Legislature(2009 - 2010)BARNES 124

03/08/2010 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 354 AK CAPSTONE AVIONICS REVOLVING LOAN FUND TELECONFERENCED
Moved Out of Committee
*+ HJR 51 PROPOSED FED. MORTGAGE LICENSING REGS TELECONFERENCED
Moved Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 8, 2010                                                                                          
                           3:21 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Mark Neuman, Vice Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Robert L. "Bob" Buch                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bob Lynn                                                                                                         
Representative Tammie Wilson                                                                                                    
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 354                                                                                                              
"An Act relating to eligibility for loans from the Alaska                                                                       
capstone avionics revolving loan fund."                                                                                         
                                                                                                                                
     - MOVED HB 354 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 51                                                                                                   
Supporting certain changes to proposed regulations to implement                                                                 
the Secure and Fair Enforcement for Mortgage Licensing Act of                                                                   
2008.                                                                                                                           
                                                                                                                                
     - MOVED HJR 51 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 354                                                                                                                  
SHORT TITLE: AK CAPSTONE AVIONICS REVOLVING LOAN FUND                                                                           
SPONSOR(s): REPRESENTATIVE(s) KELLER                                                                                            
                                                                                                                                
02/19/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/19/10       (H)       L&C                                                                                                    
02/23/10       (H)       TRA REFERRAL ADDED AFTER L&C                                                                           
03/08/10       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HJR 51                                                                                                                  
SHORT TITLE: PROPOSED FED. MORTGAGE LICENSING REGS                                                                              
SPONSOR(s): REPRESENTATIVE(s) KELLER                                                                                            
                                                                                                                                
02/23/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/23/10       (H)       L&C                                                                                                    
03/08/10       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MATTHEW JOHNSON, Staff                                                                                                          
Representative Wes Keller                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 354 on behalf of the prime                                                                  
sponsor, Representative Wes Keller.                                                                                             
                                                                                                                                
CATHY JEANS, Systems Branch Manager                                                                                             
Division of Investments                                                                                                         
Department of Commerce, Community, & Economic Development                                                                       
(DCCED)                                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 354.                                                                          
                                                                                                                                
MONTE GATES                                                                                                                     
Peninsula Airways                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 354.                                                                          
                                                                                                                                
CONSTANCE JOY JOURNEAY, Executive Director                                                                                      
Alaska Carriers Association                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 354.                                                               
                                                                                                                                
JIM POUND, Staff                                                                                                                
Representative Wes Keller                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HJR 51 on behalf of the prime                                                                  
sponsor.                                                                                                                        
                                                                                                                                
DAVID SOMERS, Political Chair                                                                                                   
Alaska Association of Realtors                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HJR 51.                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:21:12 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:21 p.m.   Representatives Olson,                                                               
Chenault, Neuman, and Buch were present at the call to order.                                                                   
                                                                                                                                
        HB 354-AK CAPSTONE AVIONICS REVOLVING LOAN FUND                                                                     
                                                                                                                              
3:21:16 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL  NO. 354,  "An Act relating  to eligibility  for loans                                                               
from the Alaska capstone avionics revolving loan fund."                                                                         
                                                                                                                                
3:21:42 PM                                                                                                                    
                                                                                                                                
MATTHEW JOHNSON,  Staff, Representative Wes Keller,  Alaska State                                                               
Legislature,  presented an  overview of  HB  354.   In 2008,  the                                                               
Capstone Avionics  Loan Program was  established in Alaska.   The                                                               
impetus  for the  program was  a Federal  Aviation Administration                                                               
(FAA)  pilot program  that confirmed  the  substantial value  and                                                               
effectiveness of  the new  avionics technology.   The  results of                                                               
the pilot program revealed that  it reduced accident rates in the                                                               
trial  area  by  47  percent.     The  FAA  estimates  that  full                                                               
implementation of  the program  will result  in 33  percent fewer                                                               
fatalities statewide.  The program  was intended to provide loans                                                               
for in  state operators and  carriers to upgrade  their avionics.                                                               
However, an  unforeseen gap exists  and those carriers  who lease                                                               
their aircraft are  not eligible for the program.   This bill, HB
354,  would correct  that problem.    It would  amend the  Alaska                                                               
Capstone Avionics Revolving  Loan Fund program to  allow a lessee                                                               
of  an aircraft  that  logs a  substantial  percentage of  flight                                                               
hours in  the state  to qualify  to apply  for loans  to purchase                                                               
Capstone Avionics  equipment.  The  effect of the change  will be                                                               
to open up the program funds to lessees of aircraft.                                                                            
                                                                                                                                
