Legislature(2015 - 2016)BARNES 124

02/20/2015 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Moved CSHB 81(L&C) Out of Committee
+= HB 86 PCE ENDOWMENT FUND INVESTMENT TELECONFERENCED
Moved HB 86 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                        February 20, 2015                                                                                       
                            3:17 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 81                                                                                                               
"An Act relating to an exemption from the regulation of                                                                         
construction contractors."                                                                                                      
                                                                                                                                
     - MOVED CSHB 81(L&C) OUT OF COMMITTEE                                                                                      
                                                                                                                                
HOUSE BILL NO. 86                                                                                                               
"An Act relating to investment of the power cost equalization                                                                   
endowment fund; and providing for an effective date."                                                                           
                                                                                                                                
     - MOVED HB 86 OUT OF COMMITTEE                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 81                                                                                                                   
SHORT TITLE: EXEMPTION: LICENSING OF CONTRACTORS                                                                                
SPONSOR(s): REPRESENTATIVE(s) TILTON                                                                                            
                                                                                                                                
01/28/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/15       (H)       L&C                                                                                                    
02/11/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/11/15       (H)       Heard & Held                                                                                           
02/11/15       (H)       MINUTE(L&C)                                                                                            
02/20/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 86                                                                                                                   
SHORT TITLE: PCE ENDOWMENT FUND INVESTMENT                                                                                      
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/30/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/15       (H)       L&C, FIN                                                                                               
02/18/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
02/18/15       (H)       Heard & Held                                                                                           
02/18/15       (H)       MINUTE(L&C)                                                                                            
02/20/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
PATRICK DALTON                                                                                                                  
Delta Junction                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 81.                                                                        
                                                                                                                                
ERIC CLARK                                                                                                                      
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 81.                                                                           
                                                                                                                                
MIKE COONS                                                                                                                      
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 81.                                                                
                                                                                                                                
PAMELA GOODE                                                                                                                    
Delta Junction                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 81.                                                                        
                                                                                                                                
JAMES SQUIRES                                                                                                                   
Delta Junction                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 81.                                                                        
                                                                                                                                
AL NAGEL, Supervisor                                                                                                            
Mechanical Inspection                                                                                                           
Division of Labor Standards and Safety                                                                                          
Department of Labor & Workforce Development (DLWD)                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 81                                                                                                                           
                                                                                                                                
GREY MITCHELL, Director                                                                                                         
Central Office                                                                                                                  
Division of Labor Standards & Safety                                                                                            
Department of Labor & Workforce Development (DLWD)                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 81.                                                                                                                          
                                                                                                                                
SARA CHAMBERS, Acting Director                                                                                                  
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community,  & Economic Development (DCCED)                                                              
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Responded   to  questions   during   the                                                            
discussion of HB 81.                                                                                                            
                                                                                                                                
ERROL CHAMPION, Chair                                                                                                           
Legislative Issues Committee                                                                                                    
Alaska Association of Realtors (AAR)                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 81.                                                                           
                                                                                                                                
KONRAD JACKSON, Staff                                                                                                           
Representative Kurt Olson                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified and  answered questions on  HB 81,                                                            
on  behalf  of the  House  Labor  & Commerce  Standing  Committee,                                                              
Representative Kurt Olson, Chair.                                                                                               
                                                                                                                                
JERRY BURNETT, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified and answered questions  during the                                                            
discussion of HB 86.                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:17:18 PM                                                                                                                    
                                                                                                                                
CHAIR  KURT OLSON  called the  House Labor  and Commerce  Standing                                                            
Committee meeting  to order at 3:17 p.m.   Representatives LeDoux,                                                              
Colver, Tilton,  Kito, Josephson,  Hughes, and Olson  were present                                                              
at the call to order.                                                                                                           
                                                                                                                                
            HB 81-EXEMPTION: LICENSING OF CONTRACTORS                                                                       
                                                                                                                                
3:17:34 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the first  order of business  would be                                                              
HOUSE  BILL NO.  81, "An  Act relating  to an  exemption from  the                                                              
regulation of construction contractors."                                                                                        
                                                                                                                                
3:18:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON,  speaking  as  prime  sponsor,  emphasized                                                              
that HB  81 will  not prevent  Alaskans from  building or  selling                                                              
their own homes  or requiring them to obtain a new  license.  Some                                                              
questions have arisen  in terms of the two-year time  limit in the                                                              
current  bill.    She  explained   that  HB  81  simply  seeks  to                                                              
reasonably include  all individuals  engaged in home  construction                                                              
as  a  business   to  be  subject  to  the   existing  residential                                                              
contractor licensure.   She characterized this bill  as a consumer                                                              
protection bill.                                                                                                                
                                                                                                                                
3:18:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER noticed a  discrepancy between  the sponsor                                                              
statement  and  provisions  in AS  08.18.    He said  the  sponsor                                                              
statement read, "In  cases where an owner-builder  finds that they                                                              
need  to sell  their  home for  a legitimate  reason,  there is  a                                                              
provision for  the Department  of Labor  to waive any  enforcement                                                              
action."   Thus, the commissioner of  the DLWD would need  to okay                                                              
the sale  within two  years.   However, the  definitions under  AS                                                              
08.18 refer  to the Department  of Commerce, Community  & Economic                                                              
Development  (DCCED.  He  asked for  further clarification  on who                                                              
will be  doing the  enforcement.   In response  to a question,  he                                                              
replied  the  language for  this  provision  is  the same  in  the                                                              
original version  and the proposed  committee substitute  (CS) for                                                              
HB 81, Version W.                                                                                                               
                                                                                                                                
3:20:01 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON stated the bill would "trump" the sponsor statement.                                                                
                                                                                                                                
3:20:05 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON reopened public testimony on HB 81.                                                                                 
                                                                                                                                
3:20:26 PM                                                                                                                    
                                                                                                                                
PATRICK  DALTON said  he found  this bill  to be  disturbing.   He                                                              
works as a  specialty contractor and  he likes to do the  best job                                                              
he can,  but these issues  would be better  addressed at  the city                                                              
and  borough level  since  the closer  the  decisions  are to  the                                                              
local  community, the  better.   He  expressed  concern that  this                                                              
bill will be difficult  to enforce in rural Alaska.   For example,                                                              
the  sponsor statement  reads, "In  cases  where an  owner-builder                                                              
needs to sell [his/her]  home for a legitimate reason,  there is a                                                              
provision for  the Department  of Labor  to waive any  enforcement                                                              
action."   He  pointed out  that the  Declaration of  Independence                                                              
originally read,  "Life, liberty,  and property," which  was later                                                              
changed to  "life, liberty, and the  pursuit of happiness."   Thus                                                              
property  is  very   important  to  Americans  and   some  in  the                                                              
unorganized borough  really value  property and freedom,  he said.                                                              
He expressed  his concern that this  bill tells people  they can't                                                              
sell  their  property without  being  illegal,  which he  said  is                                                              
close to stealing.                                                                                                              
                                                                                                                                
MR. DALTON  said although is just  a citizen, he has  a conscience                                                              
and  it  is   his  moral  responsibility  to  point   out  to  the                                                              
legislature  when  bills are  drafted  that infringe  on  people's                                                              
rights  and  freedoms.    Many  people  live  in  the  unorganized                                                              
borough  because they  like freedom.    He urged  members to  keep                                                              
this type of draconian  measure out of the boroughs  so people can                                                              
go and  be free to build  the way they  like.  He  thanked members                                                              
for the opportunity to provide his input.                                                                                       
                                                                                                                                
