Legislature(2003 - 2004)

03/12/2003 09:07 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 25(HES)                                                                                             
     "An Act relating to the teachers' housing loan program in the                                                              
     Alaska Housing Finance Corporation; and providing for an                                                                   
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.  A motion to adopt  a committee  substitute was  made but                                                            
not acted upon.                                                                                                                 
                                                                                                                                
Senator Taylor  renewed his motion  to adopt CS SB 25, 23-LS0080/Q,                                                             
3/3/03, as a working draft.                                                                                                     
                                                                                                                                
Co-Chair Wilken  reiterated the changes as detailed  in the previous                                                            
hearing.                                                                                                                        
                                                                                                                                
There was no objection  and the committee substitute  was ADOPTED as                                                            
a working draft.                                                                                                                
                                                                                                                                
AT EASE 9:47 AM /9:48 AM                                                                                                        
                                                                                                                                
Co-Chair Wilken reminded of the adoption of Amendment #2 as                                                                     
amended.                                                                                                                        
                                                                                                                                
Amendment  #3:  This  amendment  deletes  "teachers'   housing  loan                                                            
program" and inserts  "acquisition of teachers' housing  by regional                                                            
educational   attendance  areas  and   to  teachers'  housing   loan                                                            
programs" in the title of the bill to read as follows.                                                                          
                                                                                                                                
     An Act  relating to the teachers'  housing loan program  in the                                                            
     Alaska  Housing  Finance  Corporation;  and  providing  for  an                                                            
     effective date.                                                                                                            
                                                                                                                                
This amendment also inserts a new bill section on page 1, line 4 to                                                             
read as follows.                                                                                                                
                                                                                                                                
     Section 1. AS 14.08.101(9) is amended to read:                                                                             
                (9) provide housing for rental to teachers, by                                                                  
     leasing  existing housing  from a local  agency or individual,                                                             
     [OR]  by entering into  contractual arrangements  with  a local                                                            
     agency or individual  to lease housing that will be constructed                                                            
     by  the  local  agency  or individual  for  that  purpose,  or,                                                          
     without  using for the  purpose that  portion of public  school                                                          
     funding  that consists of state  aide provided under  AS 14.17,                                                          
     by constructing  or otherwise  acquiring housing that  is owned                                                          
     and  managed by the  regional educational  attendance  area for                                                          
     rental to teachers                                                                                                       
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
This amendment also inserts a new bill section on page 2, following                                                             
line 6 to read as follows.                                                                                                      
                                                                                                                                
     Sec. 3. AS 18.56.580(a) is amended to read:                                                                                
          (a) In addition to the powers authorized by AS 18.56.400,                                                             
     the  corporation  shall adopt  regulations  under AS  18.56.088                                                            
     allowing  the use of money in the housing assistance  loan fund                                                            
     to  make loans  to  regional educational  attendance  areas  or                                                          
     other  borrowers for  the purchase  or development  of  teacher                                                          
     housing  in small communities.  The regulations must  implement                                                            
     the  requirements of  (b) of this section  and establish  other                                                            
     terms  and  conditions  for teacher  housing  loans,  including                                                            
     those relating to  borrower eligibility and the number of loans                                                            
     that  may be made  to a  single borrower.  The corporation  may                                                            
     require the borrower to pay costs associated with a loan.                                                                  
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator Hoffman recalled  SB 181 of the previous legislative session                                                            
that amended the Housing  Assistance Loan Fund (HALF) program of the                                                            
AHFC and limited the amounts  of loans under this program to no more                                                            
than $250,000.  The HALF program provides for an interest  rate one-                                                            
percent  lower than  the average  rate  on loans  for properties  in                                                            
rural areas.  He informed  that the limitation  prevents REAAs  from                                                            
obtaining  loans for multi-family  housing  for teachers. He  stated                                                            
that this amendment  attempts to clarify the HALF  program, assuring                                                            
that it does  not change the teacher  housing loan program  proposed                                                            
in this legislation.                                                                                                            
                                                                                                                                
Senator Hoffman  further assured that  this amendment prohibits  the                                                            
use of foundation  funding to pay  debt incurred under this  program                                                            
and provides that other revenue must be used.                                                                                   
                                                                                                                                
