01/25/1994 01:35 PM Senate L&C

 SENATOR KELLY introduced HB 180 AM (ALASKA HOUSING FINANCE                    
 CORPORATION HOUSING INSPECTION REQUIREMENTS) sponsored by                     
 REPRESENTATIVE EILEEN MACLEAN, and he called on her aide, DAVID               
 HARDING, to review the bill.                                                  
                                                                               
 MR. HARDING reviewed some previous action by explaining, "When, in            
 1992 the legislature merged the Department of Regional Affairs                
 Rural Housing Loan Program (DCRA) into AHFC, the rural loans became           
 subject to certain housing inspection requirements as listed in AS            
 18.56.300(b).  These requirements were never intended to apply to             
 rural housing loan programs; in fact, AHFC's primary rural loan               
 program, non-conforming housing, is specifically exempted in the              
 status.  Rural housing loans have been subject to AHFC inspection             
 requirements since July 1, 1992."                                             
                                                                               
 MR. HARDING cited problems with inspection requirements that were             
 not originally intended to affect rural loans, but has caused an              
 unfair burden on rural homeowners, which was not the legislative              
 intent.  Rather than exempting the rural housing loan program from            
 these requirements, REPRESENTATIVE MACLEAN felt the rural home                
 owners and rural lenders would benefit from some form of an                   
 inspection program.                                                           
                                                                               
 MR. HARDING quoted REPRESENTATIVE MACLEAN's Sponsor Statement to              
 provide flexibility in the program in HB 180.                                 
                                                                               
 "It broadens the pool of eligible inspectors in rural areas by                
 allowing licensed architects and engineers to conduct the                     
 inspections.  These professionals are clearly qualified to                    
 accomplish the task, and they often travel to rural areas to                  
 monitor construction projects.                                                
 Number 450                                                                    
                                                                               
 It allows AHFC to identify other qualified individuals in rural               
 communities.  A local contractor or journeymen in a trade might be            
 obvious candidates to carry out part or all of a remote inspection.           
                                                                               
 It authorizes inspection methods other than a physical site visit             
 by an inspector.  For example, AHFC could approve an inspection of            
 footings and foundations based on video tape or photographs."                 
                                                                               
 In addition, MR. HARDING explained HB 180 would allow AHFC to                 
 accept building methods or materials that may not meet state                  
 building codes if the corporation is satisfied that the code                  
 variation does not sacrifice health or safety.  If a building                 
 material is available that may not meet code but would stand up to            
 an engineering review, then AHFC would be allowed to accept such              
 equivalent substitution.  He said this would save on building costs           
 and make use of available materials in remote locations.                      
                                                                               
 MR. HARDING explained the International Conference of Building                
 Officials (IBCO) inspection requirements were originally put into             
 law in order to address the concerns of some builders in the                  
 Railbelt, and he promised the proposed changes would not affect any           
 builders on the road system, but would only address problems in               
 rural Alaska loan programs.                                                   
                                                                               
 SENATOR KELLY asked if this would include Sitka, and MR. HARDING              
 answered it would exempt both Sitka and Juneau, because any place             
 that has a municipal building code is already exempt.  SENATOR                
 KELLY led a general discussion of this provision which is in                  
 current law.                                                                  
                                                                               
 SENATOR KELLY said he agreed with the thrust of SB 180, but he                
 wanted to be sure there was an adequate definition of rural.  MR.             
 HARDING reviewed the list of exempt communities that have their own           
 codes, including a number in Southeast.  SENATOR SHARP had some               
 questions because he didn't think the definition was inclusive, but           
 MR. HARDING clarified the list.                                               
                                                                               
 Number 499                                                                    
                                                                               
 SENATOR KELLY asked whether Cordova was on the list, and SENATOR              
 SALO asked about Soldotna.  MR. HARDING explained Cordova would               
 come under the provisions of HB 180, but Soldotna was not included            
 in the exemption because it is on the road system.                            
                                                                               
 SENATOR SALO questioned the video tape method of inspecting                   
 footings and foundations, and MR. HARDING answered it would be up             
 to the discretion of AHFC to allow this method.                               
                                                                               
 SENATOR KELLY asked who was on teleconference in Anchorage from               
 AHFC, and he was told ROBERT BREAN, who introduce two other                   
 persons.                                                                      
                                                                               
 SENATOR KELLY questioned whether any of the three had any                     
 objections to the bill, and MR. BREAN indicated they had worked               
 with the sponsor in suggesting the amendments, in order to provide            
 the flexibility for rural Alaska.                                             
                                                                               
 SENATOR KELLY asked if they had any proposed amendments to HB 180,            
 and MR. BREAN indicated they did not.  SENATOR KELLY clarified they           
 supported HB 180 as amended by the House and now before the                   
 Judiciary Committee.                                                          
                                                                               
 SENATOR SHARP asked the AHFC members if they were able to determine           
 any trends in losses or lack of quality due to less stringent                 
 inspections than on other AHFC financed houses.                               
                                                                               
 MR. BREAM described a period when they were exempt until after the            
 merger with AHFC in 1992, and he further explained the present                
 flexibility presently used in the inspections.  He assured the                
 committee their goal is an improvement in the quality of housing              
 all over the State of Alaska, rural Alaska included.                          
                                                                               
 SENATOR SHARP asked if AHFC specifically got complaints from buyers           
 about the quality of the homes, or lack of quality after they buy             
 them.  MR. BREAM explained in many cases, these were owner built              
 houses, with the owner acting as their own contractor.  He further            
 explained foreclosed properties were sold "as is," and the foremost           
 concern in the rural areas is the availability of housing.                    
                                                                               
 SENATOR KELLY clarified that the AHFC would not allow an owner-               
 builder to inspect their own house.  MR. BREAN said he was correct,           
 and he described their procedures.                                            
                                                                               
 SENATOR RIEGER questioned AHFC about title insurance for rural                
 housing loans, and DUANE WISE answered that they do.                          
                                                                               
 TAPE 94-3 SIDE A                                                              
 Number 001                                                                    
                                                                               
 SENATOR KELLY took an informal poll of the persons in the committee           
 audience and found there was support for the bill.  He then ask for           
 the will of the committee.                                                    
                                                                               
 SENATOR RIEGER said that in reading AS 18.56.300(b), he didn't                
 think it was clear the stated exemption for some communities                  
 applies in Subsection (b) the way it does in Subsection (a).  He              
 wanted to check on the provisions before voting.                              
                                                                               
 SENATOR KELLY asked about the next committee of referral, and MR.             
 FINK said there was no Finance Committee referral.                            
                                                                               
 SENATOR RIEGER explained the differences in Subsections (a) and (b)           
 claiming Subsection (b) did not give the same exemption.                      
                                                                               
 SENATOR KELLY said, since Labor & Commerce was the last committee             
 of referral, the committee would hang on to the bill just long                
 enough to straighten out the subsections.  He said the bill would             
 be returned to committee as soon as possible.