Legislature(2023 - 2024)SENATE FINANCE 532
04/12/2023 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB87 | |
| SB67 | |
| SB104 | |
| SB114 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 67 | TELECONFERENCED | |
| + | SB 87 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 114 | TELECONFERENCED | |
SENATE BILL NO. 87
"An Act relating to a lumber grading training program
and lumber grading certificates; relating to use of
lumber graded and certified by a person holding a
lumber grading training program certificate; and
providing for an effective date."
1:08:24 PM
SENATOR JESSE BJORKMAN, SPONSOR, read the title of the bill
and offered a sponsor statement:
Senate Bill 87 would create a local lumber grading
program in Alaska Statute to allow dimensional lumber
produced in the state to be graded by locally trained
Alaskans and then used in some residential
construction applications. Currently, dimensional
lumber used in construction must be graded and stamped
in order to meet lender requirements and building
codes. However, the grading process is expensive, and
most Alaska sawmill operators do not produce enough
lumber to cover grading costs.
Under SB 87, locally milled dimensional lumber that
conforms to DNR's substitute equivalents for agency
grading standards consistent with Number 2 and better,
Stud and Number 3 grades could be sold directly to the
end user or a contractor for use in residential
structures with up to three units. This will create
economic opportunities for small businesses, provide
an opportunity for Alaskans to purchase local
products, and perhaps offer building materials at a
lower cost than dimensional lumber from the lower 48.
It could also help address Alaska's housing shortages
across the state, which are made worse by the
significant increase in the cost of construction
materials and lag time due to supply chain issues and
encourage higher value-added use of materials
harvested from forest thinning and hazardous fuels
reduction projects that would otherwise be piled and
burned.
A local lumber grading program would lower the barrier
for entry to create new sawmills. These sawmills can
serve as a catalyst to increase investment in forest
management and help build the timber sector statewide.
This will result in permanent, stable, family-wage
jobs in rural communities and villages, and strengthen
and diversify local economies. A larger timber sector
in turn can provide the additionality needed for
creating and selling forest carbon offset projects,
adding further investment and revenues to
the timber sector.
1:12:11 PM
Senator Bjorkman continued his testimony. He discussed the
high cost of lumber in rural communities. He noted support
for the legislation in the building as well as within the
lumber industry.
1:14:23 PM
LAURA ACHEE, STAFF, SENATOR JESSE BJORKMAN, introduced
herself and discussed a Sectional Analysis (copy on file):
SB 87 Ver. A: Lumber Grading Program Sectional
Analysis Section 1: Adds new statutes to AS 41.17
directing the Department of Natural Resources Division
of Forestry and Fire Protection to establish a local
lumber grading training program for conservative
grading standards established by DNR. It specifies the
frequency of the courses and directs the division to
identify the content of courses, qualifications for
instructors, and requirements for completion. The
section also provides guidance for issuing
certificates, specifies the duration of the
certificate, defines exceptions for certification
without taking a training course, and specifies how a
certificate may be revoked.
The section also adds new statutes to AS 41.17 that
allow for the use of locally graded lumber in
residential construction of single homes, duplexes, or
triplexes. The new language allows an individual
holding a lumber grading certificate to grade and sell
lumber that they have produced directly to a person
constructing a residence or a contractor and specifies
the documentation the seller must provide. The
language also provides a building inspector the
authority to approve, conditionally approve, or reject
the lumber for use in a residence.
Section 2: Provides an immediate effective date.
1:16:24 PM
ALISON ARIANS, DEPUTY DIRECTOR, DIVISION OF FORESTRY AND
FIRE PROTECTION, DEPARTMENT OF NATURAL RESOURCES, discussed
a presentation entitled "SB 87 - Local Lumber Grading"
(copy on file).
1:17:07 PM
Ms. Arians looked at slide 2, "Grade Stamped Lumber":
• Grade Stamped lumber allows the purchaser to know
the wood meets a quality standard
• Grading agencies such as Western Wood Products
Association (WWPA) publishes the Western Lumber
Grading Rules for appearance grading
• Grading rules are accredited by the American Lumber
Standards Committee (ALSC)
• Members of WWPA receive mill training, quality
assurance (QA), market analysis, and professional
development
• Small mill operators find it economically
challenging to become a member of these types of
associations
Ms. Arians discussed lumber grading practices. She relayed
that appearance grading was when a piece of wood was bent
until broken to determine the strength of the wood. She
stressed that membership in grading agencies could be
prohibitively expensive for smaller mills.
1:19:17 PM
Ms. Arians spoke to slide 3, "Cost of grading agency
membership in Alaska":
• Membership Dues + Monthly Site Inspections +
Inspector Travel Costs ˜$2200/month
• Membership options for small mill operators:
- Only pay for membership fees during active
periods
- Stockpile milled material and bring in an
inspector when there is enough to justify the
travel costs
• Difficult for small mills to produce enough volume
to justify these costs and remain profitable
Ms. Arians stated that small mills would not have to pay
month to month and could be selective about membership
options. However, grading costs were high for smaller mills
producing a limited volume of wood. She relayed that
Northland Wood and Viking were the two mills in Alaska that
were members of the WWPA.
