Legislature(2003 - 2004)
03/12/2003 09:07 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 12, 2003
9:07 AM
TAPES
SFC-03 # 19, Side A
SFC 03 # 19, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:07 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Robin Taylor
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: BOB DINDINGER, President, Alaska Travel Industry
Association, and Owner, Alaska Travel Adventures; CARL ROSE,
Executive Director, Association of Alaska School Boards;
Attending via Teleconference: From Anchorage: DAN FAUSKE, Chief
Executive Officer and Executive Director, Alaska Housing Finance
Corporation
SUMMARY INFORMATION
Alaska Travel Industry Association
The Committee heard a presentation by this organization.
SB 25-AHFC LOANS TO EDUCATORS
The Committee heard testimony from the Alaska Association of School
Boards. A committee substitute and an amendment were adopted. The
bill moved from Committee.
Presentation by the Alaska Travel Industry Association
BOB DINDINGER, President, Alaska Travel Industry Association
(ATIA), and Owner, Alaska Travel Adventures, utilized a handout
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titled "Alaska Tourism: An Industry in Decline, A Report to the 23
Alaska State Legislature, March 12, 2003" [copy on file] in his
presentation as follows.
Mr. Dindinger reminded the Committee of the direction it gave the
ATIA to research the trends in tourism in the aftermath of the
events of September 11, 2001.
What Happened in 2002?
· "Survival was how we measured success this year." Kirk
Hoessle, Alaska Wildland Adventures, Oct. 2002
· "The preliminary data for 2002 shows an end to any
growth." Eric McDowell, Oct. 2002
Mr. Dindinger declared that the year 2002 "as far and away not the
only bad year we've had." He informed that growth has declined
since the middle 1990s.
Mr. Dindinger ascertained that the events of September 11, 2002 are
not the only factor affecting tourism, asserting "we believe there
is a direct correlation between our lack of growth and the lack
investment in tourism marketing."
ATIA 2002 Tourism Survey, The McDowell Group
· Surveyed:
o 315 businesses
o All five regions of the state
o ATIA and non-ATIA tourism businesses for
statistically reliable sampling
Survey revealed that tourism growth is flat, or worse…
Nearly 50% of businesses surveyed statewide experienced a
decline in business volume.
Mr. Dindinger furthered that 40 percent of the businesses
experiencing a decline, reported that decline is "in excess of
double digits."
Key Regional Observations
· 87% of Alaska Interior businesses experienced declining
volume
· Despite 4% increase in cruise passengers, 61% of Alaska
businesses that depend primarily on cruise traffic
experienced decreased volume
Source: McDowell 2002 Visitor Survey
Mr. Dindinger remarked that the decline is not evenly distributed
throughout the State, noting that the Interior region has
experienced the largest decline. He furthered that various types of
business experienced different degrees of decline.
Mr. Dindinger informed that cruise ship passengers comprise
approximately one-half of all visitors to Alaska. He qualified that
although the number of cruise ship passengers increased, the travel
fares were reduced significantly, which "attracted a lesser value
client." These clients, he attested, spent less money per person,
spent fewer days in Alaska, and did not travel "as far into
Alaska".
Tourism Sectors in Decline
Percentage of businesses reliant on the following sectors
that reported a decline last summer:
· 96% for overseas travelers
· 81% for adventure travel
· 65% for sportfishing
Source: McDowell 2002 Business Survey
Mr. Dindinger stated that businesses that deal with international
and overseas visitors were most affected by the declines. He
commented that in 2002, many people were reluctant to fly over
oceans. He added that businesses dealing with independent travelers
were also affected.
Convention & Visitor Bureau Impacts - Summer 2002
· Anchorage hotel revenues down 4-6%
· Fairbanks hotel revenues down 17.6 %
· Petersburg visitor counts down 9%
· Kenai visitor counts down 4% June
down 7% July
but up 11% August
Mr. Dindinger asserted, "It didn't make any difference whether it
was an urban or a rural community…a large city or a small town," as
tourism activities were "down" in "all areas with very few
exceptions." He furthered that even those communities that had an
increase in the number of visitors realized "decreased
expenditures" from those travelers.
Highway in 2002
Highway traffic to Alaska down 14.3 %
Mr. Dindinger shared that this information was garnered from
"Canadian and U.S. Immigration numbers." He stressed that at one
time, highway travel was "the largest single source of visitors
into Alaska".
