Legislature(1997 - 1998)
05/05/1997 03:28 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
May 5, 1997
3:28 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
MEMBERS ABSENT
Representative Gene Kubina
OTHER HOUSE MEMBERS PRESENT
Representative Con Bunde
COMMITTEE CALENDAR
Oversight Hearing: Deprivatization of State Recorder's Office
Activities
CS FOR SENATE BILL NO. 88(L&C)
"An Act relating to the Board of Public Accountancy; extending the
termination date of the Board of Public Accountancy; and providing
for an effective date."
- MOVED CSSB 88(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 203
"An Act relating to actions for unlawful trade practices."
- MOVED CSHB 203(L&C) OUT OF COMMITTEE
* SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 142
"An Act relating to the sale or transfer of new or used motor
vehicles; relating to the confidentiality of certain information
related to attorney general investigations of unlawful trade
practices and antitrust activities; establishing additional
unlawful trade practices; relating to the exemptions from
telephonic solicitation regulation; regulating the sale of business
opportunities; amending Rules 4 and 73, Alaska Rules of Civil
Procedure; and providing for an effective date."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 178
"An Act relating to letters of credit under the Uniform Commercial
Code; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
CS FOR SENATE BILL NO. 126(FIN)
"An Act relating to the retirement incentive program for state
employees; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 88
SHORT TITLE: BOARD OF PUBLIC ACCOUNTANCY
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
02/14/97 356 (S) READ THE FIRST TIME - REFERRAL(S)
02/14/97 357 (S) L&C, STA
03/06/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
03/06/97 (S) MINUTE(L&C)
03/07/97 626 (S) L&C RPT CS 4DP SAME TITLE
03/07/97 626 (S) DP: LEMAN, MACKIE, HOFFMAN, KELLY
03/07/97 626 (S) FISCAL NOTE TO SB & CS (DCED)
03/07/97 626 (S) FIN REFERRAL ADDED
04/10/97 (S) STA AT 3:30 PM BELTZ ROOM 211
04/10/97 (S) MINUTE(STA)
04/15/97 (S) STA AT 4:30 PM BELTZ ROOM 211
04/15/97 (S) MINUTE(STA)
04/16/97 1161 (S) STA RPT 3DP (L&C)CS
04/16/97 1161 (S) DP: GREEN, MACKIE, WARD
04/16/97 1161 (S) ZERO FN TO L&C CS (DCED)
04/24/97 (S) FIN AT 8:30 AM SENATE FINANCE 532
04/24/97 (S) MINUTE(FIN)
04/24/97 (S) MINUTE(FIN)
04/25/97 1472 (S) FIN RPT 6DP (L&C)CS
04/25/97 1472 (S) DP: PEARCE, SHARP, PHILLIPS, ADAMS,
04/25/97 1472 (S) PARNELL, DONLEY
04/25/97 1473 (S) ZERO FISCAL NOTE TO CS (DCED)
04/28/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/28/97 (S) MINUTE(RLS)
04/28/97 1514 (S) RULES TO CALENDAR 4/28/97
04/28/97 1515 (S) READ THE SECOND TIME
04/28/97 1515 (S) L&C CS ADOPTED UNAN CONSENT
04/28/97 1515 (S) ADVANCED TO THIRD READING UNAN CONSENT
04/28/97 1516 (S) READ THE THIRD TIME CSSB 88(L&C)
04/28/97 1516 (S) PASSED Y19 N- E1
04/28/97 1516 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/28/97 1531 (S) TRANSMITTED TO (H)
04/30/97 1393 (H) READ THE FIRST TIME - REFERRAL(S)
04/30/97 1393 (H) LABOR & COMMERCE
05/02/97 (H) L&C AT 3:15 PM CAPITOL 17
05/02/97 (H) MINUTE(L&C)
05/05/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 203
SHORT TITLE: ACTIONS FOR UNLAWFUL TRADE PRACTICES
SPONSOR(S): REPRESENTATIVE(S) DYSON, Croft
JRN-DATE JRN-PG ACTION
03/18/97 738 (H) READ THE FIRST TIME - REFERRAL(S)
03/18/97 738 (H) L&C, JUDICIARY
04/23/97 (H) L&C AT 3:15 PM CAPITOL 17
04/23/97 (H) MINUTE(L&C)
05/05/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 142
SHORT TITLE: BUSINESS PRACTICE REGULATIONS
SPONSOR(S): REPRESENTATIVE(S) DAVIS, Croft
JRN-DATE JRN-PG ACTION
02/17/97 374 (H) READ THE FIRST TIME - REFERRAL(S)
02/17/97 374 (H) L&C, JUDICIARY
02/19/97 408 (H) COSPONSOR(S): CROFT
04/08/97 1025 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
04/08/97 1025 (H) LABOR & COMMERCE, JUDICIARY
05/02/97 (H) L&C AT 3:15 PM CAPITOL 17
05/02/97 (H) MINUTE(L&C)
05/05/97 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
ROBERT MOTZNIK
Motznik Computer Services
8301 Briarwood
Anchorage, Alaska 99516
Telephone: (907) 344-6254
POSITION STATEMENT: Oversight Hearing: Deprivatization of State
Recorder's Office Activities.
NICO BUS, Chief
Financial Services
Division of Support Services
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801-1724
Telephone: (907) 465-2406
POSITION STATEMENT: Oversight Hearing: Deprivatization of State
Recorder's Office Activities.
SHARON YOUNG, State Recorder
State Recorder's Office
Division of Support Services
Department of Natural Resources
3601 "C" Street, Suite 1180
Anchorage, Alaska 99503-5947
Telephone: (907) 269-8882
POSITION STATEMENT: Oversight Hearing: Deprivatization of State
Recorder's Office Activities.
REPRESENTATIVE FRED DYSON
Alaska State Legislature
Capitol Building, Room 428
Juneau, Alaska 99801
Telephone: (907) 465-2199
POSITION STATEMENT: Sponsor of HB 203.
REPRESENTATIVE ERIC CROFT
Alaska State Legislature
Capitol Building, Room 430
Juneau, Alaska 99801
Telephone: (907) 465-4419
POSITION STATEMENT: Answered questions regarding CSHB 203(L&C).
CATE REMME, Consumer Advocate
Alaska Public Interest Research Group
P.O. Box 101093
Anchorage, Alaska 99510
Telephone: (907) 278-3661
POSITION STATEMENT: Testified in support of CSHB 203(L&C) and
SSHB 142.
PEGGY MULLIGAN
Capital City Task Force of the
American Association of Retired Persons
Box 240335
Douglas, Alaska 99824
Telephone: (907) 364-3144
POSITION STATEMENT: Testified in support of CSHB 203(L&C) and
commented on SSHB 142.
VERA GAZAWAY
Older Person's Action Group
Address not provided
Juneau, Alaska
Telephone: (907) 586-1777
POSITION STATEMENT: Testified in support of CSHB 203(L&C).
DAVEED SCHWARTZ, Assistant Attorney General
Commercial Section
Civil Division
Department of Law
1031 West Fourth Avenue, Suite 200
Anchorage, Alaska 99501
Telephone: (907) 269-5265
POSITION STATEMENT: Testified on CSHB 203(L&C) and SSHB 142.
REPRESENTATIVE GARY DAVIS
Alaska State Legislature
Capitol Building, Room 513
Juneau, Alaska 99801
Telephone: (907) 465-2693
POSITION STATEMENT: Sponsor of SSHB 142.
ANGELA ARD
924 East 45th Court, Number 1
Anchorage, Alaska 99503
Telephone: (907) 563-4819
POSITION STATEMENT: Testified in support of SSHB 142.
CHRYSTAL SMITH, Legislative Liaison
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Testified in support of SSHB 142.
ACTION NARRATIVE
TAPE 97-56, SIDE A
Number 001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee to order at 3:28 p.m. Members present at the
call to order were Representatives Rokeberg, Cowdery, Sanders and
Hudson. Representative Brice arrived at 3:29 p.m. and
Representative Ryan arrived at 5:15 p.m.
OVERSIGHT HEARING: DEPRIVATIZATION OF STATE RECORDER'S OFFICE
ACTIVITIES
Number 174
CHAIRMAN ROKEBERG announced the first order of business would be an
oversight hearing of the Department of Natural Resources (DNR)
State Recorder's Office.
ROBERT MOTZNIK, Motznik Computer Services, came before the
committee. He explained his business has processed all the DNR
State Recorder's Office information on his computer for eleven
years. He indicated his business has done most of the distribution
of that data to the people who need it such as title companies,
banks, collection agencies, state and federal agencies, et cetera.
