Legislature(2009 - 2010)BARNES 124

03/29/2010 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 202 RESIDENTIAL SPRINKLER SYSTEMS TELECONFERENCED
Moved CSHB 202(CRA) Out of Committee
*+ HB 419 COMMERCIAL FISHING & AGRICULTURE BANK TELECONFERENCED
Moved Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 29, 2010                                                                                         
                           3:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Mark Neuman, Vice Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Bob Lynn                                                                                                         
Representative Tammie Wilson                                                                                                    
Representative Robert L. "Bob" Buch                                                                                             
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 202                                                                                                              
"An Act relating to state and municipal building code                                                                           
requirements for fire sprinkler systems in certain residential                                                                  
buildings."                                                                                                                     
                                                                                                                                
     - MOVED CSHB 202(CRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 419                                                                                                              
"An Act relating to the board, investigations, and examinations                                                                 
of the Alaska Commercial Fishing and Agriculture Bank; and                                                                      
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED HB 419 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 202                                                                                                                  
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS                                                                                      
SPONSOR(s): REPRESENTATIVE(s) HERRON                                                                                            
                                                                                                                                
03/23/09       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/23/09       (H)       CRA, L&C                                                                                               
03/11/10       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/11/10       (H)       Heard & Held                                                                                           
03/11/10       (H)       MINUTE(CRA)                                                                                            
03/18/10       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/18/10       (H)       Heard & Held                                                                                           
03/18/10       (H)       MINUTE(CRA)                                                                                            
03/23/10       (H)       CRA RPT CS(CRA) NT 2DP 2NR                                                                             
03/23/10       (H)       DP: HERRON, MUNOZ                                                                                      
03/23/10       (H)       NR: HARRIS, GARDNER                                                                                    
03/23/10       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/23/10       (H)       Moved CSHB 202(CRA) Out of Committee                                                                   
03/23/10       (H)       MINUTE(CRA)                                                                                            
03/29/10       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 419                                                                                                                  
SHORT TITLE: COMMERCIAL FISHING & AGRICULTURE BANK                                                                              
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
03/19/10       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/19/10       (H)       L&C                                                                                                    
03/29/10       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE BOB HERRON                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 202.                                                               
                                                                                                                                
KATHIE WASSERMAN, Executive Director                                                                                            
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 202.                                                                                                                         
                                                                                                                                
PAUL MICHELSOHN                                                                                                                 
Alaska State Home Building Association (ASHBA)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 202.                                                                          
                                                                                                                                
JENNIFER SENETTE, Staff                                                                                                         
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 419 on behalf of the prime                                                                  
sponsor.                                                                                                                        
                                                                                                                                
SENATOR JOHN COGHILL                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and  answered questions during the                                                             
discussion of HB 419.                                                                                                           
                                                                                                                                
LEILA KLINGER, Chief Executive Officer                                                                                          
Commercial Fishing and Agriculture Bank (CFAB)                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 419.                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:34:46 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to order at  3:34 p.m.  Representatives Holmes,                                                               
Neuman, T. Wilson,  and Olson were present at the  call to order.                                                               
Representatives Buch,  Chenault, and Lynn arrived  as the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
              HB 202-RESIDENTIAL SPRINKLER SYSTEMS                                                                          
                                                                                                                              
3:35:10 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that the first order of business would be                                                                 
HOUSE  BILL NO.  202, "An  Act  relating to  state and  municipal                                                               
building code requirements for fire  sprinkler systems in certain                                                               
residential  buildings."     [Before   the  committee   was  CSHB
202(CRA).]                                                                                                                      
                                                                                                                                
