Since 1971, Alaska Housing Finance Corp. has received $1,369,523,000 from the state of Alaska to fulfill its mission: "to provide Alaskans access to safe, quality, affordable housing."
AHFC has returned $1,958,870,000 to the state general fund, an operating profit of $589,347,000. AHFC's net worth is $1.6 billion in its March 31 financial statements. The state's total housing profit has been a whopping $2.2 billion, 160 percent cash on cash return.
The financial performance of AHFC has been nothing short of phenomenal. No other U. S. housing agency can match its profits. AHFC could be bailing out Fannie Mae and Freddie Mac.
Bond holders love AHFC. Wall Street recognizes the profitability of the state agency and rewards its profits with top ratings for stability, financial controls and performance. The Alaska Permanent Fund does not match AHFC's return on investment.
With all this financial muscle, top staff and proven board, Alaska's housing stock should be the best in the nation. As a property manager and developer, I read the AHFC annual housing assessments to understand market needs and, hopefully, see reductions in the number of unsafe and unaffordable housing.
AHFC's 2008 and its carbon copy 2009 housing assessments state: "12,980 homes are needed to replace the overcrowded and substandard houses. 3,972 homes are unsafe, unsanitary and unrepairable." AHFC has reported close to 4,000 "falling apart" homes each year since 1991.
The conclusions of both reports state: "It is not possible that all of the housing needed to alleviate overcrowding and substandard housing will occur in one building season or even in 10. Even if the funding were available to build all of the needed units, it would take considerable time to get the job done. For this reason an estimate of gross cost is not terribly meaningful."
All of us in housing should pull together and help AHFC determine a solution, cost and timeline to correct "falling apart" housing. Could we invest a teensy bit of AHFC's huge housing profits back into correction of unsafe and unaffordable housing, instead of stuffing more money in our $12 billion-plus surplus accounts?
The worst unsafe and unaffordable properties are apartments and mobile homes. With foreclosures and closed credit markets, renters are flooding the housing market. What they find are many older structures with tons of deferred maintenance. Alaska's apartments and mobile homes are in crisis. National lenders look for ways to decline loans rather than write them and choose to write very few Alaska housing multifamily loans.
AHFC's multifamily program -- buildings of five units or more -- allows the purchase or refinance of apartments at 80 percent of appraised value. Uniquely, AHFC allows further funding of 100 percent of improvements to the property. That's a good start toward a solution for run-down apartments.
But AHFC's higher interest rates, compared to national rates, are a deterrent to affordable apartments. AHFC's interest rates are 41 percent higher than national apartment lenders'. Renters foot this higher bill. Landlords pass along the cost.
Comparison of rates shows AHFC at 7.5 percent; Fannie Freddie, 5.35 percent; and FHA multifamily, 4.75 percent. Renters pay from 3 percent to 9 percent higher rents because of AHFC's exorbitant rates.
AIDEA, another state-funded lender, sets rates under statutory authority nearly 2 full percent below AHFC at 5.76 percent for a 25-year commercial loan. Both have free state money. Cost of funds can't be the issue. Both state agencies have the best staff, great financial capability and access to the best investment bankers.
All of us -- owners, landlords, renters, Realtors and mortgage professionals -- must find the best solution for Alaskans to cure the disease of 4,000 "falling apart" homes and gain access to safe, sound and affordable housing. Dilapidated housing brings everyone's property values down.
Alaska mortgage bankers could use AHFC's multifamily program if AHFC provides competitive interest rates. Apartment buyers would know that 100 percent financing is available for the cost of upgrading and renovating apartments with AHFC. Then Alaskans could refurbish or build enough new housing that AHFC might not need a waiting list.
Jim Crawford, a third-generation Alaskan, is an Anchorage real estate broker, property manager and investor.
By JIM CRAWFORD