02/10/2025 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Housing in Alaska, Opportunities and Challenges | |
| HB80 | |
| HB34 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 80 | TELECONFERENCED | |
| *+ | HB 34 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 10, 2025
3:15 p.m.
MEMBERS PRESENT
Representative Zack Fields, Co-Chair
Representative Carolyn Hall, Co-Chair
Representative Ashley Carrick
Representative Robyn Niayuq Burke
Representative Dan Saddler
Representative Julie Coulombe
Representative David Nelson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): HOUSING IN ALASKA, OPPORTUNITIES AND
CHALLENGES
- HEARD
HOUSE BILL NO. 80
"An Act relating to minimum standards for residential buildings;
relating to construction contractors and residential contractor
endorsements; establishing the Alaska State Residential Building
Safety Council; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 34
"An Act establishing the Alaska Innovation Council; and relating
to financial disclosures for members of the Alaska Innovation
Council."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 80
SHORT TITLE: RESIDENTIAL BUILDING CODE
SPONSOR(s): LABOR & COMMERCE
01/31/25 (H) READ THE FIRST TIME - REFERRALS
01/31/25 (H) L&C
02/03/25 (H) L&C AT 3:15 PM BARNES 124
02/03/25 (H) <Bill Hearing Canceled>
02/10/25 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 34
SHORT TITLE: AK INNOVATION COUNCIL
SPONSOR(s): HOLLAND
01/22/25 (H) PREFILE RELEASED 1/10/25
01/22/25 (H) READ THE FIRST TIME - REFERRALS
01/22/25 (H) L&C, FIN
01/29/25 (H) L&C AT 3:15 PM BARNES 124
01/29/25 (H) <Bill Hearing Canceled>
02/10/25 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
MELANIE BAHNKE, Board Member
Housing Alaskans: A Public-Private Partnership
Nome, Alaska
POSITION STATEMENT: Co-offered the presentation on Housing in
Alaska, Opportunities and Challenges.
MIKE ROBBINS, Executive Director
Anchorage Community Development Authority
Anchorage, Alaska
POSITION STATEMENT: Co-offered the presentation on Housing in
Alaska, Opportunities and Challenges and presented a PowerPoint,
titled "Creating an Environment For Attainable Housing
Development."
SHAUN DEBENHAM, Real Estate Developer
Debenham LLC
Anchorage, Alaska
POSITION STATEMENT: Co-offered the presentation on Housing in
Alaska, Opportunities and Challenges.
GRIFFIN HAGLE-FORSTER, Executive Director
Alaska Association of Housing Authorities
Anchorage, Alaska
POSITION STATEMENT: Co-offered the presentation on Housing in
Alaska, Opportunities and Challenges.
MINDY O'NEALL, Executive Director
Cold Climate Housing Research Center
Fairbanks, Alaska
POSITION STATEMENT: Co-offered the presentation on Housing in
Alaska, Challenges and Opportunities via PowerPoint [hard copy
included in committee file], titled "Housing in AK:
Opportunities & Challenges"; gave invited testimony on HB 80.
TRISTAN WALSH, Staff
Representative Carolyn Hall
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 80 on behalf of the bill
sponsor, House Labor and Commerce Standing Committee, on which
Representative Hall serves as co-chair.
JEFF TWAIT, Builder
Cornerstone Custom Homes & Design
Kenai, Alaska
POSITION STATEMENT: As an invited testifier, testified and
answered questions during the hearing on HB 80.
JIMMY ORD, Director of Research & Rural Development
Alaska Housing Finance Corporation
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony during the hearing
on HB 80.
REPRESENTATIVE KY HOLLAND
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor gave presentation on HB
34.
JACQUELINE SUMMERS, Executive Director
Health TIE
Anchorage, Alaska
POSITION STATEMENT: As an invited testifier, testified in
support of HB 34.
LINDA JANES, Humanity Director
gBETA
gener8tor
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony in support of HB 34.
ACTION NARRATIVE
3:15:47 PM
CO-CHAIR ZACK FIELDS called the House Labor and Commerce
Standing Committee meeting to order at 3:15 p.m.
Representatives Nelson, Coulombe, Saddler, Burke, Carrick, Hall,
and Fields were present at the call to order.
^PRESENTATION(S): Housing in Alaska, Opportunities and
Challenges
PRESENTATION(S): Housing in Alaska, Opportunities and
Challenges
3:16:16 PM
CO-CHAIR FIELDS announced that the first order of business would
be a presentation on Housing in Alaska, Opportunities and
Challenges.
3:16:47 PM
MELANIE BAHNKE, Board Member, Housing Alaskans: A Public-Private
Partnership (HAPPP), began by explaining that HAPPP formed in
2022, making Alaska the forty-eighth state to have such an
organization. She stated that HAPPP takes both private and
public funding to leverage funds and provide housing in Alaskan
communities. She thanked the legislature for its appropriation
in fiscal year 2023 (FY 23) of $1 million. Ms. Bahnke explained
that those funds were used to launch HAPPP's first grant cycle,
with a $150,000 top-off grant. Within two weeks, she said,
HAPPP received over 35 applications, ultimately resulting in the
construction of over 80 homes and apartments in Juneau, Nikolai,
Nome, Sitka, Soldotna, and Wasilla. She stated that HAPPP
estimated a need for 27,580 new and rehabilitated homes over the
next 10 years to keep up with housing needs in Alaska.
MS. BAHNKE asserted that housing should be thought of as
"necessary community infrastructure" such as roads or schools
due to the significant impact on economics and wellbeing. She
reported HAPPP's research revealed that there are hundreds of
housing units that remain stalled due to major challenges of
accumulating "capital stacks" - typically from dozens of
sources, all with differing timelines, processes, reporting
schedules, and restrictions. She stated that it can take years
to get a project underway and years further to completion. She
explained that HAPPP connects private and public funding sources
to get projects across the finish line quickly.
MS. BAHNKE concluded that HAPPP needs more [access to] patient
capital and incentive loan rates to assist more housing
developers, private or public. She explained that other states
accomplish this with housing and land trusts, green banks,
established during a prior legislature, and working with private
financial sectors to improve financial products. She asserted
that local governments and tribal entities know the housing
needs of the community better than statewide or federal agencies
reviewing "disparate applications." She concluded that planning
for community infrastructure should occur at the local level,
and that HAPPP's focus would be on assisting with supply for
housing.
