Akis Gialopsos (left), deputy executive director of the Alaska Housing Finance Corp., and Bryan Butcher (right), the corporation’s CEO/executive director, testify in front of the Senate Finance Committee on Thursday, Feb. 8, 2024. (Photo by James Brooks/Alaska Beacon)
Before adjourning for the year, the Alaska Legislature confirmed plans to spend millions of dollars on housing projects statewide, an attempt to answer residents’ complaints about an ongoing housing shortage.
Lawmakers also passed several housing-related bills that are intended to increase home ownership. Those bills have yet to be sent to Gov. Mike Dunleavy for his approval or veto.
The engine for much of this spending and for the legislation is the state-owned Alaska Housing Finance Corp., which operates housing and offers loans for homes across the state.
Last year, lawmakers approved just over $63 million in AHFC projects within the state’s capital budget, which pays for construction and renovation projects statewide.
This year, that’s up to $77.2 million, with more than half of that money coming from the state’s general-purpose spending account.
Bryan Butcher, the corporation’s CEO and executive director, said that AHFC programs are typically funded from the dividend the corporation pays the state each year.
This year, that dividend doubled to almost $48 million as Alaskans used AHFC programs in search of lower interest rates for their new homes.
When interest rates were low, there wasn’t much demand for AHFC programs that offered interest rates only fractionally lower than ordinary banks. Now that interest rates are higher, AHFC-backed loans for new homebuyers are as much as three-quarters of a percentage point lower than a traditional loan.
“And so we’ve seen more activity,” he said.
That’s only part of the story, however. In his State of the State address this year, Dunleavy proposed a $25 million down payment assistance program for new homebuyers.
The Legislature didn’t fund that program, but lawmakers kept most of that money in AHFC, adding cash to a program that builds housing for public workers in rural Alaska. Some of the money also went to a program offering cash rebates for new home construction and to a new program intended to develop state land for housing.
The new money, plus money from AHFC’s dividend, means more effort toward housing projects.
The new-home rebate program, for example, has been effectively inactive for several years due to a lack of funding, Butcher said.
Now, there’s $7 million earmarked for that program.
“We estimate that it could result in up to 700 homes —new homes — built,” Butcher said. “And in most of the communities in Alaska, even in the largest cities, like Anchorage, we’re seeing very few new homes built.”
Under the program, a builder that builds a home to certain energy efficiency standards could offer a $10,000 rebate to a buyer who could then use it as part of a down payment.
In many parts of rural Alaska, housing for teachers, nurses and public safety officers is in short supply. AHFC operates an assistance program that offers as much as $700,000 to communities that build new housing for those public workers.
The Legislature boosted that program to $14.5 million, $5 million above what Dunleavy had requested.
AHFC’s weatherization program, which provides grants to homeowners who improve the energy efficiency of their homes, is slated to receive $25.5 million, an $8 million boost above what Dunleavy requested at the start of the legislative year.
And then there’s the legislation.
On the last day of the legislative session, lawmakers passed House Bill 273, which allows AHFC to reduce the down payment required from first-time homebuyers.
In 2023, for example, the average sales price for a home in Anchorage was $481,254. Under AHFC’s current limits, someone would have to put down $24,063 to become eligible for a loan. HB 273 would lower that to $14,438 by allowing the corporation to loan up to 97% of the home’s value.
Legislators also passed Senate Bill 205, which allows AHFC to buy a maintenance building in Anchorage. It’s a small thing, Butcher said, but it has real consequences.
AHFC maintenance hasn’t been as efficient as it might be, he said, which means some of the corporation’s public housing has become unavailable because it’s in disrepair.
That’s a direct problem, and there’s other effects, including one from the U.S. Department of Housing and Urban Development.
“HUD penalizes you when you drop below a certain percentage of occupancy, which we haven’t done, but we could be in danger of it,” Butcher said. “If you drop below, you get less vouchers, you get less money for the units, and that’s a really, really bad thing to have happen to yourself.”
Legislators also passed a bill directing AHFC to set up a new subsidiary that would act as a “green bank” for renewable energy projects.
“It basically would allow us to make loans for energy efficiency, renewable energy, potentially at both a more commercial size level and a homeowner level,” Butcher said.
Setting up the subsidiary, including hiring staff and writing regulations for it, will take “a year, nine months, something like that,” Butcher said, and only after that point would AHFC begin rolling out programs through the new bank.
He said the state stands to benefit from federal programs that send funding to state-run green banks.
“There’s billions of dollars available, in particular from the infrastructure bill, but also from other federal legislation in this area. And so we expect that there’s probably going to be huge benefits coming in federally from just having a state green bank,” he said.
All three bills have yet to be sent to Dunleavy for approval or veto.
The Alaska Legislature sent the state’s annual operating budget to Gov. Mike Dunleavy on Wednesday, starting the clock for the governor to make line-item vetoes.
The governor has until June 28 to announce those vetoes and sign the budget into law.
Still awaiting transmittal is the state’s $4 billion capital budget, including the funding for AHFC projects.
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