01/29/2003 03:15 PM House L&C
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ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
January 29, 2003
3:15 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Carl Gatto
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
Representative Nancy Dahlstrom
OTHER LEGISLATORS PRESENT
Representative Mike Chenault
COMMITTEE CALENDAR
HOUSE BILL NO. 9
"An Act relating to the registration of individuals who perform
home inspections; relating to regulation of contractors;
relating to registration fees for specialty contractors, home
inspectors, and associate home inspectors; relating to home
inspection requirements for residential loans purchased or
approved by the Alaska Housing Finance Corporation; relating to
civil actions by and against home inspectors and to civil
actions arising from residential unit inspections; and providing
for an effective date."
- MOVED CSHB 9(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 15
"An Act relating to establishing the Alaska No-Call List, a data
base of residential telephone customers who do not wish to
receive telephonic solicitations; providing that the data base
be compiled at no cost to the customers; requiring paid
telephonic sellers to purchase the data base; requiring
telephonic sellers to identify themselves; requiring telephonic
solicitors who are otherwise exempt from registration as
telephonic solicitors to file with the Department of Law and
purchase the data base; and providing for an effective date."
- BILL HEARING POSTPONED
PREVIOUS ACTION
BILL: HB 9
SHORT TITLE:HOME INSPECTORS/CONTRACTORS
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
01/21/03 0032 (H) PREFILE RELEASED (1/10/03)
01/21/03 0032 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0032 (H) L&C, JUD, FIN
01/21/03 0032 (H) REFERRED TO LABOR & COMMERCE
01/29/03 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
RICK URION, Director
Division of Occupational Licensing
Department of Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified that the division doesn't have an
official position on HB 9.
JOHN BITNEY, Lobbyist for
Alaska State Home Builders Association
Palmer, Alaska
POSITION STATEMENT: Offered general support for HB 9, although
the association didn't yet have an official position on the
bill.
STEVE CLEARY, Executive Director
Alaska Public Interest Research Group (AkPIRG)
Anchorage, Alaska
POSITION STATEMENT: Identified minor changes necessary before
AkPIRG will support HB 9.
ROBERT MILLER, Chair
State Board of Registration for Architects, Engineers, and Land
Surveyors
Anchorage, Alaska
POSITION STATEMENT: Suggested changes to HB 9 to clarify use of
stamp and signature by architects and engineers.
FRANCO VENUTI
Homer, Alaska
POSITION STATEMENT: During the hearing on HB 9, identified
numerous changes and suggested the bill be rewritten by home
inspectors.
BILL BRADY, Legislative Chair
Anchorage Board of Realtors
Anchorage, Alaska
POSITION STATEMENT: Spoke in favor of HB 9.
JANET SEITZ, Staff
to Representative Rokeberg
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 9.
BRYAN BUTCHER, Legislative Liaison
Alaska Housing Finance Corporation
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 9.
ACTION NARRATIVE
TAPE 03-3, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:15 p.m. Representatives
Anderson, Lynn, Gatto, Rokeberg, Crawford, and Guttenberg were
present at the call to order. Chair Anderson announced that
Representative Dahlstrom is excused because she is in Anchorage
attending the change-of-command ceremony at Fort Richardson for
the new commissioner of the Department of Military & Veterans
Affairs.
Representative Chenault was also in attendance.
HB 9-HOME INSPECTORS/CONTRACTORS
Number 0055
CHAIR ANDERSON opened the hearing on HOUSE BILL NO. 9, "An Act
relating to the registration of individuals who perform home
inspections; relating to regulation of contractors; relating to
registration fees for specialty contractors, home inspectors,
and associate home inspectors; relating to home inspection
requirements for residential loans purchased or approved by the
Alaska Housing Finance Corporation; relating to civil actions by
and against home inspectors and to civil actions arising from
residential unit inspections; and providing for an effective
date."