Mr. Motznik indicated he wrote the original recording office system
in 1971 for the state and has written every program that has ever
processed the Recording Office information.
MR. MOTZNIK said when he first started putting the information on-
line he went to the state, as they were still using the key punch
card system, and informed them that he would write their programs
and performing their processing on his computer, at no cost, if
they would key into his computer. That would get the data more up
to date. He noted at that time they were two months behind in
getting a document through the old system. The Recorder's Office
agreed to do that which resulted in what is called a "zero based"
contract. Mr. Motznik informed the committee members that the key
to that contract was that he would have no rights to the data. It
would be a public file and the Recorder's Office would be
responsible for the content of the data. He said he did the
programming and the processing. It was agreed that he would cover
the cost of the programming to the DNR State Recorder's Office
specifications. The DNR State Recorder's Office wrote the
specifications for the system and he did the designing and
programming. The key to that was the state would pay for the
enhancements after the original writing of the system. The state
was also to pay for additional disk space, printing and a few more
things. Mr. Motznik said that gradually, over the years, his
company dropped those requirements. They went to a cooperative
agreement in 1991, as opposed to a zero based contract so that it
would be easier for the state to pay part of the cost of
enhancements. Mr. Motznik explained he performed the enhancements
at no cost.
Number 385
MR. MOTZNIK indicated that DNR is saying that they are asking for
$1.2 million do the system themselves because his company would not
do all the enhancements that DNR wanted at no cost. He noted that
was never in their contract and that the state was supposed to pay
for enhancements. He noted he has provided enhancements and
several of them were at no cost and he was never obligated to do
so.
Mr. MOTZNIK stated that DNR has made several attempts to perform
this processing on their own. The last attempt was $1.2 million in
the current budget, last year it was $440,000 and a few years
before that it was $330,000. Mr. Motznik informed the committee
members that it is his understanding that the DNR did not receive
the $1.2 million.
Number 454
MR. MOTZNIK explained he has a letter from Commissioner John
Shively that says effective July 1, 1997, the department is going
to take over the system on their own. They're going to make a
skeletal system on the state's machine. The letter states that
they will have a hard time doing that and there will be disruptions
in the DNR State Recorder's Office data and backlogs. Mr. Motznik
said to him, that is very irresponsible. He stated he has run this
system since 1971, and there has never been a data interruption and
a self-induced one, as a threat to get funding, is irresponsible.
MR. MOTZNIK said part of the DNR's press release is that the reason
they have to do this on July 1, is because he has refused to
continue processing for free. Mr. Motznik stated that is not true.
He informed the committee members that about two years ago, the
recorder changed the procedures they use in entering names and
addresses in their index system. He compared the index system to
a phone book which is an alphabetical list to find a name to see if
there is a judgement against someone. Mr. Motznik explained there
are thousands of documents out there that can't be found because of
indexing errors. He said documents are being indexed under first
names. Mr. Motznik indicated the state recorder has instructed
that names be keyed exactly as they are on the document. So if the
document says "C Street Auto," you can't find that document under
C, you have to look under ". He stated this is a big thing. There
was already one court case a year ago where Sharon Young had to
write an affidavit that the document was indexed under the wrong
name and under the wrong property description. Mr. Motznik stated
the bankruptcy court ruled that was equivalent of not being
recorded. Pacific Rim Title was told they did not have to pay
title insurance because the end document was completely indexed
wrong, therefore, was equivalent of not being recorded. Mr.
Motznik said, "The title companies have also been trying to get Ms.
Young to clean this up. For quite awhile she would not acknowledge
it. He stated in his letter to Ms. Young he said he would continue
processing after July 1, 1997, for free, but he wants them to
address the errors in the data that is being keyed. Key it as
accurately as it has historically been and he would process it for
free.
Number 738
MR. MOTZNIK said the state conducted a very extensive campaign for
the $1.2 million. Ms. Young would call the title companies
regularly and then he would receive a call from the title companies
saying, "Hey, now she says this."
MR. MOTZNIK said he wrote a letter to the legislature. Mr. Nico
Bus wrote a letter back saying a lot of the statements in the
Motznik letter were not correct.
MR. MOTZNIK referred to the system the state wanted the $1.2
million for and said in the state's promotion of trying to get the
users to support that new system. They said the new system will
produce an index and image of the data. The users would be able to
dial in and get the service from the state. Mr. Motznik said a
bank wrote a letter supporting Ms. Young's request and then called
him the next day and apologized for writing the letter. The bank
said the reason they wrote the letter was it affected their bottom
line. The state was promising services, for free, that they now
pay for. In the letter Mr. Bus wrote, he said the new system
wouldn't compete with Mr. Motznik's system. Mr. Motznik said if
the state will provide the service for free, then they would put
him out of business. He noted Western Microfilm currently
distributes the images of the documents as they microfilm the
documents. If somebody wants a copy of a document, they can call
Western Microfilm, their title company or contact the DNR State
Recorder's Office. He stated if the state is going to provide all
the images for free, then Western Microfilm will be out of business
too. If the state received the $1.2 million in funding, they would
have provided many services that are currently provided by private
enterprise. Mr. Motznik said the DNR has basically tried to
deprivatize the system for years. Currently, his business saves
the state quite a bit of money. He said if he is providing a
service that's free to the state and then the state agency says "No
thank you," something is wrong. Imaging is not the issue,
deprivatization is the issue. He said this is a turf fight. The
state wants to provide the services that he is currently providing
and pay for it with public money. Mr. Motznik asked if he is right
or wrong.
Number 935
REPRESENTATATIVE JOHN COWDERY said Mr. Motznik has been providing
these services for 11 years. He asked how many state workers his
service displaces.
MR. MOTZNIK indicated the state would need one good systems analyst
with a programmer for a year to replace what they are currently
getting for free. Mr. Motznik indicated Mr. Bus has complained
that the department doesn't own the software. He said that is the
state's option. Mr. Motznik said when this system first started,
he wrote the programs and the state didn't want to pay anything for
them. So he said, "Fine, I'll write the programs that you don't
pay anything for them, but you don't own them. So if you want to
own them, pay me."
Number 1033
REPRESENTATIVE COWDERY referred to the present system being
discontinued June 30, 1997, and asked what would be in place July
1, that the public entities could use.
MR. MOTZNIK said all he knows is he received a letter from
Commissioner Shively saying, "Thank you very much, you're done July
1." Mr. MOTZNIK read from a press release from the DNR, "DNR
Commissioner Shively announced that the department will attempt to
create an interim indexing program as a stopgap measure to all the
recording offices to function until a long term solution can be
implemented. This will be a very bare bones temporary solution.
The public should anticipate there will be some disruption in
service and possible backlogs as a result of having to create this
interim system." Mr. Motznik said at the end of the statement,
Commissioner Shively urges the recording system users to make their
concerns known to the legislators as soon as possible to help
mitigate this potential crisis situation. Mr. Motznik said he
can't see how the DNR would have a system by July 1.
Number 1209
NICO BUS, Chief, Financial Services, Division of Support Services,
Department of Natural Resources, was next to address the committee.
He said he would like to acknowledge Mr. Motznik's excellent
service over the past 11 years. He has done the state a great
service by providing this information for free. He explained the
DNR State Recorder's Office was transferred to the DNR from the
Court System. He said the department had very poor equipment and
Mr. Motznik stepped in and helped out. The department ended up
with surplus terminals. Mr. Motznik wrote a computer program and
got the department where they were operational on the system they
are currently using.
MR. BUS informed the committee in 1990, the first agreement was up
for renewal. Mr. Motznik said he would do it again. Mr. Bus said
the department talked to Mr. Motznik about the terms and
conditions. He said the one thing Mr. Motznik says is that it is
a no cost agreement, no cost to the state, but a lot of cost to him
that has been beneficial to the state. Mr. Bus said the one
problem they have run into is Mr. Motznik is driving a lot of the
improvements the state would like to see. Often times, the DNR
would ask for these improvements in making the system more
responsive to the users or for state employees and Mr. Motznik said
he would have to evaluate whether or not he had the time or if
there were costs. Mr. Motznik has expressed repeatedly that he
would like to see some reimbursement for that service. Mr. Bus
stated he would like to do that so they would have a contractual
agreement that would be beneficial to both parties.