3:24:18 PM                                                                                                                    
                                                                                                                                
ERIC  CLARK stated  that he  and his  wife, along  with ten  other                                                              
homeowners,  found   themselves  in  a  situation   on  the  Kenai                                                              
Peninsula.  He  described his experience, in which  he purchased a                                                              
home from an  unlicensed contractor, who built two  to three homes                                                              
per year with  substantial construction defects,  including a lack                                                              
of  vapor  barrier,  undersize wiring,  absence  of  venting,  and                                                              
other structural  defects.   These homes must  be stripped  to the                                                              
studs to make  the repairs and replace the entire  plumbing, which                                                              
will  cost  $100,000 per  home  to  correct.   These  homes  never                                                              
should have  passed inspection,  but even  the home inspector  did                                                              
not find  defects.  He  said he is  currently pursuing  the matter                                                              
by  filing a  civil lawsuit.   However,  in an  effort to  prevent                                                              
other  people from  experiencing  similar  issues,  he also  filed                                                              
licensing  complaints,  but  only  the  builder  was  fined.    He                                                              
encouraged members to  pass HB 81 since the Department  of Law has                                                              
not  been able  to  prosecute unlicensed  contractors.   He  urged                                                              
members   to  help   prevent   other  people   from   experiencing                                                              
situations such as his by passing HB 81.                                                                                        
                                                                                                                                
3:29:08 PM                                                                                                                    
                                                                                                                                
MIKE  COONS   stated  that  he   has  discussed  this   bill  with                                                              
Representative Tilton  and Colver.   He related his  understanding                                                              
that  the purpose  of  the  bill is  to  address issues  that  the                                                              
previous speaker encountered.   However, in terms  of real estate,                                                              
selling  more  than one  home  per  year  requires a  real  estate                                                              
license.   Thus, it seems  that builders  would be under  the same                                                              
provisions.    For  example,  builders  cannot  purchase  ten-acre                                                              
parcels  and   build  multiple  homes   for  sale  and   refer  to                                                              
themselves  as  owner/builders  without  being in  business.    He                                                              
suggested  corrective   language  on  [page  2]   line  21-25,  as                                                              
follows," ... construction  is advertised for sale  or sold during                                                              
the period  of construction  unless the owner  can produce  to the                                                              
department's  satisfaction   a  full  list  of   the  contractor's                                                              
subcontractors used  for the construction with  full documentation                                                              
of  their licenses,  bonding and  insurance that  then would  then                                                              
protect the  future homeowner  and integrity  of the  construction                                                              
industry."   He  suggested  that  Representative  Colver has  been                                                              
working on  an amendment  that works to  address his  concern, but                                                              
he did not  think Representative Colver's proposed  amendment goes                                                              
far enough.                                                                                                                     
                                                                                                                                
3:32:11 PM                                                                                                                    
                                                                                                                                
PAMELA GOODE asked  whether the bill is constitutional,  which she                                                              
thought  is questionable.   She  further asked  whether this  bill                                                              
increases  or diminishes  anyone's individual  liberty, which  she                                                              
thinks  [the bill]  it  does.   Finally,  she  asked whether  [the                                                              
bill]  would increase  the size  or  power of  government and  she                                                              
offered her  belief that it  does.  She  said that prefers  to err                                                              
in favor  of liberty and freedom.   She suggested that  bills such                                                              
as this one are  introduced because someone has  been wronged, and                                                              
the person  seeks governmental  remedies so  others won't  also be                                                              
wronged.   However, people  have the Internet  and easy  access to                                                              
newspapers  that   could  forewarn  consumers   about  [unlicensed                                                              
contractors].  Furthermore,  if people can't sell  their products,                                                              
they will  go out  of business  since consumers  seek to  purchase                                                              
the best  product for  the best  price.   She cautioned  that when                                                              
government  is involved  it  drives  costs up  through  licensing,                                                              
rules, and regulations.   She referred to [page 2,  lines 21-25 of                                                              
HB 81],  which read, "  ... the exemption  in this paragraph  does                                                          
not apply  if the structure  under construction is  advertised for                                                          
sale or sold  during the period  of construction or for  two years                                                          
after  the  period of  construction  ends,  unless the  owner  can                                                          
demonstrate to the  department's satisfaction ...."   She said she                                                          
lives  in an  unfinished  home and  she knows  others  who do,  as                                                              
well.   She expressed concern that  based on this  language owners                                                              
won't  be  able  to  sell  their  homes  and  in  particular,  the                                                              
language "department's  satisfaction" is  a subjective term.   She                                                              
objected to  owners needing to  seek approval from  the department                                                              
which  diminishes  their individual  liberty  and  also fails  her                                                              
litmus test.  She appreciated the opportunity to testify.                                                                       
                                                                                                                                
3:35:01 PM                                                                                                                    
                                                                                                                                
JAMES  SQUIRES  described  himself   as  an  "Alaska  Constitution                                                              
Article I,  Section 2 Alaskan."   He said  he is not  a contractor                                                              
but is a  certified public accountant  by profession.  He  said he                                                              
opposes  HB  81.    He  lives remote  and  off  the  grid  in  the                                                              
unorganized  borough and  people who  live in  the urban parts  of                                                              
the  state may  not realize  the unintended  consequences of  this                                                              
bill.  He  quoted Mark Twain  as saying, "No man's  life, liberty,                                                              
or property  are safe while  the legislature  is in session."   He                                                              
objected  to the  language  in the  bill  that  states "two  years                                                          
after the  period of construction  ends".  He suggested  that over                                                          
one-half  of the  state is  in the  unorganized  borough and  many                                                              
people pay cash  for their land, build as they can  afford to, and                                                              
live  safely  and  comfortably in  unfinished  structures.    Many                                                              
people have  multiple properties  and structures, which  are often                                                              
times  all unfinished  for a  variety  of reasons.   He  expressed                                                              
concern that they could be adversely affected by this bill.                                                                     
                                                                                                                                
MR.  SQUIRES noted  that  he did  not hear  any  discussion of  an                                                              
instance in  which an  owner-builder puts up  his own  capital and                                                              
doesn't  recover it  unless  the entrepreneur  sells  it for  more                                                              
than he  has invested.   This person  bears the  full risk  of the                                                              
market  as  compared  to  the  contractor  who  does  not  put  up                                                              
capital.   He said the  dictionary definition  of a contractor  is                                                              
one  of the  parties to  a contract,  which wouldn't  apply to  an                                                              
owner/builder.   He  suggested  that there  is  a huge  difference                                                              
between the sales  contract and the building contract.   He quoted                                                              
Adolf  Hitler, who  said, "The  best way  to take  control over  a                                                              
people  and control  them utterly  is to  take a  little of  their                                                              
freedom at a time,  to erode rights by a thousand  tiny and almost                                                              
imperceptible  reductions. In this  way, the  people will  not see                                                              
those rights  and freedoms being  removed until past the  point at                                                              
which  these changes  cannot be  reversed."  He said  he was  also                                                              
opposed  to  the bill  when  it  was  introduced  last year.    He                                                              
suggested  that  legislators  and   lobbyists  are  paid,  but  he                                                              
surmised those testifying  on this bill are not paid  in any form.                                                              
He  further   suggested  that   testifiers  must  be   continually                                                              
vigilant.  He stated  that even with a zero fiscal  note, it costs                                                              
the  state  significant  time  and  money  for  this  bill  to  be                                                              
repeatedly dragged  through the legislative  process, particularly                                                              
during a  time of fiscal  crisis.  He  offered that if  this issue                                                              
creates  problems  in some  urban  areas  of  the state,  that  it                                                              
should  be handled  locally by  borough  or municipal  ordinances.                                                              
He suggested that  the bill may have unintended  consequences.  He                                                              
requested  that  members take  a  roll  call  vote when  the  time                                                              
comes.                                                                                                                          
                                                                                                                                
