04/15/2003 03:04 PM House HES
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
April 15, 2003
3:04 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Carl Gatto, Vice Chair
Representative John Coghill
Representative Paul Seaton
Representative Sharon Cissna
Representative Mary Kapsner
MEMBERS ABSENT
Representative Kelly Wolf
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 25(FIN)
"An Act relating to the acquisition of teachers' housing by
regional educational attendance areas and to teachers' housing
loan programs in the Alaska Housing Finance Corporation; and
providing for an effective date."
- HEARD AND HELD
CONFIRMATION HEARINGS
Professional Teaching Practices Commission Appointees
Mark Doner - Palmer
Thomas Lamal - Fairbanks
- CONFIRMATION(S) ADVANCED
SARS UPDATE
- HEARD
PREVIOUS ACTION
BILL: SB 25
SHORT TITLE:TEACHERS' & NURSES HOUSING/ AHFC LOANS
SPONSOR(S): SENATOR(S) WILKEN
Jrn-Date Jrn-Page Action
01/21/03 0021 (S) PREFILE RELEASED 1/17/03
01/21/03 0021 (S) READ THE FIRST TIME -
REFERRALS
01/21/03 0021 (S) HES, FIN
02/12/03 (S) HES AT 1:30 PM BUTROVICH 205
02/12/03 (S) Heard & Held
02/12/03 (S) MINUTE(HES)
02/24/03 (S) HES AT 1:30 PM BUTROVICH 205
02/24/03 (S) Moved Out of Committee
02/24/03 (S) MINUTE(HES)
02/26/03 0272 (S) HES RPT CS 3DP 1NR 1AM SAME
TITLE
02/26/03 0272 (S) DP: DYSON, DAVIS, WILKEN;
02/26/03 0272 (S) NR: GUESS; AM: GREEN
02/26/03 0272 (S) FN1: ZERO(REV)
02/26/03 (S) MINUTE(HES)
03/06/03 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/06/03 (S) Heard & Held
03/06/03 (S) MINUTE(FIN)
03/11/03 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/11/03 (S) Scheduled But Not Heard
03/12/03 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/12/03 (S) Moved CSSB 25(FIN) Out of
Committee
03/12/03 (S) MINUTE(FIN)
03/13/03 0489 (S) FIN RPT CS 5DP 1DNP 1NR NEW
TITLE
03/13/03 0489 (S) DP: WILKEN, TAYLOR, HOFFMAN,
OLSON,
03/13/03 0489 (S) STEVENS B; DNP: GREEN; NR:
BUNDE
03/13/03 0489 (S) FN1: ZERO(REV)
03/17/03 0522 (S) COSPONSOR(S): STEVENS G,
DYSON, SEEKINS
03/31/03 0641 (S) RULES TO CALENDAR 3/31/2003
03/31/03 0641 (S) READ THE SECOND TIME
03/31/03 0642 (S) FIN CS ADOPTED UNAN CONSENT
03/31/03 0642 (S) ADVANCED TO THIRD READING
UNAN CONSENT
03/31/03 0642 (S) READ THE THIRD TIME CSSB
25(FIN)
03/31/03 0642 (S) COSPONSOR(S): LINCOLN
03/31/03 0642 (S) PASSED Y16 N1 E3
03/31/03 0643 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
03/31/03 0648 (S) TRANSMITTED TO (H)
03/31/03 0648 (S) VERSION: CSSB 25(FIN)
04/02/03 0729 (H) READ THE FIRST TIME -
REFERRALS
04/02/03 0729 (H) HES, FIN
04/02/03 0751 (H) CROSS SPONSOR(S): LYNN
04/11/03 0947 (H) CROSS SPONSOR(S): ROKEBERG
04/15/03 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
SHEILA PETERSON, Staff
to Senator Gary Wilken
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented CSSB 25(FIN) on behalf of the
sponsor, Senator Gary Wilken, and answered questions from
committee members.
DANIEL FAUSKE, Chief Executive Officer and Executive Director
Alaska Housing Finance Corporation
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Testified on CSSB 25(FIN) and answered
questions from committee members.
PAUL KAPANSKI, Director
Mortgage Operations
Alaska Housing Finance Corporation
Anchorage, Alaska
POSITION STATEMENT: Testified on CSSB 25(FIN) and answered
questions from the committee.
MARK DONER, Appointee
to the Professional Teaching Practices Commission
Palmer, Alaska
POSITION STATEMENT: Testified about his willingness to serve on
the Professional Teaching Practices Commission and answered
questions from the committee.