Number 1347
MR. BUS said the department is trying to make some efficiencies in
their office, specifically in relation to the way they do their
operating budget. The DNR State Recorder's Office has a tight
budget and operates 14 different offices, many of which have a
single staff person. Mr. Bus said over the past few years, the DNR
has worked very diligently to clean up their internal processes and
get the system to be more responsive, accurate and to the point
where they can not only do the recording, but also do their
archiving responsibility. He noted they are very backlogged in
their archiving.
MR. BUS referred to industry standards and said the DNR looked at
other recording offices. Many offices are switching to new
technology and different software systems. Many counties are using
package software and imaging technology. He said imaging is a very
useful tool as the department could save 10 percent to 15 percent
of their staff time and rededicate that time to their archiving
responsibilities. The department could improve service to the
customers as they customer could receive the data faster. He noted
when you keypunch, there will be errors. Imaging would be a letter
perfect picture of what the customer presents to the department.
Mr. Bus explained the legislature didn't fund that last year. The
Office of Management and Budget (OMB) decided to do a management
audit on the operation for the DNR State Recorder's Office. They
determined that there were many things that had been done that were
correct. Mr. Bus said the department came to the legislature last
year and legislation was approved to clean up some of the recording
statutes which has helped save a lot of time and effort.
Number 1502
MR. BUS informed the committee members that in 1996, the contract
with Mr. Motznik expired. Mr. Motznik agreed to continue without
a formal signed agreement. In the meantime, the department asked
repeatedly that certain enhancements be made. Some of the
enhancements Mr. Motznik agreed to make. Mr. Motznik invested in
some equipment and, again, the issue of cost came up. Because it
was a no cost agreement, the department could not go and pay Mr.
Motznik for his services without going to a competitive bid to give
other vendors an equal chance at it. He said the situation was
explained to Mr. Motznik and he agreed to continue. When the
contract expired last year, Commissioner Shively suggested issuing
a request for interest to see who else would be interested in doing
an arrangement similar to Mr. Motznik's and to find out what else
is out there in terms of technology. This was done in September,
and there were seven responses. Those responses said they would
either provide the service Mr. Motznik is providing for free or
they had software that was state of the art that could be used.
Mr. Bus indicated that most of the people who said they would do it
for free would do it only based on the criteria that they would
have sole right to the data. Mr. Bus pointed out Mr. Motznik is
correct in that he doesn't own the data. He has written the
computer software program, which is his propriety right, but the
data that comes out of it is public information.
MR. BUS referred to the oversight hearing and said the state of
Alaska feels that privatization is really important issue. The
department put out a request for interest to see if people were
willing to do something like Mr. Motznik has been doing. He noted
Mr. Motznik did not respond to the request for information. He
stated the department will continue to talk to Mr. Motznik about
the arrangement. However, the department is in a situation where
they need to see what can be done. The no cost arrangement with
Mr. Motznik is currently to the point where it does cost the state
a lot of money. Mr. Bus said the cost is basically an issue of
control and when the state wants to make changes and when it can be
done. He said his preference is that the operating budget be
adequate to pay for the service Mr. Motznik is providing, without
that, other alternatives need to be looked at.
Number 1666
MR. BUS informed the committee members that the department's plan
with their proposed capital budget was to spend $1.2 million which
was basically for all the equipment that it would take to modernize
the DNR State Recorder's Office. It was not necessarily to replace
the Motznik system, but to have a system that will work for the
state which will speed up the recordation, do the archiving
function and make the data available to the public at large. The
department feels their customers pay for that. Mr. Bus pointed out
that the DNR State Recorder's Office operating budget is fully
funded by the users and there are no general funds going into the
operation. The customers pay for recordation and, over the last
five years, they have put well over $7 million in excess of what it
takes to fund the recording. Mr. Bus explained that Mr. Motznik
agrees imaging will speed things up, but his idea is we should wait
awhile in that the time will come where the cost of imaging
technology will come down.
Number 1734
MR. BUS informed the committee members that the department has done
surveys with the National Association of County Recorders and the
larger counties are switching to imaging and most counties are
currently using imaging technology. Imaging technology will make
public data available to more people in a digital format. Mr.
Motznik has said that will deprive him of some business. Mr. Bus
stated it is a library and everybody should have access to the
information. The department wants to make access to the
information easier. It also would allow employees in the DNR State
Recorder's Office the ability to sort and get information that
currently Mr. Motznik does provide and charges a fee for.
MR. BUS said if their budget is funded, a system would be provided
to people like Mr. Motznik, who are service providers and do
specialized service for the title and banking industries. The
proposed capital project would make a major leap into new
technology.
Number 1862
MR. BUS said the question of what will happen on July 1, is an
important question. He said, "We need to get either to a system
where somebody steps in, from the private sector, and does it all
for free or takes stuff so they can make their money on the side,
or we need to get to a system that we make it available to
everybody and then they can choose what they want to do." Mr. Bus
said over the last year there are people and organizations that
have asked for the information. He said if they go to imaging
technology he believes it will speed up commerce and a lot of
things.
Number 1994
REPRESENTATIVE COWDERY said if the Recorder's Office isn't keeping
up with their work now, how will they keep up later.
MR. BUS explained what he commented on was that the department
aren't keeping up with their archival responsibilities, but they
are keeping up with the recording responsibilities. He noted those
duties are two distinct separate issues. He indicated some of
their old books are falling apart and some of the microfilm isn't
very readable. Mr. Bus pointed out that a couple of years ago the
legislature did fund a new camera so they can go back and film the
old records. He noted they have rooms that are filled with old
records at $2 to $3 a square foot. He said in the current
situation of no cost, the department is completely dependent on Mr.
Motznik. The department can't say, "Tomorrow we'd like to change
all these programs. Could you please do it?" He stated the
department has asked Mr. Motznik to do so and he has been very
accommodating. He has said, "He'll get to it on his schedule."
Mr. Motznik said to the point he feels it is important to his
operation, he can make those decisions. Mr. Bus said, "What I'm
saying as a public servant is that we, as the managers of that
record, we'd like to be in the driver's seat and we feel it is
important to improve that record and pay Mr. Motznik for it.
That's the preferred option." The department looked for
alternatives and that is why they came up with the $1.2 million for
a capital project. They feel that would significantly improve
accessibility to all the records plus the archival function for
everybody.
Number 2135
CHAIRMAN ROKEBERG asked Mr. Bus to make available to the committee
a copy of the request for interest.
MR. BUS said he would do so and also make available a copies of the
responses.
CHAIRMAN ROKEBERG said Mr. Bus' testimony was that he had seven
responses, but his understanding of what was said was there were
seven nonresponsive bidders because they didn't meet the specs of
no cost and they desired the sole exclusive rights to the data.
That wouldn't have been responsive.
MR. BUS said there were seven people who responded to the request
for interest. He referred to the criteria in which they responded
and said there was different feedback. Some of them said they
would do it at "no cost" with the condition that they would get
sole propriety rights to the records. One even said, "If you can
get copies of all of Mr. Motznik's computer programs, we'd be happy
to do this." Mr. Bus stated his point is that Mr. Motznik has seen
the wisdom of running this for the past 11 years and when the
department asks for anything, they need to see at least if anybody
else is interested in doing something similar.
Number 2192
REPRESENTATIVE COWDERY said Mr. Bus is asking for $1.2 million in
capital funding. He asked if with or without the funding, the
department would proceed.
MR. BUS indicated that is incorrect. He said what the $1.2 million
would do is completely retool their offices. They would get
imaging equipment with all the hardware it would take. Currently,
they don't have the funding so they have the option of duplicating
Mr. Motznik's system. He said he has talked to the department's
computer people and they feel they can make it work. Mr. Motznik
is skeptical. He noted without the funding, the department feels
they can continue the service they have been providing in relation
to the recording. They would not do the imaging and digitizing the
$1.2 million would provide for.
REPRESENTATIVE COWDERY asked if hard copies and everything that is
microfilmed would continue to be available to the private sector.
MR. BUS stated that is correct.
Number 2256
CHAIRMAN ROKEBERG said for the purposes of the discussion, Mr. Bus
should assume the department wouldn't get the $1.2 million.
MR. BUS stated he is assuming that. He said on July 1, without the
$1.2 million, the department will build a system that is like Mr.
Motznik's system and they would make the tapes available to Mr.
Motznik and he can keep doing what he is doing with the title
industry. That would give the department the control to update the
program as they see fit and whenever they see fit.
Number 2278
CHAIRMAN ROKEBERG asked Mr. Bus how many scanners he thinks he
could buy for about $7,200.
