Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2016 08:30 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
Moved CSHB 81(FIN) Out of Committee
Heard & Held
Heard & Held
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 81                                                                                                             
     "An Act  relating to an  exemption from  the regulation                                                                    
     of construction contractors."                                                                                              
10:30:21 AM                                                                                                                   
Co-Chair Neuman MOVED to ADOPT the proposed committee                                                                           
substitute for HB 81, Work Draft 29-LS0346\P (Bruce,                                                                            
4/12/16). There being NO OBJECTION, it was so ordered.                                                                          
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,                                                                             
explained the changes in the Committee Substitute and read                                                                      
from a prepared statement:                                                                                                      
   HB 81 Version P differs from CSHB 81 (L&C), HB 81 Version                                                                    
   H, in three ways:                                                                                                            
   1. Deletes  "in  order"   from  the   legislative  intent                                                                    
     language  from page  1,  line  6, of  HB  81 Version  H                                                                    
     because the  words are not needed,  as many grammarians                                                                    
     often say.                                                                                                                 
   2. Adds a new section 2 (page 1, lines 8 through 14) that                                                                    
     adds a  new subsection to  AS 08.18.116 to  require the                                                                    
     Alaska Department of  Commerce, Community, and Economic                                                                    
     Development  or  the  Alaska Department  of  Labor  and                                                                    
     Workforce   Development   to   investigate   and   take                                                                    
     appropriate action if an owner-builder  tries to sell a                                                                    
     structure  while not  licensed as  a contractor  during                                                                    
     the  time of  constructing  the building  or two  years                                                                    
    after construction begins. See "begins" on line 11.                                                                         
   3. Replaces language  in  section  3  (page  3,  lines  2                                                                    
     through 6)  to require  an owner-builder to  notify the                                                                    
     Alaska Department of  Commerce, Community, and Economic                                                                    
     Development  on  a form  provided  by  the agency  when                                                                    
     advertising  or  selling  a home  built  if  an  owner-                                                                    
     builder  tries  to sell  it  while  not licensed  as  a                                                                    
     contractor   during  the   time  of   constructing  the                                                                    
     building or  two years  after construction  begins. See                                                                    
     "begins" on line 4.                                                                                                        
   The previous versions of the bill would have required the                                                                    
   owner-builder to  get permission  from the  department to                                                                    
   sell a building. HB 81 Version N  changes this to require                                                                    
Representative Wilson asked  for clarification regarding the                                                                    
two year provision.  Ms. Pierson answered that  the two year                                                                    
provision  was consistent  with current  law. Representative                                                                    
Wilson asked  when the  two year  period began.  Ms. Pierson                                                                    
deferred the question to the sponsor.                                                                                           
REPRESENTATIVE  CATHY  TILTON,  SPONSOR,  replied  that  the                                                                    
question had been asked the  prior session and was something                                                                    
the   sponsors  struggled   with   over   the  interim   and                                                                    
extensively  researched. The  two year  period began  at the                                                                    
start of construction  because the start was  the point that                                                                    
defined   the   permitting   process.  She   discussed   the                                                                    
legislation.  She  relayed  that  HB  81  provided  stronger                                                                    
protection  to   homebuyers  that  required   an  unlicensed                                                                    
builder  to   disclose  the  fact  that   the  building  was                                                                    
constructed  by an  unlicensed builder.  The  intent was  to                                                                    
allow individuals to continue  to construct their own homes.                                                                    
Unfortunately, there  were people who built  with the intent                                                                    
to sell  and avoided attaining the  required licensures. She                                                                    
stated that contractor  law had been on the  books in Alaska                                                                    
