House Finance, 5/1/26, 9am

I call this meeting of the House Finance Committee to order. Let the record reflect that it is 9:07 a.m., Friday, May 1st, 2026. Present today, we have Representative Galvin, Representative Stepp just outside the door, Co-Chair Josephson, and myself, Co-Chair Schrag.

As we start, if members could please remember to mute their cell phones. Present today to help us with the work of our committee is committee assistant Helen Phillips, Paige Tallulah Stufka, Secretary Bree Wiley, and Secretary Leah Frazier. And as always, our house moderator, Emily Mesh. Thanks for all your work to help us with our committee. We've just had Representative Bynum join us as expected.

In this morning's meeting, we'll hear briefly from Alaska Housing Finance Corporation on some of their operations and where things are at today. And also give members an opportunity to ask any questions about other items that they may be curious about. I know we have heard a lot of public testimony on some of their important programs recently. With us today to walk through our presentation, we have Planning Director Daniel Delfino, Deputy Director Aiki Giolopsis, Director of Government Relations Stacy Barnes, and Executive Director Brian Butcher available online. Thank you for being here today.

I will note quickly that we have also been joined by Representative Hannan. If you could come up to the dais and when you are ready, put your names on the record and begin with your presentation. You guys know how this works.

And we have been joined by Representative Jimmy.

Good morning, Chair Schrag, Co-Chair Josephson, and members of the House Finance Committee. Thank you. As you indicated, Mr. Chairman, my name is Aiki Galopsis, and I'm with the Alaska Housing Finance Corporation. And to my left, the committee's right, is Ms. Stacey Barnes, and to my right, the committee's left, is Mr. Daniel Delfino. And our CEO, Mr. Butcher, is online, available for questions, and he wishes he could be here, but for other corporate matters in Anchorage.

And he assures me that even though he is monitoring these proceedings very closely, this is somehow not an employee performance evaluation. That is left to be determined. Mr. Chairman, members of the committee, around this time last year, in fact, short of a day last year, Mr. Butcher came before all of you and gave an overview that was rather peripatetic, all of the different funding streams that the corporation manages at a federal and state and corporate level, all of the different programs that show themselves in the operating and the capital budget. And there were some discrete requests from this committee asking specifically for an update on some of the initiatives as it relates to getting the factors that contribute to housing attainability that the corporation was asked to progress in the coming year. The intent of this presentation is threefold, Mr.

Chair. It is to provide a brief snapshot of the state of housing with the information that the committee has heard last year and that the corporation can provide. It is to provide several case studies of the investments that the legislature and the executive branch has charged the corporation with doing to add and improve the housing stock in the state in recent years, and then to also provide an opportunity to explain some of the more recent solutions to some of the challenges that we have seen. We will pause at the end of every slide for any questions or comments at your discretion, Mr. Chair, unless you deem otherwise.

Thank you, Deputy Director. Please continue. Thank you, Mr. Chairman. We're going to proceed to slide 2 for the committee's benefit, and the corporation's mission is is to provide Alaskans access to safe, quality, and affordable housing. As a brief primer, the corporation was established by the legislature in 1971 as a housing finance agency, primarily to leverage the public bond markets with tax-exempt debt to afford mortgage instruments that would benefit first-time homebuyers and other Alaskans in unique circumstances.

The corporation is one of 5 states in the union that is allowed to offer tax-exempt bonding for veterans loans. Alongside the Veterans Administration. It is also since the early 1990s the state's Public Housing Authority, when the corporation merged with the then State Housing Authority, also known as ASHA, and it also incorporated the state's administration of the Department of Energy's weatherization program. That legislative cumulation resulted in one organization that was charged with a strategic approach in this mission that was threefold, Mr. Chair.

It was to enhance the housing stock, through the Low-Income Housing Tax Credit program, which since the 1980s and the 1990s has been the primary creator of affordable housing in the United States, and through a series of federal and state grants. It is to provide access to the housing stock through our financial instrumentation, be they mortgages or specific grants for the senior population, other professionals that we can talk about shortly. And it is to improve the housing stock, both through weatherization and, when available, through the Home Energy Rebate program. What that has resulted in, Mr. Chairman, is an organization that works every night to ensure that the better part of 7,000 Alaskans in the public housing infrastructure of the corporation, either managed directly or co-invested with our private sector and nonprofit landlords who partner with us, ensure that families, domestic violence survivors, and veterans have a safe place to put their head at night on a pillow, and to ensure that anywhere from 15% to half of the mortgage market has access to the mortgage products that allow them to attain the dream of being a homeowner in this country. Mr.

Chair, that wraps up my comments on the mission, and I am prepared, if the committee is indulging me, to move to the next slide. I will quickly note that we have been joined by Representative Allard and Representative Tomaszewski, and thank you for that introduction, Aiki. Thank you, Mr. Chairman. Proceeding to slide 3 for the committee's benefit. What we will talk briefly about is the state of housing as the corporation sees it at this point, with the proviso that this is from our limited purview with as much information as we do have.

It is not going to be a comprehensive global picture. And a lot of this can ring within the "yeah, duh" category, and for that I do apologize. But at a top level, Mr. Chair and members of the committee, what we in the corporation see with respect to the state of housing are a number of factors that have accumulated over the last two decades to create an accordion effect that challenges homeownership and home access attainability. The first is housing conditions.

