Legislature(2015 - 2016)BELTZ 105 (TSBldg)

02/09/2016 01:30 PM LABOR & COMMERCE

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Audio Topic
01:29:44 PM Start
01:31:40 PM SB69
01:35:52 PM SB161
02:10:35 PM Presentation: Cluster-based Economic Development
02:58:47 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Scheduled but Not Heard
Presentation: Strategy & Economic Development
Dr. Christian Ketels
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved CSSB 69(L&C) Out of Committee
           SB 161-EXEMPTION: LICENSING OF CONTRACTORS                                                                       
1:35:52 PM                                                                                                                    
CHAIR  COSTELLO reconvened  the  meeting and  announced that  the                                                               
next  order of  business  would be  SB 161.  [This  is the  first                                                               
hearing of the bill.]                                                                                                           
SENATOR MEYER joined the committee.                                                                                             
1:36:43 PM                                                                                                                    
WESTON  EILER, Staff,  Senate Labor  and  Commerce Committee  and                                                               
Senator Mia  Costello, Alaska  State Legislature,  explained that                                                               
SB 161  provides better protection  for consumers who  purchase a                                                               
home from  an unlicensed builder.  AS 08.18.116 allows  anyone to                                                               
build one structure  every two years without a  license. This was                                                               
intended  to  allow Alaskans  to  build  their  own home,  but  a                                                               
growing  number  of  individuals  are  using  this  exemption  to                                                               
operate a construction business. The  bill seeks to prevent abuse                                                               
of this exemption.                                                                                                              
SB 161  requires anyone  who builds  and sells  a home  without a                                                               
contractor license to disclose that  fact to the state within two                                                               
years  of completing  construction. It  does not  prohibit owner-                                                               
builder  construction,   but  calls  for  a   disclosure  to  the                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED).  It  will  not  only allow  the  department  to  monitor                                                               
unlicensed builders, but  also allow the freedom  for Alaskans to                                                               
build their own homes.                                                                                                          
He  read the  legislative intent  language  in Section  1 of  the                                                               
He reported  that SB 161  is supported  by the Alaska  State Home                                                               
Builders Associations (ASHBA).                                                                                                  
CHAIR COSTELLO requested an explanation  by the department and to                                                               
know if the administration supports the bill.                                                                                   
1:39:40 PM                                                                                                                    
JANEY  HOVENDEN, Director,  Division  of Corporations,  Business,                                                               
and  Professional Licensing,  Department of  Commerce, Community,                                                               
and  Economic  Development,  related  that SB  161  requires  the                                                               
owner-builder  to file  with  the division  within  two years  of                                                               
completing and selling  a home stating that they  are not engaged                                                               
in business  that requires a  contractor's license. She  said the                                                               
bill has no fiscal impact to the division.                                                                                      
1:40:29 PM                                                                                                                    
CHAIR COSTELLO asked  for an explanation of the  problem the bill                                                               
would solve.                                                                                                                    
MR. EILER explained that there  is a need for consumer protection                                                               
when   buying  homes   from  individuals   other  than   licensed                                                               
1:41:41 PM                                                                                                                    
SENATOR STEVENS  asked what difference  it makes to  the consumer                                                               
whether the contractor has a  license or not and what protections                                                               
are in the bill.                                                                                                                
MR. EILER said there would  be protections if there are problems.                                                               
He  recalled the  1980s when  there  was a  housing market  crash                                                               
after which  the legislature raised building  standards. The bill                                                               
prevents  non-contractor  builders, who  do  not  have to  follow                                                               
standards, from acting like licensed builders.                                                                                  
SENATOR  STEVENS  provided an  example  of  buying a  house  from                                                               
someone who does not have a  license and asked how there would be                                                               
more consumer protection under this bill.                                                                                       
MR. EILER  offered to provide  a list  of civil remedies  after a                                                               
sale.  He   commented  on  builders  not   held  to  construction                                                               
1:44:40 PM                                                                                                                    
CHAIR COSTELLO clarified  that it is a  consumer protection bill.                                                               
It  makes the  consumer  aware if  a  house was  not  build by  a                                                               
licensed contractor.                                                                                                            
1:45:14 PM                                                                                                                    
SENATOR GIESSEL  referred to page 3,  lines 4 and 5,  that states                                                               
"within  two  years  after  the   period  of  construction."  She                                                               
inquired how that time period is defined.                                                                                       
MR. EILER asked for more information.                                                                                           
SENATOR GIESSEL restated her question.                                                                                          
MR.  EILER said  he  did  not know  and  wished  to consult  with                                                               
Legislative Legal Services.                                                                                                     
1:46:35 PM                                                                                                                    
CHAIR COSTELLO opened public testimony.                                                                                         
1:46:44 PM                                                                                                                    
PAUL MICHELSOHN,  General Contractor, Alaska State  Home Builders                                                               
Association  (ASHBA), testified  in support  of SB  161. He  said                                                               
ASHBA feels the  bill is long overdue. He provided  an example of                                                               
when  he was  hired  by  an investigation  company  to inspect  a                                                               
house,  built by  an  unlicensed builder,  with  a failed  septic                                                               
system  and   other  flaws.  The   buyer  had  no   recourse  for                                                               
mitigation. He shared another example  in Sterling, Alaska, where                                                               
the home  had 22 code infractions  and the buyer was  not able to                                                               
