HB 184-AIDEA FINANCE WORKFORCE HOUSING DEVELOP.  9:07:36 AM CO-CHAIR HIMSCHOOT announced that the next order of business would be HOUSE BILL NO. 184, "An Act relating to the Alaska Industrial Development and Export Authority; and relating to workforce housing development projects." 9:07:52 AM REPORESENTATIVE ANDI STORY, Alaska State Representative, as prime sponsor, presented HB 184. She paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: In most of Alaska, there is a severe housing shortage. This holds true in our communities in Southeast Alaska. This shortage is causing outmigration of our younger residents, who are so important in filling our employment needs and keeping our longtime families here. Adding more housing units is critical to our communities. Alaska cannot keep our residents nor attract key public employees such as police, teachers and health workers if they cannot find housing. More rental units are needed. In my home community of Juneau, the 2023 Alaska Housing Finance Corporation (AHFC) rental market survey of 1,115 units sees a rental vacancy rate of four percent. Recent data from the American Community Survey (ACS), indicates a similar rental vacancy rate at 3.6 percent. Anything lower than a five percent vacancy rate indicates that the housing supply is tight, and demand is outpacing available units. This indicates that meeting demand for new housing will require additional housing construction since there is no extra supply within the existing housing market to take on this demand. HB 184 is important because it expands AIDEA's mission statement, allowing the corporation to use their loan program for the desperately needed construction of new workforce housing facilities containing five or more dwelling units. The bill provides a legal definition of "workforce housing" based on the Department of Housing and Urban Development's working definition, which calculates affordability based on the average median income of an area. This bill moves us closer to addressing our housing demands. It is imperative that we create stronger communities through more housing options. I urge your support for HB 184. 9:11:38 AM HONOUR MILLER-AUSTIN, Staff, Alaska State Legislature, on behalf of Representative Story, prime sponsor, presented the sectional analysis for HB 184 [included in the committee packet], which read as follows [original punctuation provided]: Section 1: Adds a new subsection 7 to AS 44.88.070 which states the purpose of the authority. Providing means of financing and facilitating the financing of construction of new workforce housing facilities with five or more units will now be part of the mission of AIDEA. Section 2: Adds a new subsection 33 to AS 44.88.080 stating the powers of the authority. One of the powers of AIDEA will now be to provide means of financing and facilitating the financing of construction of new workforce housing facilities with five or more units. Section 3: Extends the definition of "development project" under AS 44.88.900(6) to include workforce housing facilities with five or more dwelling units, as defined in the new subsection J of AS 44.88.900(13). Section 4: Adds a new subsection J to include workforce housing in the meaning of "project" under AS 44.88.900(13). Section 5: Adds a new subsection 22 to AS 44.88.900 defining "workforce housing". Workforce housing will be defined as residential housing that costs the occupants less than 30 percent of the income of a household with 120 percent of the area median family income, as determined by the United States Department of Housing and Urban Development. 9:13:42 AM REPRESENTATIVE RUFFRIDGE questioned the meaning of Section 5. REPRESENTATIVE STORY said it means that housing would be developed at fair market value for people who are not low income but are in need of affordable housing. REPRESENTATIVE RUFFRIDGE calculated that in Juneau where the median family income is $120,000, the bill would provide financing from AIDEA for condo units that cost $3,000 per month. He opined that $3,000 does not sound affordable. CO-CHAIR HIMSCHOOT said the goal is to provide additional multi- family workforce housing, not necessarily affordable housing. 9:16:41 AM STACY BARNES, Director, Governmental Relations & Public Affairs, Alaska Housing Finance Corporation (AHFC), said affordability refers to U.S. Department of Housing and Urban Development (HUD) standards, which are updated on an annual basis. She offered to follow up with the area median income (AMI) in each community. In response to a follow up question, she confirmed that AHFC offers loan programs for single and multi-family housing developments, but the goal is to enable AIDEA to offer something similar in recognition of the statewide housing challenge. 