Legislature(2023 - 2024)SENATE FINANCE 532
02/08/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Administration Response to Prior Meetings: Department of Natural Resources | |
| Alaska Housing Finance Corporation Update and Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 8, 2024
9:05 a.m.
9:05:13 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:05 a.m.
MEMBERS PRESENT
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
ALSO PRESENT
John Crowther, Deputy Commissioner, Department of Natural
Resources; Derek Nottingham, Director, Division of Oil and
Gas, Department of Natural Resources; Travis Peltier,
Petroleum Reservoir Engineer, Department of Natural
Resources; Bryan Butcher, CEO and Executive Director,
Alaska Housing Finance Corporation; Akis Gialopsos, Deputy
Executive Director, Alaska Housing Finance Corporation;
Senator Cathy Giessel.
SUMMARY
ALASKA HOUSING FINANCE CORPORATION UPDATE and OVERVIEW
ADMINISTRATION RESPONSE TO PRIOR MEETINGS: DEPARTMENT OF
NATURAL RESOURCES
Co-Chair Stedman relayed that the committee would have a
discussion with the Department of Natural Resources (DNR)
that was a series of answers to questions that arose in a
previous meeting. The committee would then hear a
presentation from the Alaska Housing Finance Corporation
(AHFC) regarding housing, issues, and a potential dividend.
^ADMINISTRATION RESPONSE TO PRIOR MEETINGS: DEPARTMENT OF
NATURAL RESOURCES
9:06:03 AM
JOHN CROWTHER, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, introduced himself and noted that he was in
Texas doing marketing for the state and its resources.
Co-Chair Stedman referenced a list of questions in a letter
from the DNR commissioner to the committee dated February
1, 2024 (copy on file).
Mr. Crowther relayed that Division of Oil and Gas Director
Derek Nottingham would address the questions.
9:06:56 AM
DEREK NOTTINGHAM, DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, introduced himself and
read the first question and answer on the document:
Did the operator of Prudhoe Bay boost marginal
production in the near-term but also accelerate long-
term overall decline?
As Prudhoe Bay Unit (PBU) Operator, Hilcorp has
increased gas and water throughput by increasing the
uptime and capacity for the facilities managing these
constraints (for example, Hilcorp has achieved Central
Gas Facility gas handling volumes matching the highest
annual average rates since the early 2000s), which
allows more production to occur today. These actions
do have a short-term impact of accelerating oil
production by increasing the number of wells available
to flow at any given time. Over the long term,
increasing the number of wells available to flow
should allow Hilcorp to optimize production by
creating "bench" strength. In other words, if one well
goes down, other wells can be brought online to take
its place because capacity is available. These
optimization choices over time should enable greater
ultimate recovery from the reservoir.
9:08:43 AM
Mr. Nottingham noted that the majority of the gas produced
was reinjected into the reservoir as was the water
produced. There were supplemental seawater injections going
into the gas cap. All the elements combined to stabilize
pressure in the reservoir. He continued to read from the
letter:
In addition, Hilcorp and the PBU owner group has also
invested capital in the Prudhoe Bay Unit to develop
resources that were not being pursued by the prior
operator (e.g., brought back and increased the pace of
infill drilling with rotary and coiled tubing drilling
rigs, and targeted untapped reserves for development
in the Prudhoe Bay Western Satellites and Greater
Point McIntyre Area).
Finally, a field as large as Prudhoe Bay has a huge
number of inputs to its decline rate, and the longterm
decline rate in Prudhoe is driven by geology and
physics, and thus is expected to continue to decline
over time. The Division has not observed, nor does it
expect the long-term decline rate to be detrimentally
increased by the aforementioned optimization efforts.
Senator Bishop asked about the rate of the Central Gas
Facility (CGF).
Mr. Nottingham relayed that in FY 23 the average rate
through CGF was approximately 8.5 billion per day.