Airport Enplanements Statewide
down 3 %
Mr. Dindinger stated that Anchorage "held up the best" because the
Ted Stevens Anchorage International Airport is the terminus for
many of the cruise itineraries. He listed Juneau enplanements were
down eight percent, Ketchikan enplanements were down four percent
and Fairbanks enplanements were down approximately three percent.
Tourism Means Economic Hope to Alaskan Communities - Large &
Small
"Tourism in Haines is declining. Businesses are closing,
people are losing jobs. Despite this, we remain optimistic
that tourism offers hope for our economy." Michelle Glass,
Haines CVB Feb. 2003
Mr. Dindinger described the transition of economic dependence in
recent years from resource extraction to other types of business,
stating that tourism has become "much sought after by many small
communities like Wrangell and Haines, Dutch Harbor, Talkeetna, as a
new source of employment, a new source of economic stimulus." He
remarked these efforts have been "challenging" due to the declining
growth rate. He perceived Haines residents to consider tourism to
be "their only and best hope for future growth."
Tourism Budget Trends 1992 - 2002
Is the growth gone?
Mr. Dindinger spoke "for those of us in the tourism industry" as
believing that growth could "return…but only by increased
investment."
State Tourism Budgets
· Average 2001/2002 U.S. state tourism budget was $13.1
million
· Public sector dollars are sole source of tourism funding
in 35 of 48 states (73 % of ALL states)
· Of 13 states that receive some private-sector funding,
80.5 % of their funding comes from public-sector dollars
· Alaska private sector contributions account for 60% of
the ATIA statewide tourism marketing budget.
Source: 2001-2002 Survey of the U.S. State &
Territory Tourism Office Budgets
Mr. Dindinger commented that Alaska is "significantly against the
trend."
th
Alaska Ranks 38 in State Tourism Funding
Source: NCSTD Poll Re. FY2002-03 Projected Total Tourism
Office Budget
[Bar graph indicating the following:
Hawaii $56 million
Illinois 50 million
New York 48 million
Pennsylvania 35 million
Texas 32 million
Florida 29 million
Alaska 4.6 million]
Mr. Dindinger pointed out that Alaska is "more similar" to the
State of Hawaii "in terms of what we have to overcome to attract
visitors." He explained that visitors must travel thousands of
miles to reach these two states. He compared this to the State of
Oregon, where most visitors to that state travel from the State of
Washington or the State of California. However, he stated that
visitors to Alaska and Hawaii tend to spend more money and spend a
longer amount of time than travelers to other states.
Senator Bunde asked the total amount of public and private funds
spent on tourism efforts in Alaska.
Mr. Dindinger answered that the Association intends to spend $10
million in the current year, with $6 million of that amount private
funds and $4 million State funds.
State of Alaska General Fund Dollars to Tourism Marketing
[Bar graph indicating amounts for FY 90 through FY 03]
Mr. Dindinger stated that the general fund spending for tourism
marketing has been "generally declining since the early '80s." He
recalled approximately $17 million of State funds was spent in the
"early '80s." He understood this occurred "in the days of
prosperous oil wealth." However, he pointed out that growth rates
in tourism were "double digit" during those years.
Combined Marketing Funding: State & Industry Contributions
[Bar graph indicating the amount of private and State
contributions for FY 01, FY 02 and FY 03.]
Mr. Dindinger noted the fiscal years reflected on this graph are
the New Millennium Plan years. He asserted that while the State
funding has been reduced, "the industry has, as aggressively as
possible, tried to pick up the difference by investing more."
However, he remarked that these efforts have "still have not kept
pace with inflation". He continued, "We have still not managed to
maintain our competitiveness with other destinations, other states
and countries. Our marketing presence in the domestic marketplace
has consistently been reduced."
FY 03 Funding: State & Private Sector Contributions
[Bar graph listing the following:
State Contract $4.0 million
Adv/Mkt Prog 3.0 million
Cruiseline Contrib 2.0 million
CVBs .6 million
Other* .4 million
*Other category is comprised of member dues, convention,
travel auction and interest]
Senator Hoffman asked the amount contributed by the cruise
industry.