REPRESENTATIVE  BOB HERRON,  Alaska State  Legislature, explained                                                               
that  HB 202  would  provide  a longer  public  process before  a                                                               
municipality could require mandatory  fire sprinklers for one- or                                                               
two-family homes.   He related  that HB 202  is in response  to a                                                               
national movement to  require fire sprinkler systems  in one- and                                                               
two-family  dwellings.   This bill  would require  a more  robust                                                               
public process  be followed before  sprinklers could  be mandated                                                               
in  new  home construction.    The  CSHB 202(CRA)  requires  that                                                               
before a municipality could mandate  sprinkler systems in all new                                                               
construction  of residential  buildings with  one- or  two-family                                                               
units it must  first publish a summary of the  ordinance at least                                                               
30 days prior to the first  public hearing to notice the time and                                                               
place  of  each  scheduled  public hearing.    Additionally,  the                                                               
municipality must hold  three public hearings within a  60 to 180                                                               
day  period.   This bill  recognizes  there may  be instances  in                                                               
Alaska  in which  mandating  fire sprinklers  for  one- and  two-                                                               
family dwellings  is considered  necessary.  In  those instances,                                                               
HB 202  would not  prohibit the mandate  of the  fire sprinklers.                                                               
This  bill   would  continue  to   allow  elected   officials  in                                                               
municipalities and cities explore a mandate on fire sprinklers.                                                                 
                                                                                                                                
3:36:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  related  her  understanding that  this                                                               
bill  would only  apply to  one- and  two-family dwellings.   She                                                               
asked whether larger dwellings are covered by other regulations.                                                                
                                                                                                                                
REPRESENTATIVE  HERRON answered  that  the  State Fire  Marshal's                                                               
regulations  cover  larger dwellings.    In  further response  to                                                               
Representative T. Wilson, he responded  that the decision on fire                                                               
sprinkler  requirements  is  made   by  the  State  Fire  Marshal                                                               
depending on a permit application submitted by the builder.                                                                     
                                                                                                                                
3:37:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN expressed  concern  that  the state  would                                                               
mandate what  is required  in our  own home.   He  understood the                                                               
need for  enhanced safety, but due  to the location of  his home,                                                               
it is not likely that the  electrical pump would work in the case                                                               
of a  fire.  He  asked whether fire  sprinklers would need  to be                                                               
installed when a homeowner remodels his/her kitchen.                                                                            
                                                                                                                                
REPRESENTATIVE  HERRON replied  that the  decision on  sprinkling                                                               
requirements  for homes  is a  local  decision.   The bill  would                                                               
require the necessity for a  longer public process.  Currently, a                                                               
municipality could hold hearings  and have an accelerated process                                                               
to mandate  sprinkler systems  in residential  homes.   This bill                                                               
would extend  the process  to ensure that  the public  process is                                                               
not less than  60 days and no  longer than 180 days.   In working                                                               
with  all  the  stakeholders,  this timeframe  was  found  to  be                                                               
reasonable  timeframe  and  represents   a  compromise  from  the                                                               
language in the  original bill.  He stated  that the stakeholders                                                               
were not opposed  to involving the public  in the decision-making                                                               
process.                                                                                                                        
                                                                                                                                
3:40:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  inquired  as  to  whether  municipalities                                                               
presently have the authority to require sprinkler systems.                                                                      
                                                                                                                                
REPRESENTATIVE  HERRON   responded  that  it  depends   on  which                                                               
national or international  code is adopted.   Typically, the fire                                                               
chief  would work  with the  respective assembly  or governmental                                                               
authority, such as a borough.   Thus, a municipality may have the                                                               
authority and  the process may  already be  in place.   This bill                                                               
would simply ensure that the public process is extended.                                                                        
                                                                                                                                
3:41:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN related that large  areas of Alaska fall in                                                               
unorganized boroughs.   He asked  whether this bill  would affect                                                               
them.                                                                                                                           
                                                                                                                                
REPRESENTATIVE HERRON  answered yes.   For  example, the  City of                                                               
Bethel  is  a second  class  city  and  HB  202 would  allow  the                                                               
opportunity for  a community  process if Bethel  chose to  do so.                                                               
He said this  is not likely to happen in  his community since the                                                               
fire  chief is  satisfied with  the Fire  Marshal's authority  to                                                               
only mandate fire sprinklers in  four-plex apartments and larger.                                                               
In other  areas, the  local government would  work with  the fire                                                               
chief and could require mandated fire sprinklers.                                                                               
                                                                                                                                
3:42:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN asked how the  public comment period in the                                                               
bill would  apply to people who  want to build homes  in a region                                                               
like Lime Village or in the Yukon River area.                                                                                   
                                                                                                                                
REPRESENTATIVE   HERRON   answered   that  the   "assembly"   for                                                               
communities in the unorganized borough would the legislature.                                                                   
                                                                                                                                