Number 0120
REPRESENTATIVE ROKEBERG, sponsor of HB 9, explained that the
bill has been heard by the House Labor and Commerce Standing
Committee twice in past legislative sessions. He noted that HB
9 establishes a method of licensure for the home inspector
profession in Alaska. The intention is to protect consumers and
the home inspection industry by requiring the registration of
home inspectors. Currently anybody can call himself/herself a
home inspector. For many consumers, buying a home is the
largest investment of their entire life. This bill relates only
to residential real estate; it does not cover commercial
property. Home inspection is becoming very commonplace. Many
lenders require home inspections as a condition for making a
loan. Lenders have been the primary force behind this type of
occupational licensing. In addition, real estate practitioners
are trying to protect themselves from the liability for
misrepresenting the condition of a property.
REPRESENTATIVE ROKEBERG testified that all parts of the real
estate transaction are currently regulated in Alaska. The sale
of a home in Alaska, even by a private individual, requires a
disclosure of the residence's condition. Home inspectors can
help determine if there are any defects in the home prior to the
closing of a real estate transaction. Typically, if there are
problems identified with a residence, repairing those defects
becomes part of the bargaining process and often influences the
final price. Registering home inspectors helps prevent the
"buyer beware" situation.
Number 475
REPRESENTATIVE ROKEBERG continued that this legislation applies
to inspections on existing homes as well as new homes financed
by the Alaska Housing Finance Corporation (AHFC). New home
inspections are subject to provisions of the International
Conference of Building Officials (ICBO). Many home inspectors
have certifications to inspect both new and existing homes.
Additionally, the bill exempts some professionals from this
licensing law, for example, architects and engineers and
municipal building inspectors. The bill identifies two levels
of licensees: the home inspector and an entry-level associate
home inspector who must be supervised by the former.
REPRESENTATIVE ROKEBERG explained that in past years, he
considered setting up a board of home inspectors. Several years
ago, the legislature passed [AS] 08.01.065(c), which requires
all occupational licensees to pay the full costs of
administering their licensing programs. The fees are assessed
on a biennial or two-year cycle. When considering the option of
creating a separate home inspection board, the Division of
Occupational Licensing estimated only 100 people would qualify
for licenses, at a cost of $1,500 to $1,600 every two years per
person. That fee would have probably increased the cost of a
home inspection fee that is typically $300. Some home
inspectors favored having their own board so they could have
more control over their regulation by the state.
Number 0786
REPRESENTATIVE ROKEBERG explained that he chose the non-board
type of occupational license instead, making home inspectors a
subset of specialty contractors. Their licensing would be
handled by staff in the Division of Occupational Licensing. He
noted that the Alaska Home Builders Association originally
proposed this idea. About 2,695 people are now licensed as
specialty contractors, reducing the estimated cost per home
inspector license to $248 per biennial cycle or $125 a year.
This scheme results in lower licensing fees and lower cost to
the public, and gives the division the authority to regulate the
industry, provide sanctions, and protect the public.
Number 0988
REPRESENTATIVE ROKEBERG explained that HB 9 requires the home
inspector to pass an exam by a national trade organization. A
home inspector can register to inspect new or existing homes or
both. He noted that HB 9 requires a pre-inspection document and
a written inspection report. The bill makes the inspection
report valid for six months, a provision that recognizes the
limitations of winter inspections and the physical damage caused
by the state's severe climate. He will offer an amendment to
change the six months to 180 days, he told members, because it
is easier to count days.
REPRESENTATIVE ROKEBERG described other provisions of HB 9. It
gives the Division of Occupational Licensing the authority to
require continuing education, a requirement common to most
occupational licenses. This bill establishes fees for
registration, renewals and examination fees. The bill mandates
a surety bond of $5,000, and directs claims against the bond to
the small-claims section of District Court.