Mr. Dindinger referenced the chart, listing $2 million. He
clarified that the cruise companies contribute this amount as a
"direct contribution to this marketing program" but informed that
these companies also purchase almost one-half of advertising as
reflected in the "Adv/Mkt Prog" component. Other than State funds,
he remarked, the cruise companies are the largest contributor to
the marketing effort.
Visitor Industry Growth
[Bar graph indicating the increased number of visitors each
year from 1990 through 2002.]
Mr. Dindinger indicated the growth rate was "over five percent
consistently through the first half of the '90s" and that after
1996, the growth rate "started to tail down; '96 being a great year
with ten-percent growth." He stated that the growth as "flattened
out" over the past three or four years, from below four percent to
less than one percent in each of the past three years.
Mr. Dindinger reiterated that the events of September 11, 2001 were
not the first indicators of decline.
Visitor Industry Growth by %
[Bar graph indicating the increased percentage of visitors
each year from 1990 through 2002.]
Mr. Dindinger noted the growth rates have declined at the same time
as "more people have gotten into the travel industry" including
significant investments by Native Corporations into tourism
infrastructure and development. As a result, he stated, "individual
pieces of the pie have gotten smaller."
State Tourism Marketing Allocation
Marketing Expenditures Indexed on '91 Buying Power
[Bar graph indicating the amount for each year from 1991
through 2002.]
Mr. Dindinger explained this graph details inflation-adjusted
buying power. He argued that despite the industry-contributed $6
million into the marketing program in the current year, the ATIA
does not have "near the marketing presence, or the ability to buy
into the market at the same place as we did during the early
1990s."
Comparing Visitor Growth and Total Tourism Spending
[Two bar graphs: "Marketing Expenditures Indexed on '91 Buying
Power" and "Percentage of Visitor Growth"]
Mr. Dindinger commented that as "we fail to grow our marketing
budget, that's when we appreciably start to see a fall-off in
visitor growth." He added that the funds spent for tourism
marketing in any one year affects the next several years. He
explained that approximately one-half of the people impacted by the
marketing efforts travel to Alaska the following season, while the
remaining travel to the State two or three years later. Therefore,
he ascertained that the cumulative affects are realized in the
future rather than during the present.
Tourism Benefits Alaskans
· Provides Jobs
· Generates NEW Dollars
NOT a reallocated dollar
· Renewable Resource
Mr. Dindinger declared, "Tourism benefits all Alaskans."
Tourism Provides Jobs
· 78% local hire rate (the highest of all key Alaska
industries)
· Leading industry in Southcentral, Southeast and Interior
· Provides 1 in 8 private sector jobs
· Directly & indirectly employs 30,700 Alaskans
(The McDowell Group: Economic Impacts of Alaska's Visitor
Industry, May 1999)
Visitors Contribute to the Economy (2001)
[Bar graph showing visitor spending was $1.8 million]
Mr. Dindinger corrected the amount is $1.8 billion.
Instate Expenditures
Fall 2000 to Summer 2001 (Millions)
Alaska Visitor Expenditures & Opinions, Fall/Winter 2000-
01 & Summer 2001
[Pie chart listing the following:
Lodging $589
Food & Beverage 192
Transportation 237
Recreation 247
AK Native Arts/Crafts 180
Gifts/Souvenirs 164
Clothes/Personal/Other 231]
Mr. Dindinger noted the wide distribution of these funds through
the economy. He described the "lodging" category as including
hotels, campgrounds, bed and breakfasts and lodges. He added drug
stores and hospitals as businesses that benefit from tourism
expenditures.
Growing Alaska's Economy through Increased Tourism Marketing
Dollars, Missions & Measures
Mr. Dindinger stressed this is a "science" and "not something that
is done without research."
ATIA's Marketing Strategy
· Use goals & objectives to maximize marketing program
effectiveness
· Constantly re-evaluate programs to ensure continued
success
· Good marketing = great visitor turnout
Mr. Dindinger told of the time, effort and money invested in
researching the effectiveness of the marketing program.
What a Difference a Dollar Makes: An Additional $10 Million
will:
· Generate over 290,000 visitors
· Produce $366 million in visitor spending
· Create new business opportunities
· Put more Alaskans to work!
Mr. Dindinger asserted that at least $10 million additional funding
is necessary to "get us back on track."
Where Do We Go From Here?
