HOUSE BILL NO. 291 "An Act relating to the issuance of state-guaranteed revenue bonds by the Alaska Housing Finance Corporation to finance mortgages for qualifying veterans; and providing for an effective date." 9:08:22 AM BRYAN BUTCHER, PUBLIC AFFAIRS DIRECTOR, ALASKA HOUSING FINANCE CORPORATION (AHFC) reported that this bill would allow Alaskans to vote on approving AHFC to sell up to $600 million in bonds to fund the veteran's mortgage program. He provided a history of the federal program that allowed states to sell tax exempt debts to fund a program for veterans that would be one half to five-eighths of a percentage point below the normal taxable rate. Only five states signed up originally: California, Texas, Oregon, Wisconsin and Alaska. The eligible requirement is to be in the service 1977 or earlier and not out for longer than 30 years. There were fewer veterans eligible as time has passed. There were efforts to get Congress to lift this time limit, but when the 1977 requirement was finally lifted the federal statute restricted the selling of only $10 million in bonds to fund the program per year. The number was lifted in 2008 to enable the selling of $100 million in bonds to fund the program. There was a potential to run out of funds in 2011. The Alaska Housing Finance Corporation is still responsible for funding the program; no state money has had to go into the program. The goal is to get it on the ballot this year to continue with the program. 9:11:32 AM Representative Doogan believed the State Guaranteed Revenue Bond is really a General Obligation Bond. JOE DUBLER, CHIEF FINANCIAL OFFICER, ALASKA HOUSING FINANCE CORPORATION (AHFC) answered that the Revenue Bond relies primarily upon some source, in this case mortgage loans, to make the debt service. The statute requires that there be a general obligation pledge behind that revenue stream with the state of Alaska behind this debt service. These bonds have never gotten behind at this point. Representative Doogan wondered why the voters are not being told that. He emphasized that these are actually General Obligation Bonds and should not be called by this new name. Mr. Butcher replied that in the question on the ballot it will state that it is a general obligation of the state of Alaska. The fiscal note is requesting $150,000 to provide an education campaign to all Alaskans to further define what they are voting on. Representative Doogan relayed that he wanted it on the record that these were General Obligation Bonds. Mr. Butcher added that in January 2010, Standards and Poor did a study of thirty four housing finance agencies and the AHFC latest bond issuance had the lowest delinquency rate in the country. 9:15:39 AM Vice-Chair Thomas inquired on how many loans veterans can receive under this program. Mr. Dubler replied one loan at a time and that must be paid off before getting a new loan. Vice-Chair Thomas asked if the rural rate is lower than the veteran's rates. Mr. Dubler answered that the rates are about the same at this time. 9:17:38 AM Co-Chair Stoltze referred to the public information campaign and mentioned the heavy advertising done by the Alaska Housing Finance Committee promoting various things and wondered if educating the public on this bond could fit into their existing program. Mr. Butcher contended that most of the cost would go for mail outs to get the information to all Alaskans. Co-Chair Stoltze stated that this bill is well supported and wondered if spending $150,000 was necessary. 9:18:58 AM Representative Austerman asked if the Alaska National Guard would be eligible. Mr. Dubler declared that if they served any tour of duty and have an honorable discharge, they would qualify. If they only served in the Alaska National Guard without being call up, then they would not qualify for this program. Representative Foster referred to the Sponsor Statement where it mentioned serving as a cadet in one the United States military academies. He questioned if that would qualify. 9:20:20 AM LAURIE HOLTE, ALASKA HOUSING FINANCE CORPORATION (via teleconference) responded that the veteran must have full time duty other than training. 9:20:49 AM Co-Chair Hawker stressed that $150,000 was a lot of money and under this fiscal note AHFC could spend the money any way they wanted. He asked for assurance that all the money would be spent on this specific purpose and not other things. Mr. Butcher emphasized that this fiscal note was prepared before the operating budget. He expected the actual dollar amount will be more than $150,000. He assured that AHFC can follow up on information on how the money is spent. Co-Chair Hawker assured that he did not want to create a larger burden, but thought this might be overkill. Mr. Butcher remarked that this is different from the normal marketing of their programs. This will not be promoted, but only used to provide education on the bill. Co-Chair Stoltze remarked that AHFC does a lot of communication through various means and wondered if these materials can be used to communicate the informational aspects of this bond package. Mr. Butcher indicated that he would have to get back regarding how much is spent every year, but remarked an estimate would be about $200,000 to $300,000. Co-Chair Stoltze communicated that many legislators might use this in their election bids since veteran's issues are popular in the state. 9:24:40 AM Vice-Chair Thomas noted that the qualified veterans in the bill eliminate the Vietnam veterans. Mr. Butcher replied that when the 1977 year was lifted, it was reduced to 25 years. Vice-Chair Thomas believed there was unfair discrimination against Vietnam veterans since WWII veterans were still eligible. 9:27:30 AM Co-Chair Stoltze closed public testimony and referred to the fiscal note. Co-Chair Hawker MOVED to report HB 291 out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HB 291 was REPORTED out of Committee with a "do pass" recommendation and with previously published fiscal notes: FH1 (OOG) and FN2 (REV) 9:29:23 AM