HCRA - 03/16/95 HB 192 - AHFC HOUSING LOANS CO-CHAIR IVAN asked for a motion to adopt the proposed committee substitute for HB 192. Number 656 REPRESENTATIVE KOTT made the motion to adopt the committee substitute. CO-CHAIR IVAN heard no objections and it was so ordered. He invited Representative Foster to introduce HB 192. Number 658 REPRESENTATIVE RICHARD FOSTER expressed his appreciation at the willingness of the committee to hear his bill. He honored the presence of all the veterans in the audience. He stated HB 192 didn't change the Alaska Housing Finance Corporation's (AHFC) role of retaining control of final approval of loans, but allows regional housing authorities the power to make, originate and service loans within their jurisdiction, making home mortgages available for rural Alaskans. HB 192 also changes the percentage of matching amounts from 20 to 30 percent, and the amount of monies available in the bush hasn't been enough to leverage the balance of the federal monies. In the current fiscal year, AHFC has contributed $8 million corporate funds to 11 regional housing authorities to leverage $48.8 million in HUD funds resulting in the building of 259 homes in 19 villages. He stated his staff aide, Elizabeth Dronkert, would also be available to help answer questions. Number 690 CO-CHAIR IVAN asked if committee members had any questions. Number 692 REPRESENTATIVE FOSTER stated that an identical bill passed through the House, 38-1 last year, but HB 192 was in better form. Number 696 REPRESENTATIVE KOTT asked about Representative Foster's reference to last year's `identical' bill. Number 698 CO-CHAIR IVAN stated programs like AHFC are taken advantage of in more urban areas. Rural Alaskans find costs too high to participate in, but Co-Chair Ivan has received comments from rural citizens interested in expanding this program and HB 192 encourages more rural participation. This bill provides the economy an improvement of lifestyle in the rural areas for well-meaning families pursuing housing from this program. Number 710 REPRESENTATIVE KOTT asked if there was anyone signed up to testify who could answer questions pertinent to HB 192. TAPE 95-7, SIDE B Number 002 ELIZABETH DRONKERT, Legislative Aide to Representative Foster, stated Mr. Don Fauske, the new Chief Executive Officer, Alaska Housing Finance Corporation, was available to help answer any questions. Number 006 CO-CHAIR IVAN invited Don Fauske to testify, but Les Cambell spoke on his behalf as Mr. Fauske wasn't currently present. Number 024 LES CAMBELL, Budget Specialist, Alaska Housing Finance Corporation (AHFC), supported, on behalf of AHFC, HB 192. The AHFC believed it would be beneficial for the state of Alaska if passed. Number 039 CO-CHAIR IVAN asked for questions from committee members. Number 045 REPRESENTATIVE KOTT asked about the provision in Section 3 which increased the percentage from 20 to 30, the amount dispersed in developing a unit and what effects it would have on the overall program as far as spreading the money evenly around categories within the AHFC. He also asked if the AHFC had the actual money. Number 061 MR. CAMBELL stated that the AHFC had the corporate receipts to provide funding for the assets added into the capital budget. The AHFC has currently submitted a request for 30 percent funds as the federal funds are declining and this would leverage more state funds toward the federal funds in order to bring it into the state. He noted Don Foske's presence in the audience. Number 081 DAN FAUSKE, Chief Executive Officer, Alaska Housing Finance Corporation, said the fiscal amount was estimated to be around a $5 million change by moving from the 20 to the 30 percent contribution level coming from corporate receipts, cash of the corporation from programs managed in the past. He said there were witnesses on teleconference from Anchorage wishing to testify. He stated to get into more detail, he would need the information supplied by those hooked onto the teleconference line. The AHFC did discuss the language in Section 1, subsections 1 and 2, where it has been changed. The AHFC was concerned about the original wording of the bill. Number 091 CO-CHAIR IVAN stated there were several on-line waiting to testify. Number 123 JUDY DESPAIN, Director, Operations, Alaska Housing Finance Corporation, testified via teleconference that Kay Murphy and Duane White were on-line to help answer any questions. Number 125 MR. FAUSKE stated the language needed to be changed and came up with an agreement between the AHFC employees and rural housing authorities. Originally, the bill would have created a situation where loans could be initiated at 1 percent below market rate in all areas and the AHFC wanted to change the wording to state in the rural areas. This was the AHFC's main concern with HB 192. Number 142 CO-CHAIR IVAN asked if there were any questions for Mr. Fauske. He invited Jacqueline Johnson to testify. Number 156 JACQUELINE JOHNSON, Executive Director, Tlingit and Haida Regional Authority, supported HB 192. She explained the necessity of the proposed increase. The 20 percent was set up a long time ago, but regional housing authorities develop a whole community upon the development of housing. The