finance it.  He maintained that  houses built by  contractors are                                                               
better  because  the  contractor   is  held  responsible  through                                                               
bonding for  7 years  under a structural  warranty and  must have                                                               
continuing education credits.                                                                                                   
He pointed  out that  the bill  would have more  of an  effect in                                                               
rural communities where there are fewer licensed builders.                                                                      
SENATOR  STEVENS asked  how the  previously-mentioned house  with                                                               
the sewage  issue would have  looked if Mr. Michelsohn  had built                                                               
1:51:27 PM                                                                                                                    
MR. MICHELSOHN  said the  septic system and  the well  would have                                                               
been registered with the Department  of Health and Human Services                                                               
and  he would  have fixed  it  if it  failed. It  would not  have                                                               
failed in the first place.                                                                                                      
1:52:03 PM                                                                                                                    
ANDRE   SPINELLI,   President,   Alaska   State   Home   Builders                                                               
Association  (ASHBA), testified  in support  of SB  161. He  said                                                               
ASHBA has  been working  on this  bill for a  long time.  He said                                                               
ASHBA wanted to  see reform and the bill is  less than hoped for,                                                               
but is a  start. He requested support from the  committee for the                                                               
CHAIR COSTELLO thanked the testifier.                                                                                           
1:53:28 PM                                                                                                                    
JEFF  TWAIT,  Builder,  Alaska State  Home  Builders  Association                                                               
(ASHBA), testified in support of  SB 161. He responded to Senator                                                               
Stevens'  question by  describing  how  licensed contractors  are                                                               
mandated to  have licensed plumbers  and electricians  do related                                                               
work,   whereas,  unlicensed   builders  often   try  to   do  it                                                               
themselves. He agreed that most problems are in outlying areas.                                                                 
SENATOR GIESSEL asked  Mr. Twait if he knew how  one measures the                                                               
two years listed in the bill.                                                                                                   
MR. TWAIT thought it was when occupancy is taken.                                                                               
1:55:05 PM                                                                                                                    
JESS  HALL,  Builder,  Alaska  State  Home  Builders  Association                                                               
(ASHBA), testified  in support of  SB 161. He requested  that the                                                               
bill   include  provisions   that  address   owner-builders  that                                                               
construct spec  houses. He  said the  bill does  include language                                                               
that  would  address  that issue.  He  discussed  the  inspection                                                               
schedules licensed contractors  must adhere to. He  said once the                                                               
inspection  is  signed off,  their  two  year date  begins.  Some                                                               
owner-builders also have an inspection  signed off, so that would                                                               
also be  when their two-year  period begins. He added  that homes                                                               
financed by Alaska Housing must go through an inspection.                                                                       
CHAIR COSTELLO asked about the scope of the problem.                                                                            
MR.  HALL  opined that  there  are  many  builders that  are  not                                                               
licensed  in the  Valley. He  said if  he were  a home  buyer, he                                                               
would like  to know a  lot more about  the builder than  most do.                                                               
There are few  owner-builders in the Lower 48  because most banks                                                               
won't  finance them;  they  are unique  to  Alaska. He  described                                                               
several scenarios where there were  issues when the owner-builder                                                               
sells a house.                                                                                                                  
2:00:59 PM                                                                                                                    
AARON WELTERLEN, Builder, Alaska  State Home Builders Association                                                               
(ASHBA), testified  in support of  SB 161. He agreed  that owner-                                                               
builders   should  be   allowed,   but  not   allowed  to   build                                                               
commercially.  He stressed  that  licensed builders  are held  to                                                               
much  higher standards  and  are required  to  fix problems  that                                                               
should arise.                                                                                                                   
CHAIR  COSTELLO stated  that the  bill requires  that the  owner-                                                               
builder files with the department.                                                                                              
MR. WELTERLEN said it was a simple one-page form.                                                                               
2:02:22 PM                                                                                                                    
PATRICK DALTON, representing himself,  testified in opposition to                                                               
SB 161.  He addressed the economic  crisis in Alaska and  said it                                                               
is not  wise for the state  to spend money on  this licensing. He                                                               
discussed  privacy rights.  He said  that "local  is better"  and                                                               
licensing should be done at  the borough level. He questioned the                                                               
ability to enforce the provisions in  the bill in rural areas. He                                                               
said private  property is the  cornerstone of a free  society. He                                                               
suggested that there  are other ways to protect  the consumer. It                                                               
is  the  responsibility  of  the   consumer  to  have  the  house                                                               
inspected when  they buy a  house. He suggested  certifying homes                                                               
in a way that does not infringe on privacy.                                                                                     
CHAIR COSTELLO  held SB  161 in  committee with  public testimony                                                               

Document Name Date/Time Subjects
CS SB 69 (L&C).pdf SL&C 2/9/2016 1:30:00 PM
SB 69
CS SB 69 - Updated Fiscal Note DCCED.pdf SL&C 2/9/2016 1:30:00 PM
SB 69
SB 161.PDF SL&C 2/9/2016 1:30:00 PM
SB 161
SB 161 - Sponsor Statement.pdf SL&C 2/9/2016 1:30:00 PM
SB 161
SB 161 - Fiscal Note DCCED.pdf SL&C 2/9/2016 1:30:00 PM
SB 161
SB 161 - Fiscal Note DOLW&D.pdf SL&C 2/9/2016 1:30:00 PM
SB 161
SB 108.PDF SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Transmittal Letter.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Hearing Request.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Sectional Analysis.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 - Fiscal Note DCCED.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 - Fiscal Note DOA.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Supporting Documents - Presentation.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Supporting Documents - Crosswalk.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
SB 108 Supporting Documents - Table of Contents.pdf SL&C 2/9/2016 1:30:00 PM
SB 108
2016.02.09 C. Ketels Presentation Alaska State Senate .pdf SL&C 2/9/2016 1:30:00 PM