THOMAS LAMAL, Appointee
to the Professional Teaching Practices Commission
Fairbanks, Alaska
POSITION STATEMENT: Testified as an appointee to the
Professional Teaching Practices Commission and answered
questions from the committee.
ACTION NARRATIVE
TAPE 03-34, SIDE A
Number 0001
CHAIR PEGGY WILSON called the House Health, Education and Social
Services Standing Committee meeting to order at 3:04 p.m.
Representatives Wilson, Gatto, Seaton, and Cissna.
Representatives Coghill and Kapsner arrived as the meeting was
in progress.
SB 25-TEACHERS' HOUSING/AHFC LOANS
CHAIR WILSON announced that the first order of business would be
CS FOR SENATE BILL NO. 25(FIN), "An Act relating to the
acquisition of teachers' housing by regional educational
attendance areas and to teachers' housing loan programs in the
Alaska Housing Finance Corporation; and providing for an
effective date."
Number 0104
SHEILA PETERSON, Staff to Senator Gary Wilken, Alaska State
Legislature, presented CSSB 25(FIN) on behalf of the sponsor,
Senator Gary Wilken, and she answered questions from committee
members. She explained that CSSB 25(FIN) is designed to help
local school districts attract and retain the best-qualified
teachers. It establishes a new teacher housing loan program
offered through Alaska Housing Finance Corporation (AHFC) that
allows an educator to purchase a home with a zero down payment.
AHFC will offer this program in conjunction with its other
programs. For example, first time homebuyers would have the
same interest rate as the existing AHFC Program, but with a zero
down payment. In addition, CSSB 25(FIN) allows a Rural
Education Attendance Area (REAA) school district to construct,
own, or manage rental properties exclusively for teachers. A
public elementary or secondary teacher, counselor,
administrator, or provider of special education services would
be eligible for the zero down loan program. The loan is only
used one time for an owner occupied, single family home and the
individual must meet the existing AHFC credit criteria.
Number 0226
MS. PETERSON told the committee that the zero down teacher's
housing loan program would sunset in five years, which would
allow AHFC and the Alaska State Legislature to evaluate the
program to see if they wish to continue it. She said when
Senator Wilken began looking at the program he was amazed at
what other states were offering to attract new teachers. More
than two-thirds of Alaska's new teachers come from out of state.
So in effect, Alaska's 53 school districts are competing against
other states to attract the best educators for Alaska's kids.
Other states are offering teachers signing bonuses, and one
state offers down payments of up to $20,000 for a home to
encourage its teachers to remain in the community.
Number 0308
MS. PETERSON explained that as the bill went through committee
it was amended to allow REAAs to own and construct teacher
housing. This addition was added in the Senate Finance
Committee to ensure that the existing program that was passed
last year would work as intended. Last session the legislature
established a rural housing loan program for multi-family
residences, exclusively for public school teachers. The Lower
Kuskokwim School District expressed an interest to AHFC, but
under current law an REAA does not have authority to own or
construct a rental unit. So, SB 25 allows REAAs to construct,
acquire, and manage rental homes for teachers. Those people
will have to apply through AHFC and qualify just the same as
other borrowers for this program. This particular program
offers a 1 percent reduction in the interest rate for multi-
family residences for teacher rentals. The legislation states
that no state public funds or the foundation formula can be used
for the purchase of a home.
Number 0406
REPRESENTATIVE SEATON commented that there had been some
confusion as to who could use this program. He asked if REAAs
are all exclusively rural school districts or all school
districts.
MS. PETERSON responded that REAAs are not all rural districts.
She said there are 19 REAAs within 53 school districts and those
are school districts that are within an unorganized borough.
These are school districts that do not have taxing authority and
are not required to pay the formula requirement for education.
REPRESENTATIVE SEATON asked if [the bill] only applies to REAAs.
MS. PETERSON said no. One portion of the bill that was added in
the Senate Finance Committee only applies to REAAs. An REAA
school district can enter into a loan agreement with AHFC to
purchase or construct multi-family residences for rental. The
other portion of the bill, which is Senator Wilken's main focus
of the bill, offers a zero down loan program for teachers.
These are teachers who are working in public schools; the
program would assist them so they can get into a home and settle
down in a local community without having to [provide] the
conventional $10,000 to $20,000 down payment. This portion of
the bill is only for an individual teacher.
Number 0517
REPRESENTATIVE SEATON clarified that the zero down payment plan
for individual teachers does not matter where that individual
lives in the state. The teacher can be in Kenai, Bethel,
Fairbanks, or anywhere in the state. He asked if that was
correct.