The vast majority of the housing in the state of Alaska was built between the early 1970s and the early 1980s. That proportion has shrunk, but as we all understand in Alaska, there is an obsolescence that occurs to houses, particularly in harsh climates, that exponentially requires more home improvements, more renovations. And when a big portion of the housing stock in the state is almost old enough to have an AARP card. Those costs start to accumulate as well. In terms of a workforce, Mr. Chairman, this is true not just in the United States broadly, but also in the state of Alaska.

We have seen a depletion in the ranks of the trades, both carpenters and the skilled necessary services that add to the housing stock. And that has led to an acceleration, both in terms of the scarcity of the labor, not just on the rail belt, but also in remote and in rural Alaska as well. And that labor is at the same time competing for other types of projects in industrial and commercial spaces. We also are dealing with federal restrictions, and one of those is frankly a well-intentioned one, the Build America, Buy America Act, among others. It premises being able to have all sources of federally funded projects related to housing have all material sourced in, in the United States.

We take no position to be contrary to the intent of it, but as one example, there are certain types of metals that are necessary in certain types of fixtures that need to go into plumbing that are simply not made anywhere in the United States right now. And so that leads to a very awkward conversation with federal funding authorities where they want to see housing built. We do not want to sit on any dollars, nor do any grantees, but you run the risk of either being in violation of a provision of that particular rule or frankly not having the housing built. And that's just a dichotomy where one is trying to navigate this, and this is a nationwide challenge that's trying to strike that balance to still respect the national interest but also try to further the mission of adding to the housing stock. And finally, this will come as no surprise to anyone on the committee, Mr.

Chair, but whether it's down in the contiguous United States, whether it is on the urban part of the rail belt, whether it is in remote or rural Alaska, the costs in both nominal in nominal and real terms have appreciated both to try to have access to the homeownership market, also to have access to adding to the housing stock for those costs. Once you accumulate all of those, in many cases, absent some type of intervention, adding to the housing stock, be it at a multifamily or single-family level, becomes challenging to the point of potentially prohibitive. That, Mr. Chair, has led to the realization that homeownership for first-time homebuyers has seen both a decrement in aggregate terms and the relative age increasing to where 10 to 12 years ago in the mid-teens the average first-time homeowner in the United States was in their early 1930s. Now it is approaching the age of 40.

Granted, that is an average, it is not the median, but the median even trends that way as well. And as a state that is trying to ensure that there's access for young Alaskans for opportunity to remain Alaskans, that's something that the corporation pays very close attention to. And that Mr. Chair, concludes my prepared remarks on this slide. Representative Galvin has a question.

Rep. Galvin. Thank you, Co-Chair. Co-Chair Schragg, through the chair, my question is about that you've listed something here. It looks like maybe it came from the website of National Association of Realtors. Do you have any numbers that are Alaskan?

Chair Chiraghi, Representative Galvin, with your indulgence, I would ask Mr. Delfino to prepare an answer for that for you, and if there is more detail, we are prepared to bring that to the committee in writing. Director Delfino? Thank you. Daniel Delfino, for the record. We do have data, Representative Galvin, on homebuyer data, and it is one of the things I will get to in a couple of slides here.

Okay. Then you do not need to answer that. If you are going to answer it later, that would be wonderful. Thank you. I just want to make sure.

Representative Hannan. Thank you. Good to see you all this morning. Thank you, Chair Schrag.

The Buy America provision that well-intentioned but perhaps slows the process. I was in a briefing yesterday on the gas line and discussion came up and they are allowed to work around. We were complaining about some other capital projects. Building ships are not allowed to work around. Is there a workaround for housing components that you can't get, or I mean, is it additional tariffs, or is it additional time, or is it just forbidden, and so you lose federal financial tools if those components are not American-made?

For the record, again, Aiki Galapsos, Mr. Chair, to Representative Hannan. The answer is yes and no, and we'd be happy to get this to the committee in writing. In some cases, it's an outright prohibition. In other cases, cases there is a penalty that is associated with it that would make the cost per door prohibitive.

Any follow-up, Representative Hanna? Thank you. Thank you, Chair Schraggi. Is there a specific part of those components that we could or should focus on to advocate for? Is it plumbing?

I mean, you mentioned light fixtures, and I can't imagine, but Canadian timber agreement perhaps? Is there something specific? Because of course Alaska is always going to have really high costs, so additional tariffs drive us crazy. And you know, there are a few products manufactured on the west coast of Canada and you go, if we could just reach next door and get them, that, you know, let's smuggle them across the border or advocate for an exemption for this specific thing. Mr.

Chair, Representative Hannon, I don't know if I can advocate for smuggling, but what I would say is that In all seriousness, Madam, we can get to the committee a very specific example in more comprehensive detail in writing, but for the benefit of this committee, one discrete example is our public housing funding. When we are trying to renovate our public housing assets, particularly in western and in southeastern Alaska, which have to go by barge, there are requirements that are very strict about the materials that would need to go, both in terms of appliances and in terms of the siding. That when we start adding up the components of those together, become prohibitive. And when you're trying to negotiate what those rates could be with the United States Housing and Urban Development, you're also competing with the barge schedule, as a lot of members of this committee know very well. So there's a time factor that compresses that as well.

So in terms of a discrete ask, we've made these concerns known to our congressional delegation. The congressional members, both in the House and in the Senate, are well aware and have been making their views known to the relevant federal agencies. But Being able to reiterate that is something that we would never oppose. Okay, thank you. Please continue.

