Legislature(2017 - 2018)BARNES 124

03/26/2018 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 165 COMPREHENSIVE HEALTH INSURANCE FUND TELECONFERENCED
Heard & Held
-- Public Testimony --
+= HB 379 COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
+= SB 4 BARBERS/HAIRDRESSERS;CHEMICALS;BRAIDING TELECONFERENCED
Moved HCS CSSSSB 4(L&C) AM Out of Committee
-- Public Testimony --
+= HB 374 ON-BILL FINANCING OF ENERGY IMPROVEMENTS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+ SB 45 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Heard & Held
           SB  45-EXEMPTION: LICENSING OF CONTRACTORS                                                                       
                                                                                                                                
3:34:00 PM                                                                                                                    
                                                                                                                                
CHAIR  KITO announced  that the  next order of  business would  be                                                              
SENATE BILL  NO. 45,  "An Act  relating to  an exemption  from the                                                              
regulation of construction contractors."                                                                                        
                                                                                                                                
3:34:31 PM                                                                                                                    
                                                                                                                                
SENATOR MIA COSTELLO,  Alaska State Legislature,  introduced SB 45                                                              
as   prime  sponsor.   She  paraphrased   the  sponsor   statement                                                              
[included in committee  packet], which reads as  follows [original                                                              
punctuation provided]:                                                                                                          
                                                                                                                                
     Senate Bill  45 provides  better protections for  buyers                                                                   
     of  homes and  other buildings  by requiring  unlicensed                                                                   
     owner-builders  to  disclose they  are  selling a  newly                                                                   
     built home as an unlicensed builder.                                                                                       
                                                                                                                                
     The intent of  the legislation, as stated  in Section 1,                                                                   
     is  to  continue  to  allow  individuals  to  enjoy  the                                                                   
     freedom  and ability  to construct  and  sell their  own                                                                   
     homes.                                                                                                                     
                                                                                                                                
     Following the  housing market  crash of the  1980's, the                                                                   
     Alaska  Legislature  raised professional  standards  for                                                                   
     homebuilders,  requiring residential contractors  to get                                                                   
     a  state license,  a residential  endorsement,  bonding,                                                                   
     and insurance.  The Alaska  Housing Finance  Corporation                                                                   
     was  specifically  directed   by  statute  to  establish                                                                   
     energy efficiency initiatives such as energy ratings                                                                       
     and  the Alaska  Craftsman Home  Program. These  efforts                                                                   
     helped   Alaska   become   a  place   where   the   home                                                                   
     construction   industry   provides  high   quality   and                                                                   
     affordable energy-efficient options for buyers.                                                                            
                                                                                                                                
     Construction  contractor  law  has  been  on  the  books                                                                   
     since  1968.  The current  owner-builder  exemption,  AS                                                                   
     08.18.161(12),  was first enacted  that year to  provide                                                                   
     an exemption  that allows individuals to build  one home                                                                   
     or  commercial  building  every   two  years  without  a                                                                   
     contractor license.                                                                                                        
                                                                                                                                
     Currently  state law provides  an exemption that  allows                                                                   
     individuals  to build  structures  without a  contractor                                                                   
     license.  Alaska  law  AS  08.18.161  allows  anyone  to                                                                   
     build one structure  every two years without  a license.                                                                   
     While the  exemption was intended  to allow  Alaskans to                                                                   
     build their  own home, the industry is seeing  a growing                                                                   
     number of individuals using the exemption to                                                                               
     operate construction businesses.                                                                                           
                                                                                                                                
     SB  45  requires anyone  who  builds  and sells  a  home                                                                   
     without  a  contractor  license   within  two  years  of                                                                   
     starting  construction  to  disclose  that they  do  not                                                                   
     have  a license. The  measure does  not prohibit  owner-                                                                   
     builder   construction.  It   does  not  require   state                                                                   
     approval  for  owner-builder construction.  Owners  have                                                                   
     the right  to build their own  homes and this  bill does                                                                   
     not  change that.  It  requires simple  disclosure  that                                                                   
     helps home buyers.                                                                                                         
                                                                                                                                
