Legislature(1997 - 1998)
03/31/1998 09:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 223(RLS) "An Act lowering the age requirement from 60 years to 55 years for purposes of senior housing programs; relating to the senior housing revolving fund; relating to bonds to fund senior housing loans; repealing provisions establishing the senior housing bond account of the Alaska Housing Finance Corporation; and repealing a provision relating to the interest rate on senior housing loans made by the Alaska Housing Finance Corporation." Co-Chair Sharp noted the committee had a Workdraft CS "P Version" before them. He wanted his staff member to speak to the CS. TOM WILLIAMS came to the table and testified as followed. "The principle changes to the bill - as you'll notice the title has lengthened to be very specific as to what we are doing and it is very descriptive of what is going on in the bill. The principle changes in the bill were on page 3 in lines 1-13. Basically, it added the language to say that what was left in the Senior Housing Bond Account was to include not only the amount of money appropriated to the account but to the interest earned on that money was appropriated to the account. As you may recall in previous testimony there was an appropriation of $10 million to the account and that the interest that had accrued on that over the years had amounted to about $4.2 million. So that was to remain in the account. Then on line 12 to make sure that the intent on those monies were only to be used in accordance with an appropriation of that money." "In addition, on page 4 lines 7 and 8 the repealer of AS 18.56.790(d) - that repealer was delayed until June 30, 1999 as opposed to being repealed immediately. Simply because there is that $14.2 million to be left in that account subject to appropriation and giving the opportunity for that money to be - for the Legislature to make a decision on how to appropriate those funds. That would ultimately go away on June 30, 1999." "The changes made by the bill would still allow the senior citizen revolving fund to receive and expend bond money and to move ahead as the original intent of the bill." Senator Adams referred to the issue of lowering the age eligibility and asked if there was a need to bring the age requirement down to 55. He wondered if there was not enough clientele to spend the money for senior citizen housing. He wanted to know if he would now qualify and would it be OK to build a house in Palm Springs since he plans to retire there. Mr. Williams deferred the questions to the sponsor of the bill. He pointed out that the changes made in the Workdraft did not affect the age requirements, only the bonds account. Senator Phillips moved for adoption of the CS, version "P". Without objection, it was adopted. The committee invited JOHN BITTNEY of the Alaska Housing Finance Corporation to speak to the bill. His comments were as follows. "I'm not able to comment on the CS, I haven't seen it at this point. My only comment, Mr. Chairman, at our last meeting, there was a request before the AHFC's board to declare the funds within the bond account as available for appropriation by the Legislature or make them available to the state's general fund. The board did consider that request the same day as the meeting and passed a resolution opposed to making those funds available to appropriation for other capital projects or as a dividend. That's based upon our needs assessment report and requests of the corporation for some review of projects. Our indications are that we are getting requests for projects for seniors that don't qualify for low income housing that are either middle- moderate or upper income and this is the program that's intended for that use. It's their desire to see that these funds are made available through the loan program for those kinds of projects." Senator Adams said that under the present statutes, the intent was to take care of everybody up to 60 years old. Was the intention to take care of everybody up to 55 because there was adequate extra money for that, he asked. He wanted to know if there had been a study to show a need for those between the ages of 55 and 60. Mr. Bittney responded that AHFC had done a study in 1996, which was focused on age 60 and over. He did have indications there was some need for the younger age group and he gave widows as an example. Mr. Bittney told the committee some of the senior housing projects had problems filling up their units and came to AHFC in hopes of opening up the requirements to recruit more residents. The federal law threshold was age 55, and this would align the state's requirements and allow the expansion of the requirements and hopefully fill some of the vacant units. Senator Adams asked if the construction loan funds had to be spent in Alaska. Mr. Bittney reaffirmed that. Co-Chair Sharp inquired about the initial Legislative appropriation of $10 million that was not spent. The additional $4 million was interest that accumulated on the balance, he asked. Mr. Bittney agreed and noted AHFC separately accounted for that as noted in the new CS. Co- Chair Sharp said the only thing the CS would add, would be an assurance that the Legislature would be involved through appropriation of the $14.2 million in the future. He spoke further of the intention of getting the revolving and bond funds up and running and to start dispersing funds. He asked if the program would allow funding for middle and low income seniors, or would the funding for low-income senior house be part of the capital budget appropriations as in the past. Mr. Bittney replied he would need to get some input from his technical staff on the CS. He had concerns because he didn't know to what extent the assets of that account would be necessary to go out and bond. His understanding was that the intent of the original $10 million was not only to have immediate funds on hand for loans but to also have assets that could be pledged as collateral in order to do a dept issuance. Normally what they would do is have mortgage loans already in an account and go out and do a debt issuance to recapitalize the funds for new loans. This being a new program, there are no loans to use as collateral, he explained. In reference to the question on the capital projects, Mr. Bittney continued telling the committee those were usually just strait grants for a project. He called it the subsidy piece of a project. Usually on those projects they didn't pencil out as a full loan because of a desire to keep the rents down. What the parties would then do, is apply to AHFC for a grant for the difference of what could be financed and paid for with an affordable rent and the construction costs. The request for the grant would be made first, and once secured, the party would then request the loan for the remainder of the project costs. There were two separate stages of the funding, he summarized. Co-Chair Sharp held SB 223 in committee until the next Senate Finance Committee meeting.
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