATIVE PORTER noted he also qualifies for the program. Number 0602 REPRESENTATIVE PORTER moved to report SB 268 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 268 was reported from the House Rules Standing Committee.
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