Legislature(2005 - 2006)BELTZ 211

04/07/2005 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 145 Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Including But Not Limited to:
Heard & Held
Moved CSSB 131(L&C) Out of Committee
Moved CSSB 139(L&C) Out of Committee
          CSHB  81(L&C)-CONTRACTOR LICENSE ENFORCEMENT                                                                      
CHAIR   CON  BUNDE   announced  CSHB   81(L&C)  to   be  up   for                                                               
2:41:18 PM                                                                                                                    
REPRESENTATIVE  TOM ANDERSON,  sponsor, explained  that HB  81 is                                                               
intended to help enforce Alaska's  current laws that were changed                                                               
last  session  regarding  construction contractor  licensing  and                                                               
registration. Section  2 gives  the Department  of Law  (DOL) and                                                               
the  Division of  Occupational Licensing  the authority  to issue                                                               
administrative  fines for  violations. Currently,  violations are                                                               
prosecuted by the district attorney  through the court system and                                                               
many times cases  never go to trial because  they are prioritized                                                               
below other cases  like rape and murder. His  intent with Section                                                               
2  was  to  streamline  enforcement  efforts  and  to  help  make                                                               
government more efficient by not  clogging up the judicial system                                                               
with cases that  are relatively minor compared to  other cases it                                                               
has to handle.                                                                                                                  
The bill  doesn't change any  of the laws affecting  handymen who                                                               
can work  on construction  projects less  than $5,000  and allows                                                               
them  work  on  projects  worth  more  than  $5,000  with  proper                                                               
licensure. It  also allows owner-builders to  construct a single-                                                               
family duplex,  triplex, four-plex  or commercial  building every                                                               
two  years. Current  law  states  one year.  This  change was  in                                                               
response to testimony from a  private home inspector who observed                                                               
people  abusing the  current exemption  by  building units  every                                                               
year for each  member of their family and then  selling the units                                                               
without being a general contractor.                                                                                             
REPRESENTATIVE  ANDERSON related  that  he  has heard  complaints                                                               
from   several   individuals   about   the   two-year   occupancy                                                               
requirements in  the owner-builder  exemption and he  thought the                                                               
committee could  make an amendment  in that regard. He  said this                                                               
bill is strongly supported by several building associations.                                                                    
2:43:28 PM                                                                                                                    
CHAIR  BUNDE asked  if his  experience  is that  a handyman  very                                                               
quickly reaches the $5,000 limit.                                                                                               
REPRESENTATIVE ANDERSON  replied that  he didn't set  that limit;                                                               
it is in current statute and not enforced.                                                                                      
2:45:11 PM                                                                                                                    
SENATOR SEEKINS asked  if the $5,000 limit was for  labor only or                                                               
labor and materials.                                                                                                            
REPRESENTATIVE  ANDERSON  replied that  he  didn't  know, but  he                                                               
thought it was an individual's portion of the contract.                                                                         
SENATOR  SEEKINS asked  if he  has  a $20,000  contract and  five                                                               
people  did  $4,000   worth,  would  they  be   exempt  from  the                                                               
limitation or is it the job itself.                                                                                             
REPRESENTATIVE ANDERSON answered by reading:                                                                                    
     This exemption does not apply  when the work is divided                                                                    
     into  contracts of  amounts less  than  $5,000 for  the                                                                    
     purpose  of evasion  of  the law.  For  work priced  at                                                                    
     $2,500  or more,  some  public  liability and  property                                                                    
     damage insurance is required.                                                                                              
2:46:37 PM                                                                                                                    
SENATOR SEEKINS  said he thought  that section was  confusing and                                                               
asked how a  person would be assessed a penalty  and who would do                                                               
it.  He  said, "I  have  a  natural  aversion to  having  hearing                                                               
officers who are employees of  the department that's bringing the                                                               
REPRESENTATIVE ANDERSON responded that was  a fair concern and he                                                               
added  that the  Administrative Regulation  Review Committee  had                                                               
considered   Senator   Therriault's   central   panel   in   this                                                               
legislative cycle and explained:                                                                                                
     I  think,  though, that  if  we  were  to do  that,  it                                                                    
     obviously adds  a fiscal impact to  the legislation and                                                                    
     we've been really proud that  there hasn't been such. I                                                                    
     think  Greg can  add to  that,  but that's  one of  the                                                                    
     rationales why we didn't just throw it in that panel.                                                                      
2:48:00 PM                                                                                                                    
GREY MITCHELL, Director, Division  of Labor Standards and Safety,                                                               
Department  of Labor  and Workforce  Development (DOLWD),  agreed                                                               
with trying  to avoid a  fiscal note. If  the hearings go  to the                                                               
Office of Administrative  Hearings, it would need  a fiscal note.                                                               
His  division already  has hearing  officers who  are trained  in                                                               
fair hearing  procedures. They work  in a different  section from                                                               
enforcement staff, so there is  some separation. He would not let                                                               
a hearing officer  who has any previous knowledge of  a case hear                                                               
