Legislature(1999 - 2000)
02/18/2000 03:25 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 18, 2000
3:25 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
Representative Lisa Murkowski
Representative John Harris
Representative Jerry Sanders
COMMITTEE CALENDAR
HOUSE BILL NO. 207
"An Act relating to the registration of persons who perform home
inspections; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 284
"An Act relating to uninsured and underinsured motor vehicle
insurance."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 207
SHORT TITLE: LICENSE HOME INSPECTORS
Jrn-Date Jrn-Page Action
4/21/99 900 (H) READ THE FIRST TIME - REFERRAL(S)
4/21/99 900 (H) L&C, JUD, FIN
10/21/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
MINUTES(L&C)
2/18/00 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
TOM MANNINEN, Staff
to Representative Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
POSITION STATEMENT: Reviewed changes encompassed in Version S of
HB 207.
DAN HAWKINS
Ameron Incorporated
104 Muldoon Number 186
Anchorage, Alaska 99504
POSITION STATEMENT: Supported HB 207.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Community & Economic Development
PO Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Answered questions.
DON SHEPPARD
Housemaster Home Inspection Service
6000 Yukon Road
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on HB 207.
VINCE MEURLOTT, Professional Engineer
Building Consultants
596 Arvita Court
Fairbanks, Alaska 99712
POSITION STATEMENT: Specified reasons that HB 207 should be
shelved.
BILL BRADY, Agent
RE/MAX Properties;
Chairman, Anchorage Board of Realtors Legislative Committee
PO Box 110101
Anchorage, Alaska 99511
POSITION STATEMENT: Viewed HB 207 as consumer protection
legislation.
CHARLES JEANNET, Professional Engineer
Northstar Engineering and Inspection
599 Arvita Court
Fairbanks, Alaska 99712
POSITION STATEMENT: Concurred with Mr. Meurlott's testimony.
MARK LEWIS, Registered Civil Engineer;
Home Inspector, Home Inspection Service;
Alaska Chapter of the American Society of Home Inspectors
PO Box 211021
Anchorage, Alaska 99521
POSITION STATEMENT: Opposed the exemption of civil engineers.
RON HANSEN, Civil Engineer
4117 Birch Lane
Juneau, Alaska 99801
POSITION STATEMENT: Supported HB 207 and the amendments.
ROBERT CARL, Representative, Mat-Su Homebuilders Association;
Home Inspector
PO Box 3694
Palmer, Alaska 99645
POSITION STATEMENT: Testified that the Mat-Su Homebuilders
Association supported HB 207. As a home inspector, Mr. Carl
opposed HB 207 as currently written.
JOSEPH NOTKIN, Registered Professional Architect
305 Slater Drive
Fairbanks, Alaska 99701
POSITION STATEMENT: Expressed concerns with HB 207.
RICK JARVIS, RE/MAX properties
2600 Cordova, Number 100
Anchorage, Alaska 99503
POSITION STATEMENT: Supported HB 207, but opposed exemption of
civil engineers.
DAVID OWENS, Owner and Operator,
Owens Inspection Services
PO Box 3589
Palmer, Alaska 99645
POSITION STATEMENT: Opposed HB 207 as written.
RON JOHNSON, Realtor
610 Attla Way, Number 6
Kenai, Alaska 99611
POSITION STATEMENT: Supported the concept of HB 207 and felt that
no one should be exempt.
JOHN BITNEY, Legislative Liaison
Alaska Housing Finance Corporation
4300 Boniface Parkway
Anchorage, Alaska 99510
POSITION STATEMENT: Supported the concept of HB 207.
ACTION NARRATIVE
TAPE 00-14, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:25 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro and
Cissna. Representative Brice arrived as the meeting was in
progress. Chairman Rokeberg acknowledged that at the call to order
there was not a quorum, but a quorum was expected.
HB 207-LICENSE HOME INSPECTORS
Number 0089
CHAIRMAN ROKEBERG announced that first order of business before the
committee is HOUSE BILL NO. 207, "An Act relating to the
registration of persons who perform home inspections; and providing
for an effective date." He informed the committee that there is a
proposed committee substitute (CS), Version LS0132\S,
Chenoweth/Lauterbach, 2/9/00 which will be adopted as a working
draft as soon as there is a quorum. There are also some proposed
amendments. He noted that the latest version makes some changes
with regard to professional civil engineers and engineers both of
which are part of the exemptions of the bill.