MR. BUS responded without the software to run whatever is scanned,
the scanner won't do anything.
CHAIRMAN ROKEBERG said the reason he asked the question is because
he would like to know why the department raised the state
recorder's salary range from range 20 to a range 22 last year.
MR. BUS said most everybody in the DNR State Recorder's Office is
a range 10 or a range 12. The recording responsibility is a very
serious responsibility. The Department of Administration asked for
a complete analysis of all the positions in the DNR State
Recorder's Office. They classified those positions and Sharon
Young, as the state recorder and the responsibility that she has as
a section chief, was classified at a range 22. He noted that is
what all other section chiefs in the state of Alaska are paid. Ms.
Young is responsible for a staff of 50 people and has 14 offices.
She also has a significant judiciary responsibility for all of the
records. The Department of Administration classification system
decided that she was never paid correctly, therefore, they
classified her as a range 22.
Number 2352
REPRESENTATIVE COWDERY asked Mr. Bus if the department intends to
duplicate Mr. Motznik's system whether they receive the money or
not.
MR. BUS responded that they intend to automate the DNR State
Recorder's Office system that is currently run by Mr. Motznik.
REPRESENTATIVE COWDERY asked if they intend to do this without any
disruption to the public.
MR. BUS said that is the department's plan.
REPRESENTATIVE COWDERY asked how the department can afford to
duplicate a system that has been in place for so long within their
own budget.
MR. BUS explained the no cost agreement goes at a great cost in
their operation. They decided that was worth the effort to get
control of the system so they could streamline the operation. He
noted they are continually facing downward pressures. Mr. Bus said
they have done layoff notices in the office. He said Mr. Motznik
has done a great job, but the DNR State Recorder's Office system is
not always Mr. Motznik's priority. He referred to the changes the
office might ask for and said if there is a cost to Mr. Motznik, he
makes the decision as to whether or not to make that enhancement.
Number 2429
CHAIRMAN ROKEBERG asked who will pay and where will the software
come from.
MR. BUS referred to the software and explained that is what they
are writing between now and June 30.
CHAIRMAN ROKEBERG asked Mr. Bus if he has ever consulted with the
Church of Latter-Day Saints about using them as a free source of
microfilming the records of the state of Alaska.
MR. BUS indicated he has not personally contacted them.
TAPE 97-56, SIDE B
Number 001
REPRESENTATIVE BILL HUDSON said there are two separate interests
that the department is trying to achieve. One is the recorder's
responsibility that exists by statute and the other is the archival
responsibility. He said to him like what the department is aiming
for is one fix that would handle both. Representative Hudson
indicated that this is difficult for him to follow even though he
was the commissioner of the Department of Administration when the
DNR State Recorder's Office was in that department. He said he
believes it would be a good idea to put something down in language
that separates the recording and archiving. It should state where
the department is and what they are looking for. This would help
understand where the problem is. Representative Hudson said it
sounds like the department is preparing to take care of the matter
anyway. They are going to rewrite the programs. He asked if that
is for not only the recording responsibilities, but also for the
archiving.
MR. BUS responded it would be just for the recording side. He
invited the committee members to tour the operation so they can get
a firsthand view.
Number 100
SHARON YOUNG, State Recorder, State Recorder's Office, Division of
Support Services, Department of Natural Resources, testified via
teleconference from Anchorage. She referred to privatizing any of
the recording functions and said her office isn't opposed to doing
so. In fact, they feel that making the recording information
available to a wider number of customers in a multitude of media
formats would actually stimulate entrepreneurial activity
throughout the state. Ms. Young stated there are many vendors who
already purchase copies of recording and filing information from
the Recorder's Office in both case and microfilm format. She said
those vendors are able to market a value-added product that is
unaffected by the acquisition of a new system and that new system
could be designed to streamline their internal operations and
improve customer service.
MS. YOUNG referred to the indexing system, which is maintained by
Motznik Computer Services, is only one function of many functions
that are preformed by the DNR State Recorder's Office. She pointed
out that there are may layers of functions and some of them are
manual. There is also lot of duplication of data entry, but each
of these functions are required by statute and are essential to the
recording process.
MS. YOUNG referred to what they have learned by observing and
studying other new technology in other jurisdictions is that there
are comprehensive systems that combine all of the functions,
recording, stamping, receiving, indexing, scanning, filming and
document returns, into a single system. Ms. Young said by
eliminating the layers of this process is the only way they can
streamline the work flow enough to create efficiencies in that
process and enable they to do more with (indisc.) in the future.
MS. YOUNG informed the committee the current process is very labor
intensive. She noted there are about 250,000 documents that come
through the office each year. Each document is handled on an
average of 10 to 12 times throughout the process which takes weeks
to complete. She said it is not a matter of just adding, for
example, imaging technology to an existing layered system. You
have to be able to combine the functions and work laterally in
order to distribute the workload and create efficiencies.
Number 237
MS. YOUNG indicated a point she would like to follow up on is that
this has been a valuable function that has been served by the
operation of the indexing system by the private sector, but it has
not been without cost to the state. There have been operational
costs associated with duplicate data entry. They have to enter the
material into Mr. Motznik's system and then input much of the same
information into the state revenue and billing system. She stated
that there is loss in terms of the duplication that occurs and the
many manual processes on which this indexing system depends. Ms.
Young said they also have an inability to obtain specified
management reports to meet specific criteria to support their
operations or to respond to customers who come to them for specific
report information out of the public record. Ms. Young said they
continue to have to refer those customers to Mr. Motznik for
customized extractions or other information that he might be able
to provide with the state's information.
MS. YOUNG stated she would like to emphasize that they did
undertake a customer survey questionnaire over a two year period.
The results of the survey are summarized in the OMB audit, which
was a very expensive and thorough audit of their entire operation.
She said the survey questions indicated that there is quite a
discomfort level among their customers when it comes to using the
existing computer system for locating the records through that
system. Out of all the questions that were included in the
customer survey, that question yielded a negative response in about
one out of every four responses. She said that was a concern to
her office, it continues to be a concern and they are trying to do
everything they can to improve the operation and make more
information available to a wider number of customers in the formats
they require.
Number 354
REPRESENTATIVE COWDERY asked if the department has put out a
request for proposals (RFP) and how long it would take to finalize
it.
MS. YOUNG explained they are working on an RFP, but given the grim
situation involving the capital budget, the timetable may have to
be pushed back. She stated they had originally envisioned having
an RFP ready by June 1. Unfortunately, if it comes to pass that
they do not proceed with the modernization of the system there
wouldn't be an RFP until a later time. Ms. Young stated they have
not issued an RFP, but they have done exhaustive studies.
REPRESENTATIVE COWDERY asked Ms. Young if they have determined what
the annual cost will be to maintain a new system and what costs
will be eliminated. He indicated he would like an answer in
writing.
Number 478
CHAIRMAN ROKEBERG said given the present circumstances and the fact
that the department probably won't receive the capital budget
monies that the department requested, the commissioner has gone so
far as to say in an April 25, 1997, press release, that creating
this interim indexing program is going to be a stopgap measure. It
is going to be a very bare bones temporary solution and will cause
disruptions in service and possible backlogs as a result including
service disruptions and backlogs. Chairman Rokeberg said he
doesn't understand why they state would be going down this path
when they can anticipate these types of disruptions and the further
accumulation of backlogs. He questioned what the reason is.
MS. YOUNG responded, "Our intent is, at this time, that the
privatization would be fully transparent to the public. That there
would be no adverse impact of any kind, but until we see this
system up and running and have it tested and can ensure that it is
doing what the Motznik system has done as far as indexing
information, and in many respects improving the functions under the
current system. Until we can see that tested, we cannot be sure
there will be no backlog, but it's our intent that they be
minimized and as transparent as possible for the public as well as
for our internal operations."
Number 562
CHAIRMAN ROKEBERG said it can't be transparent. He noted in the
press release admits that it won't be transparent. Chairman
Rokeberg asked Ms. Young how she can in seven weeks create a
transparent seamless transition. He said he thinks it is
impossible.
Number 573
MS. YOUNG responded that the programmers are in the computer
section of the Support Services Division and aren't part of the DNR
State Recorder's Office component. She said she would have to
defer to Mr. Bus regarding the time frames and the time that is
associated with developing the product.
Number 619
CHAIRMAN ROKEBERG asked Mr. Motznik to come before the committee to
respond to questions and comments that were made.