Mr. Crowther addressed the second question on the document
and noted that page 7 of the letter provided an updated
version of the slide showing five key new projects with
information about land ownership in each area. The Pikka
project was on both state land and Arctic Slope Regional
Corporation (ASRC) land. The Willow Project was on 100
percent federal land. The Colville River Unit (CRU) Narwhal
CD8 was on state, federal, and ASRC land. The Milne Pad
Unit (MPU) Raven Pad was on 100 percent state land. The
Kuparuk River Unit (KRU) Nuna-Torok development was on 100
percent state land.
What is the subsurface ownership for the key new
projects?
Please see Attachment 1, which includes an update of
the table on presentation slide 7 to show ownership.
Subsurface ownership determines the beneficial royalty
owner. The updated slide is followed by a map showing
the state's share of interest in the leases that
underlie part of the Pikka and Colville River units.
These lands are jointly owned by the Arctic Slope
Regional Corporation and the State, so both entities
receive portions of the royalties from any production
according to the percentages shown in the map
Mr. Crowther explained that land ownership drove the
royalty share that was attributable to the state. State
land received 100 percent of the royalty production.
Federal land and the NPR-A received 50 percent of the
royalty production. He continued that ASRC royalties went
to the corporation. Pursuant to federal law, the revenues
were shared with other regional Alaska Native corporations
and village corporations. He drew attention to page 8 of
the document, which showed a map depicting the Pikka
Project, which occupied both state and ASRC land. The
proportionate ownership of the lands had been set by a
settlement agreement dating back to the original allocation
selection of the lands. The map showed lease by lease
ownership shares, and numbers on the map showed the state
share. He made note of smaller numbers below 50 percent to
some higher percentages up to 90 percent.
9:13:26 AM
TRAVIS PELTIER, PETROLEUM RESERVOIR ENGINEER, DEPARTMENT OF
NATURAL RESOURCES, relayed that he would discuss the
Prudhoe Bay facility on page 9. He would first describe how
the table was built on Attachment 2 of the document. He
explained that the table had been presented in the previous
session and had been updated with the 2023 average
production rate for the facilities on the North Slope. He
addressed the second question on page 2 of the letter:
What are the capacities of different major facilities
on the North Slope?
Please see Attachment 2, which is an updated table
describing facility capacity status of major North
Slope units. The following is an explanation of the
data collection:
1) The facility throughput limitations with regards to
oil, gas, and water are estimated using public
information; if not available, they are estimated
based on historical peak rates from AOGCC database
when the historical production shows decline or flat
trends.
2) Some facilities still have upward trends on water
or have produced very little water up to date.
Historical peak rates might not reflect the true
facility capacity, so those estimates are not given
and are indicated in the table by a question mark.
Rather than identify inaccurate capacities for these
facilities, the Department feels it would be most
appropriate to identify there is not clarity from
public data.
3) Production from fields with multiple facilities
(such as Prudhoe Bay) are aggregated to field level
due to the interconnectivity between facilities and no
clear way of assigning production volumes from certain
wells to a specific facility for a given period.
4) Estimation of facility capacity is based on
historical peak rates and so may not reflect the real
name plate capacities of the respective facilities and
fields, but rather our best estimate if the facility
could deliver those volumes historically. These rates
may or may not be achievable under present conditions.
Specifically, operators may remove equipment from
service if their forecast shows historically high
rates may never be achieved again, and it is not cost-
effective to keep them in service. Finally, it is
important to note that gas production is influenced by
ambient temperatures, so seasonality plays a large
role in facility capacity.
Mr. Peltier explained that the tables were built using
publicly available information and historical data. He
noted that when information was unavailable, DNR did not
provide data. He used the example of water production at
Point Thomson. He discussed the aggregated data from
interconnected fields. He noted that there was no clear way
to assign production volumes from certain wells to
individual facilities over a given period of time.
Mr. Peltier discussed item 4. He thought it was important
to note that there were large seasonal fluctuations across
all facilities in the North Slope, particularly in gas
production. He discussed the effect of temperature on gas
handling, which changed with an inverse relationship to
temperature.