3:35:50 PM                                                                                                                    
                                                                                                                                
NATASHA  MCCLANAHAN, Staff,  Senator  Mia  Costello, Alaska  State                                                              
Legislature, presented  the sectional analysis of SB  45 on behalf                                                              
of  Senator  Costello,   prime  sponsor.    She   paraphrased  the                                                              
sectional  analysis [included  in committee  packet], which  reads                                                              
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     Section   1.  Adds   legislative   intent  language   to                                                                   
     uncodified law to help assure that changes made by                                                                         
     Section  3 of  the bill  be construed  broadly to  allow                                                                   
     individuals the freedom and ability to construct and                                                                       
     sell  their own  homes based  on  their own  discretion.                                                                   
     Page 1, lines 3-7.                                                                                                         
                                                                                                                                
     Section   2.  Amends   AS  08.18.116   to  require   the                                                                   
     Department of Commerce, Community, and Economic                                                                            
     Development  or the  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. Page 1, lines 8-14.                                                                                   
                                                                                                                                
     Section 3. Amends AS 08.18.161 to:                                                                                         
        • Exempt from construction contractor requirements                                                                      
          those who work on an existing structure on their                                                                      
         own property or their own existing residence.                                                                          
        • 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.                                                                      
                                                                                                                                
     Section  4. Adds  applicability  language to  uncodified                                                                   
     law  that would  provide  clarity on  when  construction                                                                   
     begins  under   Section  3:   either  when  the   actual                                                                   
     construction  starts or  when  an owner  enters into  an                                                                   
     agreement  with  someone  to  provide labor,  act  as  a                                                                   
     subcontractor,    or   provide    materials   for    the                                                                   
     construction.                                                                                                              
                                                                                                                                
3:37:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  the presenters  to  compare  the                                                              
proposed  bill to  that brought  forward  by Representative  Cathy                                                              
Tilton in a previous legislature [House Bill 81].                                                                               
                                                                                                                                
SENATOR COSTELLO answered  that the bill to which  he referred was                                                              
addressing a similar issue.                                                                                                     
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked what the remedy for abuse is.                                                                    
                                                                                                                                
MS. MCCLANAHAN answered  it's a notice issue. She  deferred to the                                                              
department.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KNOPP commented  that SB 45  is simply  a consumer                                                              
protection bill.                                                                                                                
                                                                                                                                
CHAIR KITO shared  his understanding that the proposed  bill would                                                              
not preclude  the ability of a  city to regulate  code enforcement                                                              
within its jurisdiction.   He said he thinks there  are either six                                                              
or  nine  communities  in  Alaska that  have  a  jurisdiction  for                                                              
building  codes.   He surmised  the provision  is to  try and  put                                                              
some  protections in  place  for  those people  who  don't have  a                                                              
municipal building code authority in their community.                                                                           
                                                                                                                                
SENATOR COSTELLO  said that was her understanding  but deferred to                                                              
the division.                                                                                                                   
                                                                                                                                
3:42:07 PM                                                                                                                    
                                                                                                                                
JANEY  MCCULLOUGH, Director,  Division  of Corporations,  Business                                                              
and  Professional  Licensing  (DCBPL),   Department  of  Commerce,                                                              
Community &  Economic Development  (DCCED), answered  questions in                                                              
the hearing  on SB 45.   She stated  the provision would  not have                                                              
any effect  on local municipalities'  ability to  enforce building                                                              
codes.   She underlined  it is  a consumer  protection bill.   She                                                              
said  it would  be  a requirement  to  notify  the department  and                                                              
would be another tool in the toolbox for buyers.                                                                                
                                                                                                                                