Senator  Hoffman was  not convinced  that REAAs  could utilize  this                                                            
provision  as  a feasible  means  to provide  teacher  housing,  but                                                            
expressed that it offers an option.                                                                                             
                                                                                                                                
Co-Chair  Wilken noted the  limited amount  of "fee-simple  land" in                                                            
some REAA areas  and therefore it is difficult to  obtain financing.                                                            
                                                                                                                                
Senator Bunde  understood the committee substitute  limits borrowers                                                            
under the  proposed  teacher housing  loan program  to one loan.  He                                                            
asked  if this would  apply  to the number  of loans  an REAA  could                                                            
secure.                                                                                                                         
                                                                                                                                
Senator Hoffman  again stressed this  amendment does not  affect the                                                            
proposed  teacher  housing  loan program.  Rather,  he  stated,  the                                                            
amendment applies to the HALF program.                                                                                          
                                                                                                                                
Co-Chair  Wilken explained  this amendment  applies  to Title  14 in                                                            
granting  REAAs authorization  to borrow  money for  the purpose  of                                                            
teacher housing, and to  Title 18 in establishing the amount an REAA                                                            
could borrow.                                                                                                                   
                                                                                                                                
Co-Chair  Green asked if  REAAs regularly  upkeep, maintain  and own                                                            
properties.  She also wanted  to know if REAAs  have the ability  to                                                            
obtain insurance  for maintenance  purposes, and whether  additional                                                            
staff is employed to perform maintenance and upkeep.                                                                            
                                                                                                                                
Co-Chair  Wilken  answered  that  current   statutes  provide  REAAs                                                            
authority  to  lease   or  rent  existing  housing  facilities   for                                                            
teachers. He explained  that this amendment would allow REAAs to own                                                            
such facilities.                                                                                                                
                                                                                                                                
Co-Chair Wilken  continued that regardless of whether  a borrower is                                                            
an REAA or an educator,  the loan requirements of AHFC must still be                                                            
met.                                                                                                                            
                                                                                                                                
DAN  FAUSKE,  Chief Executive  Officer/Executive   Director,  Alaska                                                            
Housing  Finance  Corporation,  testified  via  teleconference  from                                                            
Anchorage and affirmed.                                                                                                         
                                                                                                                                
Co-Chair Wilken  clarified that an  REAA would not be given  special                                                            
consideration in obtaining approval for a loan.                                                                                 
                                                                                                                                
Mr. Fauske again affirmed.                                                                                                      
                                                                                                                                
Co-Chair Green  referenced the portion  of the amendment  pertaining                                                            
to  AS  18.56.580  (a),  which  inserts  "to  regional  educational                                                             
attendance areas or other  borrowers." She asked for a definition of                                                            
"other borrowers" in this context.                                                                                              
                                                                                                                                
Senator Hoffman  understood this could  include Native corporations                                                             
and stressed  that any borrower  must meet  the requirements  of the                                                            
program to provide  housing for teachers. He surmised  that no other                                                            
party  would construct  housing  for  teachers  that would  only  be                                                            
occupied for nine months of a year.                                                                                             
                                                                                                                                
Co-Chair Wilken requested Mr. Fauske further explain.                                                                           
                                                                                                                                
                                                                                                                                
SFC 03 # 19, Side B 09:57 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr.  Fauske defined  "other  borrower" as  "any entity  eligible  to                                                            
enter  into  a  contractual  arrangement;  it  could  be  a  village                                                            
corporation,  it could be  a private construction  corporation  that                                                            
has entered into  an agreement with the REAA to build  the unit at a                                                            
certain cost and potentially  own them." He informed that the latter                                                            
arrangement was made with the REAA in Kotzebue.                                                                                 
                                                                                                                                
Senator Bunde  noted that  REAAs do not have  taxing authority,  and                                                            
asked  if upkeep  and maintenance  expenses  would be  borne by  the                                                            
rental income.                                                                                                                  
                                                                                                                                
Senator Hoffman  surmised it would,  unless a Native corporation  or                                                            
other entity subsidized the cost of these services.                                                                             
                                                                                                                                
