Legislature(1993 - 1994)

03/15/1994 01:00 PM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                         March 15, 1994                                        
                            1:00 p.m.                                          
  MEMBERS PRESENT                                                              
  Representative Harley Olberg, Chairman                                       
  Representative Jerry Sanders, Vice-Chair                                     
  Representative Con Bunde                                                     
  Representative Cynthia Toohey                                                
  Representative Ed Willis                                                     
  Representative John Davies                                                   
  Representative Bill Williams                                                 
  OTHER LEGISLATORS PRESENT                                                    
  Representative Joe Green                                                     
  MEMBERS ABSENT                                                               
  COMMITTEE CALENDAR                                                           
  *HB 497:  "An Act relating to electric and telephone                         
            PASSED FROM COMMITTEE                                              
  HB 467:   "An Act relating to housing programs of the Alaska                 
            Housing Finance Corporation and of regional                        
            housing authorities, and permitting regional                       
            housing authorities to make, originate, and                        
            service loans for the purchase and development of                  
            residential housing in the state's small                           
            PASSED FROM COMMITTEE                                              
  WITNESS REGISTER                                                             
  REPRESENTATIVE JOE GREEN                                                     
  Alaska State Legislature                                                     
  Capitol Building, Room 114                                                   
  Juneau, AK  99801-1182                                                       
  Phone:  465-4931                                                             
  Position Statement:  Prime Sponsor of SSHB 497                               
  DAVID P. HUTCHENS, Executive Director                                        
  Alaska Rural Electric Cooperative Association                                
  703 West Tudor Road #200                                                     
  Anchorage, AK  99503                                                         
  Phone:  561-6103                                                             
  Position Statement:  Supported SSHB 497                                      
  DAN BLOOMER, Executive Staff Assistant                                       
  Chugach Electric                                                             
  P.O. Box 196300                                                              
  Anchorage, AK  99519                                                         
  Phone:  762-4595                                                             
  Position Statement:  Supported SSHB 497                                      
  DAVID HARDING, Legislative Staff                                             
  Representative Eileen MacLean                                                
  Alaska State Legislature                                                     
  Capitol Building, Room 507                                                   
  Juneau, AK  99801-1182                                                       
  Phone:  465-4833                                                             
  Position Statement:  Represented Prime Sponsor of HB 467                     
  KAREN KING                                                                   
  Kodiak Island Housing Authority                                              
  Association of Housing Authorities                                           
  2815 Woody Way                                                               
  Kodiak, AK  99615-6991                                                       
  Phone:  486-8111                                                             
  Position Statement:  Supported HB 467                                        
  ROBERT L. BREAN                                                              
  Director Rural Housing                                                       
  Alaska Housing Finance Corporation                                           
  520 East 34th Avenue                                                         
  Anchorage, AK  99503-4199                                                    
  Phone:  561-1900                                                             
  Position Statement:  Supported HB 467                                        
  PREVIOUS ACTION                                                              
  BILL:  HB 497                                                                
  SHORT TITLE: OFFICERS OF UTILITY COOPERATIVES                                
  BILL VERSION: SSHB 497                                                       
  SPONSOR(S): REPRESENTATIVE(S) GREEN                                          
  JRN-DATE    JRN-PG                     ACTION                                
  02/14/94      2381    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2381    (H)   CRA, L&C                                         
  02/28/94      2550    (H)   SPONSOR SUBSTITUTE                               
  02/28/94      2550    (H)   CRA, LABOR & COMMERCE                            
  03/15/94              (H)   CRA AT 01:00 PM CAPITOL 124                      
  BILL:  HB 467                                                                
  SHORT TITLE: AHFC HOUSING LOANS                                              
  SPONSOR(S): REPRESENTATIVE(S) MACLEAN                                        
  JRN-DATE    JRN-PG                     ACTION                                
  02/11/94      2350    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/11/94      2350    (H)   CRA, FINANCE                                     
  03/10/94              (H)   CRA AT 01:15 PM CAPITOL 124                      
  03/10/94              (H)   MINUTE(CRA)                                      
  03/15/94              (H)   CRA AT 01:00 PM CAPITOL 124                      
  ACTION NARRATIVE                                                             
  TAPE 94-14, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN HARLEY OLBERG called the meeting to order at 1:03                   
  p.m.  He noted for the record that Representatives Toohey,                   
  Sanders and Willis were present and that a quorum was                        
  HB 497 - OFFICERS OF UTILTIY COOPERATIVES                                    
  Number 020                                                                   
  REPRESENTATIVE JOE GREEN, SPONSOR OF SSHB 497, testified                     
  saying, "This is actually a very simple bill.  It just                       
  addresses a problem of one of the cooperatives in the state.                 