3:21:41 PM
REPRESENTATIVE SADDLER asked about the funding sources other
than the State of Alaska for HAPPP.
3:22:01 PM
MS. BAHNKE explained that the HAPPP board consists of members
from both non-profit and private industries. She stated that
she is the President of Kawerak. She stated that HAPPP acts as
a vehicle to receive private and public funding. She reported
that Wells Fargo recently committed funds to HAPPP. She
explained that HAPPP's first priority with initial funding was
to provide top-off grants for "shovel-ready projects." She
noted that the existence of public-private partnerships is not
new and reported that 47 other states have these types of
entities.
MS. BAHNKE, in response to a follow-up question from
Representative Saddler, directed him to housingalaskans.com.
3:23:39 PM
CO-CHAIR HALL asked about plans for private fundraisers.
Further, she asked what kind of public funds HAPPP might be
seeking, local, state, or federal.
3:24:10 PM
MS. BAHNKE responded that HAPPP is always open to funding. She
reported that the legislature provided HAPPP with its initial $1
million in funding. She stated that, until HAPPP's funding
source is large enough to support whole projects, its focus
would be primarily top-off projects i.e. getting construction
past the finish line.
3:25:23 PM
CO-CHAIR HALL offered her understanding that HAPPP helped bring
80 homes online and thanked Ms. Bahnke for her work.
MS. BAHNKE responded that in her hometown, Nome, Alaska, she saw
firsthand the positive impact of HAPPP, as she witnessed the
opening of HomePlate Nome, LLC - a Housing First project
designed to provide homes for the previously unhoused.
3:26:43 PM
MIKE ROBBINS, Executive Director, Anchorage Community
Development Authority (ACDA), presented a PowerPoint, titled
"Creating an Environment For Attainable Housing Development."
He started by thanking the committee for its support of Senate
Bill 179 from the Thirty-Third Alaska State Legislature, which,
he stated, has allowed communities across the state to offer
economic development assistance for housing. He argued that the
housing crisis in Alaska has become an economic crisis. From
the second slide of the PowerPoint, he reported that 47 percent
of employers surveyed in Anchorage felt that the housing market
is impacting their worker shortage or ability to attract
workers. Additionally, he reported that 15 percent of employers
had job candidates decline to relocate to Anchorage due to
housing-related issues. Finally, [only] 8 percent of employees
reported high satisfaction with housing options available in
Anchorage. Mr. Robbins stated that ACDA is focused on creating
an environment for attainable housing development. He stated
that, in focusing on "affordable housing," many have missed
"attainable housing."
MR. ROBBINS stated that a house is typically the largest
investment that one will make in their life. He reported, from
the fourth slide, that in 2022, the average price of a home in
Anchorage was $456,000. He emphasized that to afford such a
home, one would have to make over $120,000 annually. He
asserted that attainable housing in not available in the Alaska
marketplace.
MR. ROBBINS, referencing the sixth slide, concluded that there
are many ways the legislature could help. He stated that the
legislature could not control the cost of goods, labor, or
financing; however, he argued, it could control the environment
created for laborers. He stated one of the largest expenses in
the construction of a new home is the infrastructure - sewer
system, water tank, sidewalk, et cetera. He proposed that the
legislature consider an infrastructure bank, and additional
property taxes could be levied. Finally, Mr. Robbins stated
that there are currently dueling opinions on the use of tax
increment financing (TIF). He reported that every state in the
country except for Alaska uses TIF financing. He stated that
TIF financing is commonly used for multi-family housing and
homeownership in other states. He echoed an earlier presenter
stating that access to affordable capital is a large barrier for
builders. Mr. Robbins suggested the issuance of bonds to bring
down the cost to the builders in creating more affordable
housing. He concluded by offering his belief that legislators
do not need to appropriate additional funds; rather, they need
to aid in creating an environment for builders and laborers to
thrive.
3:31:33 PM
CO-CHAIR FIELDS asked how ACDA looks at development
opportunities and how ACDA might use funds appropriated to an
infrastructure bank to complete projects.
3:32:03 PM
MR. ROBBINS provided an anecdote with a company called Debenham,
LLC. He explained that ACDA purchased land, cleaned the lot,
and provided the environmental work. He stated that ACDA
provided the land at a reasonable lease. Additionally, he
stated that ACDA provided more capital to aid the developer in
securing commercial financing from a bank. He stated that
providing for and ensuring property is "ready to go" is one of
many ways that ACDA can help in the development of projects.
3:33:20 PM
REPRESENTATIVE CARRICK asked about attainable housing thresholds
[on the fifth slide of the PowerPoint]. She asked whether
rising utility costs were factored in for numbers provided on
the columns, titled "Maximum Monthly Housing Costs" or "Maximum
Cost of Attainable Home[s]."
3:33:54 PM
MR. ROBBINS responded that the chart [on the fifth slide] does
include some allowance for utilities. He reiterated that,
currently, the Alaska Multiple Listing Service (AK MLS) reports
only 53 homes available in Anchorage that cost under $400,000.
3:35:02 PM
SHAUN DEBENHAM, Real Estate Developer, Debenham LLC, stated that
he specializes in multi-family, market-rate housing. He
reported that Debenham LLC recently finished a public/private
partnership with ACDA, in which the company completed the
construction of 48 units in downtown Anchorage. He reported
that, within 3 months, every unit was occupied, and he continues
to report a high occupancy. He stated that Debenham LLC will
construct 107 town homes in Anchorage in the coming year. He
commented that single-family housing is typically very
expensive, and he characterized his developments as "affordable
luxury."
MR. DEBENHAM stated that, in spite of high demand for the type
of housing that he provides, there are significant barriers
slowing down the process. He emphasized two significant
barriers: location [it is expensive to do construction in
Alaska] and "red tape" [bureaucracy]. He concluded that the
public sector could make a large difference in the development
of housing projects, by providing both finances and patient
capital or low-interest bridge funding for developments. He
noted that financing at the state level is typically done for
commercial, not residential, housing.
3:38:13 PM
REPRESENTATIVE SADDLER asked Mr. Debenham to provide examples of
recent developments in Anchorage, Alaska.