3:40:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked how the  changes on page  2, lines                                                              
21-25 of  HB 81  will improve  the chance  of enforcement  since a                                                              
limitation of two years exists for an owner/builder.                                                                            
                                                                                                                                
AL NAGEL,  Supervisor,  Mechanical Inspection,  Division of  Labor                                                              
Standards   and   Safety,   Department  of   Labor   &   Workforce                                                              
Development (DLWD),  answered that  the concerns stem  from within                                                              
the industry.   He  said that enforcement  will remain  consistent                                                              
with current  statute since the  prohibition for  an owner/builder                                                              
to start  and complete  a structure  is currently  two years.   He                                                              
suggested  the more  egregious violators  hold off  for two  years                                                              
before  they start  building another  in a  series of  homes.   He                                                              
characterized  this as a  means to "level  the playing  field" for                                                              
contractors   since   unlicensed  contractors   conduct   business                                                              
without carrying the overhead the licensed contractors carry.                                                                   
                                                                                                                                
3:42:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  whether this  would increase  the                                                              
aforementioned requirement to four years.                                                                                       
                                                                                                                                
MR. NAGEL answered no.                                                                                                          
                                                                                                                                
3:43:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  said  the committee  has  heard  testimony                                                              
expressing    concern     about    individual     liberties    for                                                              
owner/builders.   She  interpreted  the bill  as allowing  typical                                                              
Alaskans to  continue to have the  freedom to do so.   She related                                                              
her understanding  that an  issue would  only arise when  licensed                                                              
contractors notice someone  is not following the rules  and file a                                                              
complaint  that would  be  investigated by  the  department.   She                                                              
said  she is  very supportive  of  individual liberties;  however,                                                              
there  is a  misunderstanding of  how  this bill  might impact  an                                                              
Alaskan building  his/her home.   She suggested that  removing all                                                              
the  regulations  and  requirements  would  also  create  a  level                                                              
playing  field;  however,  so  long  as  contractor  licensure  is                                                              
required  in Alaska,  everyone engaging  in  contracting needs  to                                                              
follow the rules.   She asked for comments on how  this bill would                                                              
affect the typical Alaskan building his/her own home.                                                                           
                                                                                                                                
3:45:15 PM                                                                                                                    
                                                                                                                                
GREY  MITCHELL,  Director,  Central   Office,  Division  of  Labor                                                              
Standards &  Safety, Department of  Labor & Workforce  Development                                                              
(DLWD),   stated   the   proposed    change   created   additional                                                              
restrictions   for  those  attempting   to  evade  the   licensing                                                              
requirements  for  contractors.    He said  it  would  not  affect                                                              
Alaskans building  their own homes  or building and  selling their                                                              
homes.    Instead,  this  bill  would  assist  the  department  in                                                              
identifying  and   prosecuting  unlicensed  contractors   who  are                                                              
building  homes and  offering  them  up for  sale  on a  recurring                                                              
basis.    He  acknowledged  that  the  bill  can  help  stop  this                                                              
practice  to  the  degree  that  it  is  unfairly  competing  with                                                              
contractors who compete in the business.                                                                                        
                                                                                                                                
3:46:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HUGHES  related   her  understanding   there  was                                                              
nothing  onerous in  the bill  nor  any additional  administrative                                                              
steps an  owner-builder would  need to  comply with, for  example,                                                              
as  one testifier  mentioned  in  the event  spouse  dies and  the                                                              
family  needs  to  sell  their  home.     She  asked  for  further                                                              
clarification on  whether an owner-builder  will have  any problem                                                              
or need to  contact the department  or answer to anyone  or if the                                                              
owner/builder would just move forward and sell his/her home.                                                                    
                                                                                                                                
MR. MITCHELL agreed  that was correct, although  the wording makes                                                              
it  sound like  a person  would need  to  obtain the  department's                                                              
approval;  however, he  envisioned  the practical  application  of                                                              
this provision is  that the department would only  get involved in                                                              
the  event  a  complaint  was  filed  that  raised  the  issue  of                                                              
unlicensed  contracting.   He said  the department  does not  have                                                              
the resources to check into routine home sales.                                                                                 
                                                                                                                                
3:47:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  asked whether an owner/builder  who did not                                                              
check  in  with  the  department  will  be  in  violation  of  the                                                              
statute.                                                                                                                        
                                                                                                                                
MR. MITCHELL answered no.                                                                                                       
                                                                                                                                
3:48:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  related a scenario  in which a  person sold                                                              
their home  and the buyer later  encounters a problem.   She asked                                                              
how  the  buyer  would  be protected  if  the  department  is  not                                                              
involved.                                                                                                                       
                                                                                                                                
MR. MITCHELL answered  that the language is not  designed to catch                                                              
every case,  but is designed to provide  one more tool  to make it                                                              
more  difficult   for  someone   to  operate   as  an   unlicensed                                                              
contractor building  and selling homes.   He reiterated  that this                                                              
language  is not  intended to  apply to  owner/builders who  build                                                              
and sell their  own homes.  The department would  only investigate                                                              
if a complaint triggered one.                                                                                                   
                                                                                                                                
3:49:32 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  asked whether  that  would be considered  an "as  is"                                                              
sale.                                                                                                                           
                                                                                                                                
MR. MITCHELL answered that he was not sure.                                                                                     
                                                                                                                                
CHAIR OLSON surmised it would fall under an "as is" sale.                                                                       
                                                                                                                                
3:49:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether Mr.  Clark's situation  will                                                              
be protected or if the same thing could happen.                                                                                 
                                                                                                                                
MR. MITCHELL  said the same  thing could  happen.  He  stated that                                                              
the provision in  HB 81 will provide the department  with one more                                                              
tool to identify  unlicensed contractor activity.   It would allow                                                              
the  department   the  opportunity   to  investigate   whether  an                                                              
unlicensed contractor  built and sold three homes in  a few years,                                                              
which would  be an  enforcement issue.   However,  an issue  would                                                              
not arise  for an owner/builder  who built  his/her house  and was                                                              
trying to sell it.                                                                                                              
                                                                                                                                
3:50:51 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  said he  was aware  of Mr.  Clark's situation,  which                                                              
involved ten homes.                                                                                                             
                                                                                                                                
3:51:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON stated  that she obtained  a legal  opinion                                                              
as  to whether  home  sales by  an  owner who  is  not a  licensed                                                              
contractor  violates any  constitutional  provisions.   She  asked                                                              
permission to pass it out to members.                                                                                           
                                                                                                                                
3:51:32 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:51 p.m. to 3:45 p.m.                                                                       
                                                                                                                                