9:17:35 AM
Mr. Peltier looked at page 9 of the document (the first
page of Attachment 2), which showed a table of North Slope
facility capacities. He discussed the North Slope
facilities and highlighted that the three facilities had a
maximum gas capacity of 8.5 million square cubic feet per
day (mscf/d). He noted that December, January, and February
were typically the peak rates for gas production in Prudhoe
Bay. There was 1.45 million barrels of water per day
(bwpd), which did not include the seawater treatment that
was injected. The 2023 average rate, which considered
seasonal highs and lows, was 230,750 barrels per day (bpd)
for the six facilities and gas treatment plants. There was
a large decrease in gas capacity in the summer months.
Mr. Peltier continued that the water capacity on average in
Prudhoe Bay was 1.342 million bwpd for the year. It was
unclear how much of the oil export equipment remained in
service. Production had clearly declined since peak time,
and the operator had prudently de-inventoried some of the
oil processing equipment. He commented that Prudhoe Bay was
very interconnected and the information from facilities was
aggregated. As for all estimates, the operator would be the
authoritative source for the actual current capacities of
facilities but was not required to disclose to DNR what may
be viewed as sensitive commercial information.
Mr. Peltier addressed the final column pertaining to
Prudhoe Bay:
Gas is the biggest constraint, though water handling
at the waterflood facilities is often maxed out in
conjunction with PBU field gas-handling. For example,
water pumps at GC-2 could be fully utilized while gas
throughput at GC-2 might have space but there is no
capacity for extra gas due to the CGF being at its gas
limit.
9:21:22 AM
Co-Chair Stedman iterated that the point of the question
had been the status of the processing facilities and
constraints. He used the example of how to deal with gas
and water capacity constraints if Prudhoe Bay production
was doubled. He asked Mr. Peltier to address which
facilities were not constrained and which were at maximum
operating capacity.
Mr. Peltier had only planned to walk through the
information for the Prudhoe Bay facility. He noted that
operators would always operate within a gas constraint or
water constraint with the facilities. He shared that there
were currently no facilities on the slope that were oil
constrained, and each operator was working to the best of
its abilities to maximize oil production. He highlighted
the Badami Processing Facility was well
constrained and did not have maximized capacity in oil,
gas, or water. He reasoned that much of the constraint was
due to its original installation versus how the reservoir
performed. The other well constrained area was the Point
Thomson unit. He referenced well decline in the last year.
Co-Chair Stedman summarized that the units were running at
full capacity and were constrained by oil or water save for
Point Thomson and Badami.
Mr. Peltier answered "yes."
Co-Chair Stedman thought that the chart made the point that
production was running at full speed, even though the
pipeline could handle double the volume.
Mr. Peltier agreed.
9:24:50 AM
Mr. Crowther agreed that Co-Chair Stedman had made an
accurate statement. He noted that some of the new projects
highlighted in the production forecast involved the
installation of new facilities to increase processing
across all the constraints. He thought the infrastructure
build-out was an important part of the development.
Mr. Crowther addressed the fourth question:
What leases have produced gas on the North Slope in
the last 5 years and have there been any changes in
the companies' approaches to bring gas to tidewater?
Mr. Crowther referenced the table on page 3 that listed
leases that had produced gas for sale in the last five
years. He noted that there had not been significant gas
sales off the North Slope in the period, however there were
sales on the slope to local utilities and other uses on the
North Slope. The leases were not in large volume relative
to the gas resource itself or the daily production at the
fields. He understood that companies continued to
participate in negotiations and potential sales at a large-
scale commercialization level. He had not seen agreements
finalized for the sales but did not believe there had been
a change in the companies availability or willingness to
negotiate the efforts.
9:27:08 AM
Mr. Crowther spoke to the fifth question:
What is the production forecast for Hilcorp, and what
would the annual revenue to the State have been if
those fields were not sold?