3:38:28 PM
MR. DEBENHAM responded that Block 96, on 8th Avenue and K
Street, is most recent development completed by his company in
Anchorage, Alaska. Additionally, he stated that Debenham LLC
built a 27-unit complex in southwest Anchorage called Northwood
Apartments. He provided the websites associated with the
residences.
MR. DEBENHAM, in response to a question from Representative
Saddler on whether HB 80 would help or hinder the construction
of affordable housing, posed another question: Will [HB 80]
increase or decrease the cost of housing? He noted that he is
typically against anything that might increase the cost of
housing. Notwithstanding, he noted that Anchorage already has
very strict building and land-use codes, and he anticipated that
HB 80 would likely not be as prescriptive and difficult as the
existing codes in Anchorage.
MR DEBENHAM, in response to Co-Chair Fields' question regarding
the location of the 107-town home development, responded that
the development is adjacent to the residences on Northwood
Street, off of Raspberry Road in Anchorage, Alaska.
3:41:20 PM
GRIFFIN HAGLE-FORSTER, Executive Director, Alaska Association of
Housing Authorities (AAHA), explained that AAHA is a membership
organization comprised of the 14 regional housing authorities.
He stated that AAHA also has a strong partnership with the
Alaska Housing Finance Corporation (AHFC). He stated that
housing in Alaska, particularly rural Alaska, is too scarce,
expensive, crowded, and in need of repair. He asserted that the
Build America, Buy America (BABA) Act, a federal law, is
exacerbating the aforementioned issues in housing in Alaska. He
stated that the regional housing authorities in Alaska have been
developing and managing affordable housing for over 50 years and
AAHA was founded in 1994. He highlighted that AAHA focuses on
collaboration, not competition, and fosters an environment of
shared resources, best practices, technical assistance and
training amongst its members.
MR. HAGLE-FORSTER explained that most of the housing stock in
the state was developed in the '70s and '80s, either due to the
oil boom in urban centers, or infusions of money from the U.S.
Department of Housing and Urban Development. He asserted that,
beginning in the late '90s going into 2022, federal investment
in affordable housing did not keep up with inflation. He stated
that from 2000-2023, the purchasing power of regional housing
authorities was down 30 percent due to "stagnant federal
funding." He reported that consumer prices in Alaska have
increased by 20 percent since 2020. He added that construction
prices in the United States have increased by 30 percent. He
asserted that Alaska is behind in population growth due to lack
of investment in housing and the natural decline of construction
materials in the last two decades. He noted that, since federal
reform in the late '90s, regional housing authorities have been
able to exercise self-determination and local control in
developing homes suited for Alaska's varying climates.
MR. HAGLE-FORSTER circled back to BABA, which, he explained,
mandated that all construction materials - iron, steel, lumber -
be American-made or American-sourced. He argued that, while the
goals of BABA are allottable, the pace of the implementation of
such has been too fast. He stated that the manufacturing bases
in America could not reach the demand in the short-term without
a price increase of, he estimated, around 15-30 percent. He
reiterated that, with the cost of construction already
significant, increasing the cost of materials would decrease
available and affordable housing in Alaska.
MR. HAGLE-FORSTER stated that the state funding is used by
housing authorities to provide for programs like weatherization
and senior and rural housing grants. He asserted that housing
and energy are closely tied to each other. He argued that the
value of energy efficiency should be regarded similarly to other
fuel sources. Further, he maintained that high-performing homes
allow for the postponement of transporting liquified natural gas
(LNG) into Alaska.
3:46:57 PM
CO-CHAIR FIELDS stated that historically, energy has been
separated from housing. He noted that rising heat and electric
costs significantly increase the cost of housing. He asked if
it was cheaper to incorporate higher standards for insulation at
the start of construction or to weatherize the residence after
construction.
MR. HAGLE-FORSTER responded that it is largely dependent on the
cost of fuel, whose cost is expected to increase significantly
in the coming years. In 2012, after the conclusion of AHFC's
Home Energy Rebate Program [as a part of AHFC's Weatherization
Program], there was a 28-percent average reduction in housing
costs. Further, he anecdotally commented that every couple of
weatherized houses represents one tank of LNG that is not
shipped into the state.
CO-CHAIR FIELDS asked how the cost of utilities compares to the
cost of mortgages.
MR. HAGLE-FORSTER believed that data was available in the 2018
Housing Assessment and stated he would follow-up with the
information.
3:49:21 PM
MR. HAGLE-FORSTER, in response to Representative Saddler's
question on the duties of housing authorities, explained that
housing authorities were chartered under Alaska statues in the
early '70s as public corporations. He explained that the
legislature created them primarily to serve needs of villages
and communities around Alaska where the private market was
insufficient. He stated that AAHA members operate and maintain
housing programs around the state, including rehabilitation,
weatherization, and modernization of unites. He noted that
there is variation among the regional housing authorities in the
type of aid that is available. He stated that he would follow-
up with more information for the committee.
REPRESENTATIVE SADDLER further queried the nature of the
relationship between AHFC and AAHA.
MR. HAGLE-FORSTER explained that the supplemental housing
authority grant is used by regional housing authorities on 1:4
ratio, meaning they must secure U.S. Department of Housing and
Urban Development (HUD) funding to qualify for the Supplemental
Housing Development Grant Program (SHDG) from AHFC. Further, he
explained that funds from the supplemental housing authority
grant are not used for overhead costs; rather, funds are used
for energy efficient building techniques, or electrical
infrastructure, making AHFC a critical funding partner.
3:52:52 PM
MINDY O'NEALL, Executive Director, Cold Climate Housing Research
Center (CCHRC), as an invited testifier, co-offered the
presentation on Housing in Alaska, Challenges and Opportunities
via PowerPoint [hard copy included in committee file], titled
"Housing in AK: Opportunities & Challenges." She stated that
CCHRC is a non-profit located in Fairbanks, Alaska, that has
been active for approximately 25 years. As shown on the second
and third slides, she described the makeup of the organization.
Drawing attention to the fourth slide, she stated that the work
of CCHRC focuses on three main areas: education, policy, and
research, with the shared goal of promoting solutions for
healthy, resilient homes in cold climates. To the fifth slide,
she stated that approximately 60 percent of the work that CCHRC
does is education, providing educational opportunities,
including an educational hotline and public lectures series.
