HB 50-MULTI-UNIT HOUSING: COMMERCIAL USE  5:37:56 PM CHAIR DUNLEAVY announced the consideration of HB 50. "An Act authorizing the Alaska Housing Finance Corporation to allow certain commercial uses in a multi-unit residential housing development owned or financed by the corporation and limiting the Alcoholic Beverage Control Board's issuance of certain licenses to premises in the residential housing development." He noted that CSHB 50(FIN) was before the committee. 5:38:29 PM JOSHUA WALTON, Staff, Representative Mia Costello, sponsor of HB 50, introduced the bill on behalf of the sponsor. He explained that HB 50 allows the Alaska Housing Finance Corporation (AHFC) to authorize certain commercial enterprises in multi-unit residential housing developments that it owns or leases. This is in line with a national trend to develop more diverse and vibrant neighborhoods. Giving AHFC this power will allow more efficient use of land and help AHFC to contribute to the growth of residences and housing properties and to increase commercial leasing space. This will benefit families and small businesses, in particular. The bill specifically excludes certain types of businesses such as adult entertainment; the sale of alcoholic beverages, unless it occurs with a restaurant; substance abuse treatment programs; and businesses that primarily sell tobacco and cigarette products, although incidental sales of tobacco at a supermarket would be allowed. He offered to answer questions and noted that Ms. Shubert from AHFC was available to speak to the bill. 5:40:40 PM STACY SHUBERT, Director, Governmental Relations and Public Affairs, Alaska Housing Finance Corporation (AHFC), introduced herself. CHAIR DUNLEAVY summarized that the idea is to offset the cost of housing by expanding AHFC's authority to rent or lease property for combined uses. MS. SHUBERT said that is correct. CHAIR DUNLEAVY asked if the concept of an open flame in a restaurant would present a problem if residential units were in the same building. MS. SHUBERT said the AHFC board wouldn't approve a loan if it felt the tenants would be at risk. SENATOR OLSON discussed finite resources and asked how this would affect multi-unit housing. MS. SHUBERT said that AHFC feels that financing projects of this type are beneficial to developers, to financial institutions that might offer loans and sell them to AHFC, and to AHFC's portfolio. In particular, this will save money for developers because revenues from the commercial space could help offset the costs of the residential space. SENATOR OLSON asked how this would affect the dividend that AHFC pays the State of Alaska which goes into the general fund. MS. SHUBERT explained that AHFC is finding it more difficult to compete with interest rates in the home mortgage market and sees this as an opportunity to help increase revenues in its portfolio. Responding to skepticism from Senator Olson, she pointed out that AHFC's mission is to provide more housing for more Alaskans, and this helps achieve that goal. AHFC is proud of its track record of paying almost $2 billion in dividends to the state, and desires to continue. SENATOR OLSON relayed that the members of the Finance Committee appreciate AHFC and its leadership over a number of years. 5:44:32 PM SENATOR MICCICHE asked the definition of "commercial" and questioned whether the bill should also address municipal zoning. MS. SHUBERT said AHFC prefers to leave local zoning decisions up to the communities. She reiterated that AHFC will look at each project independently consistent with the local land use rules and regulations. SENATOR MICCICHE summarized that AHFC would use the local definition of commercial or limited commercial. MS. SHUBERT said yes. 5:45:50 PM CHRISTOPHER SCHULTE, Executive Director, Anchorage Downtown Partnership (ADP), reported that he also served on the project management team for the 2007 Anchorage Downtown Comprehensive Plan, and currently serves on the kitchen cabinet of Mayor Dan Sullivan's Homeless Leadership Team. He described AHFC as a vital partner in development of large-scale housing statewide. It will allow AHFC to finance or permit commercial enterprises in a multi-unit residential housing development in a beneficial manner. This is a sound community planning principle that will result in better uses of scarce land. Additionally, this legislation will provide an opportunity for AHFC to generate additional revenue and provide the corporation additional resources to use in addressing Alaska's growing housing shortage. Developers will find it easier to build affordable housing projects throughout the state by using income from commercial space to offset rent reductions in the housing units. MR. SCHULTE said APD also supports the limits that prohibit certain commercial uses and the flexibility to allow a business enterprise such as a restaurant that is licensed by the Alcoholic Beverage Control (ABC) Board. The bill empowers AHFC to play a more active role in development projects that conform to local planning policies and guidelines. He described how this legislation would help multi-unit residential housing development in Anchorage. CHAIR DUNLEAVY noted that public testimony was open. 5:49:40 PM SENATOR MICCICHE asked if there was precedence for a housing authority lending or leasing for mixed use, and if this would increase liability for AHFC. MS. SHUBERT said she wasn't aware of any other housing authority that offers this, but there is a nationwide trend to provide this kind of mixed use development. SENATOR MICCICHE asked if AHFC would need additional liability protections with mixed use. MS. SHUBERT said AHFC is comfortable with the language as drafted and the review that the AHFC Board does with all loans that come into the portfolio. She noted that the multi-family loan portfolio has traditionally performed very well. CHAIR DUNLEAVY observed that multiple use doesn't necessarily increase insurance issues. CHAIR DUNLEAVY stated that he would hold HB 50 in committee and keep public testimony open.