HB 65-SENIOR CITIZEN HOUSING DEV. FUND GRANTS  8:05:05 AM CHAIR MUNOZ announced that the first order of business would be HOUSE BILL NO. 65, "An Act making regional Native housing authorities eligible to receive grants through the Alaska Housing Finance Corporation from the senior citizens housing development fund." 8:05:26 AM TIM CLARK, Staff, Representative Bryce Edgmon, Alaska State Legislature, characterized HB 65 as simple legislation that would benefit seniors throughout Alaska by including regional housing authorities among the entities eligible for grants through the Alaska Housing Finance Corporation's (AHFC) Senior Citizens Housing Development Fund (SCHDF). Currently, the fund is open to municipalities, 501(c)(3) and 501(c)(4) nonprofits. He noted that the nonprofit status is based on a fairly strict Internal Revenue Service (IRS) definition. He further noted that some regional housing authorities have went to the considerable effort to qualify as nonprofits under the IRS definition. Mr. Clark then informed the committee that Alaska has 14 regional housing authorities, which he characterized as some of the most experienced and affordable housing developers in the state. He told the committee that AHFC supports HB 65, which has a zero fiscal note as the fund is already funded at $4.5 million in the governor's proposed budget. The legislation won't have any impact on costs, but will allow fund managers to more effectively allocate the available funds. 8:10:12 AM REPRESENTATIVE SADDLER inquired as to how much more money will be available to the regional housing authorities with this change. MR. CLARK said that in terms of the projects funded, usually funds from the SCHDF are just one piece of the collection of funding from various sources. He pointed out that the committee packet includes three examples of SCHDF projects, all of which demonstrate a fairly diverse collection of funding sources. For one project the total development cost was $5.1 million of which SCHDF provided about 20 percent of the funds. For another project the total costs were $2.3 million of which SCHDF provided about 50 percent of the funds. In yet another project the total development costs were $2.4 million of which SCHDF provided about 16 percent of the funds. 8:12:06 AM CHAIR MUNOZ inquired as to the balance of the fund. MR. CLARK related his understanding that AHFC tries to exhaust SCHDF's resources annually. In further response to Chair Munoz, Mr. Clark said the fund has been in the $4.5 million range over the last few years. Returning to the examples of projects he spoke of earlier, Mr. Clark informed the committee that the first example was a retirement community in Fairbanks with 20 units, which he characterized as one of the most ambitious projects of the three he highlighted. The second project, located in Houston, is six units with a cost of $2.3 million. The third project he highlighted earlier is located in Togiak and is also a six-unit project with a cost of $2.4 million. 8:14:30 AM CHAIR MUNOZ related her understanding that the SCHDF is traditionally viewed as gap financing. MR. CLARK answered that's his understanding as well. According to officials associated with housing authorities, their funding for even a single project is diverse, including funds from the U.S. Department of Housing and Urban Development, AHFC, the Denali Commission, as well as the U.S. Department of Agriculture and Rural Development. 8:15:33 AM CHAIR MUNOZ asked if the fund has historically been able to meet the requests submitted. MR. CLARK related his understanding that at times grant applicants have been turned away. However, the number of applicants turned away in a given year versus those applicants that are awarded a grant is not a great proportion. He related his further understanding that AHFC has discussed this legislation as allowing AHFC to be more effective in the allocation of these funds. Therefore, it's possible, he conjectured, that a larger number of worthy projects are being funded, but at a slightly lower amount for each project. 8:16:56 AM REPRESENTATIVE FOSTER asked if a particular regional housing authority identified the need to fill a gap. MR. CLARK opined that there's always a need for more senior housing since seniors are the fastest growing segment of Alaska's population. Furthermore, he recalled that the goal of this legislation is among the priorities of the statewide association of housing authorities. The legislation was specifically brought to Representative Edgmon by the Aleutian Housing Authority. 8:18:18 AM REPRESENTATIVE FOSTER asked if the regional housing authorities are providing feedback specifying that there are projects in the coming years. He clarified that he's trying to obtain a sense of the demand for this funding. MR. CLARK conjectured that there won't be a dramatic increase in pressure on the fund, but he noted that around the state senior projects are being hoped for and planned. 