Thank you, Mr. Chair. We are now moving, for the committee's edification, to slide 4, and I would like to ask Mr. Delfino if he can give a little bit of an analysis before he moves into his market rate analysis of both the housing and rental market about the recent developments that we have seen in terms of the multimodal way in which housing inventory, both in this country and in Alaska in particular, has morphed. Okay, please do, and just be mindful of the time. I'll do.

Um, Mr. Chairman, uh, Daniel Delfino again. So, uh, to make it simple, uh, we put a picture of a house for a simple reason. It used to be when I was a child, there were houses, there were apartments, and there were hotels, and there were three separate things that existed in most people's minds. And now a house can be all three of those things at any given point in the year. A home can be for sale, then it can be rented out, and it can be a short-term rental.

Why I bring this up is the housing models that we have for people to find places to live have been largely structured around these three things being distinct, and it's causing an adjustment for some of the folks that are trying to get into housing opportunities all around the state. And it's increased the exposure of the homeownership inventory and the rental inventory to hospitality and where workforce folks are going into short-term rentals. So there's an increasing linkage between markets that didn't exist 30 years ago because the housing stock is taking on a multipurpose inventory. So it's something that a lot of folks are struggling to try and conceptualize and track effectively. And it's really proliferated over the last couple of years.

At the same time, the people that we have to actually develop housing, that has changed. Like you mentioned, the Low-Income Housing Tax Credit program, that was created in the Reagan administration. That's—. It's a very different program. It's a very different builder community that existed in the late '80s and the early '90s than what we have now.

We have a lot of folks that are spread out over many communities, and we have pretty substantial gaps in communities to work on some of the, the more focused programs. So there, there are capacity issues with the existing housing stock itself and with the workforce that we have to do something to expand the stock that we're continuously trying to adjust to in this work. And with that, I can move on to the next slide in the interest of time, Mr. Chairman. Yes, please. And I'll just— oh, actually, Representative Tomaszewski has a question.

Uh, thank you. Thank you for being here. Appreciate it. Um, in regards to the short-term rentals, I recently read about a program they're doing in Anger— Anchorage where they actually have the plans pre-approved, architectural plans approved, and I was— and it was, I think it was more directed towards a short-term rental. So I was curious if you think that's going to help increase the number of units in short-term rentals, or if that'll give more people the idea of, hey, maybe I can rent out my house for a short-term rental.

I'm kind of curious as what your thoughts on that particular idea is. Director Delfino? Yes, Representative Tomaszewski, it's a great question, and the answer is it's difficult to answer definitively. There's a slide I'll get to, 2 slides from now, where we talk about how we track the inventory, and being able to get a complete universe of those things is very difficult to establish a baseline for growth. So there are things that people are doing to try and adjust to this and to try and move the needle one way or another with that stock.

Establishing where that stock is starting from and distinguishing a growth in that stock versus completing the data set, that's a challenge that a lot of us are struggling with right now in this product class. Sure, okay, thank you. Okay, thank you. And I'm just going to quickly note that, uh, Co-Chair Foster and Representative Moore joined us. Good morning, and please continue.

Okay, uh, so moving on to the next slide, uh, Representative Galvin, you asked about Alaska-specific data. With all the housing programs that we operate, we survey a lot of different data sources to make sure that we are effectively targeting the resources to a relevant, relevant part of the housing market. We do this through a couple of different ways, but the two biggies are a survey of lenders, and this is voluntary. We don't have a way of establishing 100% of the lending universe in the state, but we survey lenders on a quarterly basis to establish how we're doing in relation to the lending market that we can see, tracking things like home prices, how much equity is going in, things like that. And we do The same thing with the rental market.

And when we're looking at the rental market, we canvass the state every year and we look specifically at the units that are not part of affordable housing, just looking at what the unrestricted market does to see what price points are operating at and what the occupancy rates are at across the state. And we're able to assess the relationship between when someone goes from being a renter to potentially when they can be a homeowner and what the differences in those markets are like. Over the past few years, when interest rates were down in the 2s, you can see that the cost of being a homeowner has increased by over 60% across the state. For renters, it's about 30%. It varies by community.

Some communities is 10 points plus or minus, but the homeownership costs have gone up substantially. The notes that we have— and I apologize, I know it's a bit of a busy chart— but when you look at the average mortgage or the average home price of $419,000 in 2015, that represents a shrinking market. So, the market, the volume of loans that are being reported is lower. So, in addition to that, the percentage of equity that the homebuyers are bringing to each transaction is increasing. So, it tends to be a higher price point inventory that we see moving, driving a lot of these numbers with people that have more equity to roll into their homes.

We do have data on our first-time homebuyer program that we could get from our mortgage department. That isn't a part of this particular thing. We have that for our data. We don't have that data for the, the rest of the larger market because we don't have that total universe. I think it's a disclosure issue for us.

Okay. Representative Galvin. Well, thank you. I appreciate that. This slide doesn't touch on median age and helping us understand whether or not our young Alaskan families can afford this.

So where the— I guess we could maybe cross over some data that says where— who can afford this based on what we know from the Department of Labor, but it would be helpful if you had, you know, like I said, this first headline was quite interesting, and to understand it as it relates to Alaska would have been helpful. That's— this is not that, right? This is not that. So, but I do appreciate hearing this and to understand in general it's just harder for anyone to reach homeownership. So thank you for that.

Representative Hannan. My coffee kicked in and I now understand what I was going to ask. Very good. Glad it's kicked in. Representative Ballard.