MS. PETERSON said correct.
REPRESENTATIVE SEATON said the other portion of the bill deals
with multi-family dwellings and is only for REAAs.
MS. PETERSON replied that is correct.
Number 0557
REPRESENTATIVE GATTO asked Ms. Peterson if a teacher who has
been renting an apartment for ten years in a community and wants
to buy a home would be excluded or included.
MS. PETERSON said if the teacher had never purchased a home
under the zero down payment plan, that teacher would be
included.
REPRESENTATIVE GATTO turned attention to the REAA portion of the
bill, and he said the sponsor statement does not mention the
word "construct." He asked for clarification.
MS. PETERSON explained that is her interpretation; if an REAA
chooses to get a loan through AHFC through the teacher housing
loan program, they would be able to construct the building. Ms.
Peterson said Dan Fauske would be able to answer that question.
REPRESENTATIVE GATTO asked if it would be the district or
teacher who would do the constructing.
MS. PETERSON pointed out that there are two different types of
loans in the bill. The teacher-housing loan with a zero down
payment is for the individual teacher. The other loan program
in which the housing is owned and managed by REAAs is a district
run program. If a district did choose to construct rental
units, it would subcontract with someone else to construct the
building.
Number 0690
REPRESENTATIVE SEATON clarified one point about REAAs' authority
to construct housing. He said language found in the bill on
page 1, lines 11-12, provides for REAAs to construct housing for
rentals to teachers.
MS. PETERSON said correct; this is the language that was added
to the general powers of an REAA.
Number 0757
CHAIR WILSON asked if it is true that the REAA portion of this
bill is really a correction of an oversight from last year's
bill.
MS. PETERSON replied that last year Senator Dave Donley had a
rural housing loan program bill that was modified, and one of
the sections he added at the request of another senator was to
offer a teacher housing loan program for multi-family residences
for teacher rentals that could be used in rural areas in which
teacher housing is limited. The established program allowed a 1
percent reduction to the loan, setup a definition for multi-
family housing, and stipulated that the program could only be
used for teachers. If the units were rented to someone else,
then there would be a change in the interest rate. The program
was designed for rural communities and only for educators. The
problem is that REAAs do not have the authority to do that, she
explained. So, SB 25 was amended by Senator Wilken at the
request of Senator Lyman Hoffman to allow REAAs the authority to
enter into contracts to construct or otherwise acquire housing
that could be used for teacher rentals. Senator Wilken was
concerned about the monies used for this program, so it was also
amended in the Senate Finance Committee to prohibit the use of
state foundation dollars in this program.
Number 0907
CHAIR WILSON said the reason the bill was passed last year was
because there were certain areas of the state that were having a
very difficult time getting teachers to live and work in their
communities. She said this bill does not really help lure
teachers out into those rural areas because with this bill
teachers anywhere can get either cheaper rent or a school
district may even be allowed to give the teacher a place to
stay. This bill is really leveling the playing field because a
teacher anywhere in the state, if it is their first home, can
get a loan with a zero down payment.
MS. PETERSON replied that she does not believe that is a correct
interpretation of the effect of the bill. She said she believes
this bill will make it more desirable for teachers to go into
the rural communities. Currently, she said there are no homes
available for teachers in some rural communities. This bill
will allow REAAs to build a multiple housing unit, so that there
is a stable housing facility for teachers. Ms. Peterson said
the zero down payment plan really applies to the more urban
communities. She summarized that allowing REAAs to own and
construct rural housing is a beginning in addressing the need in
rural areas.
Number 1008
REPRESENTATIVE SEATON asked if REAAs currently own facilities or
if this a new duty that they will be taking on. He asked if
rural schools are owned by the state or by REAAs?
MS. PETERSON replied that she is not sure. She said perhaps
Representative Kapsner knows the answer to that question. Ms.
Peterson said when funds are appropriated for new schools to be
built, they are built by the REAAs, but she did not know who
owns the buildings.
CHAIR WILSON commented that the housing situation is different
in every school district across the state. Some school
districts offer housing at a much cheaper rate than the teachers
could get anywhere else. Other school districts have housing
that is very expensive, as high as $1,200 per month. Some
districts provide the superintendent with a house to live in.
She said when she lived in Tok the school system there had
housing for the teachers, but there was no electricity or
running water.