3:43:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  restated his question.   He asked  how the                                                               
bill would affect people who reside in unorganized boroughs.                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  related  that  the matter  would  be  the                                                               
legislature's responsibility.                                                                                                   
                                                                                                                                
3:44:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON,  in response to Representative  T. Wilson,                                                               
agreed HB 202 pertains to the  public comment period.  In further                                                               
response, he related  that this state is  filled with independent                                                               
people.   He  explained  the trend  in the  Lower  48 to  require                                                               
residential sprinklers in  single family homes.   In Alaska, many                                                               
people have  "pushed back" against mandated  sprinklers in single                                                               
family  homes.   Thus,  the  homebuilders  and fire  chiefs  have                                                               
crafted a  compromise to allow  a local  decision-making process,                                                               
which provides a 60-180 day public comment period.                                                                              
                                                                                                                                
3:46:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  related  that her  community of  North                                                               
Pole does  not have building codes.   She assumed that  this bill                                                               
would apply only to cities.                                                                                                     
                                                                                                                                
REPRESENTATIVE  HERRON agreed.    He explained  that many  people                                                               
desire a  longer process.  Thus,  HB 202 would give  the matter a                                                               
higher presence and visibility in  the community.  It would allow                                                               
people who  would be  affected by  mandated sprinkler  systems to                                                               
become informed  and have  an opportunity  to participate  in the                                                               
process.                                                                                                                        
                                                                                                                                
3:47:43 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML) introduced herself.                                                                                                       
                                                                                                                                
3:48:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked how  HB 202  would affect  people in                                                               
unorganized areas  such as  in Squentna,  near the  Yentna River,                                                               
since this bill would impose a state requirement.                                                                               
                                                                                                                                
MS.  WASSERMAN  related that  the  state  does not  mandate  fire                                                               
sprinklers  be installed  in one-  and  two-family residences  so                                                               
Squentna   would  not   have   a   government  entity   mandating                                                               
installation of  fire sprinklers.   The  bill would  only mandate                                                               
the need  for an  extra hearing  to be  held when  a municipality                                                               
decided to adopt  a building code that  requires fire sprinklers.                                                               
This bill would not affect most  homeowners, she stated.  She did                                                               
not  believe  that  most  municipalities  will  require  mandated                                                               
sprinklers   be   installed   throughout  a   new   home   during                                                               
construction.   She explained some people  expressed concern that                                                               
a municipality might  require new homes to be  equipped with fire                                                               
sprinklers  throughout   the  home.    The   municipalities  have                                                               
expressed an interest in having  local control over the decisions                                                               
on building codes in their respective jurisdictions.                                                                            
                                                                                                                                
3:51:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  referred to  a letter in  members' packets                                                               
from the  Alaska State Home  Building Association  (ASHBA) [dated                                                               
March 25, 2010] that read,  "Mandating fire sprinklers systems in                                                               
the construction of all new 1  and 2 family dwellings could raise                                                               
significant issues that most Alaskans  are currently unaware of."                                                               
He asked  whether any  part of  this bill  would mandate  a state                                                               
requirement for fire sprinklers.                                                                                                
                                                                                                                                
MS.   WASSERMAN   answered   no.     In   further   response   to                                                               
Representative  Neuman,  she explained  that  nothing  in HB  202                                                               
would  mandate   sprinkler  systems   for  one-   and  two-family                                                               
residences.                                                                                                                     
                                                                                                                                
3:52:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON asked whether HB 202 is necessary.                                                                     
                                                                                                                                
MS. WASSERMAN related  that the stakeholders agreed  to the bill.                                                               
The AML's contention  is that the building codes  should be under                                                               
municipal authority and  the state should not  mandate which code                                                               
a municipality  should adopt.   The AML  is opposed  to mandates,                                                               
but  is willing  to allow  "local control"  over building  codes.                                                               
She related this  issue has been discussed for two  years and "we                                                               
thought it was time to put it to rest."                                                                                         
                                                                                                                                
