Legislature(2009 - 2010)SENATE FINANCE 532

03/18/2009 01:30 PM Senate FINANCE

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01:38:44 PM Start
01:39:07 PM SB75
02:59:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Department of Revenue
Alaska Housing Finance Corporation
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                       March 18, 2009                                                                                           
                         1:38 p.m.                                                                                              
1:38:44 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stedman called the Senate  Finance Committee meeting                                                                   
to order at 1:38 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
MEMBERS ABSENT                                                                                                                
Senator Johnny Ellis                                                                                                            
ALSO PRESENT                                                                                                                  
Senator   Gene  Therriault,   Ginger   Blaisdell,   Director,                                                                   
Division of  Administrative Services, Department  of Revenue;                                                                   
Deven  Mitchell, Executive  Director,  Alaska Municipal  Bond                                                                   
Bank Authority, Department of  Revenue; Mike Burns, Executive                                                                   
Director,  Alaska Permanent Fund  Corporation, Department  of                                                                   
Revenue; Dan  Fauske, CEO/Executive Director,  Alaska Housing                                                                   
Finance  Corporation, Department  of  Revenue; Les  Campbell,                                                                   
Director Budget,  Alaska Housing  Finance Corporation;  Bryan                                                                   
Butcher, Director,  Government Affairs and  Public Relations,                                                                   
Alaska Housing Finance Corporation, Department Of Revenue.                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Mark Romick,  Director, Planning  Department, Alaska  Housing                                                                   
Finance  Corporation,   Department  of  Revenue;   Jim  Gurke                                                                   
Director   of   Public  Housing,   Alaska   Housing   Finance                                                                   
Corporation (AHFC).                                                                                                             
SB 75     "An Act making and amending appropriations,                                                                           
          including capital appropriations, supplemental                                                                        
          appropriations, and appropriations to capitalize                                                                      
          funds; and providing for an effective date."                                                                          
          SB 75 was HEARD and HELD in Committee for further                                                                     
SENATE BILL NO. 75                                                                                                            
     "An Act  making and  amending appropriations,  including                                                                   
     capital  appropriations,   supplemental  appropriations,                                                                   
     and appropriations  to capitalize  funds; and  providing                                                                   
     for an effective date."                                                                                                    
1:39:07 PM                                                                                                                    
Co-Chair Stedman  introduced the  legislation as  an overview                                                                   
of the governor's capital association bill.                                                                                     
DEPARTMENT OF REVENUE                                                                                                           
Reference Number 46985                                                                                                        
GINGER  BLAISDELL,   DIRECTOR,  DIVISION  OF   ADMINISTRATIVE                                                                   
SERVICES, DEPARTMENT OF REVENUE,  introduced reference number                                                                   
46985, the Tax Revenue Management  System. She explained that                                                                   
the  project was  the department's  top priority  as a  three                                                                   
phase project  with an approximate  cost of $24  million. The                                                                   
first  phase includes  the oil  and gas  revenues along  with                                                                   
corporate income  tax. The second phase addresses  larger tax                                                                   
systems such as mining, motor  fuel, and cruise ship tax. The                                                                   
third  phase   addresses  the   remaining  tax  systems   and                                                                   
insurance operated by the new management system.                                                                                
Co-Chair Stedman  requested information regarding  the master                                                                   
line of credit. Ms. Blaisdell  answered that the master lease                                                                   
line of  credit is  a funding  mechanism, different  from the                                                                   
$50  million  master lease  line  of  credit that  the  state                                                                   
typically runs to finance operating expenditures.                                                                               
1:42:26 PM                                                                                                                    
DEVEN  MITCHELL, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  BOND                                                                   
BANK  AUTHORITY, DEPARTMENT  OF REVENUE,  explained that  the                                                                   
state  sells   certificates  of   participation  subject   to                                                                   
appropriation.  The line of  credit has  a final maturity  in                                                                   
approximately  seven  years with  an  interest  rate of  3.25                                                                   
percent.  The master  lease line  of credit  is designed  for                                                                   
smaller  capital   acquisitions  that  fit   in  department's                                                                   
operating  budgets.  The  master  lease line  of  credit  was                                                                   
employed  most   recently  by  the  University   for  Vehicle                                                                   
Acquisitions Five Year Amortization at a five year rate.                                                                        
Co-Chair  Stedman asked  why the  committee  should pay  cash                                                                   
instead.  Mr.   Mitchell  responded   that  cash   is  always                                                                   
preferred,  but  the strategy  set  forth by  the  governor's                                                                   
office  provides a  balance  of funding  occasional  projects                                                                   
with sources  other than  cash. He  noted that this  instance                                                                   
