Legislature(2005 - 2006)BELTZ 211
04/07/2005 01:30 PM LABOR & COMMERCE
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* first hearing in first committee of referral
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CSHB 81(L&C)-CONTRACTOR LICENSE ENFORCEMENT CHAIR CON BUNDE announced CSHB 81(L&C) to be up for consideration. 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 action." 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 standard. 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 fine. 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 date. 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 registered. 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.