3:54:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER commented  that the  Department of  Labor &                                                              
Workforce  Development (DLWD)  enforces the  statute with  respect                                                              
to home  sales; however,  the statute  is AS  08 which applies  to                                                              
the  Department  of Commerce,  Community  &  Economic  Development                                                              
(DCCED) and  not to Department  of Labor & Workforce  Development.                                                              
He asked for further clarification on who provides enforcement.                                                                 
                                                                                                                                
SARA  CHAMBERS,   Acting  Director,   Division  of   Corporations,                                                              
Business,  and  Professional Licensing,  Department  of  Commerce,                                                              
Community,  &  Economic  Development (DCCED),  answered  that  the                                                              
Department  of   Labor  &  Workforce  Development   (DLWD)  has  a                                                              
reimbursable  services agreement  (RSA), or  contract, to  provide                                                              
enforcement  services  for  construction  contractors,  mechanical                                                              
and electrical  administrators.   She stated  that the  DCCED uses                                                              
the  DLWD as  an efficiency  measure since  the DLWD's  inspectors                                                              
are  already in  the field  conducting inspections.   This  effort                                                              
has been happening successfully for several years.                                                                              
                                                                                                                                
3:55:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  asked  which  department  would  make  the                                                              
determination   that  the   sale  of  a   home  would   circumvent                                                              
requirements of this  chapter as stated on page 2,  lines 21-25 of                                                              
HB 81.                                                                                                                          
                                                                                                                                
MS.  CHAMBERS  answered  that the  responsibility  resides  within                                                              
Department of Commerce,  Community & Economic  Development (DCCED)                                                              
in partnership  with Department of  Labor & Workforce  Development                                                              
(DLWD).  She  said that the DLWD  would be the most  likely agency                                                              
to detect  illegal activity  and issue a  cease and desist  order.                                                              
The  final arbitration  and licensing  action  or fine  collection                                                              
and due process  rights to appeal  the cease and desist  order are                                                              
all elements that would be handled within the DCCED, she said.                                                                  
                                                                                                                                
3:57:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  for  clarification on  the costs  to                                                              
enforce  the regulations  in this  section.   He recalled  earlier                                                              
testimony that indicated  the department would need  to promulgate                                                              
regulations outlining  under what  conditions an owner  could sell                                                              
his/her  home  within  the  two-year  period.   He  asked  for  an                                                              
estimated  cost to  administer, prepare  regulations, and  oversee                                                              
it.                                                                                                                             
                                                                                                                                
MS.  CHAMBERS  said  the division's  average  cost  to  promulgate                                                              
regulations was  estimated at $2,500,  which includes the  cost of                                                              
legal  services  and publication.    She  did not  anticipate  any                                                              
measureable  increase in  enforcement  costs since  these are  the                                                              
types of things  the division is  structured to do.  She  said she                                                              
and Mr.  Mitchell  are "on  the same page"  in terms  of how  this                                                              
statute would be  applied.  The department would  not seek advance                                                              
permission  of owner/builders,  but in  the event  a complaint  is                                                              
filed the  department would  investigate it  to determine  whether                                                              
the owner/builder qualifies for the exemption.                                                                                  
                                                                                                                                
3:58:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   COLVER  asked  for   an  estimate  of   the  time                                                              
investigations will take.                                                                                                       
                                                                                                                                
MS.  CHAMBERS  answered  that  much   of  the  investigative  time                                                              
depends  on  the  complainants'   willingness  to  work  with  the                                                              
agency.   She  said  she  couldn't  really predict;  however,  she                                                              
didn't   envision   any  significant   increase   in   enforcement                                                              
activity.                                                                                                                       
                                                                                                                                
3:58:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   COLVER  related   his   understanding  that   the                                                              
existing  statute doesn't  prohibit sale of  an owner  constructed                                                              
home, but  that an owner/builder  is restricted to build  only one                                                              
newly constructed  home within two  years.  He further  understood                                                              
there would not be any prohibition on owner/builder home sales.                                                                 
                                                                                                                                
MS. CHAMBERS answered that is correct.                                                                                          
                                                                                                                                
3:59:45 PM                                                                                                                    
                                                                                                                                
ERROL  CHAMPION,  Chair;  Legislative   Issues  Committee,  Alaska                                                              
Association of Realtors  (AAR), stated that the AAR  is in support                                                              
of  HB  81.   He  related  his  understanding  that  an  assistant                                                              
attorney  general  has  said  the current  statute  is  not  clear                                                              
enough to  have the  Department of  Labor & Workforce  Development                                                              
(DLWD)  or  the  Department  of  Commerce,  Community  &  Economic                                                              
Development    (DCCED)   prosecute    violators   of    unlicensed                                                              
construction  contracting.    This  bill would  clarify  that  the                                                              
owner/builder  cannot have a  home for sale,  especially if  it is                                                              
listed on a  multiple listing service unless properly  licensed to                                                              
do so.   In  fact, realtors must  verify that  aspect at  the time                                                              
they  take  a   listing,  he  said.    Contractors   must  have  a                                                              
construction    contractor's    license   with    a    residential                                                              
endorsement,  as well as  submit to  continuing education  similar                                                              
to the  ongoing education  realtors  submit to  as a condition  of                                                              
license  renewal.   Under  the bill,  the  Department  of Labor  &                                                              
Workforce  Development  (DLWD)  can  force  the  owner/builder  to                                                              
obtain the  appropriate license or  stop building.   These changes                                                              
are not  intended to make  it more difficult  in rural  areas, but                                                              
when homes  are "flipped"  every  two years the  intent is  clear.                                                              
He concluded  by saying that the  AAR supports the adoption  of HB                                                              
81.                                                                                                                             
                                                                                                                                
4:01:19 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first  determining no  one wished to  testify,                                                              
closed public testimony on HB 81.                                                                                               
                                                                                                                                
4:01:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  moved  to  adopt  the  proposed  committee                                                              
substitute  (CS)  for  HB  81,  Version  W,  labeled  29-LS0346\W,                                                              
Nauman/Strasbaugh, 2/16/15 as the working document.                                                                             
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
4:02:01 PM                                                                                                                    
                                                                                                                                
KONRAD  JACKSON, Staff,  Representative Kurt  Olson, Alaska  State                                                              
Legislature,  explained that page  2, lines 10  of Version  W will                                                              
add language  to read, "an existing  structure on" and on  page 2,                                                            
line 12,  will add, "existing."   This language  was added  at the                                                            
recommendation of Mr. Mitchell, DLWD, he said.                                                                                  
                                                                                                                                
4:02:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  referred to Mr.  Clark's case.   He pointed                                                              
out that  the Alaska State Troopers  issued a case  number 12-7320                                                              
dated February 8, 2012.                                                                                                         
                                                                                                                                
CHAIR  OLSON asked  whether  this is  pertinent  to the  committee                                                              
substitute, Version W.                                                                                                          
                                                                                                                                
REPRESENTATIVE  COLVER  answered  yes;  since  the  aforementioned                                                              
case  is  fraud.   He  stated  that the  building  inspection  was                                                              
signed  off by a  home inspector.   The  police report  identified                                                              
fraud committed by  the home inspector, which is  much bigger than                                                              
a  licensing issue  since the  home  inspector misrepresented  the                                                              
home that was  for sale.  He  wanted to ensure that the  record is                                                              
clear  that  this  matter  has  been  investigated  as  fraud  and                                                              
recommended for prosecution by the investigating trooper.                                                                       
                                                                                                                                
