HOUSE BILL 192 "An Act relating to housing programs of the Alaska Housing Finance Corporation, the corporation's supplemental housing development grants to regional housing authorities, and to housing programs of regional housing authorities, and permitting regional housing authorities to make, originate, and service loans for the purchase and development of residential housing." Co-Chair Foster MOVED to adopt work draft #9-LS0463\U, Chenoweth, 3/08/96, as the version before the Committee. Representative Brown OBJECTED for purposes of discussing the changes. BRYCE EDGMON, AID, REPRESENTATIVE RICHARD FOSTER, stated that the legislation before the Committee addresses existing programs within Alaska Housing Finance Corporation (AHFC) and would also provide for individual regional housing authorities to investigate rural areas of the State in order to provide additional financing tools to make home mortgages more available. He provided Committee members with a sectional analysis of the proposed committee substitute. [Copy on file]. Mr. Edgmon presented an overview of the sectional analysis. Representative Brown questioned the relationship between regional housing authorities and AHFC. She asked which agency would determine who would receive the loans. JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE CORPORATION (AHFC), ANCHORAGE, responded, the regional 3 housing authorities are restricted to who they can grant a loan to. Currently, statute allows loans made only to those areas defined as "rural" communities. The proposed legislation would expand the authority to make loans outside of rural communities. The types of loans made would continue to be tied to interest rates. Mr. Bitney concluded that statutes define regional housing authority boundaries as identical to regional corporation boundaries. JACQUELINE C. JOHNSON, EXECUTIVE DIRECTOR, TLINGIT-HAIDA REGIONAL HOUSING AUTHORITY, JUNEAU, in response to Representative Martin's concern, replied that matching the supplemental grant program to the AHFC loan program does not exist at present. Instead, the supplemental housing grant funds match the U.S. Housing and Urban Development (HUD) appropriated dollars. She stressed that this would be a separate issue from mortgage lending. She pointed out, also, that the dollars primarily used for regional housing authority had been allocated to low income rentals. "Real loan" programs began years ago as a result of not many loans being generated to the rural communities. Ms. Johnson continued, a problem arose because the statute does not allow regional housing authorities to provide the loan service. The proposed legislation requests that change. Representative Martin asked how small of an area could qualify. Ms. Johnson advised that because the State had concerns with the rural sized communities, they created fourteen regional housing authorities. Each one is required to come back for Legislative approval, thus prohibiting small villages from creating their own housing authority. Representative Martin asked if there was anything in the legislation that could treat urban areas differently from rural areas. Mr. Bitney explained that the authorized projects listed on Page 3, would tie areas to the projects being constructed by the regional housing authority. The legislation would not authorize AHFC to go "outside" those projects. He noted that the statute allows AHFC to authorize up to an eight-plex unit without any type of determination. There must be a feasibility study and an evaluation provided by AHFC. The statute allows AHFC to go beyond an eight-plex, although a special determination must first be provided. The interest rate on the program would remain the same as it currently is. The legislation would only "modify" the existing program. Mr. Bitney indicated that no preference would be created. 4 Representative Martin inquired if more than one authority could exist in an urban area to encourage competition. Mr. Bitney suggested that beyond a regional housing authority, a party could rely on banks. Mrs. Johnson added that each housing authority does have public housing offered, and that development corporations do exist that deal with only housing services. She concluded, in urban areas, different needs exist as do different funding source mechanisms. Representative Brown asked for further information regarding the "unfavorable" report on the Interior Regional Housing Authority. DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING AUTHORITY (AHFC), ANCHORAGE, stated, last spring when the incident occurred, AHFC immediately froze that account and sent a team to work with the new management. At that time, a duel signatory was put into effect. No new funds were transferred until the money concern was sorted out. The issue has been resolved at this time. Representative Brown WITHDREW the OBJECTION to move the committee substitute. There being NO further OBJECTION, the work draft, #9-LS0463\U, Chenoweth, 3/08/96, was adopted. Mr. Bitney stated that with the version adopted by the Committee, the fiscal impact would be reduced to zero. Representative Kohring MOVED to adopt Amendment #1. [Copy on file]. The amendment would lower the qualification age from 60 years to 55 years for senior housing. Representative Martin OBJECTED for discussion purposes. Representative Kohring explained that the amendment would allow people under the age of 60 years to be eligible to be considered for senior housing loans. He felt that there existed a housing demand among those persons who have not yet reached the age of 60, assuming that they have met the other criteria. Representative Martin stated that AHFC currently has a large demand for senior housing. If the age limit is lowered, the problem will become maximized. Representative Brown questioned the fiscal impact of the amendment. KAY MURPHY, DIRECTOR, MORTGAGE OPERATIONS, ALASKA HOUSING FINANCE CORPORATION (AHFC), ANCHORAGE, stated that the senior housing loan program was not used very often. Borrowers seem to fit into the "special needs" category. She did not feel that there would be a tremendous increase in activity through passage of the amendment. Representative Martin asked how many seniors currently receive aid. Ms. Murphy replied that the senior population is the fastest growing population in Alaska. Lowering the 5 age to 55 years would encompass a larger group of people. Ms. Johnson pointed out that currently, there are subsidy programs within the federal government using the 55 year old category. Through adoption of the amendment, a senior person would be able to tap into both the federal and state level funding. (Tape Change, HFC 96-74, Side 2). Co-Chair Hanley expressed concern that lowering the age would place an increasing demand on programs that currently exist. Ms. Murphy noted that on the federal level, the possibility exists of decreasing the age even further. Allowances are made in the guidelines for partnerships when only one member of the couple is 60 years of age or older. The other partner can stay at the residence as an eligible resident. The guidelines are established as a loan program, and are available to seniors, 60 years of age or older. A roll call was taken on the MOTION to adopt the amendment. IN FAVOR: Therriault, Brown, Kelly, Kohring, Mulder, Foster. OPPOSED: Martin, Hanley. Representatives Parnell, Grussendorf and Navarre were not present for the vote. The MOTION PASSED (6-2). Co-Chair Foster MOVED to report CS HB 192 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. Representative Brown asked AHFC authorities if there would be fiscal impact through adoption of Amendment #1. Mr. Fauske replied, the result would be adjusted through the loan process. AHFC provides estimates each year for the anticipated loan costs. The legislation could increase that estimate, although he assumed it would be small. If the cap was exceeded, AHFC would request supplemental funding. CS HB 192 was reported out of Committee with "no recommendations" and with a zero fiscal note by the Alaska Housing Finance Corporation (AHFC).