  It happens to be the one that serves my district.  The                       
  problem is:  As restricted by current statute, the presiding                 
  officer of a utility board of directors must assume the                      
  title president.  Usually the president assumes the                          
  responsibility of day-to-day operations while a chairman or                  
  a chairwomen presides over the board."                                       
  (Representatives Davies, Bunde and Williams joined the                       
  committee at 1:04 p.m.)                                                      
  REPRESENTATIVE GREEN continued, "I have sponsored this bill                  
  at the request of the electrical cooperative that serves my                  
  district.  At that utility, the day-to-day manager is called                 
  the general manager.  The problem is there that the banks                    
  and other institutions with whom this person must deal pay                   
  little attention or respect to someone with the title of                     
  general manager.  A simple solution to this, especially in                   
  regards to dealing with banks and refinancing institutions                   
  is that the bill would allow, but not require, utilities to                  
  call the presiding officer a chairman, which is the common                   
  title for such a position in today's business world.  This                   
  would allow the day-to-day manager to be called a president.                 
  When the president of the utility calls for an appointment,                  
  it is my belief that he or she will be better received than                  
  a general manager.  This then would serve the utility well                   
  and the 65,000 cooperative members would benefit."                           
  Number 063                                                                   
  REPRESENTATIVE CYNTHIA TOOHEY asked, "What is the cost of                    
  putting this bill in?"                                                       
  REPRESENTATIVE GREEN said, "In actual dollars, very                          
  REPRESENTATIVE TOOHEY asked, "Is it really that important to                 
  do this?"                                                                    
  REPRESENTATIVE GREEN replied, "It is in this particular                      
  cooperative's case because, as I mentioned, as a general                     
  manager he sometimes has difficulty getting appointments                     
  that he wouldn't have difficulty getting if he were called                   
  Number 075                                                                   
  COOPERATIVES ASSOCIATION, testified in support of SSHB 497                   
  saying, "We probably never would have raised the issue,                      
  except for the fact that the financing resources available                   
  to electric and telephone cooperatives is rapidly changing.                  
  Chugach Electric, the largest co-op of the state, no longer                  
  borrows from REA (Rural Electrification Administration) and                  
  so they have to go out into the regular commercial banking                   
  market to get their financing.  And when they go to Wall                     
  Street for a bond issue, as they have done once and                          
  anticipate doing again before too long, they found that...                   
  it was a handicap for them that they were using, as required                 
  by state statute, titles that are inconsistent with normal                   
  business practices, by others coming before the Wall Street                  
  folks for bond issues.  So this would simply make it                         
  permissive with the electric co-ops and telephone co-ops to                  
  change their bylaws if they choose to do so to use the                       
  titles chairman and vice-chairman for their board officers                   
  to free up the title president for the person who is now                     
  known as their general manager.  It's a very small item but                  
  would be of significance to the cooperative utilities as                     
  they lose their REA financing.  Right now, the only one I                    
  think this appeals to is Chugach Electric Association,                       
  perhaps Matanuska Telephone Association.  There will be                      
  others as time goes along."                                                  
  Number 130                                                                   
  REPRESENTATIVE TOOHEY asked, "What prevents your Board of                    
  Directors from naming you president?"                                        
  MR. HUTCHENS said, "The state law says that the president                    
  has to be the chief presiding officer of the board."                         