Mr. Crowther noted that page 4 included a chart of
ownership interest in the North Slope fields, and how the
interest had changed from March 2019 to January 2024. He
pointed out that Hilcorps ownership interest increased as
shown on the tables. He referenced production forecast
tables in DNRs Revenue Sources Book (RSB), which were
shown on page 5 and 6 of the document. He looked at the
production volumes forecast on the two tables, and
commented on a 40,000 bpd change in production forecast
attributed to the change in operator for Prudhoe Bay. There
were similar upward trends in other assets with Hilcorp
assets. The change in ownership came with changes of
drilling, facilities management, pursuing different
targets, and dramatic changes in production in the near
term. He commented that the upward transition associated
with the operator change was a major benefit to the state
in the context of production and royalty.
Co-Chair Stedman thought the committee might have follow up
questions at a later time.
^ALASKA HOUSING FINANCE CORPORATION UPDATE and OVERVIEW
9:33:03 AM
BRYAN BUTCHER, CEO AND EXECUTIVE DIRECTOR, ALASKA HOUSING
FINANCE CORPORATION, introduced himself.
AKIS GIALOPSOS, DEPUTY EXECUTIVE DIRECTOR, ALASKA HOUSING
FINANCE CORPORATION, introduced himself.
Mr. Butcher discussed a presentation entitled "Alaska
Housing Finance Corporation - Presentation to Senate
Finance" (copy on file).
Mr. Butcher looked at slide 2, "Introduction
Alaska Housing Finance Corporation's mission is to
provide Alaskans access to safe, quality, affordable
housing.
Mr. Butcher spoke to slide 3, "Agenda
Alaska's Housing Market 4
AHFC's 2023 Highlights & Financial Performance 9
Landlord Appreciation 12
COVID-19 related investments 13
• New vouchers
• Housing Stabilization & Recovery
Last Frontier Housing Initiative/Rural Professional
Housing 14
"Welcome Home" Down Payment Assistance proposal 15
Building & Improving Alaska's housing stock 16
Budget Overviews 18
Subsidiary Spotlight 22
• Alaska Corporation for Affordable Housing
Legislative Initiatives 25
9:34:30 AM
AT EASE
9:34:51 AM
RECONVENED
Mr. Butcher referenced slide 4, "Alaska's Housing Market
Rental Markets
• Low vacancy rates throughout state
• Multiple rent increases within same year have been
reported
Homeowner Market
• Interest rates impact potential homeowners and
renters
• Building costs are high but supply chains are
improving
Overcrowding, aging housing stock and new development
in rural areas continue to be challenges
Mr. Butcher elaborated that there was not a lot of new
construction going on in all communities in the state. He
mentioned the 6.5 percent interest rate and referenced
Alaskans staying in their homes rather than downsizing with
a higher interest rate. He discussed the lack of available
housing and noted that an upcoming slide would address
interest rates.
Mr. Butcher turned to slide 5, "Rent vs. Mortgage Payments
Statewide," which showed a bar graph comparing rent and
mortgage payments. He commented on rent and mortgage
payments being somewhat similar over the previous five
years, but with mortgage payments going up considerably in
recent days.
Mr. Butcher considered slide 6, "Average Sale Price of
Single Family Homes in Anchorage which showed a line
graph. He noted that data in Anchorage was more easily
obtainable than other areas of the state. He observed that
in a nominal sales price, home prices had gone up over the
last century. With inflation adjustment, the trend was not
as extreme.
9:38:58 AM
Mr. Butcher displayed slide 7, "AHFC My Home Rate," which
showed a line graph depicting interest rates. He noted that
although current interest rates were higher than what was
seen in the previous 15 years, they were more or less
similar to what was seen in the 2000s and less than
previous years. He mentioned that interest rates in the
1980s were routinely in the teens. He thought most experts
expected interest rates to sit at around 6 percent through
2024, and potentially drop to 5 percent in 2025. He did not
think interest rates would ever return to 3 percent in his
lifetime.