Number 1156
REPRESENTATIVE KAPSNER agreed with Chair Wilson that the
situation varies by district. For instance, each village in the
Lower Kuskokwim School District has houses that can be rented
and many of them are substandard, which is one of the reasons it
is difficult to keep teachers. There really is no option to buy
a house there or in most villages, she said. A lot of teachers
are stuck paying very high rent for older, inadequate housing.
She told the committee it is interesting to see the fights that
go on within the school over who gets which apartment or house
to rent.
REPRESENTATIVE SEATON said he is in support of the concept, but
he would like to know if the REAAs are actually owners of the
buildings or whether the state owns the buildings and the REAAs
are managing them.
CHAIR WILSON commented that perhaps individuals from AHFC could
answer that question.
Number 1275
DANIEL FAUSKE, Chief Executive Officer and Executive Director,
Alaska Housing Finance Corporation, Department of Revenue,
testified in support of CSSB 25(FIN). He said this bill
authorizes REAAs to enter into a loan arrangement with AHFC
under normal underwriting criteria. In reference to who owns
the facilities, he said he would assume it would be the state in
a relationship they have with REAA. He said one of the
questions that came up was do REAAs have the authority to bond.
Most school districts in the incorporated areas hold elections
and bond, but REAAs do not have that authority. He explained
that this bill will allow REAAs to come to AHFC with a plan to
build a facility and the corporation would analyze the plan
under normal underwriting criteria to check the revenue
generated by rents from the teachers and determine if it is
sufficient to support the overall costs of the project once it
is completed. Mr. Fauske asked who owns the school facilities
in REAAs.
Number 1350
PAUL KAPANSKI, Director, Mortgage Operations, Alaska Housing
Finance Corporation, testified via teleconference on CSSB
25(FIN). Mr. Kapanski said he does not know what the ownership
is on school facilities in REAAs, but he assumes that the REAA
would own it. He reiterated that is only an assumption on his
part.
MR. FAUSKE explained that in a normal situation a group would
approach AHFC with a business plan or multi-family loan to
either buy or build a ten-plex, for example. Mr. Kapanski and
his staff would analyze that documentation, and depending on the
size, determine whether it fit into the criteria in which [Mr.
Fauske] would have the authority to sign off on it or if it
would have to go to the board. In that case, there would be a
public hearing and the board of directors would make a
determination. The project would be based on its financial
feasibility, and AHFC would enter into an agreement with the
REAA based on the fact that it would be constructing or
purchasing a unit for the sole purpose of housing teachers.
Under normal circumstances, AHFC would hold that note and would
be the creditor on that transaction. This is what AHFC does
with any entity, single family, corporation, company, or
individual that comes to AHFC.
Number 1408
CHAIR WILSON said she assumes under these circumstances REAA
would be the owner of the buildings. She told the committee the
Department of Education and Early Development will be advising
members on the ownership of school facilities in REAAs. Chair
Wilson said the state would not be responsible for the loans and
if the state is not responsible for them, then the REAAs bear
the full responsibility. She pointed out an issue these
contracts would face. For example, since REAAs are not boroughs
and don't have a tax base and cannot use money from the
foundation formula, the contract would have to be very tight to
ensure that REAAs have enough teachers to fill those units,
otherwise the REAAs will default. Chair Wilson suggested that
in times of decreasing enrollment that could be serious trouble.
She noted that many districts are laying teacher off.
MR. FAUSKE said he thought this is a good piece of legislation,
but it would not fix everything. He said this is a great start
in the right direction, because the biggest impediment that
people in this income level is the down payment. Under current
state law, AHFC is not allowed to do 100 percent loan to value.
The highest value AHFC can go in certain situations is 95-97
percent, and then the borrower has to come up with the remaining
3-5 percent. For many individuals that is difficult, especially
a young single person or a couple coming out of college with
student loans to pay off. Trying to get started with a teaching
salary, takes some time to build up funds. He said this bill
does a lot towards helping to solve this problem.
Number 1543
MR. FAUSKE told the committee this is also a nationwide problem.
He said he was just in Washington, D.C. and there was a similar
debate with legislators there about issues related to teacher
housing and the recruitment and retention of teachers. He said
AHFC prepared a paper that he would send to the committee for
review. It is not complete, he said but AHFC got as far as
possible in terms of laying out information gathered from nine
of the twelve different school districts polled about the number
of teachers. Mr. Fauske agreed with Chair Wilson that what
different school districts do with respect to housing varies.
The problem AHFC is encountering is trying to write a loan that
takes into consideration people who do not live in the community
year round, coupled with salaries that are not in line with what
construction costs are. He said it has been a rural phenomena,
but AHFC is seeing more of it in urban areas as construction
costs go up and salaries are not commensurate with rising costs.