  CHAIRMAN OLBERG said, "Most commonly, chairman of the board                  
  and president are two distinct terms.  And president is                      
  typically chief operating officer."                                          
  REPRESENTATIVE GREEN said, "The board takes a very active                    
  part.  It's not as if it were the board of General Motors or                 
  the board of most corporations.  The board meets weekly and                  
  takes up a significant number of matters that wouldn't be                    
  common to other types of organizations and because of that,                  
  these two people are in a lot of activities that maybe                       
  wouldn't otherwise be the case, so this would certainly ease                 
  that concern."                                                               
  Number 160                                                                   
  ASSOCIATION, testified via teleconference in support of SSHB
  497 saying, "Chugach strongly supports the passage of this                   
  bill which will allow the electric and telephone                             
  cooperatives to use the title of chairman and vice-chairman                  
  for the top board officers.  ...current statute requires                     
  that the titles of president and vice president be used for                  
  these officers.  In the previous years, Chugach and the                      
  other electric cooperatives throughout the state and around                  
  the nation have relied solely on the Rural Electrification                   
  Administration, the REA, to provide capital for the                          
  construction for the construction of plant and other                         
  facilities.  In recent years, the REA has decreased the                      
  amount of loan funds available to cooperatives, increased                    
  the interest rates for its loans and has forced many of the                  
  cooperatives to take alternative financing.                                  
  "In 1991, Chugach took advantage of federal legislation                      
  which allowed it to prepay its REA debt prior to the                         
  maturity of the loan without penalty.  Chugach refinanced                    
  its REA debt through a public bond offering and became the                   
  first electric cooperative in the nation to sell bonds in                    
  the public market to replace REA debt.  During the bond sale                 
  preparation, Chugach's organizational structure was reviewed                 
  and scrutinized by a number of financiers and bond rating                    
  agencies.  Those organizations were confused with the board                  
  officers titles of president and vice president, which are                   
  different from what they experience in their dealings with                   
  privately owned corporations.  The proposed HB 497 offers                    
  electric and telephone cooperatives the option of changing                   
  these titles if they so desire but does not require them to                  
  do so."                                                                      
  CHAIRMAN OLBERG said, "Representative Toohey, I think your                   
  point is well-taken and if it weren't already in statute I                   
  think one could wonder why it's in statute, but since it is                  
  and it acts as an impediment to an organization that has                     
  guts enough to go out on the bond market and get away from                   
  REA, I think it's a valid piece of legislation."                             
  REPRESENTATIVE DAVIES said, "I would offer a conceptual                      
  amendment which would just add the word `chairwomen' and                     
  `vice-chairwomen' everywhere that it would be appropriate,                   
  in front of chairmen and vice-chairmen."                                     
  CHAIRMAN OLBERG objected to the amendment and said, "I                       
  simply think that chairmen and vice-chairmen are generic                     
  terms in everyday business."                                                 
  REPRESENTATIVE TOOHEY objected to Chairman Olberg's comment.                 
  REPRESENTATIVE DAVIES said, "I think that's the problem that                 
  we, in our language, tend to do that and I think that we                     
  need to make every effort to recognize that we don't erect                   
  glass ceilings and things like that.  By our language,                       
  sometimes we imply that somehow if you're a man, you're                      
  better than if you're a woman.  And I think that this would                  
  recognize explicitly that we don't do that.  We call our                     
  speaker `madame speaker' to reflect that.  We don't call her                 
  Mr. Speaker or something like that or some term that implies                 
  a certain gender.  So I think that either we have a gender                   
  neutral term or we reflect the appropriate gender.  Again                    
  it's an option, they can do whatever they want.  It's no                     
  mandate.  It's just an option."                                              
  Number 260                                                                   
  CHAIRMAN OLBERG said, "The question before us is then:                       
  shall the words chairwoman and vice-chairwoman be added in                   
  all the appropriate places?"                                                 
  A role call vote was taken.  Representatives Willis, Toohey,                 
  Davies and Bunde voted to adopt the amendment.                               