Additionally, as shown on the seventh slide, the center created
an owner-builder masterclass in Fairbanks, Alaska, in fall
[2024]. Pointing to the eighth slide, she noted that CCHRC
developed a 25-module online platform called the Cold Climate
Weatherization Installer Badges, which allows people to enter
the industry and be placed with contractors upon completion of
badges. She reported that CCHRC has 13,000 followers on its
YouTube [channel], where CCHRC posts videos ranging from short
tutorials to hour-long lectures.
MS. O'NEALL stated that CCHRC has many partners around the
state, including AAHA, HAPPP, the Alaska Native Tribal
Consortium (ANTC), and many other regional housing authorities,
and with those partners, drafts various manuals and programs
that establish standardized methods of building. On the sixth
slide, Ms. O'Neall reported that 60 percent of CCHRC's current
funding comes from grants. She stated that CCHRC is a partner
with AHFC and recipients of annual dividends.
MS. O'NEALL gave an overview of key research areas for CCHRC,
found on the eleventh slide, which read as follows [original
punctuation provided, with some format changes]:
Investment Challenges for Afforadable [sic] Housing
Supply Chain Tracker, Best Practices for Building in
Rural AK
Manufacturing and Distribution of local, lightweight
materials
Design buildings to enable deconstruction, reassembly
and reuse
Build Houses to withstand stronger and more frequent
weather events
Involve occupants' needs and profiles in the design
and operation
MS. O'NEALL, referring to the fourteenth slide, cited the
history of housing in Alaska, echoing a prior speaker in noting
that Alaska experienced a housing boom shortly after World War
II (WWII) and into the 1970s, particularly in urban areas. She
stated that AAHA was established in the 1970s, and, when Alaska
experienced major building failures in the 1990s, the State of
Alaska incorporated AHFC's age of efficiency standards. She
stated that the Alaska State Home Building Association (ASHBA)
established CCHRC in 1999. She reported that, in 2016, the
first rural village in Alaska relocated due to climate change.
In the same year, 30 other rural villages were labeled
"imminently threatened." A 2018 housing assessment conducted by
AHFC found the following [original punctuation provided]:
Overcrowding
More than 1/2 of rural homes are overcrowded, twice
the national average
Energy Inefficiency
Approximately 14,600 housing units are energy
inefficient, burdening residents with high costs.
High Housing Costs
Nearly 79,000 households spend more than 30 percent on
their income on costs related to housing;
Housing Construction Needed
Broadly, the current rate of construction in housing
is insufficient to keep pace with Alaska's projected
population
MS. O'NEALL, on the sixteenth and seventeenth slides, further
reported that nearly half of Cook Inlet's 2023 gas demand went
toward heating buildings and the region cannot fully meet the
gas demand forecast beyond 2026 with current proved reserves.
She asserted that it is critical to regard housing as a solution
to the energy crisis.
MS. O'NEALL gave an overview of the health/quality of life
effects of inadequate/nonexistent housing on the eighteenth,
through twenty-first slides. Some of the outcomes include poor
indoor air quality due to lack of adequate ventilation; lack of
in-home piped water in 20 percent of rural Alaska homes;
increased mental health issues; and an aging population that is
not supported by residential infrastructure. She reported that
bringing the entire Yukon Kuskokwim Delta to full water and
sewer service is estimated to save $5.6 million a year in health
care cost savings. Additionally, she reported that the elder
population in Alaska is expected to double by 2030, representing
nearly one-fifth of the total population. She stated that,
without mechanisms for senior living, fall-related injuries cost
$135 million in 2016. She argued that housing reduces
recidivism in prisons and the State of Alaska could save over
$40,000 per person per year by designating housing for those
coming out of the prison system. Finally, she showed the
twenty-second slide, which listed other challenges associated
with housing in Alaska, as follows [original punctuation
provided]:
Labor & Workforce Development
Logistics & Transportation
Poor Quality Housing to Start
Aging Population
Expensive Development Costs
Overcrowding
Extreme Climates
Health
Higher Frequency of Extreme Weather Events
High Costs of Energy
Short Building Season
Affordability
Workforce Housing
MS. O'NEALL, referring to the twenty-fourth through twenty-
seventh slides, concluded by discussing three opportunities for
housing development: prioritizing construction, using local
materials, and developing the workforce.
4:04:13 PM
REPRESENTATIVE CARRICK queried the impact of short-term rental
markets on housing availability in Alaska. Further, she asked
if there has been an increase in long-term renters over
homeowners in Alaska due to housing costs/market conditions.
4:05:22 PM
MR. HAGLE-FORSTER stated his experience is filtered through his
primary residence in Utqiagvik for the last 10 years.
REPRESENTATIVE CARRICK offered her belief that the availability
of housing is affected by the short-term rental market in
Alaska.
4:06:34 PM
REPRESENTATIVE SADDLER queried CCHRC's range and scope of
research and policy. Additionally, he asked Ms. O'Neall whether
she was an elected official to a body.
MS. O'NEALL responded that she is an assemblymember in the
Fairbanks North Star Borough (FNSB). Additionally, she
responded that CCHRC's research focus has shifted in the past
five years from technical research to the economic and social
benefits of housing. In response to a follow-up question from
Representative Saddler, Ms. O'Neall stated that, although
CCHRC's headquarters is located in Fairbanks, the work is
applicable statewide.
4:07:51 PM
CO-CHAIR FIELDS asked how to protect homeowners from increasing
natural gas cost burdens.
4:08:12 PM
MR. HAGLE-FORSTER described a "heat pump belt" from Kodiak to
Ketchikan, whereas the energy is relatively affordable and
clean. He commented that on the Railbelt and going further
north, the cost of electricity is six times the equivalent cost
of gas. He explained that natural gas costs are, currently,
highly location dependent. He offered his belief that heat
pumps will become more worthwhile in the next five years, as
prices will likely converge.
4:09:37 PM
MS. O'NEALL added that the cold climate heat pumps are evolving
fast. She offered her belief that more cold climate heat pumps
will be used in the future in the regions far north of Alaska.
She suggested investment into the workforce development of those
that install heat pumps.