allows  the access  of capital  at  a low  cost, tax  exempt,                                                                   
while allowing  maintenance of money invested  in other funds                                                                   
at  a  taxable  rate.  Normally   funds  are  maintained  and                                                                   
invested at a taxable rate                                                                                                      
1:46:07 PM                                                                                                                    
Co-Chair Stedman  requested the ongoing budget  impact of the                                                                   
decision.  Mr.   Mitchell  indicated  $4  million,   but  the                                                                   
department   utilized  a  conservative   interest   rate.  He                                                                   
explained  that he  used a  rate of  six percent  due to  the                                                                   
volatile market allowing  a savings of $6 thousand  per year.                                                                   
Co-Chair  Stedman clarified  that  the debt  financing  would                                                                   
lead to  evidence of a smaller  draw on general funds  at the                                                                   
end of the year.                                                                                                                
Mr.  Mitchell agreed  that the  master lease  line of  credit                                                                   
balances  capital budget  expenditures.  He  noted that  that                                                                   
many different options exist regarding investment.                                                                              
Co-Chair Stedman recalled that  the legislature worked on the                                                                   
financial  structure to  encourage  better  bond ratings  and                                                                   
retention.  He concluded  that increased  debt service  might                                                                   
lead to an impact on bond ratings.                                                                                              
Mr. Mitchell  agreed that  the issue  deserves awareness.  He                                                                   
noted  that Alaska  has a  low  debt burden  compared to  its                                                                   
resources  and revenue  streams. He spoke  of Alaska's  small                                                                   
population and great wealth resulting  from oil production. A                                                                   
percentage of unrestricted revenue  is utilized as an allowed                                                                   
annual service.  The department  prefers the comfort  zone of                                                                   
eight  percent of  unrestricted  revenues  obligated to  debt                                                                   
service.  Currently  the  state  is  well  within  the  eight                                                                   
percent threshold.                                                                                                              
1:50:01 PM                                                                                                                    
Ms.  Blaisdell  informed that  the  initial purchase  is  $20                                                                   
million of the  $24 million requested. She observed  that the                                                                   
choice  reduces  general  funds.   The  remaining  funds  are                                                                   
designated to customize programming.                                                                                            
Reference Number 46988                                                                                                        
Ms.  Blaisdell  addressed  reference  number  46988  and  the                                                                   
Upgrade of the NetApp System.  The current NetApp capacity is                                                                   
approximately  7.5 terabytes of  stored data, maximizing  the                                                                   
system's   capacity.  The  projected   growth  through   2013                                                                   
estimates the  need for 27  terabytes. She noted  the largest                                                                   
growth  includes online  filing for  Permanent Fund  Dividend                                                                   
(PFD) applications.  The tax division adds  approximately 100                                                                   
gigabytes  per year  and treasury  contributes 100  megabytes                                                                   
per year as the smallest contributor.                                                                                           
Reference Number 42945                                                                                                        
Ms.  Blaisdell addressed  reference  number 42945  describing                                                                   
phase   five  of   the   Child  Support   Services   Computer                                                                   
Replacement  Projects.   She  informed  that   child  support                                                                   
services  manage  230  employees.   She  explained  that  the                                                                   
desktop personal computers, servers,  printers, fax machines,                                                                   
are  on a  five  year  rotation  cycle for  replacement.  The                                                                   
proposed cost is $216 thousand.                                                                                                 
1:52:49 PM                                                                                                                    
Reference Number 42933                                                                                                        
Ms. Blaisdell  discussed reference  number 42933 and  the PFD                                                                   
Computer Replacement Project requesting $119,500.                                                                               
Ms. Blaisdell  detailed  reference number  46987 and  the PFD                                                                   
Call Center  Automated  Routing. She explained  that  the PFD                                                                   
division  envisioned  the  creation  of a  four  person  call                                                                   
center  with the ability  to access  records immediately  and                                                                   
provide information  about application status.  She mentioned                                                                   
that the  division currently  employs an automated  telephone                                                                   
system, which leads to frustration among Alaskans.                                                                              
Reference Number 46989                                                                                                        
Ms.  Blaisdell  described  reference  number  46989  and  the                                                                   
Sequel Database  Evaluation. She  explained that  the request                                                                   
was   included  in   the   initial  submitted   budget.   All                                                                   
appropriations were reviewed until  one was found unexpended.                                                                   
The department  requested a title change in  the supplemental                                                                   
budget for a $300 thousand appropriation.                                                                                       