that particular case.                                                                                                           
2:49:15 PM                                                                                                                    
SENATOR SEEKINS  explained that he  was concerned that  all those                                                               
people were getting their paychecks from the same department.                                                                   
CHAIR BUNDE  said he had a  list of people who  wanted to testify                                                               
on this  issue and if their  concerns had been met  with previous                                                               
testimony, he asked them to indicate their agreement.                                                                           
2:51:21 PM                                                                                                                    
MIKE PRAX,  North Pole contractor  representing himself,  said he                                                               
opposed HB  81. The sponsor claims  that it closes a  loophole in                                                               
current  law  and  that  loop   is  "a  bunch  of  onerous  state                                                               
regulations  that are  creating a  noose that  is strangling  out                                                               
society."  He pointed  out that  the department  already has  the                                                               
power  to issue  a  citation on  probable cause  -  a fairly  low                                                               
     This bill  gives them  the authority  to levy  a $1,000                                                                    
     fine  on a  citizen based  on probable  cause and  then                                                                    
     leaves    the   citizen    to   face    a   complicated                                                                    
     administrative procedure. And if  he doesn't fill in an                                                                    
     application  and   write  down  his  reasons   for  the                                                                    
     application  for  review  ahead  of time  in  a  timely                                                                    
     fashion,  he  is even  denied  judicial  review of  the                                                                    
He urged the committee to hold the bill.                                                                                        
PATRICK  DALTON,   Delta  Junction,  opposed  HB   81  that  puts                                                               
enforcement  teeth into  a poor  law. Many  homeowners have  been                                                               
victims  of slothful  craftsmanship, but  the other  side of  the                                                               
equation  is  that a  lot  of  good independent  craftsmen  can't                                                               
afford  expensive licensing  and bonding.  They find  it hard  to                                                               
survive during the long winter  slump and when spring arrives and                                                               
the building season starts, they face  a grim choice - ignore the                                                               
regulations  and work  without a  contractor's license  or simply                                                               
starve. He  also pointed out  that without these  people working,                                                               
there would be an acute shortage of small homebuilders.                                                                         
2:56:09 PM                                                                                                                    
TERRY DUSZYNSKI,  Fairbanks building inspector, supported  HB 81.                                                               
He works with a lot of  owner-builders and thought they should be                                                               
able to continue  to build small homes. He has  also dealt with a                                                               
number  of people  who are  building  homes for  sale who  really                                                               
don't  know what  they  are  doing and  need  the education  that                                                               
licensure provides.                                                                                                             
2:57:52 PM                                                                                                                    
MARY GIRVAN,  Delta Junction,  wanted to  know what  the original                                                               
legislation is that established the $5,000 limit.                                                                               
CHAIR BUNDE replied that it was established last year in HB 542.                                                                
2:58:46 PM                                                                                                                    
NANCY DOBBERPUHL, Fairbanks, said  that the people from Fairbanks                                                               
and  Delta Junction  have expressed  a lot  of her  concerns. She                                                               
spoke  for  herself,  her children,  her  grandchildren  and  any                                                               
Alaskans who  are tired of  senseless regulations. She  should be                                                               
able to hire who she wants and pay  them a fair wage for work she                                                               
will be able to see if it's good  or not. She thought HB 81 was a                                                               
bad bill.                                                                                                                       
3:01:01 PM                                                                                                                    
JIM  CALLAHAN,  Fairbanks,  said  he is  a  "handyman"  and  just                                                               
realized the upper limit was  lowered from $10,000 to $5,000 last                                                               
year.  He  also  wants  honest business  practices  and  consumer                                                               
protection,  but at  the end  of the  day the  difference between                                                               
$5,000 and $10,000 is that contractors  will get more of the pie.                                                               
He related  a story of a  licensed person who did  shoddy work to                                                               
support his  position that licensing  doesn't necessarily  mean a                                                               
person does good work.                                                                                                          
3:03:28 PM                                                                                                                    
NELS CHURCH waived his time.                                                                                                    
3:04:01 PM                                                                                                                    
RANDY DOLL,  Fairbanks, supported  HB 81 and  wanted to  see even                                                               
steeper fines.                                                                                                                  
3:04:26 PM                                                                                                                    
SUE ELLISON,  ABC Incorporated, Fairbanks,  supported HB  81. ABC                                                               
is  a general  contractor licensed  for residential  endorsement.                                                               
She said  HB 81 removed  a cumbersome and  time-consuming process                                                               
out of  criminal into civil  court. She recommended  removing the                                                               
occupancy limitation because it puts  undue stress on some people                                                               
and doesn't accomplish anything.                                                                                                
3:05:33 PM                                                                                                                    
JEFF ALLING,  North Pole,  said he owns  Alcan Builders  and does                                                               
heavy commercial construction and that  he is coming at this from                                                               
a whole different  angle. It's been his dream to  retire in seven                                                               