4:10:10 PM
REPRESENTATIVE COULOMBE asked about CCHRC's total annual budget.
MS. O'NEALL responded that CCCHRC's budget is about $2 million
with 60 percent of the budget funded through state and federal
grants. She stated that the majority of the center's grants
come from AHFC. She further stated that approximately [30]
percent of CCHRC's budget is driven by revenue.
REPRESENTATIVE COULOMBE asked whether the funding over the years
has been stable, or fluctuating.
MS. O'NEALL offered her belief that grants are not stable funds
by nature. She noted that, in every year prior, CCHRC had
successfully advocated for funding, but that had yet to come to
fruition in the current fiscal year.
4:11:31 PM
REPRESENTATIVE NELSON referred to the sixth slide of the
PowerPoint, titled "Housing in AK: Opportunities & Challenges,"
and asked about the sources of income.
MS. O'NEALL responded that CCHRC owns a facility that it rents
out to the National Renewable Energy Laboratory (NREL), which
constitutes the majority of CCHRC's income. Additionally, she
explained that CCHRC has a consulting firm.
4:12:16 PM
REPRESENTATIVE NELSON asked whether the educational initiatives
were well received.
MS. O'NEALL responded that as the price of energy goes up,
homeowners are looking into ways that they can save money. She
stated that CCHRC's online lecture series typically has about 30
participants and has drawn attention from outside of Alaska.
4:13:47 PM
MS. O'NEALL, in response to a question from Representative
Saddler regarding the facility that CCHRC rents out to NREL,
stated that the building was constructed in 1999 and funded
through an Economic Development Administration (EDA) grant and a
United States Department of Agriculture (USDA) grant. She
stated that the land is owned by the University [of Alaska
Fairbanks], which stipulates the usage of the facility shall be
in alignment with CCHRC's mission. She stated that NREL has
contributed significantly to cold climate research and
innovation in partnership with CCHRC.
CO-CHAIR FIELDS thanked the invited testifiers.
HB 80-RESIDENTIAL BUILDING CODE
4:15:10 PM
CO-CHAIR FIELDS announced that the next order of business would
be HOUSE BILL NO. 80, "An Act relating to minimum standards for
residential buildings; relating to construction contractors and
residential contractor endorsements; establishing the Alaska
State Residential Building Safety Council; and providing for an
effective date."
4:16:00 PM
TRISTAN WALSH, Staff, Representative Carolyn Hall, Alaska State
Legislature, presented HB 80 on behalf of the bill sponsor,
House Labor and Commerce Standing Committee, on which
Representative Hall serves as co-chair. He began a PowerPoint
[hard copy included in the committee file], titled "HB 80:
State Residential Building Code." He stated that the State of
Alaska has local jurisdictions with building codes. He stated
that, outside of local jurisdictions, the International Code
Council (ICC) acts as the governing body for regulations. He
reported that the Alaska Housing Finance Corporation (AHFC)
adopted ICC's International Building Code of 2018 and further
reported that AHFC is in the process of considering the adoption
of ICC's International Building Code of 2024. He stated the
[ICC] code is updated every three years.
MR. WALSH stated that building codes create minimum standards
with the primary goal being the safety of the occupants.
According to studies done by ICC and the Federal Emergency
Management Agency (FEMA), 65 percent of counties, cities, and
towns across the United States have not adopted modern building
codes. He reported that 50 percent of construction done post-
2000 follows the standard set by the ICC. Additionally, he
reported that 30 percent of new construction occurs in
communities with no codes or codes that have not been updated in
at least 20 years. He stated that AHFC has adopted both the ICC
and the International Residential Code (IRC) with modifications
to accommodate for "local context."
MR. WALSH gave an overview of the benefits of the proposed
legislation. He reported that studies done by the [National]
Institute of Building Sciences (NIBS) in 2019 found that the
adoption of IRC codes were cost-saving, with $11 saved for every
$1 invested. Additionally, these studies found that cost-
savings extended to retrofits and use of federal mitigation
grants. He stated that, as communities face challenges such as
flooding, hurricane surges, high wind events, earthquakes, and
fires related to climate change, the adoption of modern codes
increases the resiliency of structures and creates a more
durable housing stock for Alaska. Additionally, he asserted
that building to a higher code would save money in terms of
state/federal emergency appropriations in times of crisis. He
cited a graph on slide 6, displaying how much the State of
Alaska has invested in retrofits, and he noted that there is $4
saved for every $1 invested in retrofits. Finally, Mr. Walsh
cited a study conducted by the U.S. Department of Energy across
seven states that found the adoption of modern codes resulted in
"significant savings."
MR. WALSH, referencing slide 8, outlined consumer protections of
the proposed legislation, which read as follows [original
punctuation provided]:
Requires residential contractors to test and show
expertise in state building code for ongoing licensing
in residential contracting.
Exempts owner-builds and recreational cabins.
Creates protections for consumers by ensuring
compliance by residential constructors with a uniform
code outside of local jurisdictions.
MR. WALSH, in conclusion, talked about the relationship between
HB 80 and AHFC. He reiterated that AHFC has adopted the 2018
ICC Standards and is considering the adoption of the 2024 ICC
Standards. He noted that financiers typically look at building
codes in determination of loan applications. He stated that HB
80 would authorize AHFC to enforce regulations. Finally, he
stated that HB 80 would establish the Alaska State Residential
Building Safety Council with the purpose of advising AHFC on
regulations through public feedback on the proposed changes.
4:22:18 PM
REPRESENTATIVE SADDLER clarified that this is the first hearing
on HB 80 and the committee had previously heard invited
testimony on housing, but not on building codes.
CO-CHAIR FIELDS stated that proposed legislation was the result
of a request from the Alaska State Homebuilding Association
(ASHBA).
4:22:57 PM
JEFF TWAIT, Builder, Cornerstone Custom Homes & Design, gave
invited testimony and answered questions during the hearing on
HB 80. He stated that he is a builder in Kenai, Alaska, and a
member of the Alaska State Home Building Association. He stated
that ASHBA has been attempting to involve the State of Alaska in
residential building codes for about two decades. Initially, he
explained, the system was voluntary, with paid inspections.
After that, the statewide building code was constructed to
include everyone, homeowners and builders, and was intended to
serve as the code for every residential home in Alaska.