TOM MANNINEN, Staff to Representative Rokeberg, informed the
committee that the changes made in HB 207 were few; however, some
of the changes were substantial. He pointed out that on page 2,
lines 3-4 of Version S the following text was inserted: "the
requirements established by the board must include Alaska or
northern education or experience in Arctic construction or
building".
Number 0306
MR. MANNINEN then turned to page 6, lines 15-20, which specifies
the parameters by which legal actions can be taken against a home
inspector. He pointed out that with regards to enforcement, on
page 5, lines 17-31, the Department of Labor was dropped from that
section. Therefore, the Department of Community & Economic
Development (DCED) and the board will continue to have the
enforcement responsibilities. Section 08.57.820(c), on page 7 of
Version S, specifies that the provisions of Section 08.57.820 only
apply to a residence that is: "(1) a single-family home; (2) a
duplex, triplex, or four-plex; or (3) a townhouse or condominium
unit." He moved on to Section 2 on page 9 of Version S, which adds
the Board of Home Inspectors to the list of boards and commissions
covered by the central licensing statutes, AS 08.57.010. On page
9, line 11, Section 3 of Version S it sets forth the June 30, 2004
sunset date.
Number 0530
REPRESENTATIVE HALCRO asked if he was reading the fiscal note (FN)
correctly and that the licensing fees are going to be $2,220 per
two years.
CHAIRMAN ROKEBERG said that is based on only 50 licensees, and
therefore will be revised.
REPRESENTATIVE HALCRO inquired as to the meaning of the language
"adjusted actual cost based on positive time keeping for the first
renewal."
CHAIRMAN ROKEBERG deferred that question to Catherine Reardon,
Director, Division of Occupational Licensing, DCED. He noted that
she would be available to answer later. Chairman Rokeberg noted
that Representative Brice had arrived, and therefore a quorum was
present.
REPRESENTATIVE HALCRO moved that the committee adopt the proposed
CS, Version LS0132\S, Chenoweth/Lauterbach, 2/9/00, as the working
draft. There being no objection, it was so ordered.
Number 0718
DAN HAWKINS, Ameron Incorporated, testified via teleconference from
Anchorage. He referred to the amendment labeled LS0132\S.1,
Lauterbach, 2/17/00, in the committee packet that inserts the
language "relating to home inspection requirements for residential
loans purchased or approved by the Alaska Housing Finance
Corporation;" on page 1, line 2, following "inspections;". From
that he had the impression the Alaska Housing Finance Corporation
[AHFC] would be the only entity writing mortgages for the State of
Alaska.
CHAIRMAN ROKEBERG explained that the amendment to which Mr. Hawkins
referred pertains to the statutory language that authorizes the
operation of Alaska Housing [AHFC]. Therefore, it only applies to
those properties under the jurisdiction of Alaska Housing [AHFC]
and has no effect in general law. He indicated that it should only
expand the ability of Alaska Housing [AHFC] to bring more people
into authorization of performing inspections for financing purposes
for AHFC.
MR. HAWKINS then referred to page 3, line 7 which seems to imply
that only representatives of the construction industry be
consulted, which he hoped was not the case. He asked if the
language on page 4, lines 27-31, applied to one man shops of which
there are many.
CHAIRMAN ROKEBERG specified that the language on page 4, lines
27-31, [only requires that one have workers' compensation if one is
already required to have it under the law]. He said that he would
check with workers' compensation on that matter.
MR. HAWKINS inquired as why home inspectors would be prohibited
from advertising as specified on page 5, lines 11-13.
REPRESENTATIVE BRICE commented that the language is not a
prohibition of advertising.
CHAIRMAN ROKEBERG clarified that the language on page 5, lines
11-13, means that a home inspector cannot advertise he/she is
insured merely because he/she has met the insurance requirements of
this chapter.
MR. HAWKINS pointed out that people in other occupations advertise
that they are insured. Why should home inspectors be any
different?
Number 0909
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Community & Economic Development, suspected that
language is taken from the construction contractor licensing law
which she believed was the template for this [bill].