3:23:46 PM                                                                                                                    
                                                                                                                                
CATHY  JEANS, Systems  Branch Manager,  Division of  Investments,                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED),  stated that  the division  manages the  Alaska Capstone                                                               
Avionics Revolving Loan Fund program.   As Mr. Johnson mentioned,                                                               
the change would  allow individuals that have  leased an aircraft                                                               
to qualify  for loans to  purchase and install  Capstone Avionics                                                               
equipment in aircraft  operated in Alaska.  The  current law only                                                               
allows aircraft  owners to  qualify.   Lessees of  aircraft would                                                               
still need  to meet  all of  the program  requirements, including                                                               
collateral, credit, and capacity for  repayment.  The Division of                                                               
Investments (DOI)  anticipates a small number  of additional loan                                                               
requests with  passage of HB  354.  The Alaska  Capstone Avionics                                                               
Revolving Loan Fund program has  adequate resources to handle the                                                               
requests  and  will  not  need   additional  operating  funds  to                                                               
administer the  change.  The DOI  supports the bill as  it should                                                               
increase safety for the Alaskan flying public.                                                                                  
                                                                                                                                
3:25:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH  recalled that this proposed  bill would have                                                               
a  small impact  in Alaska.   He  related his  understanding that                                                               
enhancing the program would allow  more people to qualify for the                                                               
program loans.                                                                                                                  
                                                                                                                                
MS. JEANS agreed.   This bill would allow lessees  of aircraft to                                                               
apply for loans to install  Capstone Avionics in leased aircraft.                                                               
Currently, this program is limited to owners of aircraft.                                                                       
                                                                                                                                
3:26:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  asked whether any liability  issues will                                                               
result with passage of HB 354.                                                                                                  
                                                                                                                                
MS.  JEANS stated  that she  is unaware  of any  liability issues                                                               
created by  installing Capstone  Avionics equipment  in aircraft.                                                               
She offered to check with the FAA and report back.                                                                              
                                                                                                                                
CHAIR  OLSON  remarked  that  one   result  would  be  to  reduce                                                               
liability insurance premiums and hull coverage, as well.                                                                        
                                                                                                                                
3:27:06 PM                                                                                                                    
                                                                                                                                
MONTE GATES, Peninsula Airways, stated  that a large portion or 7                                                               
of 10 SAAB 340 aircraft  Peninsula Airways are leased.  Peninsula                                                               
Airways would  like to  install new  equipment, but  must install                                                               
the  equipment in  the whole  fleet, which  would mean  they must                                                               
rewrite  all  the  lease  agreements for  seven  aircraft.    The                                                               
alternate  method of  amending  the statute  would  allow a  more                                                               
direct  approach  for  eligibility   for  the  Capstone  Avionics                                                               
Revolving Loan Program.                                                                                                         
                                                                                                                                
3:28:27 PM                                                                                                                    
                                                                                                                                
CONSTANCE  JOY  JOURNEAY,  Executive Director,  stated  that  the                                                               
Alaska Air Carriers  support this change.  More than  half of the                                                               
carriers lease portions of their  fleet and this bill would allow                                                               
their aircraft to be eligible for the program.                                                                                  
                                                                                                                                
3:29:24 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 354.                                                                                     
                                                                                                                                
REPRESENTATIVE NEUMAN  moved to  report HB  354 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 354 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
The committee took an at-ease from 3:29 p.m. to 3:31 p.m.                                                                       
                                                                                                                                
3:31:29 PM                                                                                                                    
                                                                                                                                
          HJR 51-PROPOSED FED. MORTGAGE LICENSING REGS                                                                      
                                                                                                                              
3:31:36 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE  JOINT RESOLUTION  NO. 51,  Supporting  certain changes  to                                                               
proposed   regulations  to   implement   the   Secure  and   Fair                                                               
Enforcement for Mortgage Licensing Act of 2008.                                                                                 
                                                                                                                                