3:43:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH asked  whether the  requirement would  be to                                                              
disclose  within two  years of  the beginning  of construction  or                                                              
two years from the end.                                                                                                         
                                                                                                                                
SENATOR COSTELLO  answered the  starting point  is point  in which                                                              
the ground  is broken.  If the  home is  then completed  after two                                                              
years  and the  owner decides  to  sell it,  then notification  is                                                              
required.                                                                                                                       
                                                                                                                                
REPRESENTATIVE BIRCH  said he thinks  there is a federal  tax deal                                                              
for an owner who lives in the home for a certain amount of time.                                                                
                                                                                                                                
SENATOR  COSTELLO stated  she  is not  an expert  in  tax law  and                                                              
would defer to someone else for an answer.                                                                                      
                                                                                                                                
3:45:00 PM                                                                                                                    
                                                                                                                                
ALAN WILSON,  Owner, Alaska  Renovators,  testified in support  of                                                              
SB  45.   He said  he is  a member  of  Alaska State  Homebuilders                                                              
Association  (ASHA).   He  said the  proposed  legislation was  an                                                              
effort to  ensure that homebuyers  had some information  about who                                                              
built  a  home.    He  identified  that  there  are  no  penalties                                                              
provided for in the bill.                                                                                                       
                                                                                                                                
3:46:25 PM                                                                                                                    
                                                                                                                                
JIM  DUNLAP,  President,  Alaska  State  Homebuilding  Association                                                              
(ASHA),  testified   in  support  of   SB  45.    He   stated  his                                                              
organization would  continue to work on community  building codes.                                                              
He said SB  45 attempts to  protect consumers.  He  underlined the                                                              
initiative does not involve penalties.                                                                                          
                                                                                                                                
3:48:51 PM                                                                                                                    
                                                                                                                                
CHAIR KITO opened public testimony on SB 45.                                                                                    
                                                                                                                                
3:49:04 PM                                                                                                                    
                                                                                                                                
RICHARD  CARR testified  in support  of SB  45.   He spoke to  his                                                              
experience  as  a   remodeler  and  shared  an   example  of  poor                                                              
workmanship  he had observed.   He  said he  believes SB  45 would                                                              
help  provide critical  information  for consumers  when they  are                                                              
seeking a home.                                                                                                                 
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  asked Mr. Carr to  give testimony                                                              
on Mat-Su Homebuilder's position on the proposed bill.                                                                          
                                                                                                                                
MR. CARR  answered the  organization is "100  percent in  favor of                                                              
SB 45."   He said they think  it would improve the Valley  a great                                                              
deal.                                                                                                                           
                                                                                                                                
REPRESENTATIVE SULLIVAN-LEONARD  asked how many home  builders are                                                              
in Mat-Su Homebuilders Association.                                                                                             
                                                                                                                                
MR. CARR answered there are 145 members.                                                                                        
                                                                                                                                
3:52:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  Mr. Carr  is  currently                                                              
required  to submit  paperwork  to the  department  stating he  is                                                              
constructing a home for sale.                                                                                                   
                                                                                                                                
MR. CARR answered not in the Mat-Su Borough.                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  who in government  knows  when he                                                              
is building a home.                                                                                                             
                                                                                                                                
MR. CARR  answered no  one that he  knows of.   He added  that the                                                              
Alaska Housing Finance Corporation (AHFC) would know.                                                                           
                                                                                                                                
3:53:50 PM                                                                                                                    
                                                                                                                                
PATRICK DALTON  testified in opposition of  SB 45.  He  said a few                                                              
years  ago there was  a similar  bill which  exempted builders  in                                                              
the rural  unorganized boroughs.   He quoted  from a study  by the                                                              
Cato  Institute  from  an  article   entitled,  "Zoning,  Land-Use                                                              
Planning,  and Housing  Affordability,Policy    Analysis No.  823,                                                              
October 2017, by Vanessa Brown Calder.                                                                                          
                                                                                                                                