  Representatives Williams, Sanders and Olberg voted no.  The                  
  motion to amend SSHB 497 passed.                                             
  REPRESENTATIVE WILLIAMS moved that the amended version of                    
  SSHB 497 be moved out of committee.  There were no                           
  Chairman Olberg called an at-ease from 1:17 to 1:19 p.m.                     
  when HB 467 was brought forth.                                               
  HB 467 - AHFC HOUSING LOANS                                                  
  Number 287                                                                   
  MACLEAN, PRIME SPONSOR OF HB 467, testified saying, "HB 467                  
  makes changes to statutes related to certain rural loan and                  
  grant programs in AHFC (Alaska Housing Finance Corporation).                 
  The bill has three goals that will contribute to greater                     
  investment in rural housing.  The first is to take advantage                 
  of the regional housing authorities already out there to                     
  help sell and service AHFC loans.  The second is to                          
  encourage more private investment in multi-unit housing by                   
  doubling the size of complexes that are eligible for loans                   
  under AHFC's non-owner-occupied housing program, and                         
  allowing owners to live in one of these units to allow                       
  closer monitoring and better maintenance of the complex.                     
  The third goal is to increase the limit of AHFC's                            
  participation in water and sewer hookups to eligible housing                 
  projects.  This funding is dependent on federal support, and                 
  any increase in AHFC's participation will not reduce the                     
  federal contribution.  Representative MacLean believes these                 
  changes will lead to more housing and construction in remote                 
  areas, greater availability of rental units, and better                      
  servicing of loans.  Thank you."                                             
  Number 308                                                                   
  REPRESENTATIVE TOOHEY asked, "The $4 million fiscal note                     
  comes from?"                                                                 
  MR. HARDING deferred to someone from AHFC and added, "That                   
  comes from their corporate receipts, it's not general fund                   
  REPRESENTATIVE TOOHEY asked, "Is this fund open to all                       
  segments of Alaska?"                                                         
  MR. HARDING replied, "This is specifically a rural program,                  
  all rural areas of the state."                                               
  Number 315                                                                   
  ASSOCIATION OF HOUSING AUTHORITIES, testified via                            
  teleconference saying, "I certainly want to speak in strong                  
  support of HB 467 which we see increases opportunities for                   
  affordable housing in rural Alaska."                                         
  Number 348                                                                   
  REPRESENTATIVE DAVIES asked how many small communities would                 
  fall "under this definition and how many small communities                   
  there would be if we dropped this not connected by road                      
  restriction."  He then referred to "the very end of the                      
  bill" and read, "`small community' means a community with a                  
  population of 5,500 or less that is not connected by road or                 
  rail to Anchorage or Fairbanks, or with a population of                      
  1,400 or less that is connected by road or rail to Anchorage                 
  or Fairbanks.  In this paragraph, `connected by road' does                   
  not include a connection by the Alaska Marine Highway                        
  system, so that's, in the bill, the definition of small                      
  community replacing rural and I just would like to know, how                 
  many such communities there are...  I'm just wondering what                  
  the numbers are in this case."                                               
  MR. HARDING said, "This definition of small community is not                 
  added by the bill, it is simply reflected in the bill                        
  because there is a reference to small community in the bill.                 