3:31:41 PM                                                                                                                  
                                                                                                                              
JIM  POUND,  Staff,  Representative   Wes  Keller,  Alaska  State                                                               
Legislature,  explained that  in  2008, the  Congress passed  the                                                               
Secure and  Fair Enforcement for  Mortgage Licensing  Act (SAFE).                                                               
This legislation was intended to  bring standards to home lending                                                               
in  a "one  size fits  all" fashion.   However,  the federal  Act                                                               
imposes rules  that make it more  difficult to secure a  loan for                                                               
certain  types of  property  in Alaska.    This resolution  would                                                               
point out  the need to  create exemptions for the  Alaska housing                                                               
market.   Cabin properties  are often bought  and sold  in Alaska                                                               
between the  seller and  the purchaser  with the  seller carrying                                                               
the  note.    The  proposed   Department  of  Housing  and  Urban                                                               
Development  (HUD)  regulations  under  consideration  would  not                                                               
allow financing by the seller  for instances such as when selling                                                               
remote   cabins  used   for  hunting   in   Alaska.     Licensing                                                               
requirements at  the state level  are tied to  federal regulation                                                               
and statute, he stated.  Of  real concern is a mandate that would                                                               
require states  to adopt this language  in state law or  lose the                                                               
right to license  and regulate mortgage loan  originators.  Thus,                                                               
what are  commonly known as  "conventional loans" may also  be at                                                               
risk.    The  proposed  HUD   regulations  need  to  broaden  the                                                               
exemptions  for  seller  financing  to  exempt  all  sellers  who                                                               
provide financing  for property  they own, and  cover individuals                                                               
who  sell property  they have  inherited, even  though it  is not                                                               
their residence.   Additionally,  Alaska needs  specific examples                                                               
that  define  brokerage  firms  and  allowable  activities.    He                                                               
related   proposed   legislation   is  still   pending   in   the                                                               
legislature, which will  also need to pass or the  state may risk                                                               
federal government  action.  Additionally, the  SAFE Act requires                                                               
all  brokers  to   be  fingerprinted  for  review   by  the  U.S.                                                               
Department of Justice, which did not seem necessary.                                                                            
                                                                                                                                
3:34:36 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON recalled passing a  portion of the legislation needed                                                               
to address  this issue during  the last legislative session.   He                                                               
related that members are familiar with the issues.                                                                              
                                                                                                                                
3:34:48 PM                                                                                                                    
                                                                                                                                
DAVID SOMERS,  Political Chair,  Alaska Association  of Realtors,                                                               
stated that the SAFE Act makes a  lot of sense in some areas, but                                                               
the  fact that  it excludes  the ability  to sell  and finance  a                                                               
person's land  does not make sense  in Alaska.  In  fact, it does                                                               
not make  sense in  other areas  of the  country, and  some other                                                               
states are also  concerned, he stated.  He also  surmised that if                                                               
this resolution passes, it will help  point out the errors of the                                                               
SAFE ACT.   It  is important  to allow people  to sell  their own                                                               
land, and  if owners are forced  to go through a  lender on small                                                               
land transactions, the costs range  an additional 10 - 20 percent                                                               
of the value  of the property or higher.   People often choose to                                                               
owner-finance their  own property and  they should be able  to do                                                               
so, he said.  He urged members to endorse this resolution.                                                                      
                                                                                                                                
3:36:26 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HJR 51.                                                                                     
                                                                                                                                
3:36:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  moved to  report HJR  51 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HJR 51 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
3:36:53 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
3:36 p.m.                                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects
HB354 ver A.pdf HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Sponsor Statement.pdf HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Fiscal Note-CED-INV-3-1-10.pdf HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents 03 AAC 75.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents AS 44.33.650-690.pdf HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents DCRA info.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents Loan Application.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents Letter PenAir 2-24-10.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents Minutes 2-12-08 SENTRANS.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HB354 Supporting Documents-Articles.PDF HL&C 3/8/2010 3:15:00 PM
HB 354
HJR51 ver A.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Sponsor Statement.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents Draft C.F.R..pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents CFR SAFE summary.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents Editorial Summary SAFE.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents SAFE-Act.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents NCSL-Letter.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51
HJR51 Supporting Documents SAFE FAQ&A.pdf HL&C 3/8/2010 3:15:00 PM
HJR 51