Mr. Butcher highlighted slide 8, "5 Year Sales Prices in
Alaska," which showed a table of median sales prices in
Alaska, which had gone up considerably. He pondered higher
down payments than previous years. He mentioned a bill
introduced by the governor, aimed at giving AHFC more
flexibility by allowing a minimum of 3 percent down rather
than 5 percent. He commented that the change would be on
par with AHFCs competitors and would give Alaskans with
the credit rating and income the opportunity to afford a
home.
Mr. Butcher looked at slide 9, "AHFC 2023 Highlights
• Mortgage portfolio is growing;
• Delinquencies and foreclosures are historically low;
• Public Housing funds are stable/increasing.
• Alaska Corporation for Affordable Housing;
• Local governments seeking solutions.
Mr. Butcher thought AHFC loans provided value and a soft
touch. He mentioned that Alaska had been among the five
lowest states in foreclosures and delinquencies. He cited
that AHFC's foreclosure rates were amongst the lowest 5
states for the past 20 years. He noted that AHFCs
delinquencies of 30 days and more was 3.5 percent, which
was very low, and its foreclosure rate was less than one-
fifth of a percent. He discussed helping Alaskans stay in
their homes.
9:43:27 AM
Mr. Butcher addressed slide 10, "AHFC's Financial
Performance
•AHFC issuer credit rating by top 3 agencies is
AA+/Aa2/AA+.
•FY23 mortgage and loan purchases total $498 million.
•Cumulative dividends to the State total $2.242
billion.
Mr. Butcher spoke to the graph on slide 10 depicting the
AHFC dividend from FY 13 to FY 23. He cited that over the
previous ten years, AHFC was down to a $7 million dividend
in 2013, which had dipped during the Covid-19 pandemic and
then steadily rose. He pointed out that the rise in
dividend from the previous year was due to increased rates
for short-term investments. He referenced the liquidity
necessary to provide mortgage loans and a growing mortgage
portfolio. He noted that during the pandemic, AHFCs
competitors had artificially low interest rates, which
allowed a significant part of the corporations mortgages
to refinance out. Over $400 million was paid off in re-
finances in FY 22, and by FY 23 it had dropped to $167
million or a 59 percent decrease.
Co-Chair Stedman asked about the AHFC dividend, and whether
AHFC would be presenting the state with cash or real
estate.
Mr. Butcher mentioned that a subsequent slide would address
the question but relayed that the AHFC board traditionally
approved a dividend to go towards its capital project
request, but the current proposed would go far beyond a
capital request.
Mr. Butcher advanced to slide 11, "AHFC Operations, FY24
• ~300 employees with offices in 16 communities.
• Federal funding supports Public Housing with ~1,600
units and ~6,000 Vouchers
Mr. Butcher noted that approximately half of AHFCs
employees were in federally funded public housing
positions. The remainder were in administrative services,
procurement, HR, and the mortgage and finance departments.
He discussed the use of housing vouchers.
9:47:12 AM
Mr. Butcher looked at slide 12, "Landlord Appreciation
Federally Funded: $3.15M Impact
For leases effective after December 2023:
• $1,000 for each new 12-month lease signed with
Alaska Housing Finance Corporation
• $1,000 for each 12-month lease renewed with Alaska
Housing Finance Corporation
Mr. Butcher discussed the constrained rental market. He
mentioned that the Landlord Appreciation Program used
federal funds.
Mr. Butcher showed slide 13, "COVID-19 Related
Investments
Federal Emergency Rental Assistance: $370M
•Homeowner Assistance Fund: $50M
•New Start Vouchers in Public Housing
•Development of Housing Stabilization & Recovery
•Last Frontier Housing Initiative
Mr. Butcher noted that the rental assistance was limited to
15 months. He continued that AHFC had worked with the U.S.
Treasury to work on options for utilizing remaining funds.
