Legislature(1995 - 1996)

04/11/1995 08:07 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SB 92 - AHFC SUBJECT TO EXEC. BUDGET ACT                                    
 Number 019                                                                    
 JOHN BITNEY, Legislative Assistant to Representative Terry Martin,            
 introduced himself as the staff to the Chairman of the Legislative            
 Budget and Audit Committee.  As he stated, at their last LBAC                 
 meeting a testifier from the Department of Revenue raised some                
 concerns about SB 91.  They had some proposed language to submit to           
 the House State Affairs Committee that would address their concerns           
 about exemptions, procedures and financing, and mechanisms that               
 would allow them to take advantage of bonding opportunities in the            
 market, for one.                                                              
 CHAIR JAMES said this bill had a blank committee substitute (CS),             
 and asked if everyone had a copy of it.                                       
 Number 059                                                                    
 REPRESENTATIVE SCOTT OGAN asked if Mr. Bitney could give an                   
 analysis of the CS, and the changes.                                          
 MR. BITNEY explained that the language of the CS was prepared by              
 the Administration, or a representative of the Governor's office.             
 He said he was not involved in drafting the language, so he                   
 encouraged the committee to let the drafters speak on that; they              
 could explain it better.                                                      
 Number 070                                                                    
 CHAIR JAMES noted that she had requested the work draft.  The                 
 changes to the work draft on page 2, came from the Administration.            
 This was to give an exemption to normal business routines.                    
 MR. BITNEY said there are exemptions that begin on line 5, page 2.            
 They defined what is on the outside of the procedures of the                  
 Executive Budget Act for the corporation.  Line 7 signifies the               
 things the representative from the Department of Revenue had                  
 pointed out that would allow them to take advantage of various                
 bonding opportunities in the bond market.  The corporation's                  
 borrowing of money is exempted from the review procedures of the              
 Executive Budget Act.  Line 11 asks basically that the loan                   
 programs available for long programs, where no subsidy is provided,           
 be on the outside.  Section C is exempted from multi-family                   
 projects, where they take advantage of various tax credit                     
 opportunities, or arbitrage earnings.  Arbitrage earnings are                 
 purchases of securities on one market for immediate resale on                 
 another market in order to profit from a price discrepancy.                   
 REPRESENTATIVE OGAN asked if the sponsor agreed with the                      
 MR. BITNEY answered that the sponsor was there at the pleasure of             
 the Labor and Audit Committee.  The concerns brought up there were            
 the concerns that the committee brought up at the last hearing.               
 CHAIR JAMES said for the record, that Representative Caren Robinson           
 arrived at 8:10 a.m.                                                          
 REPRESENTATIVE JOE GREEN said that he moved they adopt the unmarked           
 House CS for SB 92 as the working copy.  There being no objections,           
 the unnumbered CS was adopted.                                                
 Number 160                                                                    
 DAN FAUSKE, Chief Executive Officer, Alaska Housing Finance                   
 Corporation, testified in support of SB 92.  He said it represented           
 a workable solution for them.  The bill considers issues, such as             
 subsidized mortgage programs, that raised such concern.  It does              
 not tie their hands in reference to entering the capital market, to           
 continue the bond portfolio in the loan programs.  He saw the                 
 language as healthy, and said it was a situation that the AHFC                
 could live with.  It also met requirements and needs that the                 
 legislature stated.                                                           
 REPRESENTATIVE GREEN said when they last met they discussed item              
 "C," which was the $10 million, and his recollection was that Mr.             
 Fauske did not have any problem with that either.                             
 MR. FAUSKE concurred that it was not something they couldn't live             
 with.  He said the original statement applied to bonded                       
 indebtedness.  In a bond portfolio $10 million would be rather                
 restrictive.  The new language is fine.                                       
 Number 180                                                                    
 CHAIR JAMES recalled that a resolution was drafted for a title                
 change, but it was not in her folder.  Her committee aide                     
 questioned if a title change was necessary, and the consensus of              
 the committee was that it was necessary.  She asked her aide to               
 check that out.                                                               
 REPRESENTATIVE CAREN ROBINSON wondered if AHFC would prefer that              
 things stay as they are.  She asked if operations would be better             
 if things remained as they were, or if this legislation would help            
 their operation.  She said Juneau builders were unhappy with this             
 bill originally.                                                              
 MR. FAUSKE said his personal assessment was that the legislation              
 would help to enhance relations with the legislature.  It would               
 make his job easier, so he viewed it as a win-win situation.  It              
 puts everyone in a situation where healthier dialogue can happen,             
 so that will be good.                                                         
 REPRESENTATIVE ROBINSON brought up that the local Juneau Home                 
 Builders Association did not like this bill originally, and                   
 wondered if Mr. Fauske would think they would be happy with the               
 MR. FAUSKE said he thought they should like the changes.  He felt             
 this legislation allowed a great deal of flexibility.  When they              
 get into projects of over $10 million, which are few, so they do              
 not come before them very often.  There is a long lead time to give           
 them adequate time to get before their constituency and the                   
 legislature for dialogue.  It changes the operation style somewhat,           
 but not enough to impede the organization's ability to carry out              
 its missions.  Mr. Fauske said it would be all inclusive in the               
 sense that many of the programs fall under the capital budget as              
 representative of the Family Home Loan Program.  He thought it                
 would increase the oversight, and also, it would not lead to                  
 situations as in the past, such as the 5 percent on the subsidies.            
 It removes the subsidized loan programs.  That program created                
 confusion and concern.  It strengthens the legislature's oversight            
 activity, or review of projects, so the changes are good.  Big bond           
 issues are reviewed and those are not impaired by this.                       
 CHAIR JAMES said she would like to move the bill out of committee             
 and asked for a motion.                                                       
 Number 252                                                                    
 REPRESENTATIVE JOE GREEN moved that they pass the House CS for SB
 92 as amended out of committee, with individual recommendations and           
 attached fiscal note.  He was referring to the CS they adopted as             
 the working draft.  Hearing no objections, the motion passed.                 
 REPRESENTATIVE PORTER moved to pass HCR unnumbered, 9-LS1029/A,               
 dated 4/3/95.  There being no objections, the motion passed.                  
 CHAIR JAMES said that the resolution for the title change would               
 also be passed out.                                                           

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