04/15/2019 03:15 PM House LABOR & COMMERCE

             HB 102-RENTAL VEHICLE BY PRIVATE OWNER                                                                         
                                                                                                                                
3:50:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced that the  final order of business would                                                               
be  HOUSE BILL  NO. 102,  "An  Act relating  to rental  vehicles;                                                               
relating to  vehicle rental networks;  relating to  liability for                                                               
vehicle rental taxes; and providing for an effective date."                                                                     
                                                                                                                                
                                                                                                                                
CO-CHAIR LEDOUX reminded committee  members that public testimony                                                               
was left open from the bill's previous hearing.                                                                                 
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
3:51:15 PM                                                                                                                    
                                                                                                                                
BRIAN  ROTHERY, Government  and  Public  Affairs Vice  President,                                                               
Enterprise  Holdings,  informed  the  committee  that  Enterprise                                                               
Holdings is a privately held,  family owned company that operates                                                               
the Enterprise, National,  and Alamo car rental brands.   He gave                                                               
a  brief background  on Enterprise's  history  in Alaska,  adding                                                               
that in 2018 they generated more  than 5.8 million dollars in tax                                                               
revenue to  the state  of Alaska.   He  expressed support  for HB
,  adding that  enacting  fair rules  will  result in  greater                                                               
choice for  consumers; more competition within  the industry; and                                                               
allow private  car owners the  ability to  make extra money.   He                                                               
opined  that rules  should be  clear and  fair for  customers and                                                               
service  providers  alike.   He  suggested  that  all  for-profit                                                               
companies competing  for the  same demand  using the  same supply                                                               
should be treated the same under the law.                                                                                       
                                                                                                                                
3:57:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS  asked  how   many  car  rental  companies                                                               
currently exist in Alaska.                                                                                                      
                                                                                                                                
MR. ROTHERY approximated more than a dozen.                                                                                     
                                                                                                                                
REPRESENTATIVE  FIELDS  questioned   whether  larger  car  rental                                                               
companies  are  looking  at  digital   platforms  to  rent  their                                                               
vehicles.                                                                                                                       
                                                                                                                                
MR. ROTHERY  affirmed that.   He  said Enterprise  Holdings views                                                               
this  as  a   new  source  of  supply  in   an  existing  market;                                                               
nonetheless, it is  still car rental.  He added  that the digital                                                               
platform  is  an  opportunity  to  get cars  into  the  hands  of                                                               
customers in an efficient way.                                                                                                  
                                                                                                                                
4:00:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL touched on car  rental competition, asking if there                                                               
is  any research  on the  peer-to-peer market  and their  pricing                                                               
structure.                                                                                                                      
                                                                                                                                
MR. ROTHERY  noted that  it would be  inappropriate to  answer in                                                               
specifics.   Nonetheless, he indicated  that the  internet allows                                                               
companies the  ability to monitor  their competition in  terms of                                                               
prices offered to customers.   He stated that Enterprise Holdings                                                               
looks at all rental transactions regardless of service provider.                                                                
                                                                                                                                
4:05:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   FIELDS   mentioned    that   he   had   received                                                               
approximately 40  letters of opposition  to HB 102  that appeared                                                               
to  be generated  by an  email  blast.   He asked  who wrote  the                                                               
letters and how they were generated.                                                                                            
                                                                                                                                
4:06:03 PM                                                                                                                    
                                                                                                                                
MICHELLE  FANG,  Chief  Legal Officer,  Turo,  stated  that  Turo                                                               
notified  their  community  about  HB 102  and  communicated  the                                                               
company's  opposition  to  the  bill.   They  invited  people  to                                                               
"engage  in the  democratic  process" by  contacting their  state                                                               
representative to  let them know  their opinion  on HB 102.   She                                                               
alleged  that  each  person  drafted their  own  email  and  were                                                               
offered  "talking  points" to  include  that  were based  on  the                                                               
company's reaction to HB 102.                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS  read several of the  "talking points" that                                                               
appeared in many of the emails.   He asked Ms. Fang how she could                                                               
feel   comfortable  disseminating   false  talking   points  that                                                               
question the integrity  of the legislature.  He  pointed out that                                                               
this is  the third public hearing  for HB 102, adding  that it is                                                               
inaccurate to say this bill  "is being pushed through with little                                                               
to no public hearings" -  a statement that repeatedly appeared in                                                               
the emails.                                                                                                                     
                                                                                                                                