MR. HAWKINS then turned to page 6, lines 19-20, and said that he
was happy that language was included. However, he wondered if it
would survive the process through a Democratic governor. He
referred to page 7, lines 4-6, and inquired as to who would inspect
those residences that are five plus. He also asked if anything
over a four-plex would be considered a commercial unit.
CHAIRMAN ROKEBERG clarified that this legislation/licensure does
not apply to commercial inspections.
MR. HAWKINS surmised then that a five-plex is considered a
commercial residence.
CHAIRMAN ROKEBERG replied yes and clarified that one would not need
a license to do it, which is consistent with other real estate
statutes throughout the state.
MR. HAWKINS directed the committee's attention to page 7, lines
29-31. He asked if that language could be interpreted to mean that
[home inspectors] are not allowed to be paid at closing. Mr.
Hawkins informed the committee that he has accepted payment of
close of escrow, which he had difficulty collecting.
CHAIRMAN ROKEBERG explained that the language on page 7, lines
29-31, says that [a home inspector] cannot do a performance-based
inspection. He said, "In other words, you [a home inspector] are
prohibited from accepting any compensation if you have a
preordained conclusion." This language is intended to prohibit
unethical inspections like appraisals.
MR. HAWKINS turned to page 8, lines 13-14, and commented that the
language seems to speak to appraisers, especially since AHFC has
been pressuring appraisers to perform inspection-type work included
in their appraisals.
CHAIRMAN ROKEBERG said that Mr. Hawkins' had a good point. He
informed everyone that the language on page 8, lines 13-14, would
either be eliminated or further clarified. In part the language
was included because it dealt with professional engineers and
architects. Chairman Rokeberg stressed that he wanted to avoid
confusion.
MR. HAWKINS pointed out that the language on page 9, lines 18-19,
seems to be a contradiction to the language on page 2, lines 11-31.
CHAIRMAN ROKEBERG clarified that Mr. Hawkins was in the Section,
Section 4, which only relates to AHFC.
MR. HAWKINS referred to page 11, line 1. He informed the committee
that the International Conference of Building Officials (ICBO)
recommends the combination dwelling inspector exam. He said that
the ICBO told him that the building inspector exam includes
commercial [residences].
CHAIRMAN ROKEBERG asked if Mr. Hawkins supported this legislation.
MR. HAWKINS replied yes.
Number 1251
DON SHEPPARD, Housemaster Home Inspection Service, testified via
teleconference from Anchorage. He expressed confusion with regard
to what is being done with the ICBO's versus the home inspector's
inspection. He turned to page 3, lines 1-3, which says, "The board
shall authorize the department to issue a home inspector license
for new construction". What about the ICBO, which is really the
new construction aspect. He further asked if the ICBO would have
to carry the mandatory insurance that the home inspector will under
these licensure provisions. The difference between the two are
vague.
CHAIRMAN ROKEBERG commented that Mr. Sheppard had a good question.
Under the drafting of the bill, he believed both would be covered.
However, he acknowledged that there may be circumstances when that
is not appropriate.
MR. SHEPPARD clarified that the question is whether an ICBO,
without insurance, perform a standard home inspection.
CHAIRMAN ROKEBERG answered that if this bill was in place, then
"you" would have to have licensure and immediate (indisc.)
insurance.
MR. SHEPPARD surmised then that the ICBO would have to come under
this law.
CHAIRMAN ROKEBERG replied yes.
MR. SHEPPARD related his understanding that when AHFC initially
required inspectors and set up the ICBO program in Alaska, their
insurance requirements were waived by the state. He did not
believe that the ICBO carries any insurance requirements in the
state.
CHAIRMAN ROKEBERG clarified that the legislation is drafted to that
and the ICBO inspectors are to be qualified for AHFC as well as
licensed under this statute. He explained that the attempt has
been to bifurcate and provide two paths from which the new board
would develop two different types of licenses. He acknowledged
that it might be, particularly in rural areas, appropriate to
reexamine some of those things.
Number 1425
VINCE MEURLOTT, Building Consultants, testified via teleconference
from Fairbanks. Mr. Meurlott read from an e-mail he sent to
committee members, which is as follows:
Your efforts to protect the home buyer are commendable.