Number 1195
REPRESENTATIVE ROKEBERG described the current problem of home
inspection reports that circulate far beyond the original
purchaser. In order to control the distribution of this report,
HB 9 provides that the report cannot be used by anybody without
the written permission of the person who bought the report. In
addition, a person cannot bring legal action based on a home
inspection report unless he or she has written consent to use
it. The bill sets the statute of limitations for legal claims
at two years for new homes and one year on existing homes;
otherwise, the statute of limitations on contracts in Alaska is
three years.
Number 1401
REPRESENTATIVE ROKEBERG defined a home inspection as a visual,
general inspection of the residence. It is not an analysis of a
specific component of a home, such as a roof or a foundation.
An inspection report may identify problems, such as "a
foundation which appears to have problems," which should then be
reviewed separately by an engineer or other expert.
REPRESENTATIVE ROKEBERG testified that under HB 9, the
department can conduct investigations and issue citations
against a home inspector for violations. The bill establishes
workers' compensation insurance and requires public liability
and property damage insurance. He said the bill has relatively
low insurance requirements: $20,000 for property damage,
$50,000 for injury, and $100,000 for injury including death.
The legislature does not mandate errors-and-omissions insurance
for occupational licensees because of its high cost and because
it is often not available.
Number 1677
REPRESENTATIVE ROKEBERG said that some provisions of HB 9 relate
to AHFC. Section 40 of the bill repeals AS 18.56.300(c) of the
Alaska Housing Finance Corporation statute because its standards
for gross negligence are so difficult to prove in court. He
said this existing standard makes it nearly impossible to
litigate against an inspector of an AHFC-financed home. This
legislation repeals that provision and allows a person to bring
legal action in superior court against a licensed home inspector
for misfeasance.
Number 1800
RICK URION, Director, Division of Occupational Licensing,
Department of Community & Economic Development, testified that
the division does not have an official position on HB 9. He
said that division staff has worked with Representative Rokeberg
on previous versions of the legislation; they believe the bill,
if passed, will accomplish the goals of the sponsor.
Number 1880
JOHN BITNEY, Lobbyist for the Alaska State Home Builders
Association, offered general support for HB 9. Although he said
the group does not yet have a position paper on the bill, it did
support last session's legislation, and this bill is very
similar.
Number 1930
STEVE CLEARY, Executive Director, Alaska Public Interest
Research Group (AkPIRG), said his group followed the legislation
last year as well. The group's support of HB 9 is contingent on
several minor changes. He recommended increasing the bond
amount for both contractors and home inspectors from the $10,000
and $5,000, respectively, proposed in the bill. The remodeling
or construction of a house can cost several hundred thousand
dollars, and he said he believes these bond levels are too low.
He also said the period of liability [one year for an existing
home and two years for a new home] is too short. He said he
would like to hear testimony from homebuilders.
Number 2010
REPRESENTATIVE ROKEBERG responded that the amount of the bonds
is part of the specialty-contractor licensing statute, and that
he is reluctant to overhaul that system.
Number 2103
ROBERT MILLER, Chair, State Board of Registration for
Architects, Engineers, and Land Surveyors, spoke to the
provisions of HB 9 that exempt architects and engineers from
registering as home inspectors. He pointed out a problem on
page 15, lines 13-18. Mr. Miller said architects or engineers
must by current law affix their seals, sign the written reports,
and add their registration numbers. But HB 9 allows the person
to either seal or sign the report. He said that a seal is a
mechanical or electronic stamp; it must be signed to be valid.
Number 2316
REPRESENTATIVE ROKEBERG said he appreciated this suggestion and
that he would incorporate it into a conceptual amendment.
TAPE 03-3, SIDE B
Number 2375
FRANCO VENUTI, Homer, introduced himself as an ICBO
(International Conference of Building Inspectors) combination
dwelling inspector, an FHA (Federal Housing Administration)
compliance inspector, and a VA [Department of Veterans Affairs]
compliance inspector. He said he inspects both new and existing
homes in the Homer and Kenai Peninsula areas. He has been
working in the industry for 35 years and inspecting homes since
1992.