MS.   FANG  contended   that  she   was  disconcerted   with  the                                                               
"mischaracterization" of what transpired.   She said that she was                                                               
"very comfortable"  advising their community about  the company's                                                               
opinion towards  the current bill,  adding that it  behooves them                                                               
to inform  people of laws  that will affect the  peer-to-peer car                                                               
sharing communities  - especially  when the industry  hasn't been                                                               
included in the  conversation.  She maintained  that the [emails]                                                               
were not  drafted by Turo  and that  each person chose  what they                                                               
wanted to include in the message.                                                                                               
                                                                                                                                
4:10:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked how many  people share their cars  on Turo's                                                               
platform in Alaska.                                                                                                             
                                                                                                                                
MS.  FANG replied  that there  are approximately  700 users  that                                                               
have  listed their  cars  in Alaska,  which  doesn't account  for                                                               
those  who have  de-listed their  cars.   She estimated  that the                                                               
actual number  of active  users in Alaska  is most  likely around                                                               
300-400.                                                                                                                        
                                                                                                                                
CO-CHAIR  WOOL said  he finds  it  interesting that  there is  no                                                               
clear answer as to how many people  rent their car out on Turo in                                                               
a month  or a  year.   He sought  clarification on  the insurance                                                               
that Turo provides.                                                                                                             
                                                                                                                                
MS.  FANG   stated  that  Liberty  Mutual   provides  third-party                                                               
liability insurance,  which covers all  trips that take  place in                                                               
Alaska.   She  explained that  car  owner hosts  who share  their                                                               
vehicles  automatically receive  one  million  dollars in  third-                                                               
party liability coverage, while the  guests who book cars receive                                                               
the  state-mandated  minimum with  the  choice  to upgrade  their                                                               
protection package.                                                                                                             
                                                                                                                                
CO-CHAIR WOOL asked  if that is comparable to renting  a car from                                                               
Enterprise.                                                                                                                     
                                                                                                                                
MS. FANG countered that it's  "slightly dissimilar."  She offered                                                               
her  understanding   that  rental  car  companies   don't  always                                                               
automatically provide insurance in many states.                                                                                 
                                                                                                                                
CO-CHAIR WOOL questioned whether Turo  should be obligated to pay                                                               
municipal or state taxes like Airbnb does in Alaska.                                                                            
                                                                                                                                
MS. FANG  offered that Turo does  not oppose a fair  and balanced                                                               
tax structure for  peer-to-peer car sharing companies  that is on                                                               
par with what the transportation network companies (TNCs).                                                                      
                                                                                                                                
4:18:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  pointed out  that the  ride-sharing bill  [HB 132]                                                               
implemented a  tax-structure for TNCs  to pay local  sales taxes.                                                               
He  noted that  this is  comparable to  what HB  102 attempts  to                                                               
establish for  peer-to-peer car companies,  except they  would be                                                               
paying the state car rental tax.                                                                                                
                                                                                                                                
MS. FANG  reiterated that Turo  is committed to working  with the                                                               
legislature  to  create  regulations  for  the  peer-to-peer  car                                                               
sharing industry  in Alaska.   She argued  that by  treating TNCs                                                               
differently than Taxis, and Airbnb  differently than hotels there                                                               
is an acknowledgment that each  unique industry should have their                                                               
own tax  model, regulations, and  insurance requirements  in this                                                               
state.    She reiterated  that  they  oppose  HB 102  because  it                                                               
regulates peer-to-peer car  sharing as if it were  the car rental                                                               
industry.                                                                                                                       
                                                                                                                                
4:20:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN asked for the  tax rate on peer-to-peer car                                                               
Sharing in the state of Maryland.                                                                                               
                                                                                                                                
MS. FANG offered  her understanding that it  is approximately 8.5                                                               
percent  for peer-to-peer  car  sharing and  11  percent for  car                                                               
rental companies,  adding that the  two industries  are regulated                                                               
differently.                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  asked if  there is a  verification process                                                               
for [hosts] to  prove that their cars are  legally compliant with                                                               
state law at the time the car is shared.                                                                                        
                                                                                                                                
MS.  FANG related  that  they have  a general  set  of rules  not                                                               
specific to  any one state that  say all cars must  be registered                                                               
and licensed to  drive.  She maintained that they  would be happy                                                               
to have a  conversation about the correct  safety requirements to                                                               
regulate peer-to-peer car sharing in Alaska.                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN questioned whether Turo  has a limit on the                                                               
amount of days a vehicle can be shared.                                                                                         
                                                                                                                                