Senator Bunde suggested REAAs should become taxing authorities.                                                                 
                                                                                                                                
Senator Taylor  questioned the applicability  of zero down  payments                                                            
on loans made to corporations.                                                                                                  
                                                                                                                                
Co-Chair Wilken reiterated  that this amendment is entirely separate                                                            
from the provisions  relating to the  proposed teacher housing  loan                                                            
program.                                                                                                                        
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Bunde,  Senator Hoffman, Senator Olson, Senator B.                                                            
Stevens, Senator Taylor and Co-Chair Wilken                                                                                     
                                                                                                                                
OPPOSED: Co-Chair Green                                                                                                         
                                                                                                                                
The motion PASSED (6-1)                                                                                                         
                                                                                                                                
The amendment was ADOPTED.                                                                                                      
                                                                                                                                
CARL ROSE, Executive Director,  Association of Alaska School Boards,                                                            
testified  in  support of  the  bill as  amended.  He  spoke to  the                                                            
difficulties  in recruiting  and  retaining qualified  teachers.  He                                                            
stressed,  "The inability to  keep pace with  supply and demand  has                                                            
resulted  in a serious  shortage  of professionals  in the  teaching                                                            
area." Therefore,  he stated the Association  is seeking  incentives                                                            
to assist in this matter.                                                                                                       
                                                                                                                                
Mr. Rose informed  that the concerns  with the original legislation                                                             
have been alleviated with the adoption of Amendment #3.                                                                         
                                                                                                                                
Mr. Rose referenced a recently  completed survey, in which 43 of the                                                            
53 school districts  participated  [copy not provided]. He  reported                                                            
that 25  percent of  respondents  provide or  subsidize housing  for                                                            
teachers.   He commented that this  relates to the responsibilities                                                             
and duties of school boards.                                                                                                    
                                                                                                                                
Mr. Rose stated  that the provisions of Amendment  #3 to allow REAAs                                                            
in conjunction  with corporations, to provide teacher  housing could                                                            
be viable.                                                                                                                      
                                                                                                                                
Mr.  Rose informed  that  the median  base  salary for  teachers  is                                                            
$34,100,  according  to the  aforementioned  survey.  Therefore,  he                                                            
opined  that  an  ability  to  provide  adequate  housing  would  be                                                            
beneficial to attract teachers.                                                                                                 
                                                                                                                                
Senator  Bunde  asked  if witness  is  aware  of  any teacher-owned                                                             
private homes in rural areas of Alaska.                                                                                         
                                                                                                                                
Mr. Rose knew of some such  homes in organized communities, although                                                            
he was  unfamiliar  whether any  teachers own  homes in unorganized                                                             
areas.                                                                                                                          
                                                                                                                                
Senator Bunde indicated  Senator Olson's comments about depreciation                                                            
and maintenance  on  homes that  are vacant  for  three months  each                                                            
year. He therefore asked the feasibility of this program.                                                                       
                                                                                                                                
Mr. Rose surmised that  those teachers who would invest in a home do                                                            
so in a  community in which  they intend to  live and are  likely to                                                            
stay year-round.                                                                                                                
                                                                                                                                
Senator Olson asked the  witness' concerns about a subsidized rental                                                            
program for teachers operated by an REAA.                                                                                       
                                                                                                                                
Mr. Rose stated  this is a decision  that each school district  must                                                            
consider, stressing  that some district must provide  housing, as no                                                            
other facilities are available.  He stated that maintenance expenses                                                            
are a concern. Noted that  some teachers accept jobs in rural Alaska                                                            
because  this  is were  jobs  are  "readily available."    As  these                                                            
teachers  gain one or two  years of experience,  he noted that  many                                                            
consider accepting jobs elsewhere.                                                                                              
                                                                                                                                
Senator  Taylor offered  a  motion to  report  CS SB  25 (FIN)  from                                                            
Committee with  individual recommendations  and zero fiscal  note #1                                                            
from the Department of Revenue, AHFC.                                                                                           
                                                                                                                                
There was no objection and CS SB 25 (FIN) MOVED from Committee.                                                                 

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