Finally, the scope of the building code was narrowed, to target
just residential contractors with continuing education
requirements such that they would be required to meet minimum
standards.
MR. TWAIT asserted that residential codes exist for life,
safety, health, and sustainability. He provided an anecdote on
smoke detectors and egress windows, emphasizing that there is
potential for death due to not building to a minimum code.
MR. TWAIT further stated that it is difficult to totally
quantify the increased cost of building to code as it is highly
dependent on how far one deviates from the building code. He
maintained that, although it may be cheaper up front not to
build to code, in the long-term, the payback is insurmountable
with regard to sustainability, maintenance, heating costs, life
safety issues, et cetera. He asserted that ASHBA should do more
consumer outreach and education to aid in raising the standard
for building. He stated that he is in support of HB 80.
4:27:59 PM
CO-CHAIR FIELDS stated that home insurance markets are changing
rapidly and there are insurers refusing to insure homes not
built to minimum standards. He noted that some weather events
in Alaska include wildfires and high wind events. He further
asked Mr. Twait how building to minimum standards might help
with insurance coverage.
MR. TWAIT commented that licensed residential builders are not
building to code due to affordability, as consumers are not able
to afford it. To address the issue of affordability, he
suggested an inclusion of a disclosure statement with detailed
code deficiencies as a possible amendment to the legislation.
4:29:34 PM
REPRESENTATIVE COULOMBE reiterated that one of the biggest
barriers to construction is red tape. She offered her belief
that HB 80 would increase red tape and cost for [licensed]
builders. She asked whether the extension of a bond could fix
the problem of "bad actors" in the building industry. She
queried whether HB 80 would help increase available housing and
pondered on the impacts of the proposed legislation in rural
Alaska.
MR. TWAIT responded that the proposed legislation would not
require additional permits; rather, all licensed contractors
with continuing education credits would be required to build to
a certain minimum standard. He provided an anecdote, stating
that, currently, a licensed builder could legally build outside
of city limits without a minimum standard. Further, he
continued that, were an earthquake to destroy a house built
outside of local jurisdictions, the homeowners would have no
legal standing against the licensed contractor. He stated that
extending a bond could help; however, he opined that may be
harder to implement than a residential statewide building code.
4:32:33 PM
REPRESENTATIVE BURKE commented that a statewide residential code
would provide necessary structure. She noted that there is a
lack of resources and emergency services in rural Alaska. She
asserted that fewer codes put more residential units and more
residents at risk. She offered her appreciation for HB 80.
4:33:29 PM
REPRESENTATIVE COULOMBE asked why local governments do not
create their own building standards, and offered her belief that
adopting standards would raise the costs. She noted that there
are municipalities with existing building codes.
CO-CHAIR FIELDS offered his belief that the codes proposed by HB
80 are not as strict as those of the Municipality of Anchorage
(MOA).
4:34:32 PM
MR. WALSH stated that HB 80, as currently drafted, would not
preclude local jurisdictions from adopting another standard.
4:34:59 PM
REPRESENTATIVE COULOMBE clarified that, were HB 80 to be
implemented in a community that doesn't have a local code, not
in a community that already has one, that particular community
would not have a lot of flexibility in the adoption of local
codes.
4:35:22 PM
MR. TWAIT responded that a community could adopt a stricter
code. If the Kenai Peninsula Borough decided to adopt the 2021
ICC Standards, it could amend certain stipulations out of the
code; however, once the standard is set, licensed builders could
not build to less than the adopted standards.
MR. TWAIT further stated that typically ASHBA is a right-leaning
organization and prefers limited government, which underscores
the gravity of the issue. He emphasized that the State of
Idaho, a state that is more conservative leaning, recently
adopted a statewide building code. He reiterated that only
licensed builders would be subject to the proposed legislation
under HB 80, not owner builders.
4:37:51 PM
CO-CHAIR FIELDS asked Mr. Twait to speak to specific examples of
extreme weather in Alaska and that houses built to a standard
are less likely to need repair or "fall apart" during extreme
weather events.
MR. TWAIT responded that, from the foundation up, there is a
pathway of connections built into a residence. He stated that
there is a vast array of climates and conditions in Alaska
identified in the codebook, such as seismic events, extreme cold
and darkness, and high wind events. Further, he stated that the
codebook has outlined methodologies for addressing region-
specific weather events.
4:39:13 PM
REPRESENTATIVE CARRICK asked if all construction projects, new
and existing, would be subject to the proposed legislation.
4:39:44 PM
MR. WALSH offered his belief that HB 80 would apply to all new
construction going forward. He repeated that AHFC had already
implemented the ICC's International Building Code of 2018 and is
considering the implementation of the ICC's 2024 code.
4:40:10 PM
REPRESENTATIVE CARRICK echoed Representative Burke's comments
about the importance of a building code in rural areas for the
protection of the residents. Further, she asked about the
barriers to the adoption of local codes.
4:41:00 PM
MR. TWAIT reported that Kenai, Soldotna, and Homer have adopted
local building codes, which represent approximately two-thirds
of the population on the Kenai Peninsula Borough. He
highlighted the importance of education in the adoption of local
codes, as there are residents that view the adoption of a code
as intrusive governance, not as a measure of ensuring safety.
REPRESENTATIVE CARRICK queried whether a statewide standard
would actually be easier than local codes in every community.
She noted that most [licensed] contractors work in multiple
communities.
MR. TWAIT explained that the State Fire Marshal has adopted a
statewide building code for commercial buildings. He offered
his belief that it would not be a "big stretch" to adopt a
statewide building code for residential buildings.
Additionally, he noted that local communities could adopt a
stricter code than HB 80.
4:42:54 PM
REPRESENTATIVE SADDLER clarified that if a small town or village
had to follow a statewide building code but wanted to adopt a
local building code, the code could not be "less strict" than
the statewide building code. Further, he asked whether there
were exemptions to adherence to the proposed statewide building
code.
MR. TWAIT deferred to AHFC.
4:43:38 PM
JIMMY ORD, Director of Research & Rural Development, Alaska
Housing Finance Corporation, as an invited testifier, answered
questions during the hearing on HB 80. He responded that AHFC
has adopted a statewide building code [ICC's International
Building Code of 2018] with some "Alaska-specific" amendments.