Thank you. So a little bit of my question. So when we're doing this, through the chair, thank you, co-chair, Shraghi, I get that it's difficult for home— new homebuyers, right? First-time homebuyers and actually second-time homebuyers too. And I think part of the problem is the capital gains because people are sitting in their homes longer because they're going to get penalized if they don't reinvest their capital gains.

So my question is, and the federal government is working on this, and I know there's some senators in D.C. that are doing this, if there's a possibility where the capital gains individuals aren't punished, that means they're going to move out of their houses. And is that going to help drive the market down for affordability for first-time homebuyers or those who moved out of their home? And because I think a first-time homebuyer can be considered somebody after 3 years— am I— I'm not— I'm correct on that? But after 3 years, you're then considered— or is it— is it 3? Yeah, then you're considered a new home buyer again.

So my question would be If we do something with the capital gains and it frees up homes for first home buyers, whether it's a first-time home buyer or first time— or there was a point I was a first-time home buyer like 5 times because we were military and we kept moving. Is that going to help our market in Alaska? Thank you, Mr. Chairman. For the record, I'm Kiki Galapsos. Mr. Chairman, Representative Allard, the answer is possibly.

And I know that's an unsatisfactory answer because it is not going to be able to definitively answer it, but it also, if I may address at the same time Representative Galvin's comment, because what we are seeing in the market that'll be brought out with our housing assessment that will deal with a lot of demographics. We're currently in the field for the first time in 7 years to talk about who is a homeowner, who's an aspiring homeowner, what are we seeing in the senior population, the first-time homebuyer population. At a fundamental level, what we have is a supply and demand proposition that is exacerbated by a host of these other factors. You have a growing elderly population in the state of Alaska and in the United States that have grown out of their homes. In a lot of cases, they're empty nesters, and there has been an underbuilding of the same type of configuration that would also be a starter home, something under 1,500 square feet.

That is just a round number, if I may proposition that. But generally speaking, individuals who are older are looking for single-story homes for mobility issues. They're not at the stage in life where they need special needs or assisted living, and the housing configuration both in the state and at a national level is not available. And so most of those homeowners, from the data that we are seeing, are doing the very rational thing. They're staying in homes that they own outright, or they have a sub-4% mortgage on.

And what one is witnessing in the market is an accordion effect as a result of that, because being able to sell one's home and then defer those capital gains into the purchase of another home is not available to them unless they wish to become a renter, and then they have a tax penalty. So there is a lot of very rational incentives that are taking place right now that are causing that exacerbation. Yeah, follow-up, Repel. Okay, so thank you. And so part of an example is that if you have a $700,000 house in Alaska, which is not— I mean, other places it's probably a little less, up here it's a little bit different.

You have a huge amount of equity, you're a senior, your house is basically paid off or almost paid off, They take a HELOC, they're comfortable, they can stay in the house and they don't want to move. Or they're moving like you're saying. They buy somewhere in the lower 48 or somewhere here, $450,000, one level floor, easier to maintain, little condo, apartment, townhome, whatever they want. They have $250,000 in cash on hand because they sold their $700,000 house and then they might just pay some capital gains tax on that because they didn't put all the money back into their home. So this is how, how, how can we as a state help?

Or can't we? Or can we with the giving an incentive?

Are we just going to have to pay capital gains tax? Mr. Chairman, Representative Ballard, capital gains. Pardon me. I apologize. Unless the feds do the work on the other side, that's just the way it's going to be.

Forgive me, Representative Ballard, to the chair. The short answer is that's a federal and congressional decision on capital gains. Okay. I see a letter on the way. Okay.

And this is Circle. Thank you, co-chair. Oh no, thank you, Representative Ballard. It's a good question. Is there not an exclusion as well for capital gains though, at least to some extent?

Mr. Chair, there is a roll-up provision up to a certain amount, and we'd be happy to provide that to the committee as to what that numeric is. Okay. Thank you. Representative Bynum.

Thank you. Kucha shragi through the chair. Appreciate all the good information here. We're talking about evaluating what's happening in the markets. One of the concerns that I have— we don't need an answer today, but just a confirmation that it will be something that we're looking at— is one of our goals, I believe, in Alaska is that we want to bring down the cost of, of housing.

It's extremely expensive. It's difficult for our community members to stay in our communities when we see this trend here. But one of the other concerns that I have is, is that if we immediately turn this down and come up with solutions to bring that pricing down, there is this window where people have been coming into the market and now they're stuck basically with this high-cost valued home that's no longer high-cost valued home. And I was hoping that maybe when you evaluate that, you can kind of give us some impacts of, of how far-reaching that might be. And ultimately, is this Is this something for us to be concerned about or not?

Mr. Chairman, Representative Bynum, thank you for that. When the housing assessment comes out, the Corporation would be more than pleased to share those details with the committee. And this, without divulging too much while it's under editing, is certainly one of the components that it is actually analyzing. Thank you. And Director, can you remind me the timeline on when that comes out?

Mr. Chairman, the Corporation's goal is to have the housing assessment out by the fourth quarter of this year. We're trying to be more aggressive with it, but we do not want to unrealistically raise expectations. Thank you. All right. Please continue.

For the record, Daniel Delfino again. So with regards to the short-term rentals, we deliberately stopped referring to them as vacation rentals because in a lot of cases— I shouldn't put a percentage on it— we have encountered a number of communities where they're not just vacation rentals. These are actually being used for workforce housing in small communities. Off the road system. So it's, it's handling a different role than I think some folks might just think of from this.