Mr. Fauske explained that AHFC is seeing that gap in
affordability widen, so someone going into the teaching
profession either has to do something else or have a difficult
time qualifying for the loans.
Number 1629
CHAIR WILSON said according to the Department of Education and
Early Development the school district would own the facility.
CHAIR WILSON asked if AHFC could set up a contract that would
accommodate the fact that teachers only get paid for nine months
per year. She asked if, for example, a mortgage of $100,000
required monthly payments of $1,000, could AHFC set up the
contract to allow monthly payments of $1,200 per month for nine
months a year.
MR. FAUKSE replied that that kind of a contract is possible. He
said, for example, AHFC would analyze under the underwriting
criteria the cash flow amount, the rent being paid, and what is
done when teachers are not paying. Some districts pay teachers
year round at a reduced amount. AHFC would analyze the revenue
coming into the REAA and then determine the feasibility of the
project.
Number 1706
MR. KAPANSKI agreed with Mr. Fauske's comments. He said what
AHFC looks at in analyzing any multi-family project is the cash
flow and the timing of cash flow based on offsetting the
expenses. AHFC tries to structure payments around the cash
flow.
CHAIR WILSON said she was really thinking of the individual
teacher loans with no down payment. She asked if AHFC would
craft a teacher's payments for the nine months per year by
adjusting the other payments slightly higher.
MR. KAPANSKI replied that is not something AHFC's system is set
up to do. He said those who own their own home are usually
staying in the community and doing something else during those
months to support the home.
MR. FAUSKE told the committee that in the case of individual
home ownership, the loan would be based on the ability to pay
twelve months a year. With an REAA arrangement, he said it
would be up to them to determine how they will set up rental
payments with teachers. There could be a potential subsidy
involved or some time of reduced rent over the summer. REAAs
would have to present AHFC with a plan on cash flow and
determine who would pay under normal standards.
Number 1798
CHAIR WILSON said if this bill passes, AHFC will be flooded with
teachers who will want to buy a house with no down payment. She
explained that there are a lot of teachers in this state that
are not able to own their own homes and this would make it
available. She asked Mr. Kapanski why AHFC cannot setup a nine-
month payment plan. Chair Wilson asked if it is because AHFC's
computers are not setup for that kind of payment plan.
MR. KAPANSKI said if a teacher has sufficient income for nine
months of the year to qualify for a loan, AHFC would have to
underwrite a loan based on that nine months worth of income for
a certain amount. Once the teacher qualifies based on that nine
months of income, then he or she should have the ability to make
payments year round on the loan.
Number 1852
MR. FOUSKE replied that it really comes down to what the teacher
makes and what can he or she afford. For example, he said if an
individual buys a car, even if you are a teacher and only work
nine months per year, the teacher is still driving the car
twelve months and making payments twelve months per year.
REPRESENTATIVE GATTO commented that this seemed really easy.
For example, he said if an individual owes $500 with payments of
$100 per month for five months, and instead pays $125 for the
first four months, there is still a balance in the account of
$100 even if no payment is made in the fifth month. So, he said
if teachers pay enough in nine months so there is a balance to
cover the other three months, it does not seem to take much
bookkeeping to achieve this. The balance is applied to the
outstanding debt for the next three months and everything is
even at the end of the year, he suggested.
CHAIR WILSON replied that that arrangement would not work
because the extra money would go towards the principal. She
said if the legislature is going to have a program for teachers,
she would like to see a payment plan that takes into account the
fact that teachers work nine months a year. She suggested that
payments should be easier for nine months per year and provide
three months off while the teacher is not working. Chair Wilson
reiterated that the amount would be the same per year, but the
payment plan would accommodate the teacher's work schedule. She
pointed out that many teachers spread their salary across the
full twelve months, but some do not.
Number 1917
REPRESENTATIVE SEATON advised the committee that the salary
payment selection is one every teacher can make. Teachers can
take a payment either nine or twelve months per year. That
would be a personal choice. He told the committee he does not
see this as a critical problem.
REPRESENTATIVE KAPSNER asked if it would be unconstitutional to
do this for teachers. She commented that she would love to have
her mortgage payments due during session when she makes more
money, but AHFC will not do it.