1:20:29 PM
Co-Chair Olson asked where the two WWPA members were
located.
Ms. Arians relayed that Northland Wood was in the Interior
and Viking was on Prince of Whales Island.
1:20:43 PM
Ms. Arians referenced slide 4, "What is a Local Use Lumber
Program?":
• It is state law/regulation in seven states allowing
non graded/stamped locally produced dimensional lumber
in some construction applications
• It is often an exemption to a building code that
requires grade stamped lumber
• It is focused on small mill operators providing
opportunities for them to enter home construction
markets
Ms. Arians shared that building homes offered structural
redundancy and predictability.
1:21:53 PM
Co-Chair Olson asked about the lumber from mills and
whether the lumber was 2x4 and 4x4, or larger pieces of
wood.
Ms. Arians relayed that a list of wood products would be
addressed later in the presentation.
1:22:34 PM
Ms. Arians turned to slide 5, "What is a Local Use Lumber
Program?":
• It includes a training program for small mill
operators on grading their own lumber and includes a
recertification schedule
• Because of the code exemption, it allows for
traditional home construction financing
• Gives building inspectors an opportunity to inspect
and reject the wood if necessary
Ms. Arians said that if a person currently wanted to build
a home, they could use cash to buy lumber but would not be
able to get a loan. The bill would allow for a loan.
1:24:00 PM
Ms. Arians considered slide 6, "What is a Local Use Lumber
Program?":
• Local use lumber must be sold to the end user or the
contractor building the home
• Most states only allow residential (1 3 family
home) construction as well as outbuildings
• Mill operator must take and pass a grading course
• Certification only lasts for 5 years
• Mill operator provides a certificate with the local
lumber
Only applies to softwood
1:25:06 PM
Co-Chair Olson asked whether there was any place in the
state that milled hard wood.
Ms. Arians thought there were mills that made hardwood for
cabinets and flooring but not dimensional lumber.
1:25:34 PM
Ms. Arians displayed slide 7, "Why is this program needed
in Alaska?":
• Wood prices have increased dramatically for home
construction
National Association of Home Builders notes
wood prices add $36k to new single family home
construction
Alaska Housing Finance Corporation cites high
cost of construction as a reason new building
permits fell 15%
• Canadian import tariffs on softwood were raised to
17.99% in early 2022
Alaska imports ~$20 million annually in wood
products from Canada (Canadian Trade Commission)
• Forest Management
Salvage harvest of beetle-killed trees less
than 4 years past mortality
Increase forest management opportunities for
private landowners
• Increase economic activity in rural communities
• Increase milling capacity
1:27:18 PM
Ms. Arians highlighted slide 8, "Mill Capacity and
Production in Alaska," which showed a graph of dimensional
lumber production capacity in Alaska. She noted that the
graph was sourced from the United States Forest Service
Southeast Alaska mill survey. The graph showed how much
capacity the state had in the past, how much was still
available, and how much could be available in the future.
1:27:54 PM
Ms. Arians looked at slide 9, "Grading Agency lumber
standards," which showed a table with categories of lumber
and grades of lumber. She said that the program would train
people in the categories of light framing, stud, structural
light framing, and joists and planks. The training covered
the scope of materials for smaller, residential homes.
1:29:11 PM
Ms. Arians addressed slide 10, "Alaska Local Use Lumber -
Substitute Equivalent Grades," which showed a table of
lumber grades. The grades included Number 2 and Better,
Stud, and Number 3. The one-day class would cover these
three grades.
1:29:57 PM
Ms. Arians advanced to slide 11, "Alaska Training and
Certification":
• One day free class focusing on visually grading
lumber to the three Alaska grades.
o Issuance of Alaska Local Use Lumber handbook
o Issuance of Air-Drying Best Practices document
• Offered at least annually in Southeast, Southcentral
and Interior
• Recertification required every five years
• Certification issued to the person, not the mill
1:30:55 PM
Senator Wilson wondered whether the department had already
implemented a one-day training course to gauge
effectiveness of the program.
Ms. Arians relayed that DNR was modelling its program after
what was done in the state of Wisconsin, which was like the
proposal in the bill and had proven successful in the state
of Wisconsin.
1:32:13 PM
Ms. Arians looked at slide 12, "Selling the lumber (special
conditions)":
• Mill owner/operator sells the lumber directly to the
end user or to the contractor building the home
• Lumber sale must include documentation that
describes the 5 designations (grade, species, moisture
content, surface condition, size)
• Lumber sale must include a copy of the mill owner's
certification with the Alaska Local Use Lumber program
• Building inspector may refuse the lumber
Ms. Arians said that builders would be encouraged to reach
out to inspectors early in the process.
