HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 10, 2000 8:07 a.m. MEMBERS PRESENT Representative John Harris, Co-Chairman Representative Carl Morgan, Co-Chairman Representative Andrew Halcro Representative Lisa Murkowski Representative Fred Dyson Representative Reggie Joule Representative Albert Kookesh MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 340 "An Act relating to designating the Ketchikan Indian Corporation as a regional housing authority." - MOVED CSHB 340(CRA) OUT OF COMMITTEE PREVIOUS ACTION BILL: HB 340 SHORT TITLE: KETCHIKAN INDIAN CORPORATION AS A RHA Jrn-Date Jrn-Page Action 2/04/00 2098 (H) READ THE FIRST TIME - REFERRALS 2/04/00 2098 (H) CRA 2/04/00 2098 (H) REFERRED TO COMMUNITY & REGIONAL AFFAIR 2/10/00 (H) CRA AT 8:00 AM CAPITOL 124 WITNESS REGISTER PETER ECKLUND, Staff to Representative Bill Williams Alaska State Legislature Capitol Building, Room 502 Juneau, Alaska 99801 POSITION STATEMENT: Presented HB 340. CHARLES WHITE, General Manager Ketchikan Indian Corporation 429 Deermount Ketchikan, Alaska 99901 POSITION STATEMENT: Answered questions relating to HB 340. BOB WEINSTEIN, Mayor City of Ketchikan 334 Front Ketchikan, Alaska 99901 POSITION STATEMENT: Testified in favor of HB 340. REPRESENTATIVE BILL WILLIAMS Alaska State Legislature Capitol Building, Room 502 Juneau, Alaska 99801 POSITION STATEMENT: Testified as sponsor of HB 340. ACTION NARRATIVE TAPE 00-8, SIDE A Number 0001 CO-CHAIRMAN HARRIS called the House Community and Regional Affairs Standing Committee meeting to order at 8:07 a.m. Members present at the call to order were Representatives Harris, Morgan, Halcro, Murkowski, Dyson, Joule and Kookesh. HB 340-KETCHIKAN INDIAN CORPORATION AS A RHA CO-CHAIRMAN HARRIS announced that the only order of business before the committee would be HOUSE BILL NO. 340, "An Act relating to designating the Ketchikan Indian Corporation as a regional housing authority." Number 0113 PETER ECKLUND, Staff to Representative Bill Williams, Alaska State Legislature, read the sponsor statement as follows: House Bill 340 was introduced at the request of the Ketchikan Indian Corporation. KIC, the governing body for the Natives of the Ketchikan area, was formed in 1940 and currently has over 4,00 enrolled members. KIC has contracted with the Department of Housing and Urban Development under the Native American Housing Assistance and Self-Determination Act (NAHASDA) to provide housing for low-income Indians/Alaska Natives in the Ketchikan area. NAHASDA requires that the low-income housing provided by tribes be tax exempt. Adding KIC to the list of regional housing authorities will allow KIC to enter into HUD [U.S. Department of Housing and Urban Development] required agreements with the appropriate local government. Passage of HB 340 will also allow the expenditure of federal NAHASDA money in the Ketchikan area and provide sorely needed low-income housing to area residents. Mr. Chairman, thank you for hearing this legislation on such short notice. I urge your favorable consideration. MR. ECKLUND requested the addition of an immediate effective date, as that was overlooked during the drafting of HB 340. Number 0256 [There was a motion to adopt version LS1399\D as a working draft, but it was the original bill and already was before the committee.] REPRESENTATIVE MURKOWSKI noted that the legislation specifically excludes Saxman. She asked: With regard to housing, is Saxman covered elsewhere? MR. ECKLUND informed the committee that Saxman is its own IRA (Indian Reorganization Act) council and receives its own funds. Since Saxman is its own local government, it does not have any difficulties in coming to an agreement with a local government in order to be tax-exempt. REPRESENTATIVE MURKOWSKI asked if the Tlingit-Haida Central Council or the Alaska Native Brotherhood currently provides any housing in Ketchikan. MR. ECKLUND deferred to KIC representatives. However, he understood that not much of the federal housing funds that have come to the Tlingit-Haida Central Council have gone to the Ketchikan area. REPRESENTATIVE KOOKESH asked if passage of HB 340 would adversely affect Tlingit-Haida or other entities in Southeast Alaska, in terms of the money that the entity would be eligible for. MR. ECKLUND explained that the NAHASDA legislation was passed in 1996 and was first funded in 1998. The agreements regarding funding levels and such were made with passage of that federal legislation. He again deferred to KIC representatives. Number 0525 CHARLES WHITE, General Manager, Ketchikan Indian Corporation, stated that there would be no negative impact on Tlingit-Haida or any of the other "regionals." He explained that this funding has been set aside for block grants and thus each individual housing entity has been granted funds at this time. MR. WHITE stated, in response to Representative Dyson, that there is no real low-income housing for the Native population in Ketchikan or for the community itself. The temporary shelters in Ketchikan have an approximately 45-49 percent Native population. Therefore, HB 340 would help alleviate that, since a couple of units could be set aside for emergency need such as a family being burned out. He emphasized that the true goal of this would be to house low-income people and attempt to elevate their status. He noted that other programs such as job training activities work in conjunction with this housing program to work towards house buy-down programs. Number 0706 REPRESENTATIVE DYSON said he assumes with Ketchikan's logging industry problems that there has not been a large increase in Ketchikan's population. MR. WHITE acknowledged that Ketchikan's population has decreased somewhat. However, Ketchikan's population has only dropped by about 1,000 people since Ketchikan's largest employer left almost three years ago. The population seems to be fairly stable, although it is not growing. In further response to Representative Dyson, Mr. White