He cited that AHFC had been able to assist almost 3,000
Alaskans out of temporary homelessness through the housing
stabilization and recovery effort. He cited that 80 percent
to 85 percent of Alaskans experiencing homelessness fit
into the temporary category. He noted that many studies
had shown that the longer a person was homeless, the more
difficult it would be to transition back into housing. He
noted that the housing stabilization program had helped
many immigrants, the majority of which were Ukrainian.
9:52:00 AM
Senator Bishop offered kudos to AHFC for a timely response
to his office after he reached out about three families
during the pandemic.
Senator Wilson thanked AHFC for its successful program
which had received national recognition. He thought the
program might be coming to an end after June, and asked
about future plans.
Mr. Butcher affirmed that AHFC had been able to carve out
some vouchers for Alaskans transitioning out of the
program. He offered to provide additional details on how
many individuals had transitioned out of the program. He
cited that 400 vouchers would be a great help.
Senator Wilson asked if the 400 vouchers were a fixed
number. He mentioned a large number of Ukrainian refugees
coming into the state.
Mr. Butcher agreed to provide a breakdown of vouchers and
how many individuals had been able to transition out of the
program.
9:55:12 AM
Mr. Butcher referenced slide 14, "Rural Professional
Housing/LFHI
Boost 2023 Rural Professional Housing
Increase the funds available for the current Rural
Professional Housing round to facilitate 7 statewide
developments.
Awarded funding to build/renovate 19 rural
professional housing units in: Hoonah, Napakiak,
Talkeetna, Thorne Bay, Togiak, Venetie and Yakutat.
Western Alaska Focus
Announce targeted rural professional and affordable
housing funds to governments in Bethel, Nome and
Kotzebue.
Southeast Alaska Focus
Announce targeted affordable housing funds to
governments in Ketchikan and Sitka.
Mr. Butcher discussed the groups assisted by AHFCs work in
rural professional housing, including health care
professionals, public safety employees, and teachers. He
discussed the Last Frontier Housing Initiative, which
prioritized developing housing in communities where there
was need but not yet development. The program used a
combination of federal funds left over from rent relief
that could be used for construction of affordable housing
units as well as some of the rural professional housing to
help with housing for state employees in smaller
communities.
Mr. Butcher mentioned the Department of Law not being able
to find adequate housing nor newly hired prosecutors. He
continued that AHFC had worked with departments and
determined the priorities of Kotzebue, Nome, and Bethel. He
continued that AHFC was working with the communities and
providing $5 million in funding, with $3 million from the
rural housing program and $2 million in federal funds to
put in a mix of housing for professionals and affordable
housing for those that qualified. He hoped to put in more
additional housing in communities.
Mr. Butcher noted that AHFC was also working in Sitka and
Ketchikan, which had both been identified as having serious
housing issues. He noted that AHFC had provided $3.5
million in federal funds. The project was a different model
for AHFC, with moving up the development curve earlier in
the process. He hoped the units would be ready sometime in
2025. He affirmed that he would provide updates.
Co-Chair Stedman thought that the rural professional
housing concept had come from the committee, which had been
working to find creative solutions. He asked if the project
was a success.
Mr. Butcher answered affirmatively and thought the program
had been the most successful that AHFC had undertaken in
the previous 20 years. He referenced his predecessor, who
had lived in Utqiagvik for 20 years and observed
significant teacher housing shortages.
Senator Bishop commented that some people were discussing
outcomes in K-12 education related to continuity and
housing for teachers.
10:00:52 AM
Mr. Butcher turned to slide 15, "Introducing "Welcome Home"
Down Payment for New Homeowners
In Governor Dunleavy's proposed capital budget for $25
million*:
• Forgivable loan of up to $20,000 for new homeowners
to cover down payment
• College or Tech school grad**
• Qualify for an AHFC loan through lending partner
• 5-year commitment for homeownership
• Commitment to primary residency (no subleasing,
short-term rental)
*$17 million AHFC dividend + General Fund
appropriation; **within five years to receive full
benefit
Mr. Butcher noted the significance of endeavoring to keep
young people in the state. He mentioned the challenge of
procuring a down payment as a barrier to transitioning from
renting to owning. He explained that for every year of
residency, 20 percent of the down payment loan would be
forgiven.