4:04:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  commented on  another very sad  incident in                                                              
which  a family  died  of  asphyxiation in  a  Wasilla  home.   He                                                              
suggested that  the testifier  alluded to this  as an  instance of                                                              
an owner-built home that resulted in death.                                                                                     
                                                                                                                                
CHAIR  OLSON  asked whether  this  is  pertinent to  the  proposed                                                              
committee substitute, Version W, which is before the committee.                                                                 
                                                                                                                                
REPRESENTATIVE  COLVER answered  that  it is  pertinent since  the                                                              
proposed  committee   substitute  takes  action  to   regulate  an                                                              
activity, but  it needs to  be very clear  that people  didn't die                                                              
because  it was  an owner-built  home,  but because  the home  was                                                              
modified by  the homeowner  to vent the  family's utility  room to                                                              
the master bedroom  to pull excess heat, which  resulted in carbon                                                              
monoxide poisoning.   While it is very sad, it is  not relevant to                                                              
whether it was  an owner-built or licensed contractor  built home,                                                              
but it was a  modification to the heating system  that caused that                                                              
tragedy, he said.                                                                                                               
                                                                                                                                
4:06:15 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  in response  to a question,  asked members  to limit                                                              
comments  to the  proposed committee  substitute (CS)  for HB  81,                                                              
Version W.                                                                                                                      
                                                                                                                                
CHAIR  OLSON  removed  his  objection.   There  being  no  further                                                              
objection, Version W was adopted.                                                                                               
                                                                                                                                
4:06:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON moved  to  adopt Amendment  1, labeled  29-                                                              
LS0346\W.1, Strasbaugh, 2/18/15, which read as follows:                                                                         
                                                                                                                                
     Page 1, following line 2:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Section 1. The uncodified law of the State of                                                                    
     Alaska is amended by adding a new section to read:                                                                         
          LEGISLATIVE INTENT. It is the intent of the                                                                           
     legislature    that    the    exemptions    listed    in                                                                   
     AS 08.18.161,  as amended  by  sec. 2  of  this Act,  be                                                                   
     construed  broadly  in order  to allow  individuals  the                                                                   
     freedom  and ability  to construct  and  sell their  own                                                                   
     homes based on their own discretion."                                                                                      
                                                                                                                                
     Page 1, line 3:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 3, line 2:                                                                                                            
          Delete "sec. 1"                                                                                                       
          Insert "sec. 2"                                                                                                       
                                                                                                                                
REPRESENTATIVE COLVER objected.                                                                                                 
                                                                                                                                
4:07:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   TILTON   said   that  Amendment   1   would   add                                                              
legislative intent  language to  make it clear  that this  bill is                                                              
intended  to be  interpreted  in  a way  to  not infringe  on  the                                                              
freedom of Alaskans  to construct and sell their  own homes acting                                                              
as contractors in a lawful manner.                                                                                              
                                                                                                                                
4:07:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  said  that  he can't  support  the  intent                                                              
language since it  sounds nice but intent language  will only have                                                              
meaning if  the legislative  history is  reviewed for  legislative                                                              
intent.   He said that  this language will  not have any  place in                                                              
the  statutory  evaluation  in  how  paragraph  [11]  is  applied.                                                              
Further, it  contradicts the clear  language that limits  the sale                                                              
of the  home with the  statement that it  doesn't have  any effect                                                              
on property  rights; however,  he thinks it  does have  an effect.                                                              
The holding  by the Alaska Supreme  Court is that  intent language                                                              
is merely an intent statement and not law.                                                                                      
                                                                                                                                
[Representative Colver's objection was treated as maintained.]                                                                  
                                                                                                                                
4:08:34 PM                                                                                                                    
                                                                                                                                
A  roll call  vote  was taken.   Representatives  Hughes,  LeDoux,                                                              
Tilton, Kito,  Josephson, and  Olson voted  in favor of  Amendment                                                              
1.     Representative  Colver  voted   against  it.     Therefore,                                                              
Amendment 1 was adopted by a vote of 6-1.                                                                                       
                                                                                                                                
4:09:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  made motion  to adopt Amendment  2, labeled                                                              
29-LS0346\A.4, Strasbaugh, 2/18/15, which read as follows:                                                                      
                                                                                                                                
     Page 1, following line 2:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Section  1. AS 08.18.051 is amended by  adding new                                                                 
     subsections to read:                                                                                                       
          (d) A residential contractor or the agent of a                                                                        
     residential  contractor  shall prominently  display  the                                                                   
     license  number of  the  residential  contractor on  all                                                                   
     advertising  by the contractor  for the initial  sale of                                                                   
     a residential structure constructed by the contractor.                                                                     
          (e)  An owner who acts as the owner's own                                                                             
     contractor  consistent   with  the  exemption   provided                                                                   
     under  AS 08.18.161(11)  shall,   for  two  years  after                                                                   
     construction  on  a  structure   begins,  state  on  all                                                                   
     advertising for  the initial sale of the  structure that                                                                   
     the  owner of  the structure  acted as  the owner's  own                                                                   
     contractor."                                                                                                               
                                                                                                                                
     Page 1, line 3:                                                                                                            
          Delete "Section 1"                                                                                                  
          Insert "Sec. 2"                                                                                                     
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 2, line 21, following "years":                                                                                        
         Insert "and shall comply with AS 08.18.051(e)"                                                                     
                                                                                                                                
     Page 2, lines 21 - 25:                                                                                                     
          Delete "the exemption in this paragraph does not                                                                  
     apply if the structure under construction is                                                                           
     advertised for sale or sold during the period of                                                                       
     construction or for two years after the period of                                                                      
     construction ends, unless the owner can demonstrate to                                                                 
     the department's satisfaction that the sale would not                                                                  
     result in circumvention of the requirements under this                                                                 
     chapter;"                                                                                                              
                                                                                                                                
     Page 3, line 2:                                                                                                            
          Delete "sec. 1"                                                                                                       
          Insert "sec. 2"                                                                                                       
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
REPRESENTATIVE COLVER  explained Amendment 2.  He  stated that the                                                              
bill  helps  enforce  contracting  law  to  achieve  better  built                                                              
homes.  He  said that he thinks  we can get better  enforcement by                                                              
requiring disclosure.   Amendment  2 would require  contractors to                                                              
display  their license  number on  any advertising  of a new  home                                                              
and require  owner/builders offering  a home  for sale  within two                                                              
years  to display  and disclose  that it  was built  by an  owner.                                                              
This would  keep the government  out of  it and the  Department of                                                              
Commerce,  Community   &  Economic   Development  will   not  make                                                              
decisions on  who can opt out  of the two-year sale  provision, or                                                              
the additional staff  time by the agency or the  Department of Law                                                              
or  Department  of  Labor  &  Workforce   Development.    Finally,                                                              
Alaskans  won't have  to  ask permission  to  sell their  lawfully                                                              
built  homes.     He  offered  his  belief  that   disclosure  and                                                              
advertising  can accomplish  the same  mission -  to avoid  having                                                              
unlicensed  builders  building  homes  - since  everyone  will  be                                                              
aware of  the signs.   He clarified that  Amendment 2  will delete                                                              
the provision  restricting the  owner/builders from selling  their                                                              
homes in  two years and avoids  having the government  infringe on                                                              
individual  property  rights  or  place  unreasonable  burdens  on                                                              
property owners.                                                                                                                
                                                                                                                                