MR. MOTZNIK referred to the figure of $1.2 million for imaging and
said that would not at all solve indexing errors. In indexing, you
have to look at the document, you have got to find the name and key
the name in right. That does not change if you are doing imaging
or microfilming. He stated the indexing errors are something that
needs to be addressed. Mr. Motznik said in continuing the free
service, he really wants the DNR State Recorder's Office to start
looking at the errors that are made in the indexing. He said he
doesn't see any way in the world they can get the system going as
there are man years of effort in writing the programs.
Number 662
CHAIRMAN ROKEBERG questioned if there is already existing software
that can be used or does a program have to specifically designed.
MR. MOTZNIK explained it has to be compatible with the existing
system. You cannot start up a new recording office system and then
say, "Well I'm going to search the title up to this point, until
July, 1997. Now I'm going to go this new system." He said that
would be a mess.
Number 679
REPRESENTATIVE COWDERY asked how can the state afford to duplicate
something that Mr. Motznik may have worked on for 20 or 30 years.
MR. MOTZNIK said, "My understanding of the state data center they
would not even allow them to do what all we do." He said the Nome
Recorder's Office can request a granter/grantee index of a range of
serial numbers. He informed the committee members that he wrote
the software that creates that on-line print on their printer in
their office. It is his understanding that the state data center
will not allow it to route print at a printer at a remote location
immediately. He referred to the duplication of the current system
and said he doesn't think that even if the programmers could write
it that the state data processing shop would support it.
Number 730
MR. MOTZNIK referred to Mr. Bus saying that one of the reasons for
doing this is they need to get control. Mr. Motznik said he has
been doing this for many years. Five years ago, there was a
proposal from the DNR for $330,000 to write the existing system on
their system. At that time, they had to agree that they couldn't
do it as well as he was doing it. The reason was that they wanted
to get control. Mr. Motznik said he would like to assure the
committee members that this is a turf war. He said he has offered
to make a proposal to incorporate imaging into the current system
and they weren't interested. Mr. Motznik noted he could probably
provide the system they want at maybe half of what they are going
to have pay on their own and they aren't interested.
MR. MOTZNIK said Ms. Young keeps talking about duplicate entry. He
said when the system was first started, the DNR State Recorder's
Office didn't account for each transaction. They keyed the dollars
that they charged into his system. Mr. Motznik said he produced an
accounting report and they used that to make their general ledger
increase. About five or six years ago, they decided they have to
issue a receipt to each individual that comes in. The question was
should it be done through the Motznik system or through the state's
system. The DNR decided they would do it on the state's system.
As soon has they had it up, they would drop keying the information
into his system. Mr. Motznik said they had trouble. They got it
onto the state's system to issue receipts, but the programmers
could never get the statistics they needed out of the state's
system. That is why they do the duplicate entry. They do the
duplicate entry because the first decision did not follow through.
Mr. Motznik said, "If they keyed information into my system, I'm on
a mainframe the state's on a mainframe, I can dump that information
and go into the current accounting system. There is no reason for
her to be doing the duplicate entry, but she is not interested in
stopping the duplicate entry." He stated this is a turf war
because the state isn't interested in solving the things that have
been complained about.
Number 849
REPRESENTATIVE JERRY SANDERS said, "This looks to me like a high
tech version of laying off the road grader. They're not getting
their money. They're going to lay you off. The public is going to
be mad and come back..."
MR. MOTZNIK said there is going to be a crises. The public is
going to demand that the legislature give the DNR State Recorder's
Office the money to fix the crises and it will be millions.
Number 910
CHAIRMAN ROKEBERG asked Mr. Bus to come back before the committee.
He said, "There has been some comments in the public that Ms. Young
has been telling certain institutions, banks and all and perhaps
title companies and so forth in the Anchorage area, that I'm aware
of, that they're going to -- if they would get behind the state's
endeavors that they're going to be getting their information free
which here to fore they've been purchasing from Mr. Motznik. Is
that correct?"
MR. BUS responded, "The proposal that we had in the capital project
was that if you wanted that information, you could just come our
office and get whatever you wanted and that was how you could get
it for free. If there would be manipulation by any of our staff,
we would not do that. We would defer to the service providers and
say `Do that.' But it's like in anything if you have a database
and you can call that database up, then you can use that data for
whatever. It's like the way we go to our public libraries right
now. You can go on the Internet. You can get a lot of information
for free. It's all public records. Our public records are
available for the public and if they want to look it up, that's
fine. If they want prints or they want any extra work, they would
have to pay for that. The free reference was to the fact that the
software had certain manipulation capabilities and search
capabilities that people could do on their own. They would not
necessarily have to go to a service provider because they say,
`Okay, give me all the National Bank of Alaska transactions.' They
could push the button and they could thumb through it just like any
search engine on a database. And that's -- right now the system
doesn't allow that. So that's an enhancement in the system. The
free -- I want to clarify again, the customer pays to get the data
recorded. So the customer paid for it in the first place. Then if
they want to get to that and they want to spend the time and effort
to look it up, and that is available to them as long as it doesn't
require our interaction, that would be free. If there would be
manipulation for title agent or whatever we say, `Go see Mr.
Motznik, go see GeoNorth - whoever the service provider is.'"
Number 999
CHAIRMAN ROKEBERG stated it is third parties mostly who would be
looking at the information. It wouldn't be the customer who paid
the recording fees. Normally, the public would retain certain
service organizations. The public would maintain a service
provider to look up that information for a specific purpose.
MR. BUS noted it is the public record. The public record is
available to everyone who spends the time to look it up. Mr. Bus
urged the committee to look at how different counties do it in the
Lower 48. He said he feels it will enhance commerce.
Number 1088
CHAIRMAN ROKEBERG stated the committee would be issuing a letter on
this issue. He suggested the department return to the bargaining
table so there isn't a crises that could interrupt the commerce of
the activities of the state of Alaska.
MR. BUS said he would be happy to talk to Mr. Motznik and the
committee members.
CHAIRMAN ROKEBERG closed the oversight hearing.
CSSB 88(L&C) - BOARD OF PUBLIC ACCOUNTANCY
Number 1122
CHAIRMAN ROKEBERG announced the committee would address CSSB
88(L&C), "An Act relating to the Board of Public Accountancy;
extending the termination date of the Board of Public Accountancy;
and providing for an effective date." He noted the committee has
addressed HB 140, which is the same bill. He said he would
entertain a motion to move CSSB 88(L&C).
REPRESENTATIVE COWDERY made a motion to move CSSB 88(L&C), Version
E, out of committee with a zero fiscal note and individual
recommendations. Hearing no objection, CSSB 88(L&C) moved out of
the House Labor and Commerce Standing Committee.
HB 203 - ACTIONS FOR UNLAWFUL TRADE PRACTICES
Number 1190
CHAIRMAN ROKEBERG said the next order of business would be HB 203
"An Act relating to actions for unlawful trade practices."
REPRESENTATIVE FRED DYSON, sponsor of HB 203, indicated he has
supplied the committee members with a committee substitute dated
April 24, 1997. He said he introduced the bill because of concerns
from people he has spoken with who are struggling because of
consumer business fraud. The Office of the Attorney General isn't
currently a part of this business and the Better Business Bureau
has limited capacity. He stated when the bill was previously
heard, several concerns came up. He referred the committee to page
2 of the committee substitute.
CHAIRMAN ROKEBERG asked if the committee substitute is Version L.
REPRESENTATIVE DYSON indicated that was correct.
Number 1300
REPRESENTATIVE HUDSON moved to adopt CSHB 203(L&C), dated 4/24/97,
Version L, for the purpose of discussion.
CHAIRMAN ROKEBERG asked if there was an objection. Hearing none,
CSHB 203(L&C) was before the committee.
Number 1320
REPRESENTATIVE DYSON referred the committee to page 2, lines 29
through 31, and said he believes this wording takes care of
concerns brought up by Chairman Rokeberg.
CHAIRMAN ROKEBERG said a subsection (b) was added to correspond
with the award that would be made to the plaintiff in subsection
(a).
REPRESENTATIVE DYSON said that is correct. He said it levels the
playing field in that if the cause of action isn't justified, then
the defendant has a recovery mechanism. Mr. Dyson said he has
thought about how someone could use this kind of an action in a
competitive advantage. He said he added subparagraph (c) on page
3, "In an action brought under AS 45.50.471 - 45.50.561, if the
court finds that the action was brought by the plaintiff to obtain
a competitive business advantage and the plaintiff is not the
prevailing party, the court shall award the defendant costs as
provided by court rule, full reasonable attorney fees at the
prevailing reasonable rate, and any damages suffered by the
defendant as a result of the plaintiff's allegations."