3:53:27 PM                                                                                                                    
                                                                                                                                
PAUL MICHELSOHN, Alaska State  Home Building Association (ASHBA),                                                               
stated  that he  serves on  several organizations,  including the                                                               
national  code  review  for  the  National  Association  of  Home                                                               
Builders, which  is the  codes and standards  committee.   He has                                                               
participated  in three  code cycles  for  the International  Code                                                               
Council  (ICC),  the organization  that  writes  the codes.    He                                                               
related that  he has  also participated in  six code  reviews for                                                               
the Municipality of Anchorage (MOA).   He stated that HB 202 is a                                                               
compromise on 18-24  months of work.  He has  also worked on this                                                               
issue  nationally for  over ten  years.   The  Alaska State  Home                                                               
Building Association  (ASHBA) believes  that HB 202  provides the                                                               
key  to inform  the  public  and educate  them  on  the cost  and                                                               
problem  with the  installation  of fire  sprinklers systems  for                                                               
one-  and  two-family  dwellings,  prior to  any  mandate.    The                                                               
Municipality   of  Anchorage,   the  Alaska   State  Homebuilding                                                               
Association,  the  Alaska  Association  of  Realtors,  Inc.,  and                                                               
various  local home  builders' associations  have worked  on this                                                               
issue.  This  bill remains the number one priority  of the Alaska                                                               
State Home  Building Association (ASHBA).   He strongly supported                                                               
the  committee  pass  the  bill  out  of  committee  without  any                                                               
amendments and to bring the bill before the body for a vote.                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 202.                                                                                     
                                                                                                                                
3:56:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN referred  to  the sponsor  statement.   He                                                               
asked whether  a municipality  that follows  the rules  and holds                                                               
public meetings could mandate fire  sprinkler systems on one- and                                                               
two-family residences, even if the public is opposed to them.                                                                   
                                                                                                                                
REPRESENTATIVE  HERRON  stated  that  Representative  Neuman  has                                                               
identified the reason  for the bill.  There is  the "fear" that a                                                               
government could overrun its neighbors  and mandate something the                                                               
community does  not want.   He  thinks this  bill would  help his                                                               
constituents since  it requires  a six-month opportunity  to hold                                                               
discussions in the community.                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN offered  his  belief  that a  municipality                                                               
could mandate sprinklers by following  the hearing rules outlined                                                               
in the bill.                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  related the advantage of  having decisions                                                               
made  by  local assemblies  and  to  provide an  opportunity  for                                                               
redress.   He further  related that  he has  observed politicians                                                               
being "thrown  out" for decisions  made contrary to  the public's                                                               
wishes.                                                                                                                         
                                                                                                                                
CHAIR  OLSON related  that  he also  has  observed his  community                                                               
"swap out" half the city council  over a land-use issue.  He said                                                               
he thinks  the political  process works  and leadership  tends to                                                               
follow the public input.                                                                                                        
                                                                                                                                
REPRESENTATIVE   HERRON  agreed.     Prior   committee  testimony                                                               
expressed concern that an aggressive  bureaucracy for an assembly                                                               
could push  through "anything."  Everyone  who testified believed                                                               
that a thorough  process would educate people on  the issue under                                                               
consideration.    The stakeholder  thought  it  was important  to                                                               
place the  requirement for  an extended  public process  in state                                                               
statute.   He restated  that the  testimony supported  the Alaska                                                               
legislature  mandate a  longer process  on  this important  issue                                                               
which will affect homeowners.                                                                                                   
                                                                                                                                
REPRESENTATIVE    NEUMAN   offered    his   belief    that   some                                                               
municipalities  previously  have  made  decisions  prior  to  any                                                               
assembly  action.     He  related  he   has  personally  observed                                                               
adversarial actions  in local government in  his district, noting                                                               
that  the   planning  committee   has  the  authority   to  adopt                                                               
regulations.   He expressed concern  that the  planning committee                                                               
could impose these  restrictions.  He asked if HB  202 passed, if                                                               
it  would  allow  communities  that   do  not  currently  have  a                                                               
requirement  for  sprinkler  systems  to adopt  code  changes  to                                                               
mandate  sprinkler systems  for one-  and two-family  homes.   He                                                               
expressed  concern that  this  bill  will set  up  a process  for                                                               
imposition of sprinkler systems.                                                                                                
                                                                                                                                