MR. VENUTI testified that no one in the inspection industry is
in favor of the additional cost and regulation of this bill. He
asked whether other committee members have heard complaints from
consumers. Inspectors are not popular with realtors because
they often point out things the seller and realtor do not want
to hear, he asserted.
Number 0495
MR. VENUTI listed his objections to HB 9. He said he opposes
repealing AS 18.56.300(c), the law that limits the liability of
inspectors to damages caused by negligence or intentional
misconduct. Current law allows inspectors to make independent
decisions and frees them from harassment through frivolous
lawsuits. He objected to the requirement for continuing
education classes from the American Society of Home Inspectors.
Mr. Venuti said a person must join the society, adding an
additional $300 to the cost of doing business, a cost that would
inevitably find its way to the consumer. Most experienced
inspectors in the business do not hold membership in the group,
he said, and he recommended removing any references to the
organization from the bill. Another section prohibits an
inspector accused of an unresolved complaint from doing
business. He questioned the fairness of applying this provision
to inspectors who are unfairly accused.
MR. VENUTI offered his belief that written reports should apply
only to existing homes. For new homes, he uses an AHFC form
that details compliance with required building codes. He also
questioned the six-month validity of the report because the
summary of inspection on a new home stays with the property
indefinitely. He recommended spelling out the continuing
competency requirements. He said AHFC should dictate what
constitutes continuing competency for inspecting its projects.
This bill should regulate energy raters because energy ratings
are an essential part of the inspection process for an AHFC loan
package. Mr. Venuti said that engineers are not required to
carry insurance, and that allowing them to perform inspections
sets up two classes of inspectors. Permitting other entities,
including general contractors, to do inspections contradicts the
intent of this bill. He testified that HB 9 overlooks the fact
that an exam for an [AHFC] combined dwelling inspector is more
exacting than the exam required in the bill. The cost of taking
redundant exams adds an unnecessary expense to the process and
dilutes the qualification requirements.
MR. VENUTI concluded by saying that such legislation needs to be
written by members of the inspection industry who understand the
process.
Number 2050
CHAIR ANDERSON invited Mr. Venuti to put his comments in writing
and send them to the next committee of referral, the House
Judiciary Standing Committee.
REPRESENTATIVE ROKEBERG expressed his disappointment that no
other members of the home inspection industry testified today.
He said he has worked closely with them and that the Alaska
chapter of the American Society of Home Inspectors grew out of
those meetings. Representative Rokeberg agreed with Mr.
Venuti's point about AHFC new-home inspection reports. He
suggested that AHFC could adopt a similar form that would meet
state law and give AHFC a paper trail to show that the work has
been done.
CHAIR ANDERSON responded to Mr. Venuti's question about whether
any committee members have heard complaints about the home
inspection industry. He said he has received four comments in
favor of the bill in the last several days.
Number 1887
REPRESENTATIVE LYNN observed that as an Anchorage realtor, he
appreciates the work of good inspectors. He offered his belief
that an inspection report identifying defects serves to protect
him, the buyer, the seller, the mortgage company, and the
general public.
REPRESENTATIVE CRAWFORD noted that he has fielded a number of
complaints from constituents in the past several years. He said
he supports the bill.
Number 1777
BILL BRADY, Legislative Chair, Anchorage Board of Realtors, said
he has testified over the past five years in favor of this
consumer legislation. The Alaska Association of Realtors and
the Anchorage Board of Realtors supported similar legislation
last year. He said his organization will send in letters of
support for HB 9. He said most of his group's members have no
problem working with home inspectors; they do have problems
working with incompetent home inspectors. Fifty dollars buys
[an Alaska business] license to become a home inspector for two
years, and he said problems can erupt in a field so easy to
enter. Most consumers need someone to evaluate a home. He said
the American Society of Home Inspectors chapter in Alaska has
supported this bill and estimates that 80-90 percent of home
inspectors support this bill. Mr. Brady said he is very
concerned about a growing number of unqualified home inspectors
who may be grandfathered in under this law. He urged the
committee to take action on the bill as soon as possible.
