HOUSE BILL 281 "An Act ratifying an agreement between the Alaska Housing Finance Corporation and the commissioner of revenue and making certain pledges to obliges of the corporation regarding that agreement; relating to the authorization for and the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; and providing for an effective date." HOUSE BILL 309 "An Act approving the University of Alaska's plans to enter into long-term obligations to borrow money from the Alaska Housing Finance Corporation for the acquisition of student housing facilities; and providing for an effective date." Co-Chair Hanley noted that HB 281 and HB 309 would be placed in Subcommittee with Representative Therriault as Chair and with members Representative Martin and Representative Brown. Representative Mulder asked the long term plans for the University of Alaska Southeast (UAS). He indicated that campus was not affordable and suggested spending those requested funds in other locations. Ms. Redman responded that the Juneau campus has intentionally been kept very small and focused. It offers only undergraduate degrees in 6 four different areas. She pointed out that it was the strongest campus in terms of student growth. She added that students from Southeast Alaska do not want to move to Fairbanks, pointing out the low enrollments of Southeast students moving to Anchorage or Fairbanks for school. Ms. Redman noted that most of those students tend to go "outside" if they do not attend UAS. She emphasized that the long term plan for Juneau would be to keep it small and focused. Representative Mulder asked the number of students that go to UAS. Ms. Redman noted that there were approximately 2000 students. Representative Kelly asked if there was a loss to the state by the number of students that leave for school. Ms. Redman replied that students that leave the state usually do not return which results in a net loss to the State. Representative Mulder asked the total cost per university student at each of the three campuses. Ms. Redman stated that the tuition was the same at all campuses. The Juneau campus does cost the State less than the cost of Anchorage or Fairbanks. She added that cost was reflective of what UAS offers, with no laboratory courses, faculty are paid on a lower wage rate and no graduate programs. Representative Martin pointed out that last year a detailed study had been provided on the costs associated with each campus. Ms. Redman stated that the Southeast campus was the most efficient campus with the lowest administrative cost. Representative Therriault questioned the fiscal note. Ms. Redman explained that the $970.2 thousand dollars was the appropriation amount and represented the University's share of the debt service on the dormitories in Anchorage. The University is required to get authorization to spend any of their own debt service that exceeds over $1 million dollars per year on a revenue bond. Representative Kohring asked if the University supported combining the two bills. Ms. Redman advised that the preference would be to leave the pieces of legislation separate and that HB 309 would be contingent on the passage of HB 281. Representative Kohring asked what the bond rate would have been if it had not been subsidized. Ms. Redman replied that the rate would be close to 6.7%. Representative Kohring pointed out that would be an interest rate subsidy. WILSON CONDON, COMMISSIONER, DEPARTMENT OF REVENUE, spoke in 7 support of HB 281. He stated that the bill had been introduced by the Governor. He provided the Committee members with a position paper regarding the statewide system. [Attachment #1]. He also provided members with the "University of Alaska Deferred Maintenance" brochure. [Copy on file]. Representative Martin commented on the deferred maintenance costs of student housing. Commissioner Condon explained that deferred maintenance would need to be housing related. DAN FAUSKE, (TESTIFIED VIA TELECONFERENCE), C.E.O., ALASKA HOUSING FINANCING AUTHORITY, DEPARTMENT OF REVENUE, ANCHORAGE, stated that deferred maintenance would be provided under AS 18:56 and that AHFC could be involved with the deferred maintenance. The key to maintaining financial stability of the package would be in continuing a good credit rating. He concluded that a strong AHFC will capture the capital needed to fund the projects. Representative Therriault asked how the $30 million dollars had been determined for the deferred maintenance bond authorization. Ms. Redman replied that the real number would be $35 million dollars as recommended in last year's legislation. Representative Therriault asked if $70 million dollars would be the transfer amount. Commissioner Condon replied that the agreement as negotiated between AFHC and the Department would transfer $70 million dollars in the next fiscal year and then followed by a $50 million dollar transfer for each of the following four fiscal years. This legislation would authorize that agreement. Representative Martin noted that the Senate had agreed with that amount. Representative Mulder disagreed with the proposal. He stated that this would take money "off the table" away from the Legislature's future use and "give" it to University priorities. Commissioner Condon countered that the bill would fund a project and would make a provision for a long term financial plan in order to protect the value of AHFC as an asset. Commissioner Condon continued that AHFC as an asset will produce roughly $100 million dollars a year in revenue that the Legislature can use. The legislation would commit those funds for use in bonding for one project. There would be no commitment in regards to the transfer plan. Representative Therriault asked if the legislation would limit the use to the assets and not the cash. Commissioner Condon did not know. He stated that the legislation would represent a policy judgement that roughly half of the net 8 available funds coming out of AHFC be reserved to meet the kinds of needs that have typically been met by AHFC and its programs. HB 281 and HB 309 were HELD in Committee for further consideration in Subcommittee.