Co-Chair  Stedman asked  how  old the  initial  appropriation                                                                   
was. Ms. Blaisdell replied that  the documented appropriation                                                                   
was last  year's. Co-Chair Stedman  noted a similar  instance                                                                   
in which the  Department of Transportation (DOT)  submitted a                                                                   
similar  request  from 1980.  Ms.  Blaisdell  noted that  DOR                                                                   
tracks old dollars and spends them first.                                                                                       
1:55:00 PM                                                                                                                    
Reference Number 47037                                                                                                        
Ms.  Blaisdell  introduced  reference number  47034  and  the                                                                   
Permanent  Fund Corporation  Investment Portfolio  Accounting                                                                   
and Reporting System.                                                                                                           
MIKE  BURNS,   EXECUTIVE  DIRECTOR,  ALASKA   PERMANENT  FUND                                                                   
CORPORATION,  DEPARTMENT OF REVENUE,  noted that  the funding                                                                   
is for security of an investment  portfolio accounting system                                                                   
for  improved   general  ledger   accounting.  The   previous                                                                   
accounting  system is 12  years old  with limited ability  to                                                                   
report  on  current  asset accounts.  Key  functions  of  the                                                                   
system   include   reconciliation   of   assets,   monitoring                                                                   
performance  of  corporate  actions such  as  dividends,  pay                                                                   
downs,  calls,   etc.  The  funding  is  spent   on  servers,                                                                   
hardware, installation, business analysis, consulting.                                                                          
Co-Chair Stedman  asked Mr. Burns  to remain in  the building                                                                   
to meet with Co-Chair Hoffman and himself.                                                                                      
1:57:17 PM                                                                                                                    
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,  DEPARTMENT OF  REVENUE,  presented the  capital                                                                   
budget  for Alaska  Housing  Finance Corporation  (AHFC).  He                                                                   
informed  that   the  figures  presented  to   the  committee                                                                   
represent  75   percent  of  adjusted  net  income   for  the                                                                   
legislation that  AHFC operates  with. He explained  that the                                                                   
corporation  assembles  a  list  of  projects  from  new  and                                                                   
existing programs.                                                                                                              
Reference Number 37918                                                                                                        
LES  CAMPBELL,   DIRECTOR  BUDGET,  ALASKA   HOUSING  FINANCE                                                                   
CORPORATION, introduced  reference number 37918  and the AHFC                                                                   
Teacher Health  Public Housing  Loan Program. The  program is                                                                   
ongoing with $8  million of corporate dividend  receipts. The                                                                   
purpose is to provide gap funding  to increase home ownership                                                                   
and  rental  units  throughout  the  state.  The  program  is                                                                   
designed  to  retain  desirable professionals  in  high  cost                                                                   
areas.  Seventy  two  units have  been  developed  under  the                                                                   
Senator Huggins asked for the  annual objective regarding the                                                                   
program. Mr. Campbell responded  that the funding would allow                                                                   
construction  of  another  62 units,  existing  primarily  in                                                                   
rural areas.                                                                                                                    
Senator  Huggins   asked  the  process  of   determining  the                                                                   
project's location.                                                                                                             
Mr. Campbell answered that the  location priority is based on                                                                   
received   applications.  The   public   is  informed   about                                                                   
available funds,  and applications are received  initiating a                                                                   
priority process.                                                                                                               
Senator Huggins asked  if teacher housing in a  rural area is                                                                   
requested  from  the  Department  of Education  or  from  the                                                                   
village. Mr. Campbell responded  that the municipality or the                                                                   
school district applies for the funds.                                                                                          
2:01:21 PM                                                                                                                    
Mr.   Fauske  interjected   that   the  corporation   prefers                                                                   
communication  among government  entities. Community  support                                                                   
is necessary for financing of  the project. Once a project is                                                                   
deemed viable,  the corporation provides the  funds necessary                                                                   
to negotiate with the school district about a loan.                                                                             
Senator Huggins asked if the school  district owns the house.                                                                   
Mr.  Fauske replied  that  either the  school  district or  a                                                                   
private developer  owns the home including a  long term lease                                                                   
with the school district.                                                                                                       
Senator Huggins  inquired about  the expense to  the teacher.                                                                   
Mr. Fauske  responded that the  teacher's rent  is negotiated                                                                   
with the school district.                                                                                                       
2:05:07 PM                                                                                                                    
Reference Number 6323                                                                                                         
Mr.  Campbell   addressed  reference  number  6323   and  the                                                                   