Ms. Arians showed slide 13, "Thank you!":
Jeremy Douse
Northern Region Forester
Alaska Division of Forestry And Fire Protection
Alaska Department of Natural Resource
907.451.2670
jeremy.douse@alaska.gov
http://forestry.alaska.gov/
https://forestrymaps-soa-dnr.hub.arcgis.com/
1:33:29 PM
Senator Kiehl asked how tall the residential units could
be.
Ms. Arians replied that she was not sure of the specific
height. She offered to get back to the committee with the
information.
Senator Kiehl wondered about graders being limited to
grading the products in their own mills and not that of
other mills.
Ms. Arians thought that the benefit of mill owners grading
only their own wood gave them a deeper knowledge of the
wood they were selling. She said that mill owners could pay
for someone else to come in and grade their wood, but that
grading their own wood offered integrity of product and
saved money.
Senator Bjorkman interjected that through the program was
like other state programs in which people could sell the
products they produced. He thought Alaska had the advantage
of having less species of trees, which provided for less
complexity. Further, the state had wood that was slow-
growing and strong, despite not being hardwood. He cited
that the spruce under discussion was most recently used in
helicopter rotors. He said that when people attested to the
quality of wood that they produced themselves it
highlighted the quality of the product.
1:37:33 PM
Co-Chair Olson asked what kind of money could be saved by
using locally harvested wood.
Senator Bjorkman thought that local production helped to
eliminate transportation costs for materials.
1:38:59 PM
Co-Chair Olson OPENED public testimony.
1:39:10 PM
KELSEY SCHOBER, SENIOR POLICY ADVISOR, THE NATURE
CONSERVANCY OF ALASKA, spoke in support of the bill. She
testified that a critical component of community
sustainability was a sustainable and regenerative economy.
She noted a report by her organization from 2021, that
explored economic opportunities for her region. She said
that one of the opportunities identified by the report was
a sustainable timber market. He said that the bill would
ensure that lumber harvests from young growth timber would
meet a certifiable standard and that the workforce would be
available to create that certifiable standard. She stated
that supporting the implementation of a lumber standard
would help to move the industry forward.
1:41:40 PM
RODNEY DIAL, MAYOR, KETCHIKAN GATEWAY BOROUGH, KETCHIKAN
(via teleconference), testified in support of the bill. He
stated that the borough was facing a housing crisis;
affordability and availability were hindering economic
growth. He believed that the proposed program was important
to increase the availability of lumber, particularly when
the supply chain was strained. He spoke of the recent high
prices of lumber in Ketchikan. He noted the long history of
lumber mills and sawmills in the area. He felt that the
bill would facilitate local access to local lumber, support
new housing, and create jobs.
1:43:47 PM
JOE YOUNG, OWNER, YOUNG'S TIMBER INC., TOK (via
teleconference), testified in support of the bill. He
relayed that he had been in business since 1993, producing
a wide range of value-added products. He said that
currently, it was cost prohibitive to bring in a lumber
grader. He asserted that SB 87 would create more jobs and
would address the housing shortage in rural areas of the
state. He noted that Alaska producers need a long-term and
steady supply of timber for the program to be successful.
1:45:58 PM
Senator Bishop asked Mr. Young whether he had done any
estimates on potential increase in timber sales if the bill
were to become law.
Mr. Young estimated there would be a 10 percent to 15
percent increase initially.
1:46:52 PM
Co-Chair Stedman asked Mr. Young about the size of his
operation, including the number of employees and size of
the sawmill.
Mr. Young explained that his company bought timber from the
Division of Forestry and harvested it with a mechanical
harvesting side. Once the logs were brought to the mill,
they were processed into saw logs. He had four different
types of sawmills that produced various lengths of timber.
1:48:40 PM
Co-Chair Olson CLOSED public testimony.
1:48:51 PM
Ms. Achee thanked the committee for hearing the bill. She
asserted that the bill allowed for greater use of Alaskas
timber products for the use of construction and would be
beneficial to the state.
1:49:34 PM
Co-Chair Stedman asked whether the bill would allow for the
timber to be cut and used for residences.
Ms. Achee understood that if someone had a personal use
harvest of lumber and was living in an area where graded
lumber was required, they could work with a sawmill that
was certified to grade lumber and use that lumber for
construction.
1:50:50 PM
Senator Bishop considered that it would be nice to have a
stamp specific to Alaska.
Ms. Arians thought the bill would be a first step in
building a market for more lumber and suggested that once
the market was built a stamp could be considered in the
future.
1:52:19 PM
Ms. Arians addressed FN 1 from the Department of Natural
Resources. She explained that the Department would contract
the implementation of a training program through the
University of Alaska Fairbanks - Cooperative Extension
Service through a Reimbursable Services Agreement. The
University has the capacity to develop training,
professional development, and outreach programs to natural
resources-based industry. She stated that the expenditure
would include $206,000 annually to fund the Cooperative
Extension Service to train graders and mill workers. There
would be $5,000 allocated for the lumber grading handbook
and minimal travel.
Co-Chair Olson set the bill aside.
SB 87 was HEARD and HELD in committee for further
consideration.