We've seen since we started tracking this data in 2021, the rate of growth has started to decelerate. It's still moving up. This is around the time of the year where we'll see the peak season. We do see a consistent trend between the occupancy and the amount of units that are available for the short-term rental around the state. Uh, we receive questions quite frequently about ownership of these, and are they out of state or are they in state?

We don't have the tax ID numbers for the entities, but we are able to track the number of listings that each individual has. So if you looked at it on a pie chart, a lot of the communities, a solid majority of the short-term rentals that we see in communities, there'll be a listing from a person who has 1 or 2 listings. There are people who will have 5 to 10 to even 20. That those Those do exist, but there are a lot of one or two off listers in this space. So this is something that we do track.

When we track the relationship to the existing rental market that most people would presumably lease for 12 months, we do see that there is a subset of the existing rental market that crosses over that can range between 15 to 40%, depending on the community and the survey response. So that's a relationship that we're trying to explore more to get a better understanding of when when they're coming on and offline and exactly what those gaps are. It is something that affects a lot of our housing service providers especially who are trying to help vulnerable Alaskans find a place to live. You mentioned that the rate of growth has slowed somewhat. Do you have any assessment as to whether that's a decreased level of demand growth or is it because of government policies?

I know some municipalities have started looking at requiring more information and disclosure and other other policy provisions? Do you look at that? That's a great question, Mr. Chairman. The, um, it— the answer takes, uh, this past a place where the data would lead me. So like, if you look at this chart and it goes up and to the right, is that because they just started counting in a better way, or is it because of the big short-term rental stock was actually growing that fast?

It's a new data set that people are tracking, so that's, that's a thing that I always try and qualify whenever I present this slide. And by the same token, the rate of growth, it's, it's a difficult thing to track. We can see what, what direction the line is going. The data don't tell us exactly why. So that would, that would take me beyond a place where I'd feel comfortable going.

Okay. Thank you. Representative Hannon. Thank you, Kucharswagi. Are we seeing the trend that you read about in largely urban areas of corporate equity firms investing in short-term rentals and buying up housing stock?

Or is Alaska remaining the one and two, or, you know, Right. Are we seeing that corporate equity investment into short-term rental stock and buying us out? Sure. It's a great question, Representative Hannon. It's one we get a lot.

To give you an example of our data, like Stacy Eicki and I, say we each have listings on Airbnb. I can tell you that I have 20 listed, that Eicki has 5 listed, and Stacy has 1. I can't tell you which one of us is a for-profit corporation, which one of us is Alaskan-based. I can just tell you that there is one person at the table that has one thing listed and another person that has 20. That is as far as our data sources allow us to go at this stage.

There might be better data sources, we just don't have them. Follow-up? Chair Schraggi, what do we need to change so we can get better data? I assume that it is, you know, since we don't have any statewide property taxes, that may be part of it. But because it gets talked about in a lot of other states and locations.

And I presume it would start in our urban areas of Anchorage or the Matsu and Fairbanks. But what is it in the data stream that we would need to tweak so that you could— we could pay attention to that? Please. For the record, Mr. Chairman, I could do lapses. Mr. Chairman, Representative Hannon, that is a combination of local decision-making and new data sets, as Mr. Delfino said, that would be coming online.

That we would see with respect to national trends. So it's a combination of local policy with better econometrics being able to be refined in this dynamic market. Okay. Very good. Please continue.

Mr. Chairman, thank you. We are now proceeding to slide 7, and I would ask Ms. Barnes to give an overview, if she may, about— bless you— the Corporation's financial instrumentation and its financial position as it relates to both the public bond market and our mortgage rates. Good morning. Excuse me. Good morning, Mr. Chairman.

For the record, Stacy Barnes, and I will be brief on this slide. Over the last decade or so, interest rates for homebuyers has been widely dramatic, from about 3%, as Mr. Delfino mentioned, to 8% post-pandemic. And so what I wanted to share with you here today is the range of interest rates that we have for homebuyers in the state. For a 15-year and 30-year mortgage. And where you see the rates that are the most competitive or the lowest cost are for qualified first-time homebuyers and also for veterans in the state of Alaska.

Uh, additionally wanted to acknowledge the legislature's work on, uh, what was House Bill 273 a couple of years ago that allowed for us to lift the cap on the loan-to-value from 95% to 97%. We know that a down payment is difficult for many homebuyers to come up with. And so that legislation allowed for, uh, based on the average price of a home, it made it much easier in terms of about a $10,000 reduction in terms of what that homebuyer might need to come up with in order to get into that house. So we're grateful for that, and that option is now available to buyers in the state.

Okay. Not seeing any questions. Please continue. And just for note, we have approximately 20 minutes left. I know some of these slides are ones we can get through a little quicker, but I'll let you guys manage that.

Thank you. In terms of the performance of the portfolio, what we see is that Alaska Housing Finance Corporation's portfolio performs very well. Delinquencies are reported at 30-day rate. Rates, and foreclosures are among the very best in the country. And in fact, at 0.10% is the foreclosure rate.

So very, very low. And that means that Alaskans are paying their mortgages timely, and that, of course, is a very good thing. There's stability there in the market. In terms of how it is that AHFC is able to offer mortgages to Alaskans, as Mr. Galapsas mentioned, we go to the bond market. And you can see some of the more recent activity that we have had there.