Representative Dyson noted he doesn't remember anybody on the
committee directing him to do something with this paragraph. He
said it seems reasonable to him.
CHAIRMAN ROKEBERG referred to the term "by court rule" and asked if
this is rule 82 or if there is another court rule that would apply.
Number 1475
REPRESENTATIVE ERIC CROFT came before the committee. He referred
to full cost and said it is understanding from the drafter of the
bill that there is a question about whether that requires changing
a court rule. There is a difference of opinion as to whether the
court rule on cost needed to be changed. He said rather than
getting into the area, they just said you are due costs as defined
by the applicable court rule to avoid conflict. Representative
Croft stated, "I read the court rules as saying anytime you are
entitle to them, this is what we mean by costs, but not really
getting into the area of when you are or not entitled to them. But
it's a little ambiguous, so they thought that wording would avoid
us getting conflict...."
Number 1546
CATE REMME, Consumer Advocate, Alaska Public Interest Research
Group, testified via teleconference from Anchorage. She said she
was asked by her membership to come and testify in support of the
legislation which would put consumer protection language back in
the state of Alaska. She said she would like to compliment Daveed
Schwartz for his hard work and also for HB 142. Ms. Remme stated
consumers crime is a serious crime and affects people's lives.
There is a tendency to treat this crime as white collar crime and
not as seriously as people who are victimized by violence.
MS. REMME indicated earlier in the week, she met with some high
school students and their consensus is that the state of Alaska
does not prosecute white collar crime in the same way that they
prosecute crimes that are committed with weapons or where violence
was involved. The students do realize that in many cases that
people's lives are seriously affected and, in some cases, destroyed
by being conned. She said she receives many calls asking what
people can do, if there is a law or is there consumer protection in
the attorney generals office. Ms. Remme said she thinks that
because of the (indisc.) laws, regardless of their profession or
their class of economic status, we should recognize the presence of
a legal force from the Attorney General's office. That is
absolutely mandatory in deterring this type of crime. Ms. Remme
said her organization has produced a report on consumer protection
titled "The Alaska Perspective," written by Dr. Jammie Campbell and
indicated she would be happy to send a copy of it to the committee.
She noted it contains statistics gathered from other states that
have consumer protection.
Number 1756
REPRESENTATIVE HUDSON asked Representative Dyson if the CS includes
the amendments the committee members have.
REPRESENTATIVE DYSON indicated the CS doesn't include the
amendments. He noted the amendments are in response to a concern
Representative Ryan brought up.
CHAIRMAN ROKEBERG said the committee would continue with testimony
and then address the amendments.
Number 1798
PEGGY MULLIGAN, Capital City Task Force of the American Association
of Retired Persons, came before the committee to testify. She
stated she testified a couple of weeks ago in support of the
measure and she also supports the committee substitute.
REPRESENTATIVE DYSON asked Ms. Mulligan if it is her sense with the
seniors that they are being approached and preyed upon by
predators.
MS. MULLIGAN indicated she believes this is taking place. She said
her organization's priority for the summer is to put out knowledge
about telemarketing fraud. She said they feel they can educate the
public about consumer fraud. Ms. Mulligan stated she definitely
believes there is a problem.
Number 1876
VERA GAZAWAY, Older Person's Action Group, testified from Juneau.
She said her organization also supports the committee substitute.
CHAIRMAN ROKEBERG suggested moving the proposed amendment for the
purpose of discussion.
Number 1918
REPRESENTATIVE COWDERY made a motion to move the following
Amendment 1 for the purpose of discussion:
Page 1, lines 9 - 10:
Delete ",or who is otherwise aggrieved,"
Page 2, lines 3 - 7:
Delete all material.
Renumber the following bill sections accordingly.
CHAIRMAN ROKEBERG clarified the amendment would delete subsection
(f) of AS 45.50.531.
REPRESENTATIVE DYSON informed the committee members this was a
concern that was raised. The amendment deletes the wording "or who
is otherwise aggrieved." It takes out any award of damages for
anything subjective. He said, "It is not a material damage,
quantifiable, then it's eliminated." Representative said page 2
lines 3 through 7 would delete Section 3. It eliminates the
subparagraph (f) to make it consistent.
Number 2116
DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law, was next to testify via
teleconference from Anchorage. He noted he doesn't have a copy of
the committee substitute and said he is at a loss to give specific
feedback. He said with respect to what has been discussed
regarding the attorney fees, it sounds like the section addresses
the concerns that were brought up previously.
CHAIRMAN ROKEBERG referred to Section 45.50.537 and said a
subsection (b) has been added. He continued to read the section,
"In an action brought under AS 45.50.471 - 45.50.561, the court
shall award the defendant costs as provided by court rule and full
reasonable attorney fees at the prevailing reasonable rate if the
action is found to be frivolous." Chairman Rokeberg referred to
there being no vexatious litigation statute, he asked if there is
a common law definition of frivolous.
MR. SCHWARTZ explained rule 82, in the Alaska Rules of Civil
Procedure, does contain a subsection dealing with vexatious and
frivolous litigation. Judges make this kind of determination all
the time under rule 82. He said he believes case law discusses
numerous instances in which litigation has been found to be
vexatious or frivolous. Mr. Schwartz said he thinks there is
common understanding in the superior, district and supreme court of
Alaska as to what constitutes vexatious or frivolous litigation.
He said he thinks it is a determination the courts make on a
routine basis whether or not the litigation is frivolous in order
to assess rule 82 fees at this time. He stated he doesn't believe
it will be a new concept at all.
Number 2207
CHAIRMAN ROKEBERG said, "In regard to the terms used in what you
have in the original bill the under attorney fees, costs and
damages, the terms `by court rule,' which is used as it relates to
the defendant also now, would that be rule 82 or are we talking
about the full costs? We've got the court rule and `for reasonable
attorney fees.' Now what are we talking about here?"
Number 2291
MR. SCHWARTZ said he believes under rule 82, a court could rule for
reasonable attorney fees.
CHAIRMAN ROKEBERG asked if it wouldn't be a percentage of the fees.
MR. SCHWARTZ said that is a routine award under rule 82. It is
generally 20 percent of attorney fees, but rule 82 also allows a
court to adjust the attorney fees depending on the circumstances.
CHAIRMAN ROKEBERG asked Representative Dyson if that was his
intent.
REPRESENTATIVE DYSON said, "Our intent was, Mr. Chair, that the
defendant who prevails in a course of action..."
TAPE 97-57, SIDE A
Number 001
REPRESENTATIVE DYSON asked Mr. Schwartz if there is any way the
language could be strengthened to accomplish their purpose.
MR. SCHWARTZ responded he thinks the existing language does provide
the level paying field that he understood the committee wanted in
the bill from the discussion at the prior hearing on the bill.
Number 061
REPRESENTATIVE CROFT said there was a concern about the wording
"costs by court rule." He said what the drafter told him was that
was necessary to invoke and not contradict rule 68 defining what
court costs are.
MR. SCHWARTZ indicated he was confused earlier. He apologized and
said he believes that appraised by court rule actually applies to
the award of costs and the award of costs is addressed in Alaska
Civil Rules of Procedure number 79. Full costs are routinely
awarded regardless of whether you've got a rule 82 attorney fee
situation or a full reasonable attorney fee situation. He said the
"by court rule" phrase refers to the award of costs under rule 79
and does not relate to the award of full attorney fees.
Number 170
CHAIRMAN ROKEBERG said there was no further witnesses to testify
and closed the public hearing. He asked if the sponsor agrees with
the intent of Amendment 1.
REPRESENTATIVE DYSON indicated he does agree.
Number 187
REPRESENTATIVE HUDSON moved to adopt Amendment 1.
CHAIRMAN ROKEBERG asked if there was an objection. Hearing none,
Amendment 1 was adopted.
Number 209
REPRESENTATIVE HUDSON moved and asked unanimous consent to move
CSHB 203, Version L, as amended, out of committee with individual
recommendations and a zero fiscal note.
CHAIRMAN ROKEBERG asked if there was an objection. Hearing none,
CSHB 203(L&C) moved out of the House Labor and Commerce Standing
Committee.
Number 257
CHAIRMAN ROKEBERG called for a brief at-ease at 5:11 p.m. He
called the meeting back to order at 5:13 p.m.