He offered his understanding that, under Section 9 of HB 80, the
statewide building code would be the ICC's International
Building Code of 2018 that AHFC has already adopted.
4:44:20 PM
REPRESENTATIVE SADDLER clarified that a village or town could
have its own code, but it must still adhere to the statewide
code.
MR. TWAIT confirmed that was his understanding.
REPRESENTATIVE SADDLER, looking at slide 7 of the PowerPoint,
titled "HB 80: State Residential Building Code," queried the
commensurate estimate of costs of implementing new technology or
standards. He quoted the bullet point, stating that there is an
estimated "5-7 percent efficiency gained by the adoption of new
technology or standards."
MR. WALSH stated that he would follow-up with Representative
Saddler.
4:45:35 PM
MINDY O'NEALL, Executive Director, Cold Climate Housing Research
Center (CCHRC), gave invited testimony during the hearing on HB
80. She began by stating, in [2018], a 7.0 magnitude earthquake
struck Anchorage, Alaska. She reported that, within the MOA, 40
buildings suffered significant structural failure due to the
earthquake. She stated that of the 40 buildings that suffered
structural failure, 95 percent (38 of the 40 buildings) were
located in areas without [residential] code enforcement.
MS. O'NEALL stated that CCHRC is in support of the enactment of
a statewide building code with "sensible, compliant
alternatives" to "account for regional differences." She stated
that weatherization programs have saved an average of 28 percent
on energy bills for residents in Alaska. With the stunted
projections of natural gas availability in Cook Inlet, Ms.
O'Neall asserted, prioritizing energy efficiency reduces heating
loss. She noted that in Fairbanks, heating loss leads to poor
air quality and poor health conditions. In rural Alaska, where
diesel is barged into communities, communities are paying a
"premium price" to stay warm.
MS. O'NEALL asserted that the adoption of a statewide
residential code would increase safety standards and protect
homeowners. She maintained that a statewide code would
establish a standard, so that, regardless of region, town, or
village, the "basics are the same." She stated that local
jurisdictions without statewide standards create a patchwork of
codes, such as the State of Missouri, which is currently
instituting a statewide building code to simplify and reduce
barriers of different codes per jurisdiction.
MS. O'NEALL stated there are proven techniques readily available
to apply region-specific codes to avoid increasing costs and
burden of construction. She offered a few examples, such as
optional exemptions for communities with small populations,
using performance-based codes over prescriptive-based codes, and
allowing a longer timeframe for compliance from local
jurisdictions. She reported that CCHRC is a good resource for
best practices that meet environmental conditions and climates
that vary widely across Alaska. She stated the existing AHFC
"Alaska-specific" amendments were written with the goal of
ensuring sustainable and durable homes. She argued that a
statewide building code would not create barriers to residential
construction, rural or urban. She echoed other speakers, saying
that HB 80 would not affect anyone who is not a licensed
contractor. She concluded that swift and certain action is
necessary to meet the [housing] needs of Alaska residents.
4:49:57 PM
REPRESENTATIVE SADDLER commented that HB 80 would be a far-
reaching change to housing and construction in Alaska. He
stated his desire to hear more testimony regarding the proposed
legislation.
CO-CHAIR FIELDS stated his intention to hear from more
homebuilders.
4:51:44 PM
REPRESENTATIVE COULOMBE stressed the importance of weighing
public safety issues against increased housing costs and
regulatory burden. She maintained that Anchorage is a perfect
example [of the increased regulatory burden]. She cautioned
that the proposed legislation could increase both housing costs
and regulatory burden.
CO-CHAIR FIELDS stated the committee would like additional
follow-up on the cost gap between meeting a minimum standard as
proposed under HB 80 and current costs for building throughout
Alaska.
CO-CHAIR FIELDS announced that HB 80 was held over.
HB 34-AK INNOVATION COUNCIL
[Contains discussion of HB 30.]
4:52:54 PM
CO-CHAIR FIELDS announced that the final order of business would
be HOUSE BILL NO. 34, "An Act establishing the Alaska Innovation
Council; and relating to financial disclosures for members of
the Alaska Innovation Council."
4:54:04 PM
REPRESENTATIVE KY HOLLAND, Alaska State Legislature, as prime
sponsor, presented HB 34. He shared that he has been involved
in the Alaska entrepreneurial and innovation ecosystem for
approximately 10 years. He stated that innovation is the center
of the economy in the United States. He said that the U.S.
economy has grown two-thirds since World War II, largely due to
innovation and the evolution of technology. He stated the
opportunity for innovation has resulted in the development of
new businesses. He cited the creation of General Communications
Incorporated (GCI) as an example of entrepreneurial innovation.
REPRESENTATIVE HOLLAND asserted that the opportunity in Alaska
is in diversifying the economy and investing in high-growth
emerging sectors, such as mariculture, seafood technologies &
logistics, et cetera. He explained that Alaska published a
Comprehensive Economic Development Strategy (CEDS) in 2022 and
highlighted goals including: cultivating growth sectors,
supporting an entrepreneurial ecosystem, building & updating
foundations, developing Alaska's workforce, building a resilient
economy, and strengthening Alaska's economic engine. He
emphasized that 89 percent of net job creation in Alaska over 10
years is generated from businesses that are less than five years
old. He argued that Alaska's economy has been relatively
stagnant for about 15 years, stating that the number of
companies has been "relatively flat" and that the working
population has decreased.
REPRESENTATIVE HOLLAND referred to a PowerPoint presentation
[hard copy included in committee file], to highlight the
proposed provisions of HB 34. He drew attention to the fifth
slide, which read as follows [original punctuation provided]:
Creates a 19-member Alaska Innovation Council with
representatives from government, industry, academia,
labor, and investment sectors.
Develops an annual Innovation & Economic
Competitiveness Plan for the Governor and Legislature.
Establishes an Innovation Index to benchmark Alaska's
progress against national metrics.
REPRESENTATIVE HOLLAND stated that HB 34 would be tied to the
Department of Commerce, Community and Economic Development
(DCCED) for the purpose of developing new businesses and
allowing them to thrive. He referenced the Joint Legislative
Seafood Task Force, the [2024] Sustainable Energy Task Force,
and the Mariculture Task Force - all of which identify a need
for innovation and growth acceleration of new businesses.