And just this year, AHFC was successful in achieving its very first AAA rating on mortgage revenue bonds. And that, of course, translates into the lower-cost mortgages that we're able to provide for Alaskans. Additionally, the veterans bonds that we have is made possible thanks to, again, legislation that was passed a number of years ago. And under federal law, only Alaska and 4 other states have the opportunity to provide tax-exempt debt to the benefit of veteran homebuyers in our state. And we will have to go back to the vote of the people, much like we did in 2010 when we asked for $600 million in authority to be able to continue to offer that veterans debt with the full backing of the state of Alaska.

At that point, uh, the voters across the state supported that initiative 2 to 1. And lastly, on this slide, Mr. Chairman, what I wanted to acknowledge was the dividend that Alaska Housing Finance Corporation pays to the state of Alaska. Our dividend is set in statute as well. It's based on 75% of our net income. And at $54 million this year, it's the highest since 2008.

And of course, we see a lot of those monies going back into programs that support housing statewide.

Please continue. Thank you, Mr. Chairman. For the record, again, I'm Kiki Lopes. For the committee's edification, Mr. Chair, the balance of this next portion of slides will be— though slide-heavy in terms of numbers, they're image-heavy.

And so with your indulgence, Mr. Chair, Mr. Delfino will move through these at a rather accelerated cadence. Okay. And before we do, Representative Galvin. Thank you.

On this slide in particular, I'm wanting to know what the goal is for Alaska Housing Finance. Is there a long-term goal? Like, in 10 years, we hope to build X amount of units in rural and X amount of units in urban. Like, are there goals put out there that you have that's your guide? Director?

Mr. Chairman, Representative Galvin, if I may, for clarification, we're referring to slide 9. I'm referring to slide 9, yes. So what I wanted to know is if there was a goal in terms of numbers of units you'd like to see online. And if, you know, if it's a 5-year goal or a 10-year goal. I know the mayor of Anchorage, for example, has a— I don't know how many years.

I think it's 10,000 in 10 years. And we know we have a housing shortage. You just went over all of that. I just— I know that I know that in some ways you are not really a part of making all of those decisions, but I wondered if you had a kind of a map that is your guide for how to make sure we get all Alaskans into low-cost housing or affordable housing, we'll say. Mr.

Chair, Representative Galvin, thank you for that question. That leads very nicely, if I may say so, to the enhancement of the Rural Professional Program. And for the committee's benefit, in the interest of time, Mr. Chair, this is the 20th 20th anniversary plus of the Rural Professional Program. That program began 20 years ago with a very simple goal.

We were seeing way too many teachers in remote and rural communities flying in, flying right out because they did not have a place to stay that was adequate. And our former chief executive officer, Mr. Dan Fousky, who lived on the North Slope, thought that that was intolerable. His goal was to get a pilot project. If he could show in the early 2000s that there was one school district or one community that could come to the table and work on a financing package and that would show the efficacy of teachers being able to remain in the community, they would be successful. Two were: the Northwest Arctic School District, and I believe it was the Village of Selu'wik as well.

And in that time, the goal has been every year to get out to remote rural communities with respect to this specific program, the Rural Professional Housing Program, recognizing that teachers, VPSOs, health nurses are essential to keeping our hub and smaller communities going, and the costs of construction are prohibitively expensive through traditional methodologies. It would have been astounding to think we would have had 100 units built 20 years ago. The fact that we have almost 600 is a testament not to the corporation, but to the can-do attitude of these communities who find ways in which they can come to the table providing land, providing in-kind custodial services, providing in-kind labor to get that per-door cost down. As it relates to the initiative we are about to talk about, Mr. Chairman and Representative Galvin, Mr. Delfino is going to give you a perfect example of a metric that we set in 2022. Mr. Chairman, this legislature and the executive branch funded an enhanced stream of dollars to specifically get into our hub communities for state workers who had their PCNs, or position count numbers, assigned to those communities but were not being filled because housing was an issue.

And what we will now share with the committee is an update about what metrics we set in this first phase, what we've learned and what we're using for secondary and tertiary phases. And with that, Mr. Chair, I would ask Mr. Delfino to take over and move at a clip, respecting if there are questions or comments, we will yield at your discretion. Thank you. Okay, for the record, Daniel Delfino again, and if we can move to the next slide.

So, um, as a bit of a segue, because I, I misunderstood, uh, Representative Galvez's questions earlier, I don't want to repeat that mistake. Um, the The map that we had up there shows a lot of Alaska with housing. Not all that housing happens over the same time. That's a 20-year period. So if we can go back to this slide.

What Brian did is, we've been hearing increasingly stories in the hub communities that we used to hear just in like the really, really remote communities about people sleeping on floors, people not being able to find anything, they're buying things sight unseen. And we're seeing that a lot of communities that should be participating in our programs for one reason or another aren't. And we're trying to understand why. And it fundamentally comes down to one of these three different factors when you're developing something. You can compare it to a car, a plane, any, any mechanical device.

You take a key piece out and having 99% of it still leaves you with a non-functioning vehicle. To try and address some of the gaps that we were seeing in the communities that were utilizing our resources, we went directly on a government-to-government basis to the priority communities that we were hearing about and said, what is it in this set of issues that's confounding development? What is it that we can help you out with? What if we come to the dollars and say, as an agency with 300 people and an IT department, all these, can we help you out with any of this? And if we can move to the next slide, that's exactly what we did.