· We MUST Regain Market Share
· We MUST Support and Further Develop Alaska's Independent
Tourism Businesses
· We MUST Fund Alaska's Independent Tourism Businesses
· We MUST Fund Alaska's Tourism Marketing Program… Now and
Into the Future…
The Alaska Travel Industry Association:
· Supports Broad Based Tourism Taxes to Fund Alaska's
- We MUST Act Now to Prevent Further Decline of
Alaska's Second Largest Industry
· Opposes: Targeted Tourism Taxes on Any One Tourism
Segment
Mr. Dindinger corrected that the ATIA board of directors did not
vote to support broad based taxes. Rather, he said, the Association
voted to "work with you and the Governor's Office to investigate
long-term funding sources of a tourism marketing program." He
continued, "We are not necessarily opposed to taxes on our
industry, but we feel that those taxes, in whole or in part, should
be used to support the marketing program that will grow this
industry into the future."
Senator Bunde noted the opposition of targeted tourism taxes to one
segment of the industry and asked how this would relate to the
proposed watchable wildlife license.
Mr. Dindinger opposed this proposal, as he constituted it to be a
head tax. He asserted, "Head taxes in the tourism industry are
considered to be punitive; they are unattractive in the
marketplace" and would be "the most aggressive tax levied by any
state against the visiting public." He relayed the ATIA preference
for a sales tax approach. He stated a sales tax would be "much more
acceptable, much broader based in terms of what types of businesses
would contribute."
Senator Bunde envisioned the proposed license fee would amount to
$10-15 per person, and questioned the witness's assessment that
this would be punitive. He made a comparison to car rental taxes
levied in the State of Hawaii.
Mr. Dindinger countered the comparison to car rentals, "It only
affects you if you rent a car and it's a sales tax approach, which
is considered by the industry, not just the Alaska industry but the
industry worldwide, as being a more acceptable approach because
sales taxes lay evenly relative to the economic activity of that
visitor, whereas head taxes do not spread as evenly."
Senator Bunde commented that although "appreciative" of the jobs
provided by the tourism industry, the Legislature's task is to
manage the State's general fund. He requested the ATIA investigate
means by which the industry could return money to the State
treasury. He clarified that the ATIA is requesting a $10 million
general fund appropriation for FY 04.
Mr. Dindinger affirmed the request is for an additional $10
million.
Senator Bunde noted that given the State's fiscal situation, the
source of funds would be from: other services, the earnings of the
Alaska Permanent Fund, or "the people" in the form of a tax.
Mr. Dindinger responded that the Legislature could better make that
determination, but he anticipated that all three of the
aforementioned sources should be tapped for this purpose. He stated
that the ATIA "is not opposed to exploring taxation options on the
visitor industry as long as those taxation options do help grow the
industry into the future." He spoke as a businessperson, "When we
are in stress, as we have been in the last few years, we do cut
back and we cut back on our operational costs and we invest more in
marketing. That's how we survive hard times. That's where Alaska is
in the tourism industry now."
Mr. Dindinger referenced an unspecified study conducted by the
McDowell Group several years prior stating, "direct State receipts
from tourism exceed $50 million" including revenue from the Alaska
Marine Highway System, airport landing fees, fishing and hunting
licensing, etc. He warned that if tourism activity declines, the
same revenue would not be generated. He remarked that the State
"owns some of the most dramatic tourism infrastructure."
Senator Hoffman commented that in prior years predator control has
been considered, although it has been perceived that such activity
would have a negative impact on tourism to Alaska. He relayed that
the Murkowski Administration has indicated predator control is a
priority. He asked if a serious decline in the number of travelers
would occur as a result of any predator control actions.
Mr. Dindinger replied that the ATIA has chosen not to take a
position on this matter. He personally deemed there would be a
minimal impact. He spoke to the timing, during the months of
October through December, of previous consideration of predator
control action and the resulting national press coverage on the
issue. He stated this is the time of year that many people are
scheduling vacations for the following summer. Contrarily, he
stated, the current discussions are occurring after the majority of
vacation scheduling for the summer of 2003 has been completed and
therefore, there should be no significant consequences.
Co-Chair Green suggested that more people would come to the Alaska
if predator control were enacted.
Co-Chair Green recalled actions taken during previous legislative
sessions of four and five years past and understood that the matter
of State funding for tourism marketing was "behind us".