However, I do not believe that the bill will provide the
protection desired. Instead it will raise the cost of
inspections and perhaps give a false sense of security to
the potential home buyer. I am a professional civil
engineer working for a municipality and also in the
private sector outside where there is no authority having
jurisdiction. I have performed over a thousand
inspections and reports for home buyers in the Fairbanks
area over the last eight years. I am also familiar with
the home buying process and inspection practices in other
states. I believe that HB 207 should be shelved for the
following reasons.
1. It raises the cost of government. Setting up a board
to police this area is more difficult and expensive than
most people think. There is a wide range of expectations
among buyers and sellers in the home market in Alaska
just as there is an equally wide range of housing stock.
At present you are free to select an inspector or
engineer to suit your needs. The problem can be dealt
with more effectively by the market and free enterprise.
Good inspectors can be found through realtors and lending
institutions. Home buyers can check with the Better
Business Bureau and other places to avoid bad inspectors.
2. The program would be difficult to administer. I
support the existing voluntary AHFC program for
inspection on new residences even though it may be
flawed for a lack of requirement consideration of soils
and engineering. The AHFC program is a start in the
right direction and has raised the quality of home
construction in Alaska significantly, but my experience
with the program shows that they lack direction in the
interpretation and enforcement when the "rules" are clear
as stated in the most recent addition of the code. The
codes change every three years and many "problems"
identified in existing construction can be very
subjective.
The problem with the majority of the housing stock in
Alaska is the lack of enforcement in building codes in
residential construction outside of the cities or
municipalities. Other states start by adopting and
enforcing the codes during the construction process.
Inspection of residences inside cities or municipalities
where codes are enforced is less problematic. Most of
them have been built to reasonable standards and
municipal inspectors can even be hired to ascertain the
condition of the home.
Number 1551
MR. MEURLOTT continued:
However, please contrast this with the Lower 48
construction. ... We are part of the last frontier.
That mentality breeds ingenuity, creativity and the use
of a wide variety of construction materials and methods
not approved by the mainstream. Sometimes this is good,
but in many instances the construction is not safe. We
are confronted with substandard construction with regard
to the major components. We deal with expansive soils,
permafrost, foundations that are not property reinforced,
improperly constructed foundations of wood and roof that
are not designed or constructed for our snow load on a
regular basis. Proper evaluation and design of remedies
for these problems ... more often than not what we can
encounter should be performed by an engineer if a
permanent solution is sought rather than a Band-Aid.
3. The public may be given a false sense of security that
"licensed" home inspectors can properly find all the
problem areas simply because they have a license. I am
an ICBO [International Conference of Building Officials]
certified Plans Examiner, Building Inspector, Combination
Inspector; Electrical, Fire, Mechanical and Plumbing
Inspector through the testing process. I have seen many
individuals pass the written exam but still seem to be
incompetent as an inspector and they can't properly
identify problems and specify a practical solution. It
is experience and engineering that make the difference.
4. The cost of inspections will go up due to licensure
and insurance requirements. Subjective areas will be
most likely contested for settlement under E and O
[errors and omissions] insurance claims simply because
these inspectors have insurance. Many people coming from
the Lower 48 think that the homes that they are buying
are constructed and inspected per code. More emphasis
should be placed on the education process of buyers and
disclosure laws to inform the buyers of homes.
5. Qualifications of the inspector according to the
proposed bill includes showing competence in Arctic
structural and thermal construction techniques. This is
most effectively done through the existing AELS [State
Board of Registration for Architects, Engineers and Land
Surveyors] registration board. Professional engineers
have demonstrated the competence desired through rigorous
testing and completion of course work in Arctic
engineering which also considers thermal considerations.
The scope of work for engineers includes investigation,
identification and providing a remedy for the problems
most homeowners are concerned most about.
Number 1670
MR. MEURLOTT continued:
6. Under qualified home inspectors without training in
engineering cannot often properly identify problem areas
or do not understand the processes or modes of failure
for the construction materials used. The result may be
a failure to identify a significant structural problem or
geologic hazard. This is the primary service the
inspector was hired to provide.
7. Under qualified home inspectors without training in
engineering often cannot prescribe a complete or cost
effective remedy for problems they may identify because
to do so involves the services of an engineer. They
cannot specify a repair because it is beyond the scope of
their expertise. Therefore, the unqualified inspector
has two difficult choices: a. To provide a service
without the proper qualifications; or b. Insist that the
buyer hire an engineer at additional expense. Neither
choice is palatable. Engineering judgement is required
to remedy some of the problems in most of the houses
under consideration.