Number 1491
CHAIR ANDERSON, after asking if anyone else wanted to testify,
closed the public hearing.
JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska
State Legislature, helped Representative Rokeberg answer
questions about agency fiscal notes in the bill packet. She
explained that the bill packet included fiscal notes from last
year's legislation because Representative Rokeberg had not
received any fiscal notes on the current bill. Today the
committee received three fiscal notes on HB 9, and the notes
were distributed to members before the meeting.
Number 1275
REPRESENTATIVE ROKEBERG replied to a question from
Representative Crawford about why the inspection report on a new
home would not be valid after 6 months. Representative Rokeberg
said that it is a judgment call over issues of harsh climate and
the changing conditions of the dwelling. He said he objects to
the acceptance of reports up to 24 months old on the State of
Alaska Residential Real Property Transfer Disclosure Statement,
a form required by state law.
Number 1146
REPRESENTATIVE CRAWFORD asked whether any municipalities or
other local governments are issuing licenses for home
inspectors. If so, could the municipality ordinance be stricter
than the bill?
REPRESENTATIVE ROKEBERG replied that he did not think a
municipality could create a home inspection program stricter
than state law. He said he would check on this point.
REPRESENTATIVE CRAWFORD asked how long it would be before an
associate home inspector could become a full home inspector.
REPRESENTATIVE ROKEBERG responded that regulations would address
the length of the training period. In any case, the person must
pass the home inspector examination to become fully qualified.
REPRESENTATIVE CRAWFORD commented that he thinks the $5,000
surety bond is low, but that he is not offering an amendment
because he wants to see the bill moved out of committee.
Number 0871
REPRESENTATIVE GATTO questioned the words "may not" on page 8,
lines 14-17, where it says the home inspector "may not be
required to give bond in applying for or holding a license
issued by a political subdivision for a similar occupation." He
also asked for a definition of "similar occupation". He
expressed his concern about a person becoming registered without
bothering to post the bond or follow the rules.
REPRESENTATIVE ROKEBERG said the intention of this legislation
is to "close the barn door" because now anyone can represent
himself or herself as a home inspector. He said he reads this
section to mean that if a home inspector already has a license
through a municipality, that person does not have to put up more
than one bond. He said he will ask the drafter of the
legislation why the term "may not" is used in the current
statute.
REPRESENTATIVE GATTO asked whether the realtor who insists on a
home inspection will accept the report of a friend of the seller
who is, for example, an engineer but not registered as a home
inspector.
REPRESENTATIVE ROKEBERG clarified that the realtor does not
require a home inspection under any law, and the bill grants an
exemption to engineers to do home inspections if they use and
sign their stamp. Whoever requires the home inspection, for
example, the seller or the lender, decides whether the report is
acceptable.
Number 0161
REPRESENTATIVE ROKEBERG, in reply to questions from
Representative Guttenberg, said HB 9 is the same bill as last
year's legislation. He said the bill does not require that all
home inspectors be engineers because inspection reports would
become phenomenally expensive. The number of engineers willing
to do this work might be limited, although in some areas of the
state, such as Juneau, it is mostly engineers who do the home
inspections. Plus, the competency of many non-engineers who
currently do home inspections would be lost.
TAPE 03-4, SIDE A
Number 0001
REPRESENTATIVE GUTTENBERG commented that there has been no
testimony from the Alaska Housing Finance Corporation, which is
one of the most influential agencies in the home building field,
or from lenders or other home inspectors. He asked for a
definition of "joint registration" on page 2, line 29. He also
pointed out a possible typographical error on page 6, lines 14-
15.
MS. SEITZ explained that the definition of "joint registration"
is found on page 18, lines 16-17, and means that an individual
is authorized to inspect both new homes and existing homes.
Number 0306
BRYAN BUTCHER, Legislative Liaison, Alaska Housing Finance
Corporation, testified at the invitation of Chair Anderson that
AHFC supports this legislation.