4:04:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HERRON  answered   that  a   municipality  could                                                               
currently  adopt  the code  with  very  little input  to  mandate                                                               
sprinkler systems.  This bill  would require municipality who has                                                               
adopted  a  code  requiring  mandated  sprinkler  systems  to  go                                                               
through yet another public process  and hold additional hearings.                                                               
He said,  "You answered  your own  question.   This does  help my                                                               
constituents,   and  your   friends  and   neighbors,  and   your                                                               
constituents."                                                                                                                  
                                                                                                                                
REPRESENTATIVE NEUMAN does not understand why it is necessary to                                                                
pass the bill.  He asked, "If it could already do this why are                                                                  
we even here talking about this today."                                                                                         
                                                                                                                                
4:05:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN asked  whether municipalities could require                                                               
sprinkler systems without passage of the bill.                                                                                  
                                                                                                                                
REPRESENTATIVE HERRON answered yes.   He explained that currently                                                               
a  bureaucrat could  recommend an  assembly adopt  a mandate  for                                                               
sprinkler systems and  an assembly may adopt  the requirement for                                                               
mandated sprinkler  systems through  a relatively  short process.                                                               
This bill  would require  a longer process  to educate  people on                                                               
the  pros and  cons  of a  mandated fire  sprinkler  system.   He                                                               
encouraged  an  affirmative  vote  since it  extends  the  public                                                               
process to be certain people are informed.                                                                                      
                                                                                                                                
4:07:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT related that currently a municipality                                                                   
could impose sprinkler systems on one- or two-family homes.                                                                     
                                                                                                                                
REPRESENTATIVE HERRON answered yes.                                                                                             
                                                                                                                                
REPRESENTATIVE CHENAULT related his understanding that this bill                                                                
would add another layer of protection for a community since it                                                                  
requires the governmental body to hold a series of meetings to                                                                  
inform the public.                                                                                                              
                                                                                                                                
REPRESENTATIVE HERRON answered yes.                                                                                             
                                                                                                                                
4:08:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLMES referred to page 1, line 5, to paragraph                                                                  
"(62) AS 29.35.144 (sprinkler fire protection systems)."  She                                                                   
asked for clarification to be certain the statute citation for                                                                  
the paragraph is the correct citation.                                                                                          
                                                                                                                                
REPRESENTATIVE HERRON replied that any conforming amendments are                                                                
fine.                                                                                                                           
                                                                                                                                
4:09:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN related he has a "libertarian streak."  He                                                                
said he does not think we need to pass a new law.  He hoped that                                                                
a municipality would hold the additional meeting without passage                                                                
of this bill.  He stated that he did not vote for the mandatory                                                                 
seatbelt law, yet he uses his seatbelts.  He considered putting                                                                 
sprinklers in his home, but he does not trust government and                                                                    
does not see the necessity for the bill.                                                                                        
                                                                                                                                
4:10:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT moved to report CSHB 202(CRA) out of                                                                    
committee with individual recommendations and the accompanying                                                                  
fiscal notes.  There being no objection, CSHB 202(CRA) was                                                                      
reported from the House Labor and Commerce Standing Committee.                                                                  
                                                                                                                                
4:11:04 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:11 p.m. to 4:12 p.m.                                                                       
                                                                                                                                
          HB 419-COMMERCIAL FISHING & AGRICULTURE BANK                                                                      
                                                                                                                                
4:12:19 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE   BILL  NO.   419,   "An  Act   relating   to  the   board,                                                               
investigations,  and   examinations  of  the   Alaska  Commercial                                                               
Fishing  and Agriculture  Bank;  and providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
4:12:24 PM                                                                                                                    
                                                                                                                                
JENNIFER SENETTE, Staff, Representative Kurt Olson, Alaska State                                                                
Legislature, on behalf of the prime sponsor of HB 419, offered a                                                                
brief explanation  of the  bill.  This  bill would  eliminate the                                                               
designation for  a "resident  farmer" to be  required as  a board                                                               
member.     She  explained  that   the  Commercial   Fishing  and                                                               
Agriculture  Bank (CFAB)  created by  the legislature  came at  a                                                               
time when the emphasis was  on agriculture.  When the Agriculture                                                               
Revolving  Loan  Fund  (ARLF) was  later  established,  the  loan                                                               
market  for  the number  of  people  who qualified  as  "resident                                                               
farmer"  has dwindled.    The removal  of  the "resident  farmer"                                                               
requirement  also demonstrates  the extent  to which  the program                                                               
has  evolved.    Additionally,  HB 419  would  require  the  CFAB                                                               
financial  records be  examined  by the  Department of  Commerce,                                                               
Community, & Economic Development (DCCED) at 36 month intervals.                                                                
                                                                                                                                