MS.  FANG replied  that  they do  not create  a  limit for  their                                                               
customers, adding  that 96 percent  of hosts in Alaska  share two                                                               
or fewer cars and most customers  are not listing them 365 days a                                                               
year.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  HANNAN asked  for the  average number  of days  a                                                               
host shares their vehicle in Alaska.                                                                                            
                                                                                                                                
MS.  FANG answered,  "significantly  less than  180  days."   She                                                               
further noted that the average trip in Alaska is 5.5 days.                                                                      
                                                                                                                                
4:27:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  sought  clarification  on  whether  Turo's  one                                                               
million dollars of liability insurance  offered by Liberty Mutual                                                               
covers the [car owner] or the driver.                                                                                           
                                                                                                                                
MS. FANG  explained that during  the reservation  period, Liberty                                                               
Mutual provides  insurance for three people:  one million dollars                                                               
for  the  car  owner  in third-party  liability  coverage;  state                                                               
minimums up to  one million dollars for the driver  and an option                                                               
to upgrade  the protection  package; and  one million  dollars to                                                               
Turo in case they are sued.                                                                                                     
                                                                                                                                
CO-CHAIR  LEDOUX  surmised  that   Turo  is  providing  liability                                                               
coverage of  50,000 to 100,000  dollars for the driver,  which is                                                               
the state mandated  amount, unless the driver has his  or her own                                                               
policy.  She asked if that was correct.                                                                                         
                                                                                                                                
MS. FANG  answered, "only  sometimes."   She continued  by saying                                                               
that  the  state's  mandated insurance  amount  is  automatically                                                               
included for  the driver,  adding that  he or  she can  choose to                                                               
upgrade the protection package to the million-dollar option.                                                                    
                                                                                                                                
4:34:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked why  a driver should  be exempt  from paying                                                               
the 10  percent rental tax to  the state of Alaska  regardless of                                                               
whether  they rented  from a  bricks-and-mortar facility  or they                                                               
used a  car sharing  app.   He asked why  Turo should  be treated                                                               
differently than other car rental companies.                                                                                    
                                                                                                                                
MS. FANG restated that they are  not opposed to taxation on peer-                                                               
to-peer car sharing.                                                                                                            
                                                                                                                                
CO-CHAIR  WOOL interjected,  asking why  [peer-to-peer companies]                                                               
should get a special rate.                                                                                                      
                                                                                                                                
MS. FANG said in the state of  Alaska rental cars are taxed at 10                                                               
percent, RVs are  taxed at 3 percent, and TNCs  are taxed locally                                                               
at  different percentage  rates.   She  remarked  that there  are                                                               
different taxes for different industries,  and they would like to                                                               
discuss the  appropriate tax for  the [peer-to-peer  car sharing]                                                               
industry.   She  further alleged  that rental  car companies  are                                                               
charging  customers in  Alaska for  their  own vehicle  licensing                                                               
fees (VLFs)  and after recouping  those costs continue  to charge                                                               
the same  fees and pocket  the difference.   She added  that when                                                               
cars  are   shared  there  are  fewer   cars  manufactured,  less                                                               
greenhouse  gases, and  lower oil  consumption, which  is a  "net                                                               
good" for Alaska.                                                                                                               
                                                                                                                                
4:40:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STUTES   sought  clarification  on   whether  the                                                               
[guest] pays Turo or the individual sharing the car.                                                                            
                                                                                                                                
MS. FANG  replied that Turo  processes the payment and  takes out                                                               
their own  fees while remitting  the bulk, typically  70 percent,                                                               
to the host.                                                                                                                    
                                                                                                                                
MS.  FANG, in  a follow-up  question from  Representative Stutes,                                                               
addressed her assertion that the  rental car companies are taking                                                               
advantage of Alaskans by charging them  to pay for their VLFs and                                                               
then, once recouped, profiting off it.                                                                                          
                                                                                                                                
4:45:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS asked  Mr.  Rothery to  speak  on the  VLF                                                               
allegation.                                                                                                                     
                                                                                                                                
4:45:18 PM                                                                                                                    
                                                                                                                                
MR. ROTHERY  acknowledged that Enterprise is  permitted by Alaska                                                               
law to  charge a VLF, which  is 1.13 dollars per  day, in attempt                                                               
to recover  costs that incur each  year.  He rejected  the notion                                                               
that car rental companies are using  that fee as a profit center,                                                               
adding  that  he would  be  happy  to substantiate  that  through                                                               
numbers.   He  stated  that the  entire amount  of  all fees  are                                                               
disclosed  to their  customers upfront  and  the suggestion  that                                                               
they are recovering  their money the first third of  the year and                                                               
then profiting  the second two-thirds  of the year  is "blatantly                                                               
false and frankly,  inappropriate for a chief legal  officer of a                                                               
company to suggest  on a sort of hypothetical basis  that this is                                                               
occurring without any evidence."                                                                                                
                                                                                                                                