Senator Wilson asked about the definition of "new home
owners.
Mr. Butcher explained that AHFC had talked about first-time
homebuyers as those who had not owned a home in the
previous five years, but had discussed expanding the
parameters. He mentioned out-of-state home buyers who might
be relocating to the state. As the legislative session
progressed, AHFC would work on the details.
Senator Kiehl asked if the funding was anticipated to be an
annual $25 million, or if it would stretch over two years.
Mr. Butcher relayed that initially the funding was for one
time. He expected the project to last for two or three
years. He affirmed that AHFC would update the legislature,
and if the program was working as intended it would be
possible to request more funding to continue the program.
Senator Kiehl asked Mr. Butcher to get back to the
committee with information on the number of first-time
homebuyers in the previous few years.
Mr. Butcher agreed to provide the information. He thought
the program might result in more first-time homebuyers.
10:05:24 AM
Mr. Butcher considered slide 16, "Building & Improving
Housing Stock," which showed two photographs of small
dwellings.
Mr. Butcher displayed slide 17, "Federal Energy Rebates
AHFC preparing $75 million application for U.S.
Department of Energy in 2024.
• Home Efficiency Rebate Program
• Home Electrification and Appliance Rebate Program
Mr. Butcher explained that the $75 million had already been
appropriated by the legislature. He noted that the rebate
program was bound by federal rules that were not Alaska-
specific, and the rebates were focused more on low-income
Alaskans. The funding would be approximately split in two
by the programs listed on the slide. The Home
Electrification and Appliance Rebate Program would cover
purchase and installation of heat pumps, dryers, water
heaters and more energy efficient appliances. The program
was only for those at 150 percent of median income and
lower. He hoped to roll the program out before the end of
2024. He noted that as of a week previously, no states had
yet to begin the program.
Mr. Butcher highlighted slide 18, "Governor's Proposed FY25
Operating Budget, AHFC," which showed a pie chart showing
that AHFC's budget was approximately two-thirds federal
funding and one-third AHFC receipts. There was a status quo
budget request for the current year, which he would
elaborate on at a later time.
Mr. Butcher looked at slide 19, "FY25 Governor's Proposed
Capital Budget," which showed a table. He noted that almost
all of the programs listed had been in the budget request
for many years, and some for decades. The items included
weatherization programs, matching funds for public housing,
rural professional housing, homelessness, and things the
committee had seen every year.
Co-Chair Stedman thought that the committee would have AHFC
back to testify when the capital budget was being
considered. He thought AHFC was very successful in its
management and in helping citizens of the state. He thought
there was a lot of support in the committee.
Mr. Butcher addressed slide 20, "FY24 Governor's Proposed
Supplemental Operating Budget," which showed a table of two
supplemental requests. The requests asked for extending the
lapse dates for carry-forward of federal stimulus dollars
so that AHFC could continue to utilize the funds.
10:09:20 AM
Mr. Butcher advanced to slide 21, "Subsidiary Spotlight:
Alaska Corporation for Affordable Housing
Mission is to increase the availability of affordable
housing in Alaska through the acquisition,
development, management or operation of affordable
housing
Incorporated in February 2012, under the authority of
AS 18.56.086
Designated 501(c)(3) non-profit corporation that
enables ACAH to leverage grant and private foundation
funding.
Mr. Butcher discussed the need for coming up with funds for
the Alaska Corporation for Affordable Housing (ACAH).
Mr. Butcher looked at slide 22, "Subsidiary Spotlight:
Alaska Corporation for Affordable Housing
Anchorage Investments:
Loussac Place
• Completed in partnership with Cook Inlet Housing
Authority in 2012
• 120 units
Susitna Square
• Completed in partnership with Cook Inlet Housing
Authority in 2015
• 18 family units
Ridgeline Terrace
• Completed in partnership with Cook Inlet Housing
Authority in 2016
• 70 units: 50-family, 20-senior
Mr. Butcher discussed using Anchorage developments to
identify whether the housing subsidiary was effective.