4:14:27 PM                                                                                                                    
                                                                                                                                
SENATOR JOHN  COGHILL, Alaska State  Legislature, in  response to                                                               
Representative Neuman,  answered no.   He  stated that  this bill                                                               
does not apply to the ARLF.                                                                                                     
                                                                                                                                
4:15:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  whether  the CFAB  falls under  the                                                               
same umbrella as the ARLF.                                                                                                      
                                                                                                                                
SENATOR COGHILL provided  a brief history of CFAB.   He explained                                                               
that CFAB is  a private organization authorized to  loan based on                                                               
value  of a  commercial fishing  permit.   The AFRL  is based  on                                                               
whole  different  system,  he  stated.   At  the  time  CFAB  was                                                               
established, Alaska contemplated agriculture  as an industry, but                                                               
the possibilities have  not grown to the extent  that fishing has                                                               
grown.   The agriculture loan  portfolio is quite  small compared                                                               
to the  fishing loan portfolio.   The initial requirement  was to                                                               
have a  "resident farmer" participate.   He read  the definition.                                                               
A  "resident farmer"  means a  person who  is a  resident of  the                                                               
state  and  who  is  engaged in  commercial  agriculture  in  the                                                               
state."  He related that the  state envisioned the CFAB as a coop                                                               
limited  to  agriculture  and  fishing.   The  ARLF  provided  an                                                               
infusion  of  cash  managed  by  the  state  in  a  manner  quite                                                               
different  than a  private organization.    The state  envisioned                                                               
that  Alaska would  have  a vibrant  agriculture  industry.   The                                                               
proposal to  take the  requirement for  "resident farmer"  out of                                                               
statute   recognizes  that   the  pool   of  people   engaged  in                                                               
agriculture  has  diminished.   Thus,  it  is more  difficult  to                                                               
fulfill the board role of "resident farmer."                                                                                    
                                                                                                                                
4:19:04 PM                                                                                                                    
                                                                                                                                
SENATOR COGHILL related that the  Agriculture Revolving Loan Fund                                                               
(ARLF)'s purpose is to promote  the development of agriculture as                                                               
an industry  throughout the state  by means of  moderate interest                                                               
rate  loans.   Quite often  the fund  has been  managed based  on                                                               
"state  policy" decisions.   The  CFAB is  a private  cooperative                                                               
serving  and owned  by Alaskans  and makes  investments based  on                                                               
"private decisions."                                                                                                            
                                                                                                                                
4:19:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  if the  Agriculture Revolving  Loan                                                               
Fund  (ARLF) is  autonomous and  does  not fall  under the  state                                                               
government.  He assumed the CFAB is autonomous.                                                                                 
                                                                                                                                
SENATOR COGHILL agreed the CFAB  is a totally private enterprise.                                                               
He explained an  annual audit is currently conducted.   This bill                                                               
would  allow the  state  to examine  CFAB every  36  months.   He                                                               
agreed it  is a  "very different  creature" than  the ARLF.   The                                                               
only commonality shared between the  ARLF and CFAB is agriculture                                                               
needs.                                                                                                                          
                                                                                                                                
4:20:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN stated  he did not want ARLF  to be "rolled                                                               
into" CFAB  and assumed  that the bill  would not  accomplish any                                                               
merge.                                                                                                                          
                                                                                                                                
4:21:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  asked why  farmers would  not want  be                                                               
part of CFAB.                                                                                                                   
                                                                                                                                
SENATOR  COGHILL explained  it is  not  a matter  of desire,  but                                                               
rather  that only  a handful  of  commercial agriculture  farmers                                                               
currently exist.   Thus, the loan  portfolio is so small  that it                                                               
has become much more difficult  to fill the position of "resident                                                               
farmer."                                                                                                                        
                                                                                                                                