  That's an existing definition that I believe dates back to                   
  when these programs were under DCRA (Department of Community                 
  and Regional Affairs)...  5,500 would in rural Alaska that                   
  would pretty much cover all of the regional hubs.  Pretty                    
  much everything out there... other than like the Kodiaks,                    
  Sitkas, places like that.  Bethel's probably the only                        
  community that comes close to hitting that cap.  I think it                  
  has about 5,000 right now."                                                  
  Number 392                                                                   
  REPRESENTATIVE TOOHEY asked, "How does this fit with the                     
  federal matching?"                                                           
  MR. HARDING said, "My understanding is there is a certain                    
  amount of funding that comes from federal Housing and Urban                  
  Development each year that's specifically for water and                      
  sewer extensions to make some of these rural projects                        
  possible, and in the law right now AHFC is only able to                      
  match up to 20 percent of that.  And the intent here is not                  
  to reduce the federal share..."                                              
  Number 420                                                                   
  REPRESENTATIVE BUNDE said, "I'd like them to take a position                 
  on the bill (HB 467) and... I'd like someone to comment on                   
  the limitation of 16 units."                                                 
  Number 425                                                                   
  FINANCE CORPORATION, testified via teleconference saying,                    
  "We have submitted a copy of a letter to David Harding which                 
  generally outlines our support of the bill.  We've been able                 
  to work very closely with David and Representative MacLean                   
  in putting these features into the bill that would make                      
  flexible and considerate piece of legislation for the rural                  
  parties.  The second question:  initially the residential                    
  program allows for up to a duplex to be built and a non-                     
  owner-occupied allows for up to an eightplex to be built.                    
  But what we found is, in some instances we were having                       
  requests by individuals that were larger than eightplexes.                   
  There were very few larger than fifteenplexes.  We felt that                 
  simply by doubling the scope with that program, that would                   
  sufficiently cover the need out there.  Also we increased                    
  the residential rural energy of homeowner for occupied                       
  program to build up to a fourplex.  This would allow an                      
  individual to live in the fourplex, have some kind of a                      
  local business and maybe rent a couple of rooms out."                        
  Number 454                                                                   
  REPRESENTATIVE DAVIES asked, "Can you tell me how this                       
  program, as it applies to rural areas, differs from your                     
  programs that apply to the rest of the state and what the                    
  need for those differences are?"                                             
  MR. BREAN replied, "The general difference is that we have a                 
  lower interest rate out in the rural areas and initially,                    
  for example, the rental program was established in the early                 
  days basically to build teachers housing, so the teachers                    
  had housing after the Molly Hooch case passed.  But the                      
  primary reason is the interest rate.  It's lower for the                     
  rural areas than it is for the urban areas."                                 
  CHAIRMAN OLBERG said, "The obvious question would be, how                    
  MR. BREAN said, "I believe on that particular program it's                   
  one percent lower than the rate of the most recent bond                      
  Number 471                                                                   
  REPRESENTATIVE TOOHEY asked, "Does your rate fluctuate?"                     
  MR. BREAN said, "It does fluctuate.  Originally, a year or                   
  so we had in statute a set rate of ten and a half percent.                   
  We found that wasn't working because percentage rates had                    
  obviously dropped a lot lower than that.  So we had an                       
  amendment about a year ago that put a sliding mechanism in                   
  there so that it adjusted according to the most recent bond                  
  REPRESENTATIVE TOOHEY said, "I assume that you'll always be                  
  at least one percent lower than urban areas."                                
  MR. BREAN confirmed this.                                                    
  Number 486                                                                   
  REPRESENTATIVE DAVIES said, "I noticed on the fiscal note                    
  that the fiscal impact seems to be primarily in the capital                  
  side.  There are no operating costs anticipated by                           
  increasing the number of loans in the rural area."                           
  MR. BREAN said, "We would have additional operating costs,                   
  but those would all be borne by corporate receipts.  The one                 
  fiscal note that we have attached there is relative to the                   
  match for the supplemental housing program and that's why                    
  it's in the capital budget."                                                 
  CHAIRMAN OLBERG asked, "When Alaska Housing is involved in                   
  legislation, we're never talking about general funds, are                    
  MR. BREAN replied, "No, we are not, Mr. Chairman.  We                        
  anticipate that all these expenses will be borne by                          
  corporate receipts."                                                         
  Number 504                                                                   
  REPRESENTATIVE DAVIES moved that HB 467 be passed out of                     
  committee with individual recommendations.  There were no                    
  CHAIRMAN OLBERG adjourned the meeting at 1:37 p.m.                           

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