Number 1961
MR. FAUSKE replied that he supports trying to help teachers, and
that is not the issue for AHFC. He said he is not sure about
the constitutionality of the question either, but this would
enter a dangerous zone with respect to normal underwriting
criteria and conventional loans. Teachers buy homes all the
time under the prevailing system. He said as far as being
swamped with teacher loans, he hopes that is the case because
that is business to the corporation. This bill makes it easier
for teachers to purchase a home based on affordability and
commensurate salaries. Mr. Fauske promised the committee that
AHFC would have a conversation about seasonal payments. He said
this question has been asked before by fishermen that have a bad
season. He said it gets difficult to forgive principal and
interest, and he may be wrong but he believed the corporation is
forbidden to forgive the interest under law, but there can be
some arrangements or concessions on principal payments. It also
depends on the funding criteria, for example, if the corporation
is trying to sell bonds to fund a program, what might be gained
in simplicity or ease for the ultimate consumer, the corporation
loses in costs that are paid because the risk is increased for
the investor. He said AHFC wants to provide the best program
possible to assist teachers. He reiterated that the corporation
will look at the possibility of a nine-month payment plan.
Number 2046
CHAIR WILSON commented that the House Finance Committee could
look into that issue. She said the question remains before the
committee as to whether members want to support a program that
would give teachers an opportunity to purchase a home with a
zero down payment, and whether the REAAs should be allowed to
take advantage of the program offered in last year's
legislation.
REPRESENTATIVE SEATON asked for clarification with respect to
REAAs. He said in organized boroughs the boroughs own the
schools, not the school districts. He said he does not want to
pass legislation that places obligations and duties on REAAs
that are outside of their current role without everyone knowing
full well that this is happening. He asked for clarification.
He said Chair Wilson's comments were well spoken with respect to
the REAAs ability to make payments if the rental units are
vacant for a period of time.
Number 2118
REPRESENTATIVE SEATON moved to report CSSB 25(FIN) out of
committee with individual recommendations and the accompanying
fiscal notes.
Number 2124
REPRESENTATIVE COGHILL objected for purposes of discussion. He
said whether it is a fisherman, police officer, fireman,
correctional officer, or other group that is struggling with
employment retention, this is an important discussion and policy
call. Representative Coghill offered an example, in the past,
whenever there was a discussion in committee about an exception
to allowable absences for the permanent fund dividend, for every
one that was allowed, there were six more waiting. This
committee could be doing that as well with this piece of
legislation, he suggested. He said he does not have a clear
understanding of the mechanism involved, and he has some
questions about Section 4. Representative Coghill told the
committee he would like to get a brief explanation before the
vote.
REPRESENTATIVE COGHILL asked Mr. Fauske if the reference to
"other borrowers" in Section 3 is related to the proposed [Sec.
18.56.109]. He asked who the "other borrowers" are.
Number 2223
MR. FAUSKE replied that "other borrowers" refers to the REAAs, a
company, village corporation, or other entity that might enter
into an arrangement with the REAA to build a facility to house
teachers. For instance, he said if a village corporation built
housing for teachers, they would own and be allowed to
participate in the loan program as long as the tenants were
restricted to teachers.
REPRESENTATIVE COGHILL asked if that would also satisfy the
variety of other individuals who would want to come into this
type of a lending situation.
MR. FAUSKE responded that he did not know if this language would
satisfy other individuals. He said he does not believe he could
address that issue. Mr. Fauske said he is not in a position to
address the legality of creating a lending program specifically
for teachers. When discussions with respect to policemen,
firemen, and others have come up, AHFC has always been referred
to HUD's (U.S. Department of Housing and Urban Development)
program called the "good neighbor program." The advantage that
HUD has is it has an inventory and it can take from that
inventory and designate certain houses in a particular area to
be specifically for public safety officers.
Number 2284
REPRESENTATIVE COGHILL commented that Mr. Fauske brings up the
very point he would like to discuss. He said what happens if
for some reason an REAA takes a loan and builds a house for
teacher housing, and at some point in the future that REAA makes
the decision to put all of its money into a regional learning
center. They now have teacher housing that will no longer be
fulfilling that purpose, he said. He asked Mr. Fauske what
would happen to the loan.
MR. FAUSKE responded that AHFC will lend money after due
diligence has been performed on the application submitted to the
corporation. He said one of the points that will be addressed
is does this fit within the legal parameters that the
legislature established about who can borrow the money, for what
reason, and does it have the cash flow. Any change down the
road would have to be discussed with the corporation if it has a
negative effect on their ability to service the loan. He said
this is what AHFC does everyday.
REPRESENTATIVE COGHILL agreed that was an economic factor that
AHFC would look at as it reviewed the plan. He said another
point that he would like to address is the question of
designating value. In some communities it is very difficult to
do because there is no way to regain the value of the property
under default circumstances, he suggested. He asked Mr. Fauske
to explain how this problem is addressed.