3:57:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked why the provision would  be such a                                                              
burden.  He pointed out the requirement involves a form.                                                                        
                                                                                                                                
MR. DALTON  answered that the  article addresses  that regulations                                                              
in  any form  create paperwork  which creates  uncertainty in  the                                                              
building market.   He said businesses always pass  the cost on the                                                              
consumer.    He added  uncertainty  is  created over  whether  the                                                              
application will be accepted.                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked why  the  legislature should  not                                                              
exercise  caution  on  behalf  of  consumers  in  the  unorganized                                                              
boroughs.                                                                                                                       
                                                                                                                                
MR.  DALTON  asked  whether the  legislature  was  protecting  the                                                              
homebuilder from  increased prices.   He said  that houses  in his                                                              
area are cheaper than houses in Fairbanks, Alaska.                                                                              
                                                                                                                                
4:01:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH asked  whether Mr.  Dalton is  aware of  any                                                              
outside financing in Delta Junction.                                                                                            
                                                                                                                                
MR.  DALTON  answered  he  is a  specialty  contractor  and  can't                                                              
answer questions  on financing.  He  said people move to  his area                                                              
of  the  state  to  be free  from  the  regulations  in  organized                                                              
boroughs.  He said they want fewer regulations.                                                                                 
                                                                                                                                
REPRESENTATIVE BIRCH  asked Mr. Dalton  whether he has  a business                                                              
license.                                                                                                                        
                                                                                                                                
MR. DALTON answered in the affirmative.                                                                                         
                                                                                                                                
REPRESENTATIVE  BIRCH said  he did  not see the  proposed  bill as                                                              
more complicated than acquiring a business license.                                                                             
                                                                                                                                
MR. DALTON asked  how the legislature is protecting  the rights of                                                              
a homebuilder.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  BIRCH shared  his understanding  that there  is no                                                              
prohibition on building one's own home.                                                                                         
                                                                                                                                
MR. DALTON shared  his understanding that the proposed  bill would                                                              
require paperwork.   He said  he thinks  it is an  infringement on                                                              
private property rights.                                                                                                        
                                                                                                                                
4:08:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KNOPP   commented  that  the  proposed   bill  has                                                              
nothing to  do with  planning or  zoning.  He  added that  it does                                                              
not require seeking  permission.  He said the  proposed bill would                                                              
require that the  homeowner notify the prospective  buyer that the                                                              
house was  not built by  a licensed contractor.   He noted  that a                                                              
young builder  may not  know all  the regulations.   He  opined it                                                              
doesn't limit  rights in any  shape or form.   He stated  where he                                                              
lives  the borough  has not adopted  codes but  the cities  within                                                              
the borough have.                                                                                                               
                                                                                                                                
4:11:15 PM                                                                                                                    
                                                                                                                                
CHAIR KITO held over SB 45.                                                                                                     
                                                                                                                                

Document Name Date/Time Subjects
SB004 Sectional Analysis ver. N 3.19.2018.pdf HL&C 3/26/2018 3:15:00 PM
SB 4
SB004 ver N.pdf HL&C 3/26/2018 3:15:00 PM
SB 4
SB004 Explanation of Changes ver. U.A to ver. N 3.19.2018.pdf HL&C 3/26/2018 3:15:00 PM
SB 4
SB004 Legal Memo Tattooing.pdf HL&C 3/26/2018 3:15:00 PM
SB 4
SB045 Sectional Analysis.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB045 Sponsor Statement.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB045 Support Letters 3.22.18.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB045 Ver. O.PDF HL&C 3/26/2018 3:15:00 PM
SB 45
SB45 Opposition Letter 3.23.18.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB045 Fiscal Note DCCED-CBPL 2.3.17.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB045 Fiscal Note DCCED-CBPL 3.15.18.pdf HL&C 3/26/2018 3:15:00 PM
SB 45
SB004 ver N.pdf HL&C 3/26/2018 3:15:00 PM
SB 4