SSHB 142 - BUSINESS PRACTICE REGULATIONS
Number 267
CHAIRMAN ROKEBERG announced the next order of business would be
SSHB 142, "An Act relating to the sale or transfer of new or used
motor vehicles; relating to the confidentiality of certain
information related to attorney general investigations of unlawful
trade practices and antitrust activities; establishing additional
unlawful trade practices; relating to the exemptions from
telephonic solicitation regulation; regulating the sale of business
opportunities; amending Rules 4 and 73, Alaska Rules of Civil
Procedure; and providing for an effective date."
Number 315
REPRESENTATIVE GARY DAVIS, prime sponsor of SSHB 142, came forward
to explain the bill. He informed the committee members the bill
was initiated, drafted and introduced quite awhile ago. He said
the reason a request to hear the bill was just recently submitted
to the committee was because there has been a lot of work done
between him and the department to get a clean bill. He informed
the committee they ran into complications with the Automobile
Dealers Association. He indicated he attended the Automobile
Dealers Association meeting held in Juneau. Representative Davis
stated he understands a lot of the association's concerns and also
agrees with a lot of their concerns as indicated in the sponsor
statement. A large portion of the test in the bill relates to used
car dealers and how they expose problems that may exist on a
vehicle. At the Automobile Dealers Association meeting, the
association indicated that over the years there has been numerous
pieces of legislation that deal with the used car dealers. Of
course a lot of people will associate used car dealers reputations
right along with politicians. So there is a lot of public concern
with how things are dealt with.
REPRESENTATIVE DAVIS said it would be his recommendation to
simplify the bill and delete Section 2, that deals with public
disclosure. This section is questionable and probably needs some
work. He indicated he thinks the department will agree with the
change. Representative Davis said, "Section 2 of the bill that
deals with problems with the vehicles that not only the used car
dealers, but new car dealers and manufacturers must convey, what is
felt in a reasonable fashion in the bill, to the consuming public."
Number 576
REPRESENTATIVE DAVIS pointed out Section 1 deals with the
inspection/emissions certification that is required in Anchorage
and Fairbanks. There have been some problems. Some people would
say significant problems and others would say they are relatively
minor problems. He indicated there are people to testify.
REPRESENTATIVE DAVIS said, "The other sections of the bill relate
to some consumer problems that have come up in court cases and also
some tweaking of recent legislation that the Consumer Affairs
Section of the Department of Law, I believe is how it can be
presented - I'm not exactly who - what Daveed Schwartz office is
called, but they've come across some problems that I believe are
just some housekeeping measures in the bill relating to catalog
sales. And our telemarketing legislation that we passed, I believe
last year, they found a loophole in the catalog exemption sales or
it's not addressed properly. That's being addressed in here. It's
just closing a loophole there. Then in some recent situations
around the state with some of these business opportunity sales
people that come in and give some high power speeches in how to go
into business and make a quick buck and they're the ones making the
quick buck and there isn't much chance for anybody else. So that's
being addressed also. So of course having being familiar with the
sections, I feel there is just some technicalities being cleaned
up, but of course I hope I can convince the committee of the same
and other testifiers of the same."
Number 745
REPRESENTATIVE COWDERY asked if the legislation would also pertain
to private transactions.
REPRESENTATIVE DAVIS said the same question came up by the
Automobile Dealers Association. He noted that is not addressed in
Section 2. It should be addressed if that section stays in the
bill.
Number 780
CHAIRMAN ROKEBERG said he would like to take public testimony. He
noted it is his intention to move the bill to a subcommittee for
interim study as it is a very broad and major bill dealing with
consumer protection in other areas.
CHAIRMAN ROKEBERG said, "As it relates to Section 2, as suggested
by the sponsor, it is the desire of the chair right now to leave
that in the bill because we want to review to see, if in all
probability reviewing it, that perhaps another bill would be
generated out of it to make sure that those concerns are properly
covered in whatever vehicle. We'll be working with the bill
sponsor on that."
Number 865
ANGELA ARD testified via teleconference on behalf of herself as a
citizen of Anchorage. She read the following statement into the
record:
"On July 29, 1996, I purchased an $11,000 GMC Sierra from a well-
known Anchorage known Anchorage used auto dealer. During
negotiations, I indicated that I would like to take the vehicle to
a mechanic for an inspection before purchasing it. I was told by
the salesman that an inspection wasn't necessary and the truck was
in great shape. I proceeded to close the deal. The following
morning, upon attempting to start the truck, it made a horrible
grinding noise and had to be towed back to the dealership for
repairs. I was informed by the dealership that the truck would not
pass I/M certification and had to have part of the engine repaired
because of extensive smoke damage. Had I known that this $11,000
vehicle would not pass I/M certification, I never would have
purchased it. The dealership, however, required me to sign a
disclosure guaranteeing that my trade-in auto would pass I/M
certification, and that if it failed, I would pay to fix it. They
offered no such guarantee on the truck they were selling me.
"After the dealership made the necessary repairs to the truck, I
took it to a mechanic for an inspection and learned that the truck
had been in a prior wreck and had no air conditioning. I had asked
a mechanic at the dealership why the air wasn't working, and he
told me to, quote, let it run a little longer. In actuality, the
entire air conditioning system had been removed from the vehicle
because of the wreck it had suffered.
"After failing to find me a decent vehicle, I asked the dealership
to unwind the deal. They refused. I finally sought legal
assistance, at which time they unwound the deal.
"It was very frustrating and disappointing to be mislead and taken
advantage of by this auto dealership. If this bill were in effect
when I was in the market for purchasing a used vehicle, it would
have saved me from purchasing this `lemon.'"
Number 986
CHAIRMAN ROKEBERG said Ms. Ard's fact pattern is very similar to
something he heard last session.
REPRESENTATIVE COWDERY asked Ms. Ard if she bought the vehicle from
a dealer in Anchorage.
MS. ARD said that is correct.
REPRESENTATIVE COWDERY asked if he was right in saying the
dealership wouldn't make the deal good until after she sought legal
assistance.
MS. ARD responded that was correct. She noted several times they
tried to give another vehicle which they keep increasing in price.
She stated she had those vehicles checked out and they had several
mechanical problems. She said she spoke to Mr. Schwartz and he
spoke and wrote a letter to the dealership. The dealership then
agreed to unwind the deal after that.
REPRESENTATIVE COWDERY questioned if the dealer is still in
business.
MS. ARD indicated they are still in business.
Number 1077
CATE REMME, Consumer Advocate, Alaska Public Interest Research
Group, testified via teleconference from Anchorage in support of
SSHB 142. She stated he has the same feelings as Ms. Ard. She
referred to Representative Davis' discussion regarding removing
Section 2 and said the whole concept of consumer protection
revolves around the notion consumers should get what they paid for,
be aware of the contents of the items when purchased, be guaranteed
the safety of those products and be aware of any policies and
practices affecting the finances of their private lives and have
recourse for breaches of any of these principles. Ms. Remme said
without legal recourse, these consumer issues are very often
unresolved.
REPRESENTATIVE COWDERY informed the committee he owns four
vehicles. He said he sells them when he starts seeing that the
repair bills increase, but there isn't anything particularly wrong
at the time. Representative Cowdery asked Ms. Remme if the
legislature should address this kind of a scenario towards the
private section.
MS. REMME said it is her understanding that there is no
jurisdiction over private sale. One of the major complaints they
receive is dealers, who are posing as private citizens, sell
previously wrecked vehicles that have been totaled by insurance
companies. They create very dangerous driving situations. She
said she doesn't have answer to Representative Cowdery's question,
but currently there is no jurisdiction that addresses that.
Number 1183
REPRESENTATIVE DAVIS said he would like to assure Ms. Remme if
Section 2 does get deleted from the bill, the issue will still be
looked at, but may not be a part of this legislation.
PEGGY MULLIGAN, Capital City Task Force of the American Association
of Retired Persons, testifying from Juneau, stated she thinks her
organization will probably support the legislation. Ms. Mulligan
stated she would like to wait to testify until the bill comes out
of the subcommittee.
Number 1225
CHRYSTAL SMITH, Legislative Liaison, Civil Division, Department of
Law, came before the committee. She stated she would like to
express the division's support for SSHB 142. Ms. Smith said she
reviewed the bill from the view of a consumer. She stated she
would like to make it clear that nothing in the bill is intended to
harm honest straight forward business people. It is her belief
that people who are in business in Alaska are doing it according to
the rules. If there are bad actors in a profession, it harms those
who are not bad actors.
MS. SMITH said the bill has five parts. One is the emissions
certificate that would let a person know what the status is before
a sales contract is signed. She noted that cleans up legislation
which was passed in 1992.