Number 2359
MR. FAUSKE explained that the value is established by how much
is spent in trying to develop something and how much revenue can
be generated to pay for it. In other words, he said there are
"X" number of apartments and the teachers will occupy these
apartments, school districts can certainly make it a condition
of employment that the teachers will live in teacher housing,
then AHFC will analyze that based on the amount of money coming
in versus what the payments are. That is what is looked at with
respect to loan criteria, he said.
TAPE 03-34, SIDE B
REPRESENTATIVE COGHILL said he understood what AHFC will pay for
value, but he didn't see that in statute.
Number 2340
MR. KAPANSKI agreed with Mr. Fauske's comments. He said in all
loans AHFC engages an appraiser, and it is up to the appraiser
to determine value and whether it is comparable to the immediate
area or comparable in another geographic area. When it is new
construction the appraiser looks at construction costs or at
other comparables or market sales. He told the committee there
are experienced appraisers out in rural market areas. He said
AHFC relies on the [experienced appraiser's] determination of
the value.
REPRESENTATIVE COGHILL said he knew under prudent loan criteria,
AHFC will not loan on something that looks good for the first
three years and then becomes so costly it becomes an albatross.
Number 2311
MR. FAUSKE agreed with Representative Coghill. He said if AHFC
is selling bonds to generate the funds to support this program,
it does no good unless AHFC is professional and top of the line
in what is done or the corporation will be quickly be shut off
from Wall Street in terms of issuing bonds.
REPRESENTATIVE COGHILL said he still questioned the 100 percent
value of the property. He said it can still be very subjective
in some areas of the state, and even though there is a
depreciated value of the house and money, the resale value is
nothing compared to those two values in some areas of the state.
MR. FAUSKE agreed with Representative Coghill. He explained
that AHFC was trying to come up with a way to build [housing] in
many of the rural areas. Ideally, he said there would be a real
estate market that is flourishing with the normal buying and
selling of a property. Unfortunately, he said in some areas
that does not exist because there is no inventory. In this
situation AHFC is entering into an arrangement, and in order to
help recruit and retain teachers, an REAA under normal
underwriting criteria can come up with plan to build a unit in
which it houses teachers to bring them into their region. It is
a unique structure in that community, he said.
Number 2233
REPRESENTATIVE COGHILL said he knew there was a motion still
pending, but he would like to talk to the sponsor about the
section to be repealed and the effective date in 2008.
REPRESENTATIVE KAPSNER said she really appreciates Senator
Wilken sponsoring this bill and allowing the REAAs to
participate. She said this is such a big issue. She said she
did not question the legality of the bill because she believed
it was the state's responsibility to educate kids. She said in
many of these communities teachers are hesitant to go to rural
areas, and [the condition of the living areas] can make it
difficult to retain teachers.
REPRESENTATIVE KAPSNER said her father was a principal in
Tuntutuliak and her family lived in a tiny house with no carpet
or furniture, beds that were made out of plywood, and no running
water or bathroom facilities. She said the place was not fit
for human habitation. She told the committee her father stuck
with it and her family lived in the house for two years.
Representative Kapsner said she believed this will go a long way
in being able to recruit and retain teachers. She said it is
the right thing to do.
Number 2166
The committee took an at-ease from 3:59 p.m. to 4:04 p.m.
CHAIR WILSON said she would like to hold the bill over until
Tuesday. She said she wanted the bill to pass and believed the
committee was in agreement. She suggested that teachers were in
short supply all over the nation, but the nursing shortage was
actually worse than the teaching shortage.
Number 2137
MR. FAUSKE told the committee that there is a $4.3 million line
item in the AHFC capital budget for rural teacher/health
professional housing. He said he asked the board to put that
in, and he noted that AHFC put in $8 million last year. He said
he was persistent, even though there was no program in place,
because he knew there was a great need, not just for teachers,
but also for health professionals. He said after AHFC submitted
its budget to OMB [Office of Management & Budget], the
Governor's Office called him and asked his feelings on adding
health professionals to that line item. He told the governor's
office that he whole-heartedly supported it and that the board
would as well. He summarized by saying that there is support
for adding the nursing profession to the program.
CHAIR WILSON commented that this committee has a responsibility
not just to education, but also to health and social services.
So, she said it would be in the committee's scope of
responsibility to address this issue. She shared data about the
increased need of health care professionals between [2003] and
2007. She said Alaska will need 4,100 more nurses than are
currently here and that there is a vacancy rate of 11.5 percent.