And that's what we called the Last Room to Your Housing Initiative. We just went to the 5 communities directly We said, here's a target, how many number of units we want to see. What is it going to take to get there? And this was us sitting down at the table with Nome. We did it in every other community and we just had a conversation and we listened to the community and the community made a lot of decisions about how things were going to proceed amongst themselves.

And we provided support. There are photos of this and then we can go through the slides in the interest of time if I can. So Saxman, good example. All 5 of the communities that were covered under this initiative work differently. A one-size-fits-all approach would not have generated housing in all of these communities.

In Saxman, the city of Ketchikan, the borough, and Saxman all came together and said Saxman should get it. The borough will help out with procurement. We have land that the city can contribute. Project moved at a breakneck speed. We asked for 8 units, they were able to deliver 14.

The only help they needed from us was that photo with some of our program staff going down there for a day explaining how the program worked. That's all that was stopping them and the money. 12 Months later, units up and going. In Sitka, when we had our conversations with the local government down there, the local government was down 20 positions. They didn't even have a city attorney.

They needed all kinds of help. So in that one, we managed the procurement for them and worked with Baranof Island Housing Authority who is building this facility. And I'm happy to say a number of our housing authorities have done this. This is not just housing for tribal members to leverage this funding. This is housing available for anyone in Sitka whose income qualifies.

So it resulted in an expansion of their business model to be able to leverage these resources. In Bethel, another great series of conversations. These units, that photo on the left with the carpenter, was taken in July on one of our site visits. A lot of local labor going in there. City We had a really, really aggressive contractor, and I mean that as a compliment from a cost-cutting perspective, who brought these units in very, very quickly and efficiently.

The city bifurcated the ownership structure, so the affordable units that we asked for were going to be owned and managed by someone else. The city wanted to take ownership of the professional units. Again, different from all the other ones. The one-size-fits-all approach would not have worked for this. With Nome, they're— they have a lot going on with the port, and there are capacity issues with our counterparts in the local government.

It was a situation similar to Sitka where they needed more help, and we managed the procurement with them. We ended up securing Bering Straits Regional Housing Authority, who bought the units that were manufactured in, I think, Palmer by Nana— I'm sorry, they were in Big Lake. Manufactured by Nana and then shipped up to Nome last year. So they're going to be coming online this year. So this was an initiative that we started.

We had our first conversations in late 2023, in December and in January of 2024. The units, the first units were already online in 2025. The remaining units are all coming online this summer. And then the final one, Kotzebue. This was a really encouraging discussion.

We flew up and the borough was there, the city was there, the school district, the housing authority, the community was around the table like this firing off questions for about 3 hours as to who was going to do what because there were only 3 pieces of land that the city owned and there were a bunch of other properties that were tied up in probate. So it really took the community coming together. It was a partnership between KIC for the affordable units on one side of town and a partnership with the school district to not just house school district staff but to house state workers on land that the school district owned. So it was another great example of things moving forward and those are from our site visits. Turn it over to Aiki.

And before we do, Representative Bynum has a question for you. Yes, thank you, Coach. I try to get through the chair. Thank you. Yeah, I think those programs were very successful.

I know specifically the program in Saxman happened very quickly. A lot of coordination. I think you guys did phenomenal with that. The only criticism, I guess, that I would say is, is that when we, when we look at these programs and specifically I can point to the program for Saxman that provided 14 units of affordable housing. And they were basically in— there's an income restriction to be able to be in those housing.

So one of the criticisms that I had after it was complete was the requirement in those facilities when they built them, there was no requirement to talk about how they are heated. And we know that energy cost is an extremely important part of of the individuals living in these units. And so, for example, there was no— they didn't put heat pumps in. It has baseboard electric heat, which is great. I mean, there's affordable electric heat, but it's an extremely important part of the— energy cost is an extremely important part of people living in these units.

So there wasn't a requirement that they put that additional technology in, which would have created a tremendous savings for the home the people living there. So when you're looking at these programs in the future, it would be very helpful to think about long-term operating costs, not just the affordability getting into a home. Mr. Chairman, this is Aiki Galopsis for the record. Through the chair to Representative Bynum, thank you for that. And Representative, you get to the heart of what was the urgency in this particular phase.

As Mr. Delfino noted, we had a goal of trying to get dollars out to the rural hub communities that the legislature and the executive asked for our professionals. But at the same time, We had expiring federal authority that was under a clock. We had until the end of that federal fiscal year to be as shovel-ready as possible to get affordable housing built, which the United States Department of Treasury said it had to go to affordable housing that needed to be constructed in these communities. And that led to a balancing test, which was how much does the corporation want to put— I wouldn't say restrictions, but provisions that may retard the development of housing. And those dollars needed to be not just encumbered, but spent.

And are we okay with the benchmarks of a set number of units and a community match? And your point is well taken, Representative. The communities of Saxman and Ketchikan worked well together, provided land, got us far more units than we expected. But when one's trying to work with a sense of urgency, it gave us pause to say, what are things that we can do when we have a bit more deliberativeness? And with your indulgence, Mr. Chairman, in the interest of time, that takes us to slide 17, because it was some of those lessons that we took with the Lands to Housing Catalyst 2 years ago.