4:47:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  asked how much  the state of Alaska  charges for                                                               
vehicle licensing.                                                                                                              
                                                                                                                                
MR. ROTHERY  explained that 1.13  dollars per day was  arrived at                                                               
by  taking the  total costs  incurred in  getting a  vehicle road                                                               
ready that are  paid to a state  agency or entity.   He said they                                                               
spread the total cost over  the anticipated number of rental days                                                               
for that particular vehicle.                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX sought  clarification on  whether the  intent of                                                               
the fee is to reimburse the  amount that it costs to license each                                                               
vehicle.  She asked if maintenance fees are included.                                                                           
                                                                                                                                
MR. ROTHERY answered no.  He  said the litmus test for applicable                                                               
fees for this type of recovery  are limited to those fees paid to                                                               
a state agency  that relate to the operation of  the vehicle.  He                                                               
asserted that under  no circumstance is this a  profit center for                                                               
Enterprise Rent-A-Car.                                                                                                          
                                                                                                                                
CO-CHAIR LEDOUX asked how much Alaska charges in licensing fees.                                                                
                                                                                                                                
MR.  ROTHERY replied  that he  was  not prepared  to answer  that                                                               
question;  however, he  would follow  up with  the answer  by the                                                               
following day.                                                                                                                  
                                                                                                                                
4:51:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STUTES questioned whether  1.13 dollars per day is                                                               
a standard rate or if it changes for each vehicle.                                                                              
                                                                                                                                
MR. ROTHERY stated  that it is an average of  all vehicle classes                                                               
across the entire fleet.  He  added that the rate is periodically                                                               
revisited  throughout the  year  to ensure  that the  anticipated                                                               
number  of rental  days remains  accurate and  that they  are not                                                               
over collecting.                                                                                                                
                                                                                                                                
4:54:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  asked what  earnings Turo is  obligated to                                                               
report to the federal government.                                                                                               
                                                                                                                                
MS. FANG said a 1099-K.                                                                                                         
                                                                                                                                
MS.  FANG, in  a follow-up  question from  Representative Hannan,                                                               
stated that Turo complies with  all the requirements of the 1099-                                                               
K under federal law.                                                                                                            
                                                                                                                                
4:57:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked if Alaskans can share their RVs on Turo.                                                                    
                                                                                                                                
MS. FANG answered no.                                                                                                           
                                                                                                                                
CO-CHAIR WOOL said he is interested  in finding out how many cars                                                               
have been  rented through Turo in  Alaska over the past  year and                                                               
how many  drivers there are.   He mentioned a woman  in Fairbanks                                                               
who bought her third  car to share on Turo, none  of which is the                                                               
car she drives regularly for personal  use.  He asked Mr. Rothery                                                               
how many rental cars Enterprise has in Alaska.                                                                                  
                                                                                                                                
4:59:46 PM                                                                                                                    
                                                                                                                                
MR. ROTHERY said 1900.                                                                                                          
                                                                                                                                
4:59:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS  reiterated  his request  for  information                                                               
from Mr. Wilson  who testified on behalf of Turo  at the previous                                                               
bill hearing for HB 102.                                                                                                        
                                                                                                                                
MS. FANG  replied that Turo  is a private  company and is  not at                                                               
liberty to  disclose the answers  to all the questions  that were                                                               
posed to Mr. Wilson.   Nonetheless, she offered the following: 96                                                               
percent of Alaska  hosts share two or fewer  vehicles; there have                                                               
been just over 27,000 sharing  days in Alaska; last month, nearly                                                               
70 percent  of the  trips were in-state;  and the  average Alaska                                                               
host earns about 300 dollars per month.                                                                                         
                                                                                                                                
5:01:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    FIELDS   asked    how   much    Turo's   market                                                               
capitalization is and how much the company is worth.                                                                            
                                                                                                                                
MS. FANG pointed out that a  market cap doesn't exist for private                                                               
companies.                                                                                                                      
                                                                                                                                
5:02:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX closed public testimony.                                                                                        
                                                                                                                                
[HB 102 was held over.]