Mr. Dindinger responded, "The conversation was behind us for most
of four years" referring to the Millennium Plan, which he
characterized as an agreement between the tourism industry and the
State to "scale back" State funding and increase private sector
funding over a "four-year cycle". He remarked that an exception was
made as a result of the events of September 11, 2001, because the
ATIA requested additional State funding.
Mr. Dindinger determined, "However, four years later and looking
forward into the future, that agreement and that plan will fail to
meet the needs of the industry and the State." He explained this is
"because our position with regard to world tourism and national
tourism is declining; our ability to meet the needs of the
entrepreneurs in the State of Alaska has declined and those needs
are unmet now." He asserted that visitor industry businesses are
going bankrupt and that the ATIA has an obligation to represent
those businesses.
Co-Chair Green did not argue whether a need for this funding
exists. However, she concluded that amending the Millennium Plan
would be a more appropriate consideration. She qualified that the
information given in the presentation was "helpful", although it is
misleading to those legislators who were not serving when the
original legislation was passed.
Mr. Dindinger agreed that the Millennium Plan must be revised. He
informed that the industry's lobbyists have been "exploring options
of how best to pursue those changes."
Co-Chair Green asked if the events of September 11, 2001 had not
occurred, whether the visitor industry growth would have continued.
Mr. Dindinger replied that if expenditures for the marketing
program had been consistent with inflation, the anticipated growth
rate would have had been between five and ten percent.
Co-Chair Green asserted this was the intent of the Millennium Plan.
Mr. Dindinger responded, "in hindsight" the Millennium Plan was
"not aggressive enough; it didn't allow us to get back to where we
were". He remarked that the Plan was conceived "because we saw the
decline beginning." However, he admitted, "We underestimated the
task; we underestimated the erosion caused by inflation". He
furthered, "We needed the State to hang in there with us and
continue to spend similar resources to what they had done in the
past and at the same time the industry putting in more."
Senator Olson spoke of global issues and asked the expected impact
military action in Iraq would have on visitor travel to Alaska.
Mr. Dindinger informed that global instability tends to increase
cruise traffic, as it is perceived as a safer mode of travel and
because ships are redeployed from the Middle East to Alaska.
However, he stated that other people "hunker down" during times of
stress and do not travel. He stated that although the number of
cruise passengers increased the summer following September 11,
2001, the number of air travelers and highway travelers, i.e.
independent travelers, decreased.
Senator Taylor told of cancellations of repeat customers to a
fishing lodge who listed the reason as their poor financial
situations. Senator Taylor stressed this had no relation to the
amount of money spent on marketing efforts or improved tourism
infrastructure. He noted the ATIA presentation gave no reference to
the national economy as a whole.
Senator Taylor also noted the decline in growth rates from ten
percent in 1994 to 3.7 percent in 1995, and the subsequent increase
to ten percent in 1996. He surmised these changes had no direct
relationship to expenditures, as the expenditures were fairly
constant during this time period.
Senator Taylor asked about the impact of the overall economy and
other variables, such as the price of gasoline.
Mr. Dindinger answered that the predicted increase in the price of
gasoline would definitely impact travel to Alaska, including
Recreational Vehicles (RV) travelers and rentals of RVs. He said of
relatives and friends of Alaskans who might drive to the State: "as
their cost of travel increases their desire to travel decreases."
Mr. Dindinger continued that the "lackluster economy" has caused
businesses to spend less on company "perks and incentives", which
has substantially affected the charter fishing industry.
Mr. Dindinger warned however that spending less on marketing
efforts could not uniformly solve these problems. Rather, he
asserted that more must be spent on marketing activities to "get
your share" of those people who would be traveling.
Senator Hoffman asked if the request for the additional $10 million
is a one-time request. If not, he asked about the ATIA's intent of
State participation for the next four years.
Mr. Dindinger answered that the request is not for one year of
funding. He perceived that an additional $10 million State funds
plus additional private sector funds are necessary to make the
industry competitive and viable. He emphasized that these efforts
must be maintained into the future and that the amount must
increase relative to inflation. "As we grow the economy in Alaska,"
he said, "as the tourism industry in Alaska provides more for
Alaskans and for government revenues, a share of that marketing
should also continue to grow." He opined, "Some type of broad based
tax policy can be worked out here that will provide for our needs
and your needs as well. That is the dialog that we are open to
exploring with you now."