said that the residential rental market seems to remain stable. He noted that there are many houses on the market in Ketchikan, which will be beneficial for KIC in that it will be able to purchase units that are already on the market. In response to Representative Dyson, Mr. White related his belief that the rental market is up. REPRESENTATIVE DYSON inquired whether KIC would be building a new structure under this program. MR. WHITE replied not at this time. He explained that KIC will be looking to purchase ten units or five duplexes for the low- income housing. The strategic plan would be to eventually build some housing units. Mr. White agreed with Representative Dyson's assumption that KIC would not build new units if there are units available on the market. He mentioned that there is some stigma associated with grouping low-income housing. Therefore, KIC will, at this time, purchase units in different areas in order to reduce that stigma. He further agreed with Representative Dyson's assessment that KIC, if successful in this project, will provide housing for those that do not have a place to live. REPRESENTATIVE DYSON asked if there are ten families in the Ketchikan area that do not have a place to live. MR. WHITE replied yes. He explained that there are many families that live in groups - three families in one housing unit. REPRESENTATIVE DYSON asked if this proposal is a better strategy than subsidizing their income so that those individuals could move into housing already on the market. MR. WHITE said KIC believes so. With regard to Ketchikan's economic outlook, he felt optimistic because the veneer plant is coming. He believed that KIC could work with the various employers and help people elevate their position and buy their own housing with the house buy-down program. Number 0995 REPRESENTATIVE DYSON related his understanding that the units will not be available to anyone who is not an enrolled member of KIC. MR. WHITE said Representative Dyson's understanding is correct. He felt that this is a vital part of Ketchikan because dollars will influx into the community. This housing would take some of the pressure off other state housing operations. REPRESENTATIVE HALCRO asked if, once KIC receives tax exempt status, there are requirements that KIC would have to follow with regard to qualifying someone for low-income housing. MR. WHITE replied yes. As with other housing block grants, a lengthy proposal is required. He noted that KIC goes through a single audit every year, and KIC has received a clean audit every year since its inception. REPRESENTATIVE HALCRO asked if KIC has had any discussions with the local government in Ketchikan. Is the local government concerned with any adverse impact on the property tax base? MR. WHITAKER acknowledged that there was some concern [with the possibility of adverse impact on the property tax base]. He noted that there had been discussions with the borough and the city governments in Ketchikan. That will be worked out in the memorandum of agreement (MOA). He informed the committee that KIC will make a payment in lieu of taxes, which will be included in the MOA. Number 1163 REPRESENTATIVE KOOKESH inquired as to the intent of the HB 340. MR. WHITE specified that the intent of HB 340 is to place KIC on the list so that it can negotiate the MOA with the municipalities. As the statute currently reads, the local governments have difficulty in understanding what KIC is. Therefore, this legislation will clarify that KIC is a housing entity and thus allow KIC to negotiate the MOA with the local government through statute. In further response to Representative Kookesh, Mr. White did not know of any housing authority that was opposed to HB 340. He noted that he deals with other housing entities and other tribes. Furthermore, he could not imagine any opposition to HB 340 because the funding is already developed. REPRESENTATIVE MURKOWSKI returned to the issue that this proposal would provide housing to only KIC members. From the statute provided in the bill packet, Representative Murkowski read a portion of the May 6, 1981, opinion of the attorney general. That portion read as follows: While various specified Native associations are given authority to establish regional housing authorities under this section, and may receive donations of land from municipalities, the programs administered by those associations must be racially neutral. REPRESENTATIVE MURKOWSKI interpreted that portion of the opinion to mean that the corporation could not exclude a person, who qualified as low-income, even if he/she were not a member of the corporation. MR. WHITE informed the committee that all of the Native housing authorities have the same clients and serve the same population. He explained that all the HUD dollars for the NAHASDA program are restricted to Alaska Natives or American Indians. There is not anything different in this statute, and therefore he assumed that this issue has been reviewed. He pointed out, "The obligation of the federal government or the United States in trust is to provide education, housing and health for the Native population and the American Indians and thus couldn't be looked at as a discriminatory factor." REPRESENTATIVE MURKOWSKI commented that she remained perplexed by the aforementioned opinion of the attorney general. Number 1436 REPRESENTATIVE DYSON asked if the property that KIC acquires will be deed restricted. MR. WHITE replied no. REPRESENTATIVE DYSON surmised then that if KIC decided to sell that property in the future, it could sell the property at market value. MR. WHITE agreed with Representative Dyson's assessment. REPRESENTATIVE DYSON asked if there is a mechanism within the federal law or KIC's MOA, that would allow the local government to recapture the taxes that were not paid during the period the property was not taxed. MR. WHITE explained that the program requires that all HUD dollars, including the interest achieved