or nine  years and shortly after  that he wants to  perhaps build                                                               
one rental unit  per year or build  a house for one  of his kids.                                                               
It could  be argued under  Section 5 (12)  that his child  is the                                                               
owner-builder, but  that wouldn't be  the case. It could  also be                                                               
construed that  he is acting  as a contractor, which  he wouldn't                                                               
be if  he were retired. Also,  he would be allowed  to build only                                                               
one rental unit  every two years and he would  have to promise to                                                               
occupy it  or show undue hardship  for not occupying it.  He came                                                               
to Alaska  from Connecticut for  independence and freedom  and he                                                               
would like to be able to exercise his ambition when he retires.                                                                 
3:07:34 PM                                                                                                                    
CHAIR  BUNDE said  that  the sponsor  had  indicated interest  in                                                               
amending  that issue  and would  be back  with a  CS at  a future                                                               
3:08:05 PM                                                                                                                    
ROGER BURGGRAFF, Fairbanks,  said the public was  unaware of this                                                               
bill and  he opposed  it anyhow  as being  obnoxious, un-American                                                               
and un-Alaskan.  It would  put the handyman  out of  business. He                                                               
suggested raising the  limit requiring a license  back to $10,000                                                               
or more.                                                                                                                        
3:11:12 PM                                                                                                                    
TODD LARKIN,  North Pole, said HB  81 would hurt consumers  if it                                                               
were  not amended.  He charges  $30 per  hour for  his labor  and                                                               
works for two categories of  people - contractors and every other                                                               
kind of customer  from homeowners to real estate  agents. When he                                                               
is serving  the homeowners  and real estate  agents, his  time is                                                               
broken up  into service visits,  which means he cannot  get eight                                                               
billable hours without working 10 or  12 hours. When he works for                                                               
contractors on a  temporary basis, he is able  to string together                                                               
40  hours per  week or  more for  one to  three weeks  at a  time                                                               
without interruption.  This, in effect, subsidizes  his rates for                                                               
the other customers  and allows him to keep rates  at the current                                                               
level. If  the committee doesn't  correct HB  81 he will  have to                                                               
raise his rates to achieve the  same income. He noted that he had                                                               
offered the committee a conceptual amendment in writing.                                                                        
3:14:05 PM                                                                                                                    
SETH CHURCH,  Fairbanks, said  HB 81 needed  an amendment  to the                                                               
occupancy provision  in Section 12.  If he currently had  a house                                                               
under  construction, he  couldn't  sell it  without  a notice  of                                                               
completion or  undue hardship. It  lets the government  decide if                                                               
he can sell his house.                                                                                                          
3:16:32 PM                                                                                                                    
MIKE  MUSICK,  Fairbanks,  said  he  is  a  licensed  and  bonded                                                               
homebuilder and supported HB 81.                                                                                                
3:19:01 PM                                                                                                                    
JACK HEBERT,  Fairbanks, said he  is a homebuilder  and supported                                                               
HB 81. He  hated to see the old  days go as he has  always been a                                                               
small builder,  but he  didn't feel that  this bill  changes that                                                               
much. He  supported it because it  sends out a message  that they                                                               
all have to start playing by the same rules.                                                                                    
3:21:24 PM                                                                                                                    
LISA PEGER,  Fairbanks, said she  is an apartment owner  and that                                                               
rentals  always  need  repairs  and  this  would  actually  drive                                                               
handymen away.  No one will take  small jobs and it  would end up                                                               
hurting the small business people.                                                                                              
3:22:41 PM                                                                                                                    
RANDY  GRIFFIN,   Fairbanks,  opposed   HB  81,   especially  the                                                               
occupancy requirement  in Section 12.  He has lived in  his house                                                               
for years, but  it isn't finished and he wondered  if he would be                                                               
able  to sell  it. He  also suggested  that maybe  handymen could                                                               
hand their  customer a  notice saying they  aren't bonded  so the                                                               
customer knows that upfront.                                                                                                    
3:24:59 PM                                                                                                                    
ALAN  WILSON,  Co-chair,   Legislative  Committee,  Alaska  State                                                               
Homebuilding Association, noted that  this bill was introduced at                                                               
his request.  Basically, he  thought most  issues would  be taken                                                               
care  of with  the amendment  that was  going to  be offered.  It                                                               
makes it  easier for enforcement  to cite individuals  similar to                                                               
parking or speeding  tickets. It would simplify what  is going on                                                               
now  and  will  level  the  playing  field  in  the  construction                                                               
industry. He  informed the committee  that California has  a $500                                                               
limit; Oregon and  Washington both require all  individuals to be                                                               
3:28:21 PM                                                                                                                    
CHAIR  BUNDE thanked  everyone for  being courteous  and said  he                                                               
would  hold the  bill for  further  work. He  then adjourned  the                                                               
meeting at 3:28:53 PM.                                                                                                        

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