REPRESENTATIVE HOLLAND shared that he drew inspiration for HB 34
from Calgary and Alberta, Canada, which utilized an "innovation
council type of structure." He explained that Calgary's economy
was heavily reliant on oil, gas, and mining approximately 15
years ago. He stated that Calgary, upon the realization that
there was little growth in oil, gas, and mining, brought
together a group of people with the aim of creating 1,000 new
technology startups by 2030. He maintained that Calgary is
still supporting their legacy economies [oil, gas, mining] in
addition to developing data science, energy technologies, and
healthcare technology. He further referenced innovation
councils established in Utah and Washington.
REPRESENTATIVE HOLLAND concluded by describing the outcomes of
the proposed legislation, including job creation and business
development. Additionally, he offered his hope that HB 34 would
help to keep young people in Alaska and excite them regarding
future prospects. Finally, he noted that HB 30 includes an
entrepreneurship office and includes provisions for DCCED to
support emerging entrepreneurial activities. He stated that HB
34 and HB 30 are complimentary and do not overlap with each
other.
5:04:31 PM
JACQUELINE SUMMERS, Executive Director, Health TIE, gave invited
testimony during the hearing on HB 34. She explained that
Health TIE is an Alaska-based healthcare innovative hub. She
reported that Alaska has some of the highest healthcare costs in
the country. She stated that, through work with startups both
in and outside of Alaska, she has launched a series of pilot
projects with new methods for addressing opioid use/treatment,
independence for those with intellectual/developmental
disabilities, those with traumatic brain injuries (TBIs), and
senior care. She emphasized that there is a need for
coordination of activities within the entrepreneurial ecosystem.
She described challenges to connecting healthcare startups with
local nonprofit organizations and social services. She
concluded by offering strong support for HB 34.
5:06:32 PM
LINDA JANES, Managing Director, gBETA, gener8tor, gave invited
testimony during the hearing on HB 34. Since 2021, Ms. Janes
stated, gBETA at gener8tor helped raise over $5.5 million to
initiate 30 companies and sustain 91 jobs. She gave a list of
the various industries she works with, including housing in
rural communities, clean outdoor air technology, aviation
weather monitoring, food preservation, industrial facilities,
sustainable energy generation, oil and gas, and many more. She
said that a strong support network is critical to success,
especially in an "islanded place" like Alaska. A strong support
network entails access to early capital, mentorships, exposure
to like-minded entrepreneurs, and innovation-supported
infrastructure. She offered her belief that HB 34 addresses the
need [for a strong support network] by assembling a council of
investors, entrepreneurs, and industry leaders who would advise
on best practices, enhance commercialization efforts, promote
capital formation in Alaska, and identify opportunities for
action.
MS. JANES opined that the cost attached to HB 34 should be
looked at as an investment, not "throwing money away," and noted
that the investment of time and money create returns. She
argued that there is a false sense of security in Alaska and
further stated that the demand for medical jobs is increasing,
primarily due to the aging population in Alaska that is expected
to peak in 2035. However, she argued that the long-term
economic landscape shows an out-migration of young, working
people due to a lack of "ongoing opportunities." Ms. Janes
concluded that people in Alaska need to see the State of Alaska
invest in long-term opportunities for the state.
5:10:10 PM
CO-CHAIR FIELDS invited questions from committee members.
5:10:19 PM
REPRESENTATIVE COULOMBE asked how the Alaska Small Business
Development Center (ASBDC) is different from the proposed
council.
5:10:58 PM
REPRESENTATIVE HOLLAND answered that ASBDC provides a broad
array of services, particularly for "bankable" local businesses
or businesses that are eligible for a loan or are
"bootstrap[ped]." He offered commentary that technology
businesses and technology transfers require a different set of
skills. He noted that Path to Prosperity [Business Competition]
has been a successful program in Southeast Alaska (SEAK) in
helping local entrepreneurs develop businesses, and programs
like that would be complemented by ASBDC. He stated that ASBDC
is one of many tools that aspiring entrepreneurs/businessowners
can utilize for aid. He stated that in many cases,
entrepreneurs need additional help with customer
validation/discovery work.
REPRESENTATIVE HOLLAND provided an example, stating that GBeta
would help an aspiring entrepreneur with creating an investable
business model, which might eventually lead to a small business
opportunity that is "bankable" and thus could use help from the
ASBDC. He stated that, throughout the country, it is common to
see the entrepreneurial ecosystems feed into the SBDCs.
5:13:30 PM
REPRESENTATIVE SADDLER remarked that HB 34 would create a 19-
member council. He asked what would oblige the legislature or
the administration to follow or implement the recommendations of
the Alaska Innovation Council.
REPRESENTATIVE HOLLAND explained that he did not intend to
create required action in statute. He stated that the function
of the Alaska Innovation Council would be advisory, and the
Council could identify potential state action.
REPRESENTATIVE SADDLER clarified that the function of the Alaska
Innovation Council would be to generate advice. He asserted
that the cost of the proposed legislation would be "significant"
at $500,000.
REPRESENTATIVE HOLLAND responded that the Alaska Innovation
Council would be a "next step" in developing methodologies for
implementing Alaska's 2022 CEDS, for example. He agreed with
Representative Saddler, asserting that whether action is taken
would be dependent on the will of the commissioners, the
governor, and the legislature. He reiterated that HB 34 would
not be "binding" but argued that Alaska "would have to go beyond
plans on a shelf that are ignored."
REPRESENTATIVE SADDLER asserted that he does not see how the
advice would be taken into action with the voluntary model of
the proposed legislation.
REPRESENTATIVE HOLLAND gave an anecdotal response, stating that
when starting a business, one typically writes a business plan.
He added that enforcement of a business plan is not mandatory.
He continued that, if a business plan is well thought out and
given to the right people, people would commit time and
resources towards action, such as getting said business afloat.
He further noted that there is no end to business plans that
have been thought out and never acted upon. He concluded by
offering his hope that the legislature would pursue action
recommendations of the proposed Alaska Innovation Council.
5:18:36 PM
CO-CHAIR FIELDS announced that HB 34 was held over.
5:18:42 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:18 p.m.