Supplemental  Housing  Development   Program.  He  noted  the                                                                   
ongoing  program  supplements   federal  housing  funds  from                                                                   
regional housing authorities ensuring  clean and safe housing                                                                   
throughout Alaska.  The program supplements up  to 20 percent                                                                   
of   funds  received   from  the   federal  government.   The                                                                   
supplemental    housing    funds    generally    cover    the                                                                   
infrastructure of rural homes.                                                                                                  
Reference Number 6332                                                                                                         
Mr.  Campbell   discussed  reference  number  6332   and  the                                                                   
Weatherization  Program. The request  for 2010 is  $2 million                                                                   
in  federal  receipts.   The  purpose  is  to   provide  cost                                                                   
effective  energy   improvements  to  homes  of   low  income                                                                   
residents.  The  funds  supplement  those  appropriated  last                                                                   
Co-Chair Hoffman  asked why the program is  dropped from $300                                                                   
million. Mr. Fauske answered that  $360 million is committed.                                                                   
Co-Chair Stedman  requested a  brief update about  the status                                                                   
of the $360 million. Mr. Fauske  informed that $30 million of                                                                   
the appropriation is committed.                                                                                                 
2:08:26 PM                                                                                                                    
BRYAN  BUTCHER,  DIRECTOR,  GOVERNMENT   AFFAIRS  AND  PUBLIC                                                                   
RELATIONS, ALASKA HOUSING FINANCE  CORPORATION, DEPARTMENT OF                                                                   
REVENUE, repeated  that $30 million  was committed  in AHFC's                                                                   
Weatherization  Program. He  explained that  the ramp  up was                                                                   
accomplished with  $200 million  from the previous  year. The                                                                   
Home Energy  Rebate Program  encumbered  $66 million  for the                                                                   
program. The  wait list  is in excess  of 5 thousand  Alaskan                                                                   
residents. He  expressed comfort  that the corporation  would                                                                   
retain funds until FY10 for continuation  of the program. Mr.                                                                   
Fauske added that  the stimulus money is not  included in the                                                                   
presented amounts.                                                                                                              
Reference Number 6334                                                                                                         
Mr. Campbell  introduced reference  number 6334 and  the AHFC                                                                   
Senior  Citizens Housing  Development Program.  He cited  the                                                                   
request  as $7,500,000  of corporate  dividend receipts.  The                                                                   
purpose is to provide development  of senior citizen housing.                                                                   
The  program  has  funded 11  hundred  units.  The  requested                                                                   
funding provides  90 additional  units and modifications  for                                                                   
accessibility to an additional 40 units.                                                                                        
2:11:10 PM                                                                                                                    
Reference Number 47066                                                                                                        
Mr. Campbell  detailed reference  number 47066 and  phase one                                                                   
of the  Fire Protection System.  He explained that this  is a                                                                   
statewide   program   requesting  $3,450,000   of   corporate                                                                   
dividend receipts.  The purpose of the project  is evaluation                                                                   
of life  safety code  repairs for  public housing  throughout                                                                   
the  state.   The  project   reduces  maintenance   cost  and                                                                   
increases the  useful life of  the structure. He  mentioned a                                                                   
previous   capital  budget  observing   the  properties   for                                                                   
evaluation.  This appropriation  allows implementation  based                                                                   
on recommendations.                                                                                                             
Reference Number 47068                                                                                                        
Mr. Campbell noted  reference number 47068 and  a request for                                                                   
$750,000  for Security  System Replacement  and Upgrades.  He                                                                   
announced that the program was  statewide with the purpose of                                                                   
upgrading  existing  security  and  door  access  systems  in                                                                   
senior, disabled, and multifamily public housing complexes.                                                                     
Reference Number 47069                                                                                                        
Mr. Campbell  introduced reference number 47069  the Building                                                                   
System Replacement Program. He  announced the new program and                                                                   
noted  the  request  for  $2,500,000  of  corporate  dividend                                                                   
receipts.   The   purpose  addresses   specific   repair   or                                                                   
replacement of  items identified in  a five year  review. The                                                                   
project   addresses  major   roof  replacements,   sidewalks,                                                                   
retaining walls, and paint for siding.                                                                                          
2:14:12 PM                                                                                                                    
Reference Number 6347                                                                                                         
Mr. Campbell addressed reference  number 6347 and the Housing                                                                   
and Urban Development  Federal Home Grant  Program requesting                                                                   
$3,300,000  in federal  receipts  with a  corporate  dividend                                                                   