flexibility between 20 to 30 percent is necessary to make a project work at a particular site which was unable to be developed before. She used the example in Craig, where she waited three years to come up with additional funding sources through different entities, during which citizens were without money and the cost of construction rose. She believed the flexibility would help a rural community meet some of the public responsibilities such as providing safe water and sewer services. She mentioned another portion of the bill which addressed the ability for housing authorities seller services of the AHFCs loans. Currently, several housing authorities are able to run a rural loan program which used to be under Community and Regional Affairs before it merged with the AHFC. Some other regional housing authorities aren't able to service the rural loan program because the statutes state if there is an AHFC office within that area, loans can't be serviced. She said that by becoming a seller servicer for the AHFC loans, it is not in competition with banks because the program markets to a different class of people. The AHFC markets toward those programs not profitable for a bank and in many cases, the AHFC looks toward the reduction of Housing and Urban Development (HUD) funds and potential lost HUD funds. She stated the AHFC was looking at other ways to leverage their money to be able to meet their mandate of providing housing to low income people. She said it wasn't directed toward the Native Alaskan but the AHFC had a public responsibility to the whole region. To meet this mandate, this program needs the flexibility to use equity funds within the housing authority or use other public or private funds to make loans happen and even be creative with the developing to reduce the cost to smaller groups of people. She stated requesting the flexibility was a reason to ensure the rural housing authorities had the ability and right to utilize future programs instigated by the AHFC. Number 229 CO-CHAIR IVAN asked committee members if they had questions or comments. He invited Bruce Kovarik from Nome to testify. Number 236 BRUCE KOVARIK, Executive Director, Bering Straits Regional Housing Authority, testified via teleconference from Nome in support of HB 192. His housing authority serves 17 communities including Nome. He stated the loan program providing federal funds for new housing is not sufficient to meet the needs for housing in rural Alaska. Alternative means for developing and financing new housing needed to be found with substantial rehabilitation of existing substandard housing. He listed two provisions of HB 192 to help in this regard. First, in terms of participation in the AHFC's loan programs, several currently available programs are severely under utilized in rural Alaska. The reason is village economics and the lack of village access to information and basic mechanics of the loan program. He stated there were moderate income families who could benefit from these programs and achieve their goals of home ownership. An accessible home loan would require more effort in rural areas than in an urban community. HB 192 would help regionalize the loan program and offer familiar faces to families trying to participate in the loan programs. Second, the expansion of the supplemental housing grant program including all site sewer, water and infrastructure facilities would benefit those in rural communities. He said that in every program they are promoting, the housing authority was also developing the community. Mr. Kovarik believed the authorization of offsite sewer/water facilities in the supplemental housing grant program would be helpful, but he would still try to remain active in supporting the needs of the village and village housing. Number 292 CO-CHAIR IVAN asked for questions from the committee. He asked whether there were others signed up to testify regarding HB 192. Number 303 REPRESENTATIVE KOTT referred to page 3, which called for the AHFC to establish a party system for the allocation of monies in advance to pay the offsite water/sewer facility improvements authorized by the statute. He asked how the AHFC anticipated prioritizing the projects. He also mentioned the fiscal note didn't require additional personnel to be hired to work the projects. Number 318 MR. FAUSKE called on the staff who worked on this to answer the question. Number 326 MS. DESPAIN stated she understood it established the prime release system and the job could be done with existing staff. Number 329 REPRESENTATIVE KOTT asked if Ms. DeSpain could give him a basic idea on how a priority system would be set up for the allocation of grant monies for the purpose of offsite sewer/water facility improvements. Number 335 MS. DESPAIN stated the first priority considered would be the funds available. The allocation would be on a first come, first served basis depending on the accessible funds. Number 347 CO-CHAIR IVAN welcomed other questions or comments from the committee. He asked the desire of the committee concerning HB 192. Number 350 REPRESENTATIVE KOTT made a motion to pass CSHB 192(CRA) out of committee with individual recommendations. Number 354 CO-CHAIR IVAN heard no objections and it was so ordered.