8:19:20 AM REPRESENTATIVE SADDLER inquired as to whom the 501(c)(3) and 501(c)(4) nonprofits are and how they feel about this proposed increase in competition for the grant funds. MR. CLARK related his understanding that AHFC didn't anticipate any problems. He pointed out that the applicants in the past have totaled two to nine. 8:20:53 AM REPRESENTATIVE GARDNER asked if the sponsor anticipates that with passage of HB 65 different groups will participate or will those existing nonprofits have easier access. MR. CLARK informed the committee that only a handful of the 14 housing corporations have managed to acquire 501(c)(3) or 501(c) (4) nonprofit status. Therefore, HB 65 will save the other housing authorities from having to acquire 501(c)(3) or 501(c)(4) nonprofit status, which he predicted will greatly increase the number of qualifying housing authorities. 8:22:12 AM REPRESENTATIVE SADDLER inquired as to what organizations will be in line to apply for these funds. MR. CLARK explained that the regional housing authorities in the state are Native housing authorities, many of which are administered through the area's Native associations. However, he pointed out that the Native association's work as housing authorities are open to anyone in need. REPRESENTATIVE SADDLER asked if there are other entities that will want to utilize this opening to SCHDF grants. MR. CLARK opined that since the regional housing authorities are so closely identified with the regional Native entities, this legislation would take care of that desire. 8:23:38 AM REPRESENTATIVE AUSTERMAN turned the committee's attention to the zero fiscal note and asked if this proposal will eat into AHFC's dividend that it pays to the state each year. MR. CLARK related that AHFC doesn't believe there will be any additional cost to the state. With or without HB 65, SCHDF has been included in the governor's proposed budget in an appropriation of $4.5 million. 8:25:07 AM MARK ROMICK, Director, Planning Department, Alaska Housing Finance Corporation, related that AHFC supports HB 65. 8:25:33 AM REPRESENTATIVE CISSNA remarked that after visiting so many communities and seeing senior housing, she is reminded of the need for studies in order to discover what exactly is needed in terms of senior housing. She asked if there have been such housing studies. MR. CLARK noted that the grant process for the SCHDF is quite rigorous and includes the showing of a demonstrated need, feasibility of the project, and sustainability of the project once it's built. REPRESENTATIVE CISSNA inquired as to the meaning of sustainability. 8:29:13 AM MR. ROMICK answered that for AHFC sustainability includes operating expenses, particularly utilities. Therefore, AHFC requires all property in which it's involved to meet the state's thermal standards for energy efficiency. The AHFC encourages meeting the highest level of energy efficiency palpable with the existing energy efficient rating system. The corporation also encourages exploration of alternative heating systems rather than traditional oil systems. Mr. Romick said that energy efficiency and reduction of operating expenses through the heating system or use of long-term maintenance free materials and using very energy efficient construction is an important part of the program, as well as the use of energy efficient appliances. 8:31:20 AM REPRESENTATIVE CISSNA suggested that it would be great to more closely review the rating speculations in terms of meeting the needs that exist. CHAIR MUNOZ said she would be happy to hear that topic at another hearing. 8:32:23 AM REPRESENTATIVE SADDLER directed the committee's attention to the letter from the Bristol Bay Housing Authority (BBHA) which references an attorney general's opinion stating that the regional housing authorities weren't eligible to use these grants. He requested that Mr. Clark speak about that. MR. CLARK explained that the opinion refers to the 501(c)(3) and 501(c)(4) status demanded by the IRS. Because the regional housing authorities are nonprofits and operate similar to a 501(c) nonprofit, there was confusion regarding whether those entities were already eligible for the grant fund. Therefore, the attorney general's opinion was to clarify that matter. When it was definitively determined that the regional housing authorities weren't eligible unless they became 501(c)(3) or 501(c)(4) status, this legislation was pursued. 8:33:58 AM REPRESENTATIVE FOSTER pointed out that HB 65 has the support of AHFC as well as many regional housing authorities. He then expressed interest in the number of senior citizens HB 65 would benefit. To that end, he used the first project as an example and extrapolated numbers to determine that 80 seniors would benefit. 8:35:17 AM CHAIR MUNOZ announced that HB 65 would be held over.