match  of  $750  thousand.  The purpose  of  the  program  is                                                                   
expansion of low and moderate  income housing. He praised the                                                                   
plan to design  and implement strategies for  the achievement                                                                   
of  safe,  energy  efficient   and  affordable  housing.  The                                                                   
program funded  44 rental projects  containing 818  units and                                                                   
rehabilitated  373 low income  family units, while  assisting                                                                   
315 low income households to purchase homes.                                                                                    
Reference Number 6342                                                                                                         
Mr. Campbell addressed reference  number 6342 and the Housing                                                                   
and Urban  Development Capital  Fund Program. The  request is                                                                   
for  $3,200,000  in  federal receipts.  The  purpose  of  the                                                                   
program is  to receive federal  funds for the  public housing                                                                   
program for the  renovation of public housing  units owned by                                                                   
Reference Number 6348                                                                                                         
Mr. Campbell addressed reference  number 6348 and the Federal                                                                   
and Other  Competitive Grants.  The request is  $1,500,000 in                                                                   
corporate  receipts  for match  purposes  and  $3 million  of                                                                   
federal  receipts. The  purpose of  the program  is to  allow                                                                   
AHFC  to  apply  for opportunities  from  Housing  and  Urban                                                                   
Development (HUD)  or other agencies targeting  housing needs                                                                   
and support services of low income  and special needs groups.                                                                   
2:16:59 PM                                                                                                                    
Reference Number 6350                                                                                                         
Mr.  Campbell   discussed  reference  number  6350   and  the                                                                   
Competitive Grants  for Public Housing. The  request includes                                                                   
$750 thousand in corporate receipt  authority with a match of                                                                   
$250 thousand of corporate dividend  receipts. The program is                                                                   
similar to reference number 6348,  except it addresses public                                                                   
housing residents.                                                                                                              
Reference Number 6351                                                                                                         
Mr. Campbell discussed  reference number 6351  and the Energy                                                                   
Efficiency Monitoring Research.  The request is $2 million of                                                                   
corporate dividend  receipts. The  purpose of the  project is                                                                   
the  provision of  a  designated grant  to  the cold  climate                                                                   
housing  research center.  The cold  climate center  conducts                                                                   
housing   construction   research   analysis   and   provides                                                                   
information dissemination among  the housing industry and the                                                                   
Co-Chair  Stedman  asked about  the  annual  increase in  the                                                                   
program's requests.  He observed that the  appropriated money                                                                   
was   spent.  He   requested   that  the   committee   retain                                                                   
flexibility regarding fund appropriation.                                                                                       
2:19:14 PM                                                                                                                    
Mr. Fauske explained that the  purpose of the requests was to                                                                   
provide a  list of projects that  AHFC plans to  continue and                                                                   
their  associated  costs.  He anticipated  that  the  session                                                                   
would provide the appropriate changes to the requests.                                                                          
Co-Chair  Stedman  asked  if   the  requests  are  listed  in                                                                   
priority  order. Mr. Fauske  affirmed  that the requests  are                                                                   
listed in  priority order. He  offered to provide  additional                                                                   
detail regarding new projects and increased requests.                                                                           
Reference Number 32526                                                                                                        
Mr. Campbell described  reference number 32526  and the State                                                                   
Energy Program  Special Projects.  The request includes  $150                                                                   
thousand  in federal receipt  authority  with a $50  thousand                                                                   
corporate  dividend  receipt  match.  The  program's  purpose                                                                   
enables the  state to  apply for  and participate in  special                                                                   
projects funded by the Department of Energy (DOE).                                                                              
2:20:58 PM                                                                                                                    
Reference Number 40068                                                                                                        
Mr.  Campbell  discussed  reference   number  40068  and  the                                                                   
Statewide  Project   Improvements.  The  request   equals  $3                                                                   
million in corporate dividend  receipts. The purpose includes                                                                   
funding  to address known  and unknown  conditions in  AHFC's                                                                   
housing stock.  He mentioned units throughout  the state with                                                                   
needs estimating $13 million.                                                                                                   
Reference Number 43076                                                                                                        
Mr.  Campbell  discussed  reference   number  43076  and  the                                                                   
Loussac Manor Renovation and Replacement.  The request is for                                                                   
$8,492,400  of  corporate  dividend   receipts.  The  request                                                                   
completes  phase   three  of  the  project.   Estimates  were                                                                   