AT EASE 9:43 AM / 9:45 AM
CS FOR SENATE BILL NO. 25(HES)
"An Act relating to the teachers' housing loan program in the
Alaska Housing Finance Corporation; and providing for an
effective date."
This was the second hearing for this bill in the Senate Finance
Committee. A motion to adopt a committee substitute was made but
not acted upon.
Senator Taylor renewed his motion to adopt CS SB 25, 23-LS0080/Q,
3/3/03, as a working draft.
Co-Chair Wilken reiterated the changes as detailed in the previous
hearing.
There was no objection and the committee substitute was ADOPTED as
a working draft.
AT EASE 9:47 AM /9:48 AM
Co-Chair Wilken reminded of the adoption of Amendment #2 as
amended.
Amendment #3: This amendment deletes "teachers' housing loan
program" and inserts "acquisition of teachers' housing by regional
educational attendance areas and to teachers' housing loan
programs" in the title of the bill to read as follows.
An Act relating to the teachers' housing loan program in the
Alaska Housing Finance Corporation; and providing for an
effective date.
This amendment also inserts a new bill section on page 1, line 4 to
read as follows.
Section 1. AS 14.08.101(9) is amended to read:
(9) provide housing for rental to teachers, by
leasing existing housing from a local agency or individual,
[OR] by entering into contractual arrangements with a local
agency or individual to lease housing that will be constructed
by the local agency or individual for that purpose, or,
without using for the purpose that portion of public school
funding that consists of state aide provided under AS 14.17,
by constructing or otherwise acquiring housing that is owned
and managed by the regional educational attendance area for
rental to teachers
New Text Underlined [DELETED TEXT BRACKETED]
This amendment also inserts a new bill section on page 2, following
line 6 to read as follows.
Sec. 3. AS 18.56.580(a) is amended to read:
(a) In addition to the powers authorized by AS 18.56.400,
the corporation shall adopt regulations under AS 18.56.088
allowing the use of money in the housing assistance loan fund
to make loans to regional educational attendance areas or
other borrowers for the purchase or development of teacher
housing in small communities. The regulations must implement
the requirements of (b) of this section and establish other
terms and conditions for teacher housing loans, including
those relating to borrower eligibility and the number of loans
that may be made to a single borrower. The corporation may
require the borrower to pay costs associated with a loan.
New Text Underlined [DELETED TEXT BRACKETED]
Senator Hoffman moved for adoption.
Co-Chair Wilken objected for an explanation.
Senator Hoffman recalled SB 181 of the previous legislative session
that amended the Housing Assistance Loan Fund (HALF) program of the
AHFC and limited the amounts of loans under this program to no more
than $250,000. The HALF program provides for an interest rate one-
percent lower than the average rate on loans for properties in
rural areas. He informed that the limitation prevents REAAs from
obtaining loans for multi-family housing for teachers. He stated
that this amendment attempts to clarify the HALF program, assuring
that it does not change the teacher housing loan program proposed
in this legislation.
Senator Hoffman further assured that this amendment prohibits the
use of foundation funding to pay debt incurred under this program
and provides that other revenue must be used.
Senator Hoffman was not convinced that REAAs could utilize this
provision as a feasible means to provide teacher housing, but
expressed that it offers an option.
Co-Chair Wilken noted the limited amount of "fee-simple land" in
some REAA areas and therefore it is difficult to obtain financing.
Senator Bunde understood the committee substitute limits borrowers
under the proposed teacher housing loan program to one loan. He
asked if this would apply to the number of loans an REAA could
secure.
Senator Hoffman again stressed this amendment does not affect the
proposed teacher housing loan program. Rather, he stated, the
amendment applies to the HALF program.
Co-Chair Wilken explained this amendment applies to Title 14 in
granting REAAs authorization to borrow money for the purpose of
teacher housing, and to Title 18 in establishing the amount an REAA
could borrow.
Co-Chair Green asked if REAAs regularly upkeep, maintain and own
properties. She also wanted to know if REAAs have the ability to
obtain insurance for maintenance purposes, and whether additional
staff is employed to perform maintenance and upkeep.
Co-Chair Wilken answered that current statutes provide REAAs
authority to lease or rent existing housing facilities for
teachers. He explained that this amendment would allow REAAs to own
such facilities.