from investing those HUD dollars, return back to the housing program. He mentioned that this is a nonprofit organization. Therefore, if a unit were sold, all the dollars would be reinvested into another part of the housing program. The only exception is with interest up to $24,000, which can be reinvested in another area. In further response to Representative Dyson, Mr. White specified that the dollars would return to the local housing program not the federal housing program. He reiterated that the money put back into the housing program could be used for anything to do with housing. Number 1580 REPRESENTATIVE DYSON said he suspected that this is all in good faith and that [KIC] wants to serve its members. However, the organization could build up this tax-exempt property, sell the property and do other things with the money from the sale. MR. WHITE emphasized that all of the programs are run as a nonprofit and all of the dollars are returned in order to help people with job training and assist them in emergency general assistance. He pointed out that their [KIC's] social services department works in conjunction with the people in need in all these programs. CO-CHAIRMAN HARRIS commented that as long as this program has been in existence, had something such as Representative Dyson described occurred, something would have been done to end that. CO-CHAIRMAN MORGAN returned to Representative Murkowski's concern regarding the attorney general's opinion. He informed the committee that he belonged to the Village of Aniak and he used to belong to Aniak's housing authority. Through the NAHASDA program, Aniak decided to organize its own NAHASDA. He emphasized his understanding that there is to be no discrimination. However, each housing authority can write its own bylaws to allow only members of a particular group. REPRESENTATIVE KOOKESH asked if anyone had challenged on the basis of that racially neutral language. MR. WHITE said that he had not heard of such a suit. Number 1787 BOB WEINSTEIN, Mayor, City of Ketchikan, testified via teleconference from Ketchikan. Mayor Weinstein testified in favor of HB 340. Ketchikan is in need of low-income housing. He mentioned that the city has a good working relationship with KIC and has been in discussions with KIC regarding the need for low-income housing. As a result of those discussions, the Ketchikan City Council unanimously approved the following: an ordinance allowing for tax exemptions for low-income housing projects, as approved by the council on a case-by-case basis; a five year agreement for a tax exemption for KIC's proposed project. After the council adopted the ordinance, the council was advised by the office of the State Assessor that KIC is not identified in the statute before the committee for amendment. Therefore, the council could not technically offer that exemption to KIC. Mayor Weinstein said that the city strongly supports the inclusion of KIC in this statute. "The city has certainly weighed, what we believe is a minimum loss of taxes for a five year period, as balanced against a great need to add some low- income housing in our community." CO-CHAIRMAN HARRIS asked if Mayor Weinstein was familiar with Representative Murkowski's question regarding the authority to not discriminate. MAYOR WEINSTEIN replied, "Not relative to the federal program which funds this program." In the city's discussions with KIC, it was clear that those who would benefit from this low-income housing would be eligible members of KIC or other Native Americans. CO-CHAIRMAN HARRIS asked if the City Council had any problems with the payment in lieu of taxes. MAYOR WEINSTEIN reiterated that an agreement had been reached with KIC and the City Council did support both the agreement and the aforementioned ordinance. Number 1986 REPRESENTATIVE DYSON commented, "These things are troubling to me." He informed the committee that he does not like government programs. Furthermore, he expressed his inherent dislike of anything that is done on a racial basis. He hoped that, had he been around many years ago, he would have been far more outraged at the pervasive racism versus the relatively minor and inconsequential things such as this. Representative Dyson said there is no reason KIC should not be recognized along with all the others listed. REPRESENTATIVE KOOKESH commented that the original purpose and intent of the legislation that KIC wants to be recognized under was the acute shortage of housing and related facilities in the villages of the state. Furthermore, adequate housing could not be provided by the private sector. Although he recognized that racially funded programs such as this may not sit well with some, there is a purpose for these programs. If the private sector could provide low-income housing, "we" would not be here nor would this particular legislation. Representative Kookesh said he would appreciate the support of committee members to move HB 340 forward. CO-CHAIRMAN HARRIS closed the public testimony. Number 2172 REPRESENTATIVE MURKOWSKI moved that the committee adopt a conceptual amendment allowing for an immediate effective date. There being no objection, it was so ordered. REPRESENTATIVE DYSON moved to report HB 340, as amended, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 340(CRA) was reported out of the House Community and Regional Affairs Standing Committee. REPRESENTATIVE BILL WILLIAMS, Alaska State Legislature, spoke as the sponsor of HB 340. He thanked the committee for working on HB 340. He offered to look into Representative Murkowski's question regarding the attorney general's opinion, which spoke to these organizations' being racially neutral. MR. WHITE also thanked the committee for its expeditious consideration of HB 340. [CSHB 340(CRA) was reported out of committee.] ADJOURNMENT There being no further business before the committee, the House Community and Regional Affairs Standing Committee meeting was adjourned at 8:41 a.m.