reviewed and  the replacement  costs are  $15.1 million  by a                                                                   
2007 estimate.  For renovation, the  cost is $13  million. He                                                                   
thought it advantageous to replace the 15 units.                                                                                
Mr.  Fauske  informed  that  the   mentioned  location  is  a                                                                   
valuable piece of property. He  explained that the $8,492,000                                                                   
will leverage between  $28 and $32 million due to  the use of                                                                   
tax credits. The result is a 120 unit development project.                                                                      
2:25:49 PM                                                                                                                    
Co-Chair Hoffman  asked if  the investment property's  future                                                                   
includes  privatization.   Mr.  Fauske  concurred   that  the                                                                   
property would house low and moderately  low income families.                                                                   
The tax credits provide leeway for the rent structure.                                                                          
Co-Chair  Hoffman if  the  state would  continue  to own  the                                                                   
property.  Mr. Fauske  affirmed  that the  state will  remain                                                                   
owner of the property with the right to determine tenants.                                                                      
Co-Chair Hoffman asked the category  of low to medium income.                                                                   
Mr. Fauske answered those families  within 80 percent of Area                                                                   
Median Income (AMI).                                                                                                            
2:27:03 PM                                                                                                                    
MARK ROMICK,  DIRECTOR, PLANNING  DEPARTMENT, ALASKA  HOUSING                                                                   
FINANCE  CORPORATION, DEPARTMENT  OF  REVENUE (testified  via                                                                   
teleconference),   answered   the   question   about   income                                                                   
category.  He  informed that  the  income eligibility  for  a                                                                   
family of four  is $77 thousand per year, with  80 percent at                                                                   
$56 thousand  per year,  and 60 percent  at $40 thousand  per                                                                   
Co-Chair  Hoffman  asked if  the  state is  participating  in                                                                   
assistance  in  medium  income  homes.  He  asked  about  the                                                                   
opinion of  private enterprise  regarding the involvement  of                                                                   
the state in  medium income homes.  Mr. Romick  answered that                                                                   
AHFC participates  with less  than 80  percent of the  medium                                                                   
income homes.  He cautioned about heavy competition  with the                                                                   
private sector.                                                                                                                 
Co-Chair  Hoffman  asked  if the  income  requirements  would                                                                   
remain  the  same  once  the property  is  owned  by  private                                                                   
enterprise.   Mr.  Romick  replied   that  rent   and  income                                                                   
restrictions remain consistent for 15 to 30 years.                                                                              
2:30:06 PM                                                                                                                    
JIM GURKE DIRECTOR OF PUBLIC HOUSING,  ALASKA HOUSING FINANCE                                                                   
CORPORATION (AHFC), (testified  via teleconference) announced                                                                   
that  requirements for  units  designated  as public  housing                                                                   
remain  the  same.  He stated  that  AHFC  retains  fiduciary                                                                   
responsibility to HUD for necessary assurances.                                                                                 
Co-Chair  Hoffman  asked  if the  concept  of  mixed  finance                                                                   
developed was  considered in other  state regions.  Mr. Gurke                                                                   
answered that the practice is  common throughout the country.                                                                   
Currently the project is the only  one of its kind in Alaska.                                                                   
The type  of project is  known as mixed finance  development,                                                                   
with  public and  private funding  leveraging  each other  to                                                                   
build affordable units.                                                                                                         
Mr.  Fauske announced  AHFC's goal  to apply  the process  to                                                                   
other  regions  of  the  state as  an  avenue  to  affordable                                                                   
Co-Chair  Hoffman  expressed concern  that  additional  rural                                                                   
Alaskans  might  leave  their  home  towns  to  live  in  the                                                                   
affordable housing in Anchorage.  He expressed relief to know                                                                   
that similar projects will occur statewide.                                                                                     
Senator Thomas asked how many  square feet were available for                                                                   
the project.                                                                                                                    
2:33:44 PM                                                                                                                    
Mr. Gurke  estimated that  50-60 thousand  square feet  exist                                                                   
among the  livable space. He  lacked the requested  number of                                                                   
total available  square feet in  the project.  Senator Thomas                                                                   
asked Mr. Gurke  to present the information  to the committee                                                                   
in the near  future. He expressed surprise that  the elevator                                                                   
requirement was avoided in public buildings.                                                                                    
Mr. Gurke responded that the property  is substantial and the                                                                   
design plan  envisions a  collection of eight-plex  buildings                                                                   
that  span  the  perimeter  of  the  property  as  one  story                                                                   
buildings. He  noted that one  building in the  project plans                                                                   
contains an elevator.                                                                                                           
Mr. Fauske  informed about an  old building with  centralized                                                                   