since 1968. She detailed  that the current homeowner/builder                                                                    
exemption  was enacted  in 1982  and modified  in 2006.  The                                                                    
current  law  provided an  exemption  allowing  a person  to                                                                    
build their own home or  commercial building every two years                                                                    
without  a license.  A growing  number  of individuals  were                                                                    
exploiting the  provision to build and  operate construction                                                                    
businesses without attaining  required licensure. Homeowners                                                                    
who  purchase a  home  from the  unlicensed  builder had  no                                                                    
recourse  in the  law if  the home  had issues  and was  not                                                                    
built  properly. She  declared  that the  bill provided  for                                                                    
transparency and disclosure.                                                                                                    
Co-Chair Thompson OPENED public testimony.                                                                                      
RICHARD    CARR,     OWNER,    BEMA     CONSTRUCTION    (via                                                                    
teleconference), spoke  in support  of the bill.  He relayed                                                                    
that he  specialized in restoration  and remodeling.  He had                                                                    
received  many  "frantic  calls from  insurance  agents  and                                                                    
homeowners"  with  serious  issue  due to  faulty  work.  He                                                                    
shared  personal  experience  with   customers  who  had  no                                                                    
financial  recourse  because  the  builder did  not  have  a                                                                    
"performance bond." The bill would  protect the consumers of                                                                    
Alaska from  "unscrupulous builders"  that "hide  behind the                                                                    
two year allowance."                                                                                                            
ANDRE SPINELLI, PRESIDENT,  ALASKA HOME BUILDERS ASSOCIATION                                                                    
(via  teleconference),  stated  his strong  support  of  the                                                                    
bill. He  shared that  the association  worked on  the issue                                                                    
for many years.                                                                                                                 
PATRICK    DALTON,   CONTRACTOR,    DELTA   JUNCTION    (via                                                                    
teleconference),  testified   against  Section  11   of  the                                                                    
current version of the bill.  He felt that the provision was                                                                    
extreme   and  "interfered   with  the   right  of   private                                                                    
property."  He agreed  with  the  regulations for  organized                                                                    
boroughs.   He  proposed   an   exemption  for   unorganized                                                                    
boroughs.   He   believed    the   provision   protected   a                                                                    
professional group at the expense of rural homebuilders.                                                                        
10:42:27 AM                                                                                                                   
JAMES  SQUYRES, SELF,  RURAL  DELTANA (via  teleconference),                                                                    
testified  against  the  bill.  He  believed  the  bill  had                                                                    
unintended  consequences for  rural  residents. He  stressed                                                                    
that   "the  contractor   lobby   was   tenacious  and   was                                                                    
terrorizing"  regular  Alaskans.  He opposed  the  provision                                                                    
that  required the  owner/builder  to fill  out  a form  and                                                                    
provide  proof  to the  Department  of  Labor and  Workforce                                                                    
Development (DOL) and Department  of Commerce, Community and                                                                    
Economic Development  (DCCED) in order to  sell their owner-                                                                    
built  home.  He opined  that  the  provision increased  the                                                                    
agencies bureaucratic  functions and impinged  on individual                                                                    
TERRY   DUSYNSKI,   MEMBER,   ALASKA   STATE   HOMEBUILDER'S                                                                    
ASSOCIATION  (via teleconference),  testified in  support of                                                                    
the bill. He shared that he  was a home inspector since 1978                                                                    
and  had seen  many owner-built  homes. He  voiced that  the                                                                    
exemption  in the  bill allowed  people to  build their  own                                                                    
homes. He explained  that the bill merely  required a person                                                                    
building a house  and selling it before the  two year period                                                                    
to notify the department and  explain why the individual was                                                                    
selling  the house.  He  emphasized that  the  bill did  not                                                                    
prohibit constructing an owner built home.                                                                                      
Co-Chair Thompson CLOSED public testimony.                                                                                      
Representative Wilson  asked who  would enforce the  issue -                                                                    