Number 0397
REPRESENTATIVE ROKEBERG answered Representative Gatto's
questions about why the [previous] bill didn't pass the Senate
and whether there were unresolved issues with the bill.
Representative Rokeberg explained that the bill passed the
Senate Labor and Commerce Committee and the Senate Finance
Committee. It was on the calendar for the final day of session,
but it died because it didn't come off the Senate's "rolling
calendar" before the midnight deadline.
Number 0559
REPRESENTATIVE ROKEBERG pointed out for the record the inclusion
of language on page 5, lines 2 and 14, that was requested by the
Division of Occupational Licensing. The section states that a
person must have been free for seven years after serving a
sentence for certain types of criminal conviction. He said the
term "sentence" includes the probation period.
Number 0642
REPRESENTATIVE ROKEBERG moved to adopt Amendment 1, which reads:
Page 4, Line 23:
After "examination"
DELETE: "or set of applicable courses"
Page 4, Line 24:
After "American Society of Home Inspectors"
INSERT: ", American Home Inspectors Training
Institute, or National Association of Home Inspectors"
Page 4, line 25:
After "examination"
DELETE: "or set of applicable courses"
Page 6, line 11:
After "valid for"
DELETE: "six months"
INSERT: "180 days after the date the home
inspector signs and dates the report"
Page 6, line 21:
After "competency requirements."
INSERT: "The department shall require at least
8 hours continuing competency per licensing period."
Page 22, line 25:
After "American Society of Home Inspectors"
INSERT: ", American Home Inspectors Training
Institute, or National Association of Home Inspectors"
Number 0600
REPRESENTATIVE GUTTENBERG objected for discussion purposes.
REPRESENTATIVE ROKEBERG explained that proposed Amendment 1
reflects changes made in the Senate version of last year's bill.
On page 4, lines 23 and 25, the choice of taking either an exam
or coursework is reduced to the exam. On page 4, line 24, and
page 22, line 25, two other trade organizations that offer home
inspector exams are added. On page 6, line 11, "six months" is
replaced by 180 days, which is easier to count. He said the
language "signs and dates the report" clarifies the start of the
six-month period. On page 6, line 21, the amendment specifies
eight hours of continuing competency training rather than
allowing the regulation writer to set the number.
REPRESENTATIVE GATTO asked whether a choice of exam or
coursework should be dealt with by regulation rather than in
statute.
REPRESENTATIVE ROKEBERG answered that it is appropriate to make
the decision in law because it sets a standard.
REPRESENTATIVE ROKEBERG responded to Representative Guttenberg's
question about whether a person must be a member of these trade
organizations to take the exam, a question raised earlier by one
person who testified. Representative Rokeberg replied that this
bill does not require membership in these organizations, nor do
these organizations require membership to take their tests.
Number 0900
REPRESENTATIVE GUTTENBERG withdrew his objection to Amendment 1.
Number 0916
CHAIR ANDERSON, upon hearing no further objections, declared
that Amendment 1 was adopted.
Number 0926
REPRESENTATIVE ROKEBERG offered conceptual Amendment 2, a
handwritten amendment that reads [original punctuation and
format provided]:
p. 15 line 16
change "or"
to "and"
p. 15 line 22 after reports
change "or" to
"and"
p. 15 lines 17 & 22
after "signs"
Insert "and dates"
REPRESENTATIVE ROKEBERG explained that this amendment responded
to the issue raised earlier in testimony by Mr. Miller, chair of
the State Board of Registration for Architects, Engineers, and
Land Surveyors, in which an engineer or architect must sign as
well as stamp a home inspection report.
Number 1019
CHAIR ANDERSON announced, with no objections, that Amendment 2
was adopted.
Number 1029
REPRESENTATIVE LYNN moved to report HB 9, as amended, out of
committee with individual recommendations and attached fiscal
notes. There being no objection, CSHB 9(L&C) was reported from
the House Labor and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:10 p.m.
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