Mr. Butcher spoke to slide 23, "Subsidiary Spotlight:
Alaska Corporation for Affordable Housing
Fairbanks Scattered Project
The Meadows
• 18 senior, one-bedroom, accessible units
Borealis Park
• 40 family units, an array of one, two, and three-
bedroom units, 20 accessible
Next development is currently in discussion.
Mr. Butcher thought ACAHs next steps would be in small
communities. He mentioned finding land and looking at
regional hubs in Ketchikan, Sitka, Cordova, Kodiak, and
Bethel. He commented on the success of developments and
commented that the smaller the community in the state, the
greater need for housing.
Senator Kiehl thought a lot of subsidized housing built in
the 1970s with federal money had long-term covenants. He
asked if the state was replacing the units or maintaining
livable status at a sufficient rate to keep up.
Mr. Butcher agreed that a lot of affordable housing was
done by using Internal Revenue Service (IRS) Low Income
Housing Tax Credits, which extended 30 years in totality.
He recounted that AHFC was producing more affordable units
now than before. He referenced a tax bill currently in
Congress that included a 12.5 percent increase for states
to be able to do the tax credit properties. The rate had
increased in a tax bill passed under President Donald
Trump, but the increase had a three-year limit. He noted
that the Alaska congressional delegation had been
supportive.
10:14:22 AM
Senator Wilson asked about the projects on slide 22 and 23,
and asked if the units were for mixed-income residents.
Mr. Butcher relayed that the Loussac Place was for mixed
income housing, but others were just affordable housing. He
referenced many studies that indicated that the reason the
U.S. Department of Housing and Urban Development (HUD)
started issuing vouchers rather than building housing was
due to the stigma of housing projects. Vouchers went to
landlords and benefitted the private sector, as well as
provided access to a range of schools. He explained that
AHFC endeavored to put developments in neighborhoods that
were not identified as low income.
Senator Wilson referenced senior housing, and asked if it
would be mixed-use.
Mr. Butcher affirmed that AHFC had been involved in the
developments.
Senator Bishop mentioned Raven Landing.
Mr. Butcher agreed that Raven Lading in Fairbanks was a mix
of affordable and other units.
Co-Chair Stedman asked about Sitka and Ketchikan land
availability, which led to housing issues. He thought some
businesses were looking at converting business real estate
into housing. He thought other areas of the state had the
same issue.
10:18:38 AM
Mr. Butcher agreed with Co-Chair Stedman. He noted that
with the AHFC program, there was a minimum requirement for
a community to come up with no less than 50 percent of the
project cost, which could be in-kind. It was hoped that the
communities would offer land.
Co-Chair Stedman emphasized the need for housing for the
work force.
Mr. Butcher referenced slide 24, "Legislative Initiatives
SB191/HB 273 AHFC
make/purchase mortgage loans
Eliminate the 95% LTV requirement in statute; cleanup
language. Support well qualified borrowers by reducing
down payment requirements.
SB205/HB 292 AHFC authority to acquire building
Authorize AHFC to purchase a maintenance hub in
Anchorage at a cost NTE $9M in federal funds.
SB 125/HB125 AHFC: Sustain Energy
Create a subsidiary at AHFC for the purpose of
accepting federal funds and investing in sustainable
energy development.
Senator Bishop commented that there were often comments
about the state squandering its money in the 1980s, and
he thought AHFC was a fine example of a great and positive
return on the states investment.
Co-Chair Stedman thanked the testifier.
ADJOURNMENT
10:21:39 AM
The meeting was adjourned at 10:21 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 020824 AHFC SFIN budget presentation.pdf |
SFIN 2/8/2024 9:00:00 AM |
|
| 2024 02 01 SFIN DNR Production Forecast Presentation Response to Committee.pdf |
SFIN 2/8/2024 9:00:00 AM |