Legislature(2003 - 2004)
03/12/2003 09:07 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. 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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