DOL or DCCED.                                                                                                                   
CHRISTOPHER  CLARK,  STAFF,   REPRESENTATIVE  CATHY  TILTON,                                                                    
replied  that the  provision in  Section 2  of the  bill was                                                                    
enforced by both DCCED and  DOL. He added that the provision                                                                    
in Section  3 was  enforced by DCCED.  Representative Wilson                                                                    
wanted to know how the bill would be enforced.                                                                                  
10:48:12 AM                                                                                                                   
AL  NAGEL, DEPARTMENT  OF  LABOR  AND WORKFORCE  DEVELOPMENT                                                                    
(via teleconference), answered that  the details had not yet                                                                    
been  worked out  between the  departments; the  regulations                                                                    
would be written  after the bill was  adopted. He delineated                                                                    
that both departments had  investigators that were dedicated                                                                    
to license enforcement.                                                                                                         
Representative   Wilson  wondered   whether  the   bill  was                                                                    
necessary. She asked how the  bill changed what was supposed                                                                    
to  currently be  done. Mr.  Nagel replied  that he  was not                                                                    
sure what the  department was not doing now.  He stated that                                                                    
the  bill  offered  more structure  about  when  a  two-year                                                                    
exemption period started. He  emphasized that the department                                                                    
was    seriously    enforcing    the    existing    statute.                                                                    
Representative  Wilson  asked  what   paper  work  would  be                                                                    
required  to  prove  the  starting  date  of  the  two  year                                                                    
construction  period. Mr.  Nagel answered  that the  statute                                                                    
would  require  notice  that  the  homeowner  was  divesting                                                                    
herself  of  a property;  not  for  a business  reason.  The                                                                    
department  would  investigate  and  determine  whether  the                                                                    
activity   was  unlicensed.   Representative  Wilson   asked                                                                    
whether updated fiscal notes were forthcoming.                                                                                  
Co-Chair Neuman  spoke to  the fiscal  notes. He  noted that                                                                    
the Division  of Corporations, Businesses,  and Professional                                                                    
Licensing  (DCBPL) submitted  a  zero note  (FN  1 CED).  He                                                                    
detailed that  the division noted  that the  licensing costs                                                                    
covered  the regulatory  costs. He  noted the  Department of                                                                    
Labor  and  Workforce Development  zero  fiscal  note (FN  2                                                                    
10:52:25 AM                                                                                                                   
Representative  Wilson  spoke  to   the  fiscal  notes.  She                                                                    
believed the bill carried fiscal impacts to the agencies.                                                                       
Co-Chair Neuman  stated that according  to the  fiscal notes                                                                    
the  department  determined that  its  fees  and staff  were                                                                    
sufficient to enforce the legislation.                                                                                          
Co-Chair    Thompson    reminded    the    committee    that                                                                    
investigations were presently happening on a regular basis.                                                                     
Co-Chair  Neuman  MOVED  to  report   CSHB  81(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
Representative Wilson  OBJECTED. She was concerned  over how                                                                    
the regulations would be written  and believed that the bill                                                                    
impacted   personal  property   rights.  She   WITHDREW  her                                                                    
CSHB 81(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and  with one new  zero fiscal note  from the                                                                    
House  Finance Committee  for  the  Department of  Commerce,                                                                    
Community and  Economic Development and one  new zero fiscal                                                                    
note   from   the   Department  of   Labor   and   Workforce                                                                    

Document Name Date/Time Subjects
HB 194 CS WORKDRAFT FIN GH1060-S.pdf HFIN 4/14/2016 8:30:00 AM
HB 194
HB 81 CS WORKDRAFT vP.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
House Members - SB 196ce.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
SB 196 Fin updated sectional.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
sb 196 Leg finance spread sheets.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
CSSB 210(FIN) AM - Sectional Analysis.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM E.A.PDF HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM Sponsor Statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB210(FIN) AM - Community Assistance Distribution.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
HB 81 Summary of Changes Pversion 8 March 2016.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
196 new sponsor statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
4 14 16 SB 210 by Borough.pdf HFIN 4/14/2016 8:30:00 AM
SB 210