4:11:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO referred  to subsection  (d) of Amendment  2,                                                              
which  identifies  a residential  contractor  or  the agent  of  a                                                              
residential  contractor.   He asked  whether he  could explain  if                                                              
the  agent  of  the residential  contractor  would  be  a  general                                                              
contractor.                                                                                                                     
                                                                                                                                
REPRESENTATIVE COLVER  answered that agent  would refer to  a real                                                              
estate agent.                                                                                                                   
                                                                                                                                
4:12:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON suggested  that subsection  [d] is  already                                                              
addressed   under  AS   08.18  051,   related  to   identification                                                              
requirements for contractors.                                                                                                   
                                                                                                                                
MR.  NAGEL answered  that  the existing  statute  in AS  08.18.051                                                              
requires substantially  the same thing  that is in  subsection (d)                                                              
of  Amendment 2.    He  acknowledged that  it  may  be clearer  in                                                              
subsection (d)  but the requirement  is still there  in subsection                                                              
(b) and (c) of the current statute.                                                                                             
                                                                                                                                
4:14:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES   asked  how  the  bill  might   impact  an                                                              
ordinary Alaskans  wanting to build  their own homes,  noting they                                                              
wouldn't  need  to  do  anything   different  under  current  law.                                                              
However,  she  said [Amendment  2]  would  add a  requirement  for                                                              
owner/builders.   She  said that  Amendment 2  would actually  add                                                              
onerous requirements  on Alaskans who desire to  build their homes                                                              
and  it does  not promote  individual liberties.   Therefore,  she                                                              
will not be supporting Amendment 2, she said.                                                                                   
                                                                                                                                
MR.  MITCHELL answered  that  [Amendment 2]  does  seem to  create                                                              
another requirement  for owner/builders who build  their own homes                                                              
to put some statement to that effect in their advertising.                                                                      
                                                                                                                                
4:15:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  pointed out the  reason the bill  is before                                                              
the  committee is  to enforce  unlicensed  contractors.   Further,                                                              
the  concern from  the industry  is that  unlicensed builders  are                                                              
selling  homes.   He  offered  his  belief  that the  reason  most                                                              
owners build homes  is to live in their homes.   He said if people                                                              
do not get  a contractor's license,  they need to state  that they                                                              
are  owner/builders acting  as their  own contractors.   Doing  so                                                              
makes  it clear  to the  public that  they are  buying homes  that                                                              
were built  by owner/builders and  not contractors.   Further, the                                                              
advertising is  prominently displayed, which is  the clarification                                                              
between the language  in [Amendment 2] and the  existing statutory                                                              
language.   He  characterized it  as  the "golden  seal" since  it                                                              
identifies  any   homes  built  by   licensed  contractors.     He                                                              
acknowledged that  home inspections are part of  the due diligence                                                              
performed by  the buyers.  He  offered his belief  that [Amendment                                                              
2] creates  something that  is straightforward  and simple  rather                                                              
than  requiring owner/builders  to ask  the government  permission                                                              
to  sell their  homes  within two  years.   This  simply  requires                                                              
disclosure  and  the  government  will  not  be  involved  in  the                                                              
process,  he said;  instead,  the  onus is  on  public  and it  is                                                              
similar to how many things are handled.                                                                                         
                                                                                                                                
4:17:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  asked for the reason to set  up two classes                                                              
of people,  with one group  that must be  licensed and  bonded and                                                              
another group  of people  who are [building  homes] as  a business                                                              
who don't  need to  be licensed and  bonded.  She  said she  has a                                                              
problem with this amendment but she likes the bill.                                                                             
                                                                                                                                
4:18:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  said  he  is  not likely  to  vote  for                                                              
Amendment 2,  but he did  not think the  burden in subsection  (e)                                                              
is so egregious.   After all, the law already  restricts owners to                                                              
build  one home  every two  years.   Thus, current  law creates  a                                                              
break  on  pure  liberty  interest   and  restricts  owners.    He                                                              
understands  the point  the  sponsor of  Amendment  2 attempts  to                                                              
make,  which  is to  create  notice  and  cure  the problem  in  a                                                              
different  way.  He  expressed concern  with Amendment  2 since  a                                                              
person could  be working on a home  for two years.   Certainly the                                                              
timeframe could  spill in to  second year  and the notice  will be                                                              
eaten  up by  the  time  of construction,  since  [subsection  (e)                                                              
states it will begin  after construction.  He said  the time could                                                              
end  at time  of sale  so  he was  unsure that  there  would be  a                                                              
"whole lot of" notice.                                                                                                          
                                                                                                                                
REPRESENTATIVE COLVER maintained his objection.                                                                                 
                                                                                                                                
4:20:06 PM                                                                                                                    
                                                                                                                                
A  roll call  vote  was taken.    Representative  Colver voted  in                                                              
favor of  Amendment 2.   Representatives  Hughes, LeDoux,  Tilton,                                                              
Kito,  Josephson,   and  Olson  voted  against  it.     Therefore,                                                              
Amendment 2 failed by a vote of 1-6.                                                                                            
                                                                                                                                
4:20:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER moved  to  adopt Amendment  3, labeled  29-                                                              
LS0346\A.5, Strasbaugh, 2/18/15, which read, as follows:                                                                        
                                                                                                                                
     Page 2, line 22, following "is":                                                                                       
          Insert "in a home rule, first class, or second                                                                    
     class borough or unified municipality"                                                                                 
                                                                                                                                
CHAIR OLSON objected.                                                                                                           
                                                                                                                                
REPRESENTATIVE  COLVER   explained  that  Amendment   3  basically                                                              
exempts  unorganized communities.   He  said it  would apply  in a                                                              
home  rule,  first  class,  or second  class  borough  or  unified                                                              
municipality.                                                                                                                   
                                                                                                                                
4:21:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  pointed out that as a  general rule that                                                              
some  code  enforcement will  occur  in  larger communities.    He                                                              
assumed that  the problem the sponsor  is trying to  remedy exists                                                              
in rural Alaska, as well.                                                                                                       
                                                                                                                                
CHAIR OLSON  responded that  the issues in  his district  are from                                                              
areas outside the city limits and not in Kenai or Soldotna.                                                                     
                                                                                                                                
4:22:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER offered  his belief  that Amendment  3 will                                                              
help reduce  inspections by  the Department  of Labor &  Workforce                                                              
Development  (DLWD) of owner/builder  homes in  rural Alaska.   He                                                              
said it  does not  apply in  the Kenai  Peninsula Borough,  but it                                                              
will apply  in communities such as  Tok and Glenallen, as  well as                                                              
areas  along  the  river  systems.    He  suggested  that  funding                                                              
doesn't exist to enforce the current law.                                                                                       
                                                                                                                                
4:23:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  added  that  protection  is  needed  in  the                                                              
unorganized areas to protect them from actions.                                                                                 
                                                                                                                                
CHAIR OLSON maintained his objection.                                                                                           
                                                                                                                                