4:22:16 PM                                                                                                                    
                                                                                                                                
LEILA KLINGER,  Chief Executive  Officer, Commercial  Fishing and                                                               
Agriculture Bank (CFAB), introduced herself.                                                                                    
                                                                                                                                
4:23:27 PM                                                                                                                    
                                                                                                                                
MS. KLINGER explained  that when CFAB was created in  1979 and in                                                               
1980  that   considerable  emphasis  was  placed   on  developing                                                               
agriculture  in  the state.    The  CFAB made  many  agricultural                                                               
loans, but few new agricultural loans  have been made in the past                                                               
10  years.   Since CFAB's  elected directors  are elected  by its                                                               
membership and the number of  farmers has dwindled, it has become                                                               
less necessary  to have a farmer  serve as a director.   The role                                                               
of CFAB  has shifted,  she stated.   It is  critical for  CFAB to                                                               
reach  into its  broad pool  of members,  consisting of  not only                                                               
fishers and  farmers, but tourism  operators and  other resource-                                                               
based  businesses to  maintain viability  of and  service to  its                                                               
constituencies.                                                                                                                 
                                                                                                                                
MS. KLINGER  stated that it may  seem odd to seek  oversight, but                                                               
the  CFAB   represents  a  collection  of   diverse  but  related                                                               
fiduciary  responsibilities.    It   operates  as  a  cooperative                                                               
corporation  with a  fiduciary  relationship  and obligation  for                                                               
past, current,  and future  borrowers.  It  also has  a fiduciary                                                               
responsibility to  the state since  it is a  financial investment                                                               
of the state.  Additionally,  CFAB is the only private enterprise                                                               
with  the  authority to  encumber  a  Commercial Fishing  Limited                                                               
Entry (CFEC) permit  with a consensual lien.   Thus, CFAB's board                                                               
remains  sensitive  to  its diverse  fiduciary  responsibilities.                                                               
While CFAB is subject to an  annual audit by a professional firm,                                                               
the audits  tend to focus  on quantitative values  and accounting                                                               
protocol, but only  touch on the qualitative  aspects of lending,                                                               
policies,  practices, and  results.   However,  the state's  bank                                                               
examiners are trained and prepared  to evaluate the likelihood of                                                               
repayment  of loans.    The  examiners have  the  results of  the                                                               
experiences  of other  financial institutions  and can  establish                                                               
norms  or  guidelines  by  which   CFAB's  effectiveness  can  be                                                               
measured.   The  CFAB's  Board of  Directors  and management  are                                                               
enthusiastic in their support of HB 419, she stated.                                                                            
                                                                                                                                
4:26:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON related  her understanding that a farmer                                                               
must have a loan to serve on the CFAB Board of Directors.                                                                       
                                                                                                                                
MS. KLINGER agreed.                                                                                                             
                                                                                                                                
4:26:28 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 419.                                                                                     
                                                                                                                                
4:26:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON moved to  report HB 419 out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 419 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
4:27:22 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:27 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB 202 Talking Points.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Fiscal Note-DPS-FLS-03-23-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Sponsor Statement.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) Supporting Documents Letter-Realtors 3-25-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202
CSHB202 (CRA) ver S.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
HB202 - ISO Fact Sheet.PDF HL&C 3/29/2010 3:15:00 PM
HB 202
HB 202 Changes from Original to CSHB 202 (CRA).pdf HL&C 3/29/2010 3:15:00 PM
HB 202
HB419 ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
SB264 Fiscal Note-1-1-031710-CED-Y.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Sectional Analysis ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Sponsor Statement ver A.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents AS 44.81.270.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Chart of Examinations.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Discussion-Examination Legislation.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents History of CFAB.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Letter-Huppert 3-5-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Letter-Klingert 3-17-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
Mar 29 Packet Info.pdf HL&C 3/29/2010 3:15:00 PM
HB419 Fiscal Note-CED-BSS-3-26-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents Five Year Delinquency Chart.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
HB419 Supporting Documents CFAB Discussion Papers.pdf HL&C 3/29/2010 3:15:00 PM
HB 419
CSHB202 (CRA) Supporting Documents Letter-HomeBuilders 3-25-10.pdf HL&C 3/29/2010 3:15:00 PM
HB 202