Co-Chair Wilken continued that regardless of whether a borrower is
an REAA or an educator, the loan requirements of AHFC must still be
met.
DAN FAUSKE, Chief Executive Officer/Executive Director, Alaska
Housing Finance Corporation, testified via teleconference from
Anchorage and affirmed.
Co-Chair Wilken clarified that an REAA would not be given special
consideration in obtaining approval for a loan.
Mr. Fauske again affirmed.
Co-Chair Green referenced the portion of the amendment pertaining
to AS 18.56.580 (a), which inserts "to regional educational
attendance areas or other borrowers." She asked for a definition of
"other borrowers" in this context.
Senator Hoffman understood this could include Native corporations
and stressed that any borrower must meet the requirements of the
program to provide housing for teachers. He surmised that no other
party would construct housing for teachers that would only be
occupied for nine months of a year.
Co-Chair Wilken requested Mr. Fauske further explain.
SFC 03 # 19, Side B 09:57 AM
Mr. Fauske defined "other borrower" as "any entity eligible to
enter into a contractual arrangement; it could be a village
corporation, it could be a private construction corporation that
has entered into an agreement with the REAA to build the unit at a
certain cost and potentially own them." He informed that the latter
arrangement was made with the REAA in Kotzebue.
Senator Bunde noted that REAAs do not have taxing authority, and
asked if upkeep and maintenance expenses would be borne by the
rental income.
Senator Hoffman surmised it would, unless a Native corporation or
other entity subsidized the cost of these services.
Senator Bunde suggested REAAs should become taxing authorities.
Senator Taylor questioned the applicability of zero down payments
on loans made to corporations.
Co-Chair Wilken reiterated that this amendment is entirely separate
from the provisions relating to the proposed teacher housing loan
program.
Co-Chair Wilken removed his objection to the adoption of the
amendment.
Co-Chair Green objected.
A roll call was taken on the motion.
IN FAVOR: Senator Bunde, Senator Hoffman, Senator Olson, Senator B.
Stevens, Senator Taylor and Co-Chair Wilken
OPPOSED: Co-Chair Green
The motion PASSED (6-1)
The amendment was ADOPTED.
CARL ROSE, Executive Director, Association of Alaska School Boards,
testified in support of the bill as amended. He spoke to the
difficulties in recruiting and retaining qualified teachers. He
stressed, "The inability to keep pace with supply and demand has
resulted in a serious shortage of professionals in the teaching
area." Therefore, he stated the Association is seeking incentives
to assist in this matter.
Mr. Rose informed that the concerns with the original legislation
have been alleviated with the adoption of Amendment #3.
Mr. Rose referenced a recently completed survey, in which 43 of the
53 school districts participated [copy not provided]. He reported
that 25 percent of respondents provide or subsidize housing for
teachers. He commented that this relates to the responsibilities
and duties of school boards.
Mr. Rose stated that the provisions of Amendment #3 to allow REAAs
in conjunction with corporations, to provide teacher housing could
be viable.
Mr. Rose informed that the median base salary for teachers is
$34,100, according to the aforementioned survey. Therefore, he
opined that an ability to provide adequate housing would be
beneficial to attract teachers.
Senator Bunde asked if witness is aware of any teacher-owned
private homes in rural areas of Alaska.
Mr. Rose knew of some such homes in organized communities, although
he was unfamiliar whether any teachers own homes in unorganized
areas.
Senator Bunde indicated Senator Olson's comments about depreciation
and maintenance on homes that are vacant for three months each
year. He therefore asked the feasibility of this program.
Mr. Rose surmised that those teachers who would invest in a home do
so in a community in which they intend to live and are likely to
stay year-round.
Senator Olson asked the witness' concerns about a subsidized rental
program for teachers operated by an REAA.
Mr. Rose stated this is a decision that each school district must
consider, stressing that some district must provide housing, as no
other facilities are available. He stated that maintenance expenses
are a concern. Noted that some teachers accept jobs in rural Alaska
because this is were jobs are "readily available." As these
teachers gain one or two years of experience, he noted that many
consider accepting jobs elsewhere.
Senator Taylor offered a motion to report CS SB 25 (FIN) from
Committee with individual recommendations and zero fiscal note #1
from the Department of Revenue, AHFC.
There was no objection and CS SB 25 (FIN) MOVED from Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:09 AM
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