9:22:16 AM REPRESENTATIVE RUFFRIDGE asked whether AIDEA had received requests for multi-family dwelling loans and whether the definition of area median family income in the bill would increase affordability. BRANDON BREFCZYNSKI, Deputy Director, Alaska Industrial Development & Export Authority (AIDEA), said no, AIDEA has not received any commercial housing applications through the bank, but there have been preliminary talks with municipalities about financing multi-family units. Nonetheless, ADIEA has the ability to provide commercial housing development. REPRESENTATIVE RUFFRIDGE said under his estimation, AIDEA already has the ability do what is being proposed in HB 184, but the bill would impose artificial limitations by defining workforce housing with the income requirements. He asked whether that is correct. MR. BREFCZYNSKI agreed that in terms of running a loan through the definition of workforce housing in the bill, it would be limiting. He confirmed that AIDEA has the ability to finance a commercial housing development through its various funds and programs. 9:28:52 AM REPRESENTATIVE STORY clarified that AIDEA does have the authority to provide housing loans, which they did primarily in the 1980s. They have since stopped providing them. The bill emphasize the importance of these loans in statute and provides more direction. She said the key problem is that contractors are not building affordable housing because it's not affordable for them. She referred to the Ridgeview housing complex in Juneau, which was intended to offer affordable housing, but is no longer considered affordable. 9:30:52 AM CHRISTINE WOLL, Assembly Member, City and Borough of Juneau (CBJ), gave invited testimony during the hearing on HB 184. She stated that affordable housing is the assembly's number one priority. She discussed the dire nature of the housing crisis in Juneau, due in part to changing demographics and a lack of multi-unit dwellings that has resulted in less available housing. The CBJ put together a housing action plan in 2016 and has implemented property tax abatement for multi-family buildings over four units, reduced parking requirements, and built a number of loan and grants programs in addition to rewriting the housing code. The city is finally starting to see the fruits of that effort, she said, with several developments taking advantage of these opportunities. She concluded that larger projects do not pencil out without flexible financing options. She said HB 184 would not solve the housing crisis, but it would add one more tool to the toolbox. 9:35:25 AM RICHELLE JOHNSON, Research & Technical Assistance Director, Center for Economic Development, University of Alaska Anchorage (UAA), gave invited testimony during the hearing on HB 184. She observed that housing is one of the top barriers to economic growth in Alaska, which also impact workforce attraction and th retention. Alaska ranks 45 in terms of new housing construction and new development on multi-family housing has slowed even more. While there's a clear demand in housing, its not translating to increased development, which indicates that nontraditional tools are necessary. She spoke to the tie between housing and workforce, which impacts the state's economic health. She agreed that the bill would not solve every challenge for every community, but it would give them access to a new source of capital and would help improve the margins on housing development on the cusp of financial feasibility. 9:38:47 AM REPRESENTATIVE HOLLAND asked why there is a housing crisis in a stagnant economy that is experiencing an increase in outmigration and a growth in nonresident workers. He asked how the data informs the kind of housing strategies that are needed and how to make new construction attractive. MS. JOHNSON reported that that there is a trend in smaller household sizes across the state, in addition to multi- generational households without enough available or affordable housing for the younger generation to move out. Further, many houses were constructed in the 1970s and 1980s, and the aging houses are leading to an attrition of available units statewide. So, while there is a decreasing number of people in Alaska, there is also a decreasing number of available homes. CO-CHAIR HIMSCHOOT commented that despite adding three new neighborhoods in Sitka, there is still a housing shortage, which is related to people aging in place. 9:42:17 AM REPRESENTATIVE STORY highlighted the letters of support from the Alaska Municipal League (AML) and Housing Alaskans, as well as the zero fiscal note attached to the bill. REPRESENTATIVE HALL shared that Alaska has a very serious housing shortage and is in "crisis mode." According to an Agnew::Beck study, Alaska needs 27,500 new housing units over the next 10 years. She described the bottleneck taking place with the housing landscape in Alaska. 9:44:17 AM REPRESENTATIVE PRAX asked whether there had been input from bankers, developers, or the real estate industry on HB 184. REPRESENTATIVE STORY said she had not reached out to developers. 9:46:52 AM CO-CHAIR HIMSCHOOT announced that HB 184 would be held over.