MS. SMITH referred to Section 2 and said it deals with
confidentiality of investigative records for consumer protection
antitrust cases.
MS. SMITH referred to the telemarketing and said there has been
problems with people saying that they were exempt from the
telemarketing registration requirement because they were mail order
catalog people. Ms. Smith stated there are certain requirements
for being a legitimate mail order business.
MS. SMITH referred to the question of business opportunities and
said, "I guess it wasn't one of you although I'm sure you have all
had this experience with your constituents, we did get a call
recently - somebody saying - a legislator saying `Well what can we
do about these, quote, business opportunities?' The one that I
think Representative Davis said they're making more money off them
then the folks we get taken in by the deals. So there is a
comprehensive statute included in this bill that would require
registration of business opportunity people." Ms. Smith indicated
the department would also would be willing to work on the bill over
the interim.
Number 1404
REPRESENTATIVE COWDERY said when he was a legislator in the 1980s,
the "lemon law" was established. He asked if SSHB 142 would impact
that law.
MS. SMITH said it is her understanding that this legislation would
supplement the "lemon law." She noted that as she understands, the
"lemon law" is for new vehicles.
Number 1443
REPRESENTATIVE RYAN said when he was a young man, there were many
jokes going around about the fellow that bought the horse. He said
it seems to him it has now moved to automobiles. You have to
really be careful of what you're buying because if you don't, you
could get stuck with something. He asked where the responsibility
comes on the person who is laying their money down.
MS. SMITH informed Representative Ryan that she just bought a used
car. She went to every dealer in Juneau. She said she felt
uncomfortable enough in that she went to her mechanic and asked him
to help her find a used car because she believes if a person
doesn't know something in a specific area, you can get taken
advantage of.
Number 1586
DAVEED SCHWARTZ, Assistant Attorney General, Commercial Section,
Civil Division, Department of Law, testified via teleconference
from Anchorage. He said he would give technical comments on the
legislation when it comes up in the subcommittee. Mr. Schwartz
said he believes Ms. Smith has articulated the philosophy behind
the Department of Law's interest in supporting the legislation.
MR. SCHWARTZ explained Section 1 ensures that a person who is
buying a used car, that requires an auto emissions inspection, is
going to be notified up front prior to the sale of the emissions of
the status of the vehicle. He said Ms. Ard's testimony illustrates
the need for Section 1. Mr. Schwartz noted he personally deals
with the Anchorage I/M Office frequently regarding problems and
they have told him that on an average, over a year, they receive
about ten complaints per month from people who buy a used car from
a used car dealer. They find out after they have obligated
themselves to the sale that the car will not pass I/M and they will
have to invest quite a bit of additional funds to get it to pass
I/M so they can register it and legally drive the vehicle.
Number 1659
MR. SCHWARTZ referred to Section 2 and said there are all kinds of
situations that arise in terms of the failure to disclose damage
that used car dealers may know that a vehicle has. The Office of
the Attorney General prevailed in a three week jury trial against
a major Anchorage auto dealer, who was found to be liable on 18 of
22 counts of civil fraud in that he failed to disclose that 8
vehicles that had been sold were previously wrecked and totalled.
He noted some of the vehicles were extreme safety hazards.
MR. SCHWARTZ referred to Sections 4, 5 and 6 and said these
sections clarify the existing state of affairs with regard to the
confidentiality in the investigative records in the Office of the
Attorney General for consumer protection antitrust investigations.
It would ensure sure that businesses that have alleged to have
violated the law don't have their names (indisc.) about simply
because there are allegations that may turn out to be unfounded.
It also ensure that witnesses who may want to testify for or
against business that have been alleged to have violated the law
will not be subjected to a lot of publicity simply because they
have offered testimony to the Office of the Attorney General.
MR. SCHWARTZ explained Section 7 deals with clarification of the
existing exemptions, the provision that deals with the mail order
catalog exemption to the telemarket or registration law. He said
there was a case involving a San Diego telemarketer who had a
catalog that they only distributed in San Diego, but they were
telemarketing to Alaskans. They refused to register under our 1993
Telemarketing Registration Act. The Alaska supreme court agreed in
January of this year that the mail order catalog exemption did not
cover that particular instance. He said they are now trying to
clarify the existing statute to make sure that everyone knows what
it takes to qualify as a mail order catalog operation and,
therefore, be exempt from telemarketing registration.
Number 1774
MR. SCHWARTZ informed the committee that Section 8 is the
Comprehensive Business Opportunities Disclosure Act legislation
which will get primarily at the Lower 48 business opportunity
sellers who largely work with sales kits/business kits to Alaskans,
particularly around permanent fund dividend time. They then use
the sale of the kits, which usually range anywhere from $500 to
several thousands of dollars, as an entree to sell Alaskans even
more services that range up to $10,000 to $15,000 per year. This
would require registration, disclosure, bonding and other
protections for people who have an entrepreneurial spirit, but
really get caught up in the excitement and high pressure sales that
occur in the large hotel ballroom where most of these sales of
business opportunity (indisc.) are pitched.
Number 1826
CHAIRMAN ROKEBERG said, "I've got a really significant concern here
because this committee is in the process of rewriting the entire
real estate statute, if I can only recall the title right now, but
business opportunities are something that, in part but not
exclusively, have been handled by real estate brokers. And I
appreciate at what you're getting at here - those folks who
advertise on late night T.V. for these seminars I guess is the
thrust of your thing here. I'm kind of concerned about the sweep
here and what you're getting into as it relates to some of these
other things and, in essence, creates some type of kinds of a
defacto licensure, if you will, or something going here that might
more properly be under another title or something. What you're
getting at is -- are you endeavoring to prohibit these types of
sales activities, regulate them or infringe on real estate brokers?
What's the thrust here?"
MR. SCHWARTZ indicated he is not trying to do that at all. The
bill actually has a series of exemptions and tend to be exact. He
noted that they can be found on page 17, line 8 through page 18,
line 11. He pointed out the tenth exemption deals with if the
seller or the buyer is licensed as a real estate broker, associate
real estate broker or real estate sales person under Title 8 of the
Alaska statutes and the sales or offers regulated by Title 8. He
said it is not their intent to create a new licensure for real
estate agents, brokers or other people already regulated. Mr.
Schwartz said this whole registration scheme is modeled after the
existing telemarketing registration law. The two policies driving
the exemptions in the telemarketing law and in this bill for
business opportunity registration would be that there would be no
attempt to require registration of those activities that are
otherwise regulated by statute in a similar way. Also, there would
be no attempt to require registration of activities that don't seem
to pose a problem. He noted the last thing the Department of Law
wants to do is to duplicate existing registration and regulations.
Number 1951
CHAIRMAN ROKEBERG questioned which department they register with.
MR. SCHWARTZ referred to telemarketing and said the bill would
require registration with the Office of the Attorney General.
CHAIRMAN ROKEBERG asked if it is correct to say that if you weren't
a member of the Bar or if you weren't a licensed real estate
broker, you would have to registered with the Office of the
Attorney General to do something like selling businesses.
MR. SCHWARTZ responded that there are some exemptions, but he would
have go over each and every exemption with the committee members.
He said, "After you get past the exemptions, what this bill really
gets at is the kind of sale where it's advertised on a late night
T.V. info commercial and what they're selling are T-shirt
businesses, 900 number businesses, distress merchandise businesses
for anywhere from $500 to $3,000 or more and it's that kind of sale
that this registration is aimed at rather than activities that are
already regulated or don't seem to pose a problem. One exemption,
for example, is the sale of a business opportunity to an ongoing
business, just as an example of the many (indisc.) exemptions to
narrow the scope of this registration requirement. The goal here
would be to really target the problem."
Number 2019
CHAIRMAN ROKEBERG asked if it is a new Chapter 66.
MR. SCHWARTZ responded it would be a new chapter in the Consumer
Protection Act.
CHAIRMAN ROKEBERG asked if the areas about down payments, escrow
accounts only relates to this particular chapter.
MR. SCHWARTZ responded that was correct. He continued by saying
Section 8 goes from page 6, line 31, to page 21, line 8. Mr.
Schwartz said he would answer any questions the committee may have.
Number 2073
CHAIRMAN ROKEBERG said it is his intention to appoint a
subcommittee to look into the legislation, SSHB 142, during the
interim. He then appointed himself, Representative Ryan and
Representative Brice to the subcommittee. He closed the public
hearing.
ADJOURNMENT
Number 2118
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:44 p.m.
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