Legislature(2007 - 2008)BUTROVICH 205
02/04/2008 01:30 PM Senate HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| SJR11 | |
| SB231 | |
| SB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SJR 11 | TELECONFERENCED | |
| += | SB 231 | TELECONFERENCED | |
| += | SB 233 | TELECONFERENCED | |
SB 233-TEACHERS/HEALTH CARE PROFESS HOUSING LOAN
2:16:42 PM
CHAIR DAVIS announced consideration of SB 233. She said she did
not bring a committee substitute because there were no
recommendations for changes.
BRYAN BUTCHER, Public Affairs Director, Alaska Housing Finance
Corporation, Anchorage, AK, said that SB 233 does two things.
Five years ago a program was established at AHFC to allow
teachers and registered nurses to purchase a home without a down
payment. Communities were having difficulty recruiting and
retaining teachers and nurses and one of the biggest hurdles for
home ownership for young teachers and nurses was coming up with
money for a down payment. A sunset date was established which
expires July 2008. The program has been quite successful; 373
teachers and nurses have taken out mortgages in 34 different
communities across the state at no additional cost to AHFC or
the state. Of the 373, there has only been one foreclosure. AHFC
would like to remove the sunset date and make it a permanent
program as well as to expand it beyond nurses to include all
health care professionals.
2:19:21 PM
SENATOR DYSON asked where the homes are.
MR. BUTCHER referred to a list of all the communities since the
inception of the program. 'E' designates teacher loans and 'H'
designates nurses. There have been 100 loans for teachers and 77
loans for nurses in Anchorage. The majority of the loans take
place in urban Alaska although there were some in rural Alaska.
The program is a partner to the rural teacher and nurse loan
program funded through the capital budget.
SENATOR DYSON said he didn't know the program would be used on
the road network. He said these are good paying professions and
wondered why a nurse would need a loan in order to get a house.
MR. BUTCHER said that when the program started they had talked
to people who said they wouldn't have been able to get a
mortgage because they were just out of school and had
outstanding student loans. The starting salary for teachers
isn't a lot. The normal amount of mortgage insurance requires a
20 percent down payment, but on these loans the requirement is
30 percent in order to cover the corporation in case there are
defaults.
SENATOR DYSON said this makes the jobs more attractive and it's
different than what he anticipated. Housing for professionals in
very rural areas off the road system is a huge crisis. He said
he's disappointed there isn't more for them. He also asked if
there's a similar program for housing for public safety officers
slated for the future.
MR. BUTCHER said the agency is open to expanding the program to
public safety officers in the future but it plans to move
slowly. He said that because these are unique programs, they are
seen by the rating credit agencies as non-conforming loans.
Since the loans don't fit into the normal categories, they are
weighed more heavily when looking at the credit rating of the
recipients. The agency has created a history over five years to
show the success of the program.
He said that although the program requires a zero down payment,
it does not provide a reduced interest rate. It's not costing
AHFC or the state anything. He said he agreed with the concerns
about rural Alaska housing and said the specifically rural
program from the capital budget is working well.
DAN FAUSKE, CEO, Alaska Housing Finance Corporation (AHFC),
Anchorage, AK, said there are 221 units in the rural component.
That program has leveraged $30 million into $50 million in
assets. He said that in most cases in the rural areas with
itinerant or transient teachers, there hasn't been that much
demand for home ownership. He said the agency supported a loan
in Bethel and financed a 22-unit facility for state troopers
which helped with recruitment and retainment. He said the
program is not generally viewed as a job enticement. He said
that with accelerating housing costs in Anchorage, it is
difficult for young professionals starting out to buy a home.
2:27:37 PM
SENATOR COWDERY asked if the program could be expanded to help
construction and labor workers.
MR. FAUSKE said he had not heard that request before.
SENATOR DYSON suggested that Senator Cowdery was asking if the
construction of the facilities had been used as a training tool
for apprentices in order to create work opportunities as well as
housing.
SENATOR COWDERY said that was partly what he meant but he was
also asking if housing for these low-income workers was being
considered.
MR. BUTCHER replied that the agency has been hesitant to expand
the program because that would raise costs and could risk their
credit rating.
MR. FAUSKE said there is an absolute priority on these projects
for local hire at the village level. Training raises costs but
they have been trying to include it.
2:31:05 PM
SENATOR DYSON referred to the 22 units for state troopers built
in Bethel and asked if this could be done in other villages in
order to address the need for good housing for public safety
officers and the transient nature of some of those assignments.
MR. FAUSKE replied that the agency always encourages builders to
talk to public safety people and others to determine if they
might need to build a six-plex instead of a four-plex. This
could also bring another viable source of income into the
project.
SENATOR DYSON asked if the idea to extend the housing option to
others would be affected by the legislation before the
committee.
MR. FAUSKE replied that the rural program would be coming to the
committee through the capital budget and said he would arrange
for Senator Dyson to get that information.
SENATOR DYSON said that he didn't want to find out that rural
needs for housing are cut short because too much money has gone
to programs on the road network.
MR.FAUSKE said he'd like to emphasize that these are loans and
gave the example of a building that might cost $1 million but
based on the salaries of the community, $700,000 was all they
could afford. The agency writes a check for a loan of $300,000,
and when the school foundation funding formula is passed, his
agency is then able to tap into that resource in the form of
salaries and get the best bang for the state dollar. The process
also creates private ownership, local support and eliminates the
need for the agency to have a direct relationship with the
contractors.
2:36:34 PM
SENATOR THOMAS said he had looked at these types of loans as
incentives for people living and doing service in remote areas
and said he was concerned about the urban programs and the
higher incomes of those targeted. He said there was discussion
at an earlier meeting of setting income limits and he would like
to see that explored. The only justification he sees for the
program is to encourage people into those occupations which are
needed especially in rural areas. It appears now that people in
a particular occupation are being favored and it's not
necessarily based on need.
MR. FAUSKE said five years ago there had been an attempt to
address the issue of recruiting and retaining teachers and
health professionals. There was an attempt at that time to add
on more professions, but it was decided that a test run was in
order first. This was the reason for the sunset provision. He
said the loan is not attractive to those with higher incomes.
The largest problem teachers and health care providers have is
the affordability of the down payment. People can't afford to
live where they work. For someone starting out at $38,000 per
year, the average cost of a new home in Anchorage at $329,000 is
not an option.
2:41:13 PM
SENATOR COWDERY asked what the salary range is for people who
qualify for the program.
MR. BUTCHER replied that people that benefit the most from the
program are people who don't have the down payment and people
who are looking for investment opportunities. This program
requires owner occupation so it cannot be used for investment
properties.
MR. FAUSKE said it's not cost effective for someone who makes
$200,000 or even $100,000 per year because they can shop around
for a lower interest rate and with enough for a down payment,
would not have to pay mortgage insurance. He said he would get
more detailed information on salaries for the committee.
2:45:38 PM
MELISSA STONE, Director, Behavioral Health, Department of Health
and Social Services, Anchorage, AK, said she supported SB 233.
She said her department has 29 percent of all estimated
vacancies in the state in the health care profession. For
behavioral health, that translates to 22 percent vacancies in
the rural area and 9.3 percent vacancies in the urban area.
CHAIR DAVIS said that including an income limitation provision
was discussed at the last meeting, but that her office did not
receive any recommendations to prepare a CS.
SENATOR THOMAS said he was satisfied that the bill appear to be
self limiting.
SENATOR COWDERY moved to report SB 233 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried. There being no further
business before the committee, CHAIR DAVIS adjourned the meeting
at 2:51:48 PM.
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