4:23:52 PM                                                                                                                    
                                                                                                                                
A  roll call  vote  was taken.    Representative  Colver voted  in                                                              
favor of  Amendment 3.   Representatives  Hughes, LeDoux,  Tilton,                                                              
Kito,  Josephson,   and  Olson  voted  against  it.     Therefore,                                                              
Amendment 3 failed by a vote of 1-6.                                                                                            
                                                                                                                                
4:24:39 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON stated Version W is before the committee.                                                                           
                                                                                                                                
4:24:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said he  has spent considerable  time on                                                              
this bill.   He  acknowledged Representative  Colver's point  that                                                              
too much government  isn't a good thing and if  people are foolish                                                              
and make bad purchasing  decisions that it is on  them.  They need                                                              
to  be  grownups,  be  vigilant,  and  look  after  themselves  or                                                              
basically, caveat emptor  - "let the buyer beware".   He suggested                                                              
all of these things  apply to this bill.  In terms  of liberty, if                                                              
it took someone  two years to build,  the person could  be tied to                                                              
the home  for four years, which  somewhat concerns him,  but he is                                                              
not surprised by  the Legislative Legal opinion since  he has read                                                              
some of  the cases  cited.   However, there  are over 300  million                                                              
people in the U.S.  and our country is much more  complicated than                                                              
when  it was  founded.   He said  rules  are designed  to keep  us                                                              
safer.     He  said   the  idea   of  "meeting  the   department's                                                              
satisfaction"   as  a   deciding   factor   seems  arbitrary   and                                                              
capricious since he  has no idea what that phrase  actually means.                                                              
He also  was not  sure how these  key lines  will help  much since                                                              
enforcement costs money.   He pointed out dry cabins  can be built                                                              
outside  of  Anchorage.    Ultimately, what  Mr.  Green  wrote  on                                                              
February  18,  2015   in  a  letter  in  support  of   HB  81  was                                                              
persuasive,  which read, "If  you believe  anybody should  be able                                                              
to be a  builder, then we need  to change and/or do away  with the                                                              
requirements we  now place on  our licensed general  contractors."                                                              
He  said  that  was  the  deciding  factor  for  him.    Thus,  he                                                              
recommends voting to  move HB 81 out of committee  with a positive                                                              
recommendation.                                                                                                                 
                                                                                                                                
4:28:02 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON agreed with the comments of the previous speaker.                                                                   
                                                                                                                                
4:28:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER said  that the  issue raised  in this  bill                                                              
comes  from  his community.    However,  passing this  bill  won't                                                              
change  the competitive  landscape.   He suspected  that if  a few                                                              
builders  are  not  getting  licensed,  they  will  likely  get  a                                                              
license, but the  "playing field" will not change  since there are                                                              
competitive  business  models  used  to  gain an  advantage.    He                                                              
predicted that  what will  happen is  Alaskans will lose  freedom.                                                              
He  said Alaskans  don't  want  to go  to  the government  to  ask                                                              
permission to  sell their property  just as  they don't go  to the                                                              
U.S.  Securities  and Exchange  Commission  to ask  permission  to                                                              
sell  their stocks.   Instead,  individuals  are free  to buy  and                                                              
sell as they see fit.                                                                                                           
                                                                                                                                
REPRESENTATIVE  COLVER  said  the  law allows  Alaskans  to  build                                                              
their own  homes every  two years.   He suggested  that a  lack of                                                              
adequate  enforcement  exists,  which  has led  to  this  measure.                                                              
However, he  characterized HB  81 as an  overreach that  will cost                                                              
government  money.   Further,  he  questioned  whether  it is  the                                                              
government's decision  since it's not clearly defined  in the bill                                                              
when people  can sell their  homes.  He  suggested that is  yet to                                                              
be determined,  which really needs  to be worked  out.  He  said a                                                              
lot of  Alaskans feel  strongly about  their rights  and he  joins                                                              
them.    He  suggested  it  is  possible  to  have  a  competitive                                                              
landscape and  a well-licensed, well-regulated  building industry,                                                              
but many  communities, such as the  greater Mat-Su Borough  do not                                                              
want building  permits.   Thus, the  approach taken will  regulate                                                              
the industry  through another  angle, which is  to have  the state                                                              
intervene.  He offered  his belief that some of  these issues need                                                              
to be  solved locally.   He estimated 60-70  percent of  the homes                                                              
currently being  built are owner/builder homes, in  which Alaskans                                                              
buy  land, build  a home,  add on  to it,  and if  they sell,  the                                                              
prospective buyers will obtain their own inspectors.                                                                            
                                                                                                                                
REPRESENTATIVE  COLVER  pointed out  that  an instance  of  simple                                                              
fraud and  falsified  documents led  to this bill.   He  concluded                                                              
that this bill  is overkill.  He cautioned members  about limiting                                                              
liberty and asked members to tread lightly on Alaskans' freedom.                                                                
                                                                                                                                
4:31:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  answered that  she supports having  a level                                                              
playing  field.    She  understood  the  argument  for  individual                                                              
liberty, which is  as important to her as it is  to anyone else in                                                              
this  body.   However,  she suggested  that  the committee  either                                                              
passes   this   bill  or   should   simply   eliminate   licensing                                                              
requirements  for everyone  in the  industry.   She said that  for                                                              
most of this century,  the idea of caveat emptor  - "let the buyer                                                              
beware"  -  did  apply to  construction  contracts;  however,  the                                                              
legislature previously  made policy decisions to  require builders                                                              
and  contractors to  be  licensed and  bonded.   Therefore,  let's                                                              
make it for everyone, she said.                                                                                                 
                                                                                                                                
4:32:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES said  she would  not be  supportive of  the                                                              
bill  if it  limited  liberty of  individual  Alaskans.   However,                                                              
this  bill   does  not   require  individual   Alaskans  who   are                                                              
owner/builders to  seek permission from the government.   Further,                                                              
it does  not place  any burden  on Alaskans  who have built  their                                                              
own  homes.    She agreed  with  Representative  LeDoux  that  the                                                              
legislature has  previously made  policy decisions.   She referred                                                              
to a Legislative  Legal Services memo that opines that  HB 81 does                                                              
not  constitute  any  constitutional  issues with  respect  to  an                                                              
unwarranted restraint  of trade for an owner/builder  who is not a                                                              
licensed construction contractor.                                                                                               
                                                                                                                                
REPRESENTATIVE HUGHES  acknowledged previous testimony  related to                                                              
a  home  inspector  who was  being  recommended  for  prosecution;                                                              
however, there  were underlying  problems with  the home  that was                                                              
built.   In fact,  policy decisions  have been  made in  order for                                                              
Alaskans to  have safe homes.  Although  she would love  it if the                                                              
market could  take care of  the problems,  and people can  get the                                                              
best product for  the best price, but buyers can't  see everything                                                              
in the walls,  nor are all  people experts.  Certainly  people can                                                              
hire inspectors, but  things can be missed.  However,  buyers need                                                              
assurances that their  homes have been built by  someone who knows                                                              
what they  are doing and  who is following  the rules.   She asked                                                              
to  place  on   the  record  that  this  bill   does  not  require                                                              
individual  Alaskans to seek  permission from  the government  and                                                              
Alaskans  will continue  to have  the  liberty to  build and  sell                                                              
their own homes as owner/builders.                                                                                              
                                                                                                                                