location in need  of repair. The location provides  access to                                                                   
the bus and other social services.                                                                                              
2:37:34 PM                                                                                                                    
Mr. Gurke answered the question  about square footage for the                                                                   
mentioned  site as 119  thousand square  feet of living  area                                                                   
and 8000 square feet for the community center.                                                                                  
Mr. Campbell discussed reference  number 41531 and the Denali                                                                   
Commission  Project. He  noted  that the  request  is for  $5                                                                   
million   in   federal   receipts   with   the   purpose   of                                                                   
administering  the Denali  Commission's  housing programs  in                                                                   
rural Alaska.  The programs include  both teacher  and senior                                                                   
housing programs.                                                                                                               
Reference Number 45388                                                                                                        
Mr.  Campbell  addressed  reference   number  45388  and  the                                                                   
Statewide Energy Improvements.  The request is for $5 million                                                                   
in corporate  receipts. The purpose  is to implement  some of                                                                   
the  energy efficiency  findings developed  under the  energy                                                                   
audit process.  The goal  is to  renovate AHFC properties  to                                                                   
the same standards.                                                                                                             
Reference Number 45389                                                                                                        
Mr.  Campbell  addressed  reference  number  45389  for  $500                                                                   
thousand of  corporate dividend receipts. The  Americans with                                                                   
Disabilities Act  (ADA) requires upgrades. He  mentioned that                                                                   
the project was  ongoing and a similar request  would be made                                                                   
of the legislature next year.                                                                                                   
Reference Number 47070                                                                                                        
Mr. Campbell addressed  reference number 47070  and the Birch                                                                   
Park II  Building Reconstruction.  The purpose is  to rebuild                                                                   
the four-plex  structure in  Fairbanks recently destroyed  by                                                                   
fire.  The  original   request  was  for  $800   thousand  in                                                                   
corporate receipts and $640 thousand  in federal receipts. He                                                                   
noted the  amendment to the  Office of Management  and Budget                                                                   
(OMB) to reduce the corporate  dividend receipts down to zero                                                                   
while retaining the federal receipts of $640 thousand.                                                                          
2:41:35 PM                                                                                                                    
Reference Number 45390                                                                                                        
Mr.  Campbell  addressed  reference   number  45390  and  the                                                                   
Homeless  Assistance  Program.  The  purpose  is  to  address                                                                   
homelessness,  providing assistance  to families in  imminent                                                                   
danger  of becoming  homeless, or  those currently  homeless.                                                                   
The request  is $6  million in  corporate dividend  receipts,                                                                   
$500  thousand in  mental  health trust  authority  receipts,                                                                   
$500 thousand in  general funds mental health,  $1 million in                                                                   
statutory  designated  funding,  and $2  million  of  federal                                                                   
receipts. A  ten year plan to  end long term  homelessness in                                                                   
Alaska was developed  and is currently reviewed  for internet                                                                   
Mr. Fauske  noted that  the council will  meet to  review the                                                                   
ten year  plan recommending  construction of multiple  units.                                                                   
He expressed satisfaction with the process.                                                                                     
2:45:14 PM                                                                                                                    
Reference Number 6360                                                                                                         
Mr.  Campbell   discussed  reference  number  6360   and  the                                                                   
Homeless  Assistance Program  Beneficiary  and Special  Needs                                                                   
Housing. The  program request equals $1,750,000  of corporate                                                                   
dividend  receipts.  The  purpose  is to  provide  funds  for                                                                   
Alaskan nonprofit  service providers and  housing developers.                                                                   
The  benefits  include increased  housing  opportunities  for                                                                   
Alaska mental health trust beneficiaries.                                                                                       
Reference Number 43318                                                                                                        
Mr.  Campbell  addressed  reference   number  43318  and  the                                                                   
Emergency   Assistance  Grants   for   Mental  Health   Trust                                                                   
Beneficiaries.  The request  is for $200  thousand in  mental                                                                   
health trust  authority receipts.  The purpose is  to support                                                                   
beneficiaries  in maintaining  home  ownership  or long  term                                                                   
rental stability.                                                                                                               
2:47:43 PM                                                                                                                    
Senator Thomas  suggested that the  cited cost for  the four-                                                                   
plex unit  in Fairbanks was excessive  at $1.4 million.   Mr.                                                                   
Fauske  responded that  bids were  analyzed  and the  numbers                                                                   
were reasonable.  Senator Thomas  asked when the  project was                                                                   