This committee, the other bodies— Finance Committee and the executive branch— gave the corporation $4 million and said, work with the public land agencies, the university, the Mental Health Trust Land Office, the railroad, Department of Natural Resources, figure out why it is that land is not being made available for housing development. It can be legal reasons, it can be constitutional, it can be legitimate soil composition issues, it could be there being an unrequited demand for labor within the agencies. And so the corporation worked in the last year since Mr. Butcher was here very aggressively, because once again another tranche of federal money was made available that was also expiring, which gave us an opportunity to purchase land that we could then make available for partly affordable housing, partly market-rate housing. And what Mr. Delfino and his team did was identified the communities where there was the greatest propensity for that land in proximity to to the ability to stimulate market activity without fundamentally distorting the market, because it's not our job to displace private sector actors, of course. And with your indulgence, Mr.

Chair, I'd ask Mr. Delfino to very briskly walk through those slides. Yes, briskly. Thank you. Quite briskly. Daniel Delfino again.

So, land housing catalyst— we worked with those four agencies, and we were trying to identify, could they even get land out? Legally? That was the first question. Second question was, did they have the capacity to do it even if they legally could? Next test, is the land they have anywhere close to where people are going to live?

And then the final test was, is the land something that could actually be reasonably developed? And we went through those agencies. It's a long, long, longer presentation than this, but we ended up settling with the university as the group that could move the fastest. We did environmental reviews, we did site visits, we did a lot of due diligence on the sites and crossed off a lot of parcels in the process. I just want to point that out.

So there were deliberately things that we, we passed over that it wouldn't have been good fits. We ended up closing in September, which was the deadline for the Treasury funds. We made sure that no Alaskan was turned away for lack of funds to buy land. And then we closed on a little over 600 acres and a couple of communities around the state. That we're going to be developing into land here in the near future.

And also in Cordova, uh, we were looking at not just at land that we could acquire, but were there lands that were high-centered? Like, was there a really not cost-prohibitive road or infrastructure thing that we could do to help improve the property to make it available for sale? So it was purchase and land improvement. Example of one of those properties that we purchased. These are photos from the site visit.

This is up in the valley. You can see the university had already done a feasibility assessment. There are some wetlands on the site, but there are access— there is access to places to build out according to lot lines that they projected. So we closed on properties like that. Because there are 650 acres, that's a lot of land.

We don't have the ability to fund construction on a lot of that. If we look at rental developments, usually our multifamily rentals will be about 15% of the development costs are supported by debt. We're able to do a lot more if we're able to connect with the $300,000+ in mortgage equity that homebuilders are able to bring along with their units. So our target for this was to make the lands available for things that could be multifamily development, but primarily would be single-family development that could operate at a different price point from construction and bring in additional equity sources. So that was our goal, was to make these lands available, and we did that.

We met with the local governments, just like we did on the Last Frontier Housing Initiative. We met with all the community leaders where we purchased properties. We pitched them our plan before we launched it, and then we released it to the public, and the process is open now. We've gone through our first phase of the procurement where folks have to submit a letter of intent to submit a full proposal in June, and we received over 30. So it's It could have been zero.

So we cleared the first hurdle and all the properties that we acquired have been spoken for multiple times. So we are hopeful that by this time next year we will have a lot of positive things to report on this initiative.

And if we could just spend one minute on this slide. I know it is important work, but we are also out of time. I'm sorry, slide 23. Thank you, Mr. Chair.

For the record, Aki Galapsos. And you are right, Mr. Chair, we would respectfully submit that this would be our final slide. That the corporation in the midst of these projects that the legislature the legislature and the executive branch and our congressional delegation has entrusted to it also has to pivot when circumstances arise because that's our mission. We worked and partnered with Representative Jimmy's office, our congressional delegation, FEMA, the Department of Military and Veterans Affairs for Typhoon Halong in our own small way.

We recently experienced a fire at some of our assets in Mountain View, and we're working to judiciously figure out the path forward on what the next stage for those units look like while humane and compassionate to those who have lost their housing, and recognizing the changing demographics that we said at the beginning, that the housing composition of 40 years ago may change with its demands today as a result of either federal taxation policies, the accordion effect of our housing stock, and all sorts of other demands that may be placed on it that are good challenges in pursuit of that mission. And with that, we thank you, Mr. Chair, for the committee's patience with this voluminous set of slides, and we're available for any questions. Thank you for bringing us home here so expeditiously and efficiently. I'm not seeing any questions.

Rep. Jimmy, please. More of a comment. Thank you, Co-Chair Sharkey. Just more of a comment. I just really want to extend my gratitude to Alaska Housing Finance in this time of need.

Thank you. Thank you to all three of you and the director online. We appreciate you being here this morning. Oh, Co-Chair Foster. Oh, did you have a comment as well?

Sorry, I couldn't see you behind the chair here. Yeah, no problem. Thank you. A thank you for the slides I see from Nome there and just all of rural Alaska. And not just rural, but also I wanted to maybe bring up, and we could talk about this later, I know that each year the group has been coming down regarding trying to develop the area around the Sullivan Arena.

And I just wanted to get maybe a little bit of an update on that. And one of the things that I As much as I try to represent rural, I want to come at this from a statewide perspective because I know a lot of folks from rural Alaska also move to urban parts of Alaska. And so that's also good for just folks around the state. So anyway, if you could think about that and I'll catch up with you later on that. Thank you.

Very good. Well, on that positive note, I want to thank you all again. That concludes our business for this morning's meeting. Our next House Finance meeting will be this afternoon. At 1:30.

See you all here soon. We're adjourned.