4:35:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TILTON stated that  she appreciated the  questions                                                              
that  have been  raised.   She  stated  it is  not  her desire  to                                                              
prevent  people from  building or  selling their  own homes.   She                                                              
said that  HB 81 is intended  to close a loophole  [for unlicensed                                                              
contracting] and not remove any personal liberties.                                                                             
                                                                                                                                
4:36:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  moved  to report  the  proposed  committee                                                              
substitute    (CS)    for    HB     81,    labeled    29-LS0346\W,                                                              
Nauman/Strasbaugh,  2/16/15  [Version W],  out  of committee  with                                                              
individual recommendations and the accompanying fiscal notes.                                                                   
                                                                                                                                
REPRESENTATIVE COLVER objected.                                                                                                 
                                                                                                                                
4:36:47 PM                                                                                                                    
                                                                                                                                
A  roll call  vote  was taken.   Representatives  Hughes,  LeDoux,                                                              
Tilton, Kito,  Josephson, and  Olson voted in  favor of  moving to                                                              
report the proposed  committee substitute (CS) for  HB 81, Version                                                              
W  out of  committee.   Representative  Colver  voted against  it.                                                              
Therefore, the  CSHB 81(L&C) was  reported out of the  House Labor                                                              
and Commerce Standing Committee by a vote of 6-1.                                                                               
                                                                                                                                
4:37:14 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:37 p.m. to 4:39 p.m.                                                                       
                                                                                                                                
               HB 86-PCE ENDOWMENT FUND INVESTMENT                                                                          
                                                                                                                                
4:39:35 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the final  order of business  would be                                                              
HOUSE BILL  NO. 86, "An  Act relating to  investment of  the power                                                              
cost equalization  endowment fund; and providing  for an effective                                                              
date."                                                                                                                          
                                                                                                                                
4:39:47 PM                                                                                                                    
                                                                                                                                
JERRY BURNETT,  Deputy Commissioner,  Office of the  Commissioner,                                                              
Department  of  Revenue (DOR),  stated  that  HB 86  would  remove                                                              
"seven percent"  from the  statute and replaces  it with  a phrase                                                              
that  reads,   "to  meet   the  objectives   of  the  power   cost                                                            
equalization   and   rural  electric   capitalization   fund   (AS                                                            
42.45.100)."   He clarified  that none of  the other funds  have a                                                            
numerical objective  in statute,  but risk  is involved  in trying                                                              
to reach a specific numerical objective over time.                                                                              
                                                                                                                                
4:40:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON   asked  whether  anything   unfortunate                                                              
happened to the account or the language is just being adjusted.                                                                 
                                                                                                                                
MR. BURNETT  stated that he  has been with  the department  for 10                                                              
years.   He  recalled  that the  department  suffered some  fairly                                                              
large losses  in 2008 in the  fund, but relatively  speaking there                                                              
haven't been  any bad decisions  during that time;  however, since                                                              
he  has been  with  the department,  all  five commissioners  have                                                              
supported removing the number from statute.                                                                                     
                                                                                                                                
4:42:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  said  it seemed  as  though  the  investment                                                              
goals may  have changed,  since enough  income is being  generated                                                              
by  the  fund to  pay  for  the current  Power  Cost  Equalization                                                              
Program.   He said it appeared  as though the department  wants to                                                              
manage it and not lose the ability to do so.                                                                                    
                                                                                                                                
MR. BURNETT  said it  is currently probably  less important  to be                                                              
an aggressive  investor than it might  have been a few  years ago.                                                              
The balance  in  the fund is  over $950  million  and a 7  percent                                                              
payout is  more than  what is  required to  manage the  power cost                                                              
equalization (PCE)  expenditures.  He suggested it  is well within                                                              
the objectives of the fund to "ratchet down risk" a little bit.                                                                 
                                                                                                                                
4:43:06 PM                                                                                                                    
                                                                                                                                
CHAIR   OLSON   reported   that   the   committee   has   received                                                              
documentation  today that  since 2000  the PCE  fund has  averaged                                                              
6.05 percent return on investment.                                                                                              
                                                                                                                                
MR. BURNETT  said it is a  geometric annualized return and  not an                                                              
arithmetic  average  of  the  returns  year  to  year,  but  is  a                                                              
geometric average, which includes the losses.                                                                                   
                                                                                                                                
4:43:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  asked  whether  this  is  now  just  being                                                              
brought  forward  due  to  the market.    She  asked  for  further                                                              
clarification on the types of investments.                                                                                      
                                                                                                                                
4:44:01 PM                                                                                                                    
                                                                                                                                
MR. BURNETT said  Gary Bader previously testified  on the standard                                                              
deviation between  different types  of investments and  how having                                                              
a riskier investment  may look like it will reap  a higher return,                                                              
which  will happen  arithmetically  over time,  but the  geometric                                                              
return can be reduced  due to the losses.  He  stated that capital                                                              
market assumptions  change each year  so the department  considers                                                              
different  levels of  risk.   This  year  the goal  might  be a  6                                                              
percent  return and  next year  it might  be a  9 percent  return,                                                              
depending on  the market.  He  referred to the different  types of                                                              
investments   such  as  stocks   relative   to  bonds,  or   fixed                                                              
investment  - which  currently  has little  return.   He  reported                                                              
that the stock  market has been going  up for the past  six years,                                                              
but it  has never gone  up for  seven years.   It doesn't  mean it                                                              
won't  but it  has  never  happened since  1802,  he  said.   This                                                              
matter was  introduced in  last legislature, but  it did  not move                                                              
through the process, he reported.                                                                                               
                                                                                                                                
4:45:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES  related   her  understanding  that  the  7                                                              
percent requirement  was established in statute since  it was what                                                              
was considered necessary  to pay the PCE expenditures.   She asked                                                              
for the target return to meet expenditures.                                                                                     
                                                                                                                                
MR.  BURNETT  answered  that  the  statute for  the  payout  is  7                                                              
percent of  the average of  the prior three  years.  He  said that                                                              
this  is reported  to the  Alaska  Energy Authority  and they  use                                                              
that figure  as the maximum  that it could  request.   He recalled                                                              
that the  budget for  the PCE is  in $50  million range,  which is                                                              
approximately between a 5-6 percent return.                                                                                     
                                                                                                                                
4:47:03 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after first  determining no  one wished to  testify,                                                              
closed public testimony on HB 86.                                                                                               
                                                                                                                                
4:47:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES moved  to  report HB  86  out of  committee                                                              
with  individual  recommendations   and  the  accompanying  fiscal                                                              
note.  There being no objection, HB 86 was reported from the                                                                    
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
4:47:56 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:47 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB81 Opposing Documents-Email Thomas Hall 2-16-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Email Jess Hall 2-16-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Email Richard Carr 2-18-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Email Richard Green 2-18-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Email Scott Allen 2-17-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Draft Proposed CS ver W.PDF HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Draft Proposed Amendment W.1-Tilton.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Draft Proposed Amendment A.4-Colver.PDF HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Draft Proposed Amendment A.5-Colver.PDF HL&C 2/20/2015 3:15:00 PM
HB 81
HB86 Supporting Documents-Letter AVEC 2-17-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 86
HB81 Supporting Documents-Assorted Emails and Documents-Eric Clark 2-20-2015.pdf HL&C 2/20/2015 3:15:00 PM
HB 81
HB81 Supporting Documents-Legal Memo #15-108lem.pdf HL&C 2/20/2015 3:15:00 PM
HB 81