last bid. Mr. Fauske  answered that it was out  to bid twice,                                                                   
last  summer. Senator  Thomas  recommended  that the  project                                                                   
receive yet another bid.                                                                                                        
2:50:12 PM                                                                                                                    
Co-Chair Stedman  introduced the final item  for the hearing,                                                                   
the request for the Alaska gas spur line.                                                                                       
Reference Number 45291                                                                                                        
Ms.  Blaisdell  discussed  reference  number  45291  and  the                                                                   
Alaska Gas Spur  Line. She informed that the  request equaled                                                                   
$8 million.  The funds  would  go to the  Alaska Natural  Gas                                                                   
Development Authority  (ANGDA). The  original request  was $5                                                                   
million,  which  addressed  many logistics  involved  in  the                                                                   
gasline's  establishment. The  process helped determine  that                                                                   
$10  million is  a more  realistic amount.  She mentioned  $2                                                                   
million available  in a different appropriation  from another                                                                   
agency that might  provide for the spur line.  The $8 million                                                                   
would  enable  development  of  an  in-state  gas  line.  She                                                                   
mentioned  Harry Noah  and Harold  Hines  as two  individuals                                                                   
defining specifics regarding the  creation of the instate gas                                                                   
line. He promised  a detailed work plan detailing  the use of                                                                   
the  requested  funds  for the  committee.  Co-Chair  Stedman                                                                   
asked why the $8 million request  in ranked last in the order                                                                   
of projects presented to the committee.                                                                                         
Ms. Blaisdell  answered that the  agency was heard  first and                                                                   
the list is  alphabetical. She noted that  using alphabetical                                                                   
order,  the  departments  fall behind  the  agency  requests.                                                                   
Housing falls before natural in the alphabet.                                                                                   
Senator Thomas asked about the route for the spur line.                                                                         
Ms.  Blaisdell  responded  that  another  bill  was  recently                                                                   
introduced  to  expand  the  scope   of  Alaska  Natural  Gas                                                                   
Pipeline Development  Authority to address the  Western Slope                                                                   
and  the Brooks  Range  as  a  couple of  possibilities.  She                                                                   
believed  that the  pertinent route  was North  Slope Gas  to                                                                   
South  central  Alaska. She  was  not  aware of  the  route's                                                                   
2:54:13 PM                                                                                                                    
Senator Huggins  asked about  appropriating additional  money                                                                   
without  a  clearly  outlined  concept. He  stated  that  the                                                                   
committee   required   the  concept   and   route  prior   to                                                                   
appropriating  funds.  He  asked where  the  allocated  money                                                                   
would rest. Ms.  Blaisdell answered that currently  the money                                                                   
will  go  to  ANGDA. She  stated  that  the  committee  would                                                                   
receive a detailed account of  the proposed spending as early                                                                   
as tomorrow.                                                                                                                    
Senator  Huggins  asked  about  the  letter  written  by  the                                                                   
commissioner  of DOR to  ANGDA recommending  that they  cease                                                                   
spending for some reviews. Ms.  Blaisdell stated that she had                                                                   
not  reviewed  the  letter either.  She  mentioned  that  the                                                                   
department was  reviewing all  appropriations to  ensure that                                                                   
they fit within the scope of work.                                                                                              
Senator   Huggins  asserted   that   the  committee   members                                                                   
understood the  criticality of instate gas. He  mentioned the                                                                   
two related bills  and he assumed that they may  pass in lieu                                                                   
of the $8 million dollars requested today.                                                                                      
Ms.  Blaisdell  responded  that  there are  three  pieces  of                                                                   
legislation.  The instate  gas bill  has a  fiscal note.  The                                                                   
interstate  transmission bill  has a  different fiscal  note.                                                                   
The instate  gasline is similar  to this $8 million  project,                                                                   
but differences exist as well.                                                                                                  
2:57:41 PM                                                                                                                    
Co-Chair Hoffman  requested information  about the  viability                                                                   
of the  gasline once the  spur line is  built. The  spur line                                                                   
may jeopardize the  economic viability of the  gasline to the                                                                   
lower 48.  He wondered  if the  appropriation of $10  million                                                                   
addresses the question.                                                                                                         
Ms. Blaisdell  did not have an  answer, but promised  to pass                                                                   
the question along to those hosting the ANGDA meeting.                                                                          
SB  75   was  HEARD  and   HELD  in  Committee   for  further                                                                   
2:59:22 PM                                                                                                                    
The meeting was adjourned at 2:58 PM.                                                                                           

Document Name Date/Time Subjects
AHFC Capital Budget Request.pdf SFIN 3/18/2009 1:30:00 PM
SB 75