CHAIR WILSON announced that the bill would be held until next
Tuesday.
Number 2052
REPRESENTATIVE SEATON withdrew his motion to move CSSB 25(FIN)
out of committee.
MR. FAUSKE added that he is on the School of Nursing Advisory
Board and his mother was a nurse, so he knows what the committee
is dealing with.
[CSSB 25(FIN) was held over.]
CONFIRMATION HEARINGS
Professional Teaching Practices Commission Appointees
Number 2027
CHAIR WILSON announced that the committee would consider the
governor's appointees to the Professional Teaching Practices
Commission. The candidates, Mark Doner of Palmer and Thomas
Lamal of Fairbanks, would testify via teleconference. Chair
Wilson asked Mr. Doner to provide a brief statement to the
committee.
Number 1984
MARK DONER, Appointee to the Professional Teaching Practices
Commission, testified. He said he was willing to serve the
State of Alaska by helping to define and enforce the ethics of
those in the teaching profession. He said he believed teaching
was one of the most important public service professions that
affect youth in Alaska.
Number 1969
CHAIR WILSON asked Mr. Doner to tell the committee about his
background in Alaska.
MR. DONER said he is the grandson of a homesteader, and he
graduated from high school in Anchorage and attended college in
Montana. He said after working as an engineer he found that he
liked working with people, so he went back to college to get his
teaching certificate. He said he taught and coached at both
Wasilla High School and Colony High School, and he is currently
a cross-country coach.
REPRESENTATIVE GATTO asked Mr. Doner if he is any good at
coaching cross-country running.
MR. DONER said he is not sure if he is good at it, but his
athletes have done well.
REPRESENTATIVE GATTO pointed out that some of those athletes
have gone on to do well in universities across the country.
MR. DONER said Representative Gatto's daughter ran for him for
four years, and she has done well.
REPRESENTATIVE GATTO told the committee that he had known Mr.
Doner for over 20 years, and believed he was a good candidate
for the appointment.
REPRESENTATIVE COGHILL thanked Mr. Doner for his willingness to
take the time to serve on the commission.
Number 1895
REPRESENTATIVE GATTO made a motion to advance the appointment of
Mark Doner from committee. There being no objection, the
confirmation of Mark Doner was advanced.
Number 1847
THOMAS LAMAL, Appointee to the Professional Teaching Practices
Commission, testified. He offered a brief history of his
service to Alaska, and he told members he had been teaching in
Fairbanks for 13 years. He said he believed this would be a
great opportunity to learn about Alaska's laws regarding
education and to have input as to how they are administered. He
said he believed he could make fair decisions, and he is looking
forward to working with the commission.
Number 1826
REPRESENTATIVE COGHILL asked Mr. Lamal if he had the opportunity
to look at what was expected as a commissioner?
MR. LAMAL replied that he had an opportunity to talk with some
of the individuals who serve on the commission.
REPRESENTATIVE COGHILL asked if there was anything he'd like to
see improved systemically or if he thought there should be
changes made to the commission's goals.
MR. LAMAL said he didn't want to comment, since it was his first
day.
REPRESENTATIVE COGHILL said that is why he asked, and often
legislators believe they'll be able to change things in the
first week. Representative Coghill said he believed Mr. Lamal
will bring the classroom perspective to the commission, which is
so important. He said many times appointees are asked to be the
judge without understanding the circumstances that individuals
work in. He thanked Mr. Lamal for his willingness to serve on
the commission.
Number 1757
REPRESENTATIVE GATTO moved to advance the appointment of Thomas
Lamal from committee. There being no objection, the
confirmation of Thomas Lamal was advanced.
Number 1739
The committee took an at-ease at 4:15 p.m. to prepare for a
briefing from the Division of Public Health on Severe Acute
Respiratory Syndrome (SARS). [End of Tape 03-34.]
SARS UPDATE
NOTE: The meeting was recorded but no log notes were taken. A
copy of a separate tape for the SARS update, labeled Tape 03-
34A, may be obtained by contacting the House Records Office at
State Capitol, Room 3, Juneau, Alaska 99801 (mailing address),
(907) 465-2214, and after adjournment of the second session of
the Twenty-Third Alaska State Legislature this information may
be obtained by contacting the Legislative Reference Library at
(907) 465-3808.
ADJOURNMENT
There being no further business before the committee, the House
Health, Education and Social Services Standing Committee meeting
was adjourned at an unspecified time.
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