In summary, this legislation will raise the cost of home
inspections, raise the cost of government to monitor
inspectors, encourage less qualified inspectors to
perform work beyond their capabilities relying on their
insurance to cover their mistakes. Please rely on the
existing licenses and registration of engineers to
perform the services desired. The home buyer or public
will not be well served by this legislation as it is
written.
Thank you for your time and work in this area. Please
feel free to contact me for clarifications or questions
if I can be of service. I am eager to hear your concerns
and will attempt to provide my insight to the process
under consideration. Thank you.
Number 1745
CHAIRMAN ROKEBERG asked if Mr. Meurlott was aware that civil
engineers are exempt under the latest version of HB 207.
MR. MEURLOTT said that he was not sure that civil engineers were
exempt from all considerations or just under the qualifications.
CHAIRMAN ROKEBERG clarified that civil engineers can conduct their
home inspections without being licensed.
MR. MEURLOTT stated that he could understand that, but the other
concerns he mentioned remain.
CHAIRMAN ROKEBERG pointed out that anyone can call themselves a
home inspector. In fact, there are many in Anchorage who perform
home inspections, but are not certified engineers.
REPRESENTATIVE HALCRO asked if Mr. Meurlott had an association of
home inspectors to which he belonged.
MR. MEURLOTT answered that there is no such local association.
Number 1817
BILL BRADY, Agent, RE/MAX Properties; Chairman, Anchorage Board of
Realtors Legislative Committee, testified via teleconference from
Anchorage. He began by thanking [the sponsor] in regards to how
far the bill has come in the last year. In contrast to Mr.
Meurlott's testimony, Mr. Brady felt that this legislation is a
consumer protection bill as does the Anchorage Board of Realtors
and the state association. It is time that home inspectors are
licensed and based on the same requirements. Therefore, he
strongly objected with Mr. Meurlott that one can purchase a
business license and perform home inspections. On one hand, Mr.
Meurlott said that the market place will bear weight with regard to
whether the inspector is good or not. To that, Mr. Brady inquired
as to what happens to the people that are harmed while the home
inspector is learning.
MR. BRADY informed the committee that the Anchorage Board of
Realtors and the state association are not sure that certified
engineers should be exempt from HB 207. Perhaps, certified
engineers should be under the same guidelines as the home
inspectors. He was not sure that an electrical engineer could
perform a competent home inspection. With regard to the errors and
omissions (E&O) insurance requirement, he was not sure that the
minimum amount of $250,000 for each occurrence is adequate because
today there are $1 million plus houses on the market. How would
the insurance handle a fire that was the liability of the home
inspector?
MR. BRADY commented that in the year that he has been discussing
this legislation with others, those that are opposed seem to be
those that should not be in the market place as well as the
engineers.
CHAIRMAN ROKEBERG informed Mr. Brady that the current version of HB
207, Version S, only exempts civil engineers and architects not the
other disciplines. With regard to the E&O insurance requirement,
Chairman Rokeberg asked Mr. Brady what he felt it should be.
MR. BRADY informed the committee that his E&O at RE/MAX is about
$300,000 and he does not have the responsibility of inspecting a
home.
Number 2012
REPRESENTATIVE HALCRO posed a situation in which a real estate
agent suggests to a client that a particular home inspector be
hired. The home inspector is incompetent. He inquired as to the
type of liability that would exist for the real estate agent.
MR. BRADY informed the committee that on the multiple listing
service (MLS) form there is a space where the person bringing the
offer can specify who will be used as a home inspector. He
believes there are six places to specify that. The seller has the
opportunity to negotiate that and may say that he/she does not want
to work with one of the home inspectors. Mr. Brady said that he
only uses licensed and bonded home inspectors with good
reputations. Although there is a liability issue, there are many
new agents that are entering real estate and do not know the home
inspectors.
REPRESENTATIVE HALCRO turned to Mr. Brady's comment that there are
many new real estate agents. He asked if the board or the
association has an education program so that the new real estate
agents can be educated with regard to obtaining and identifying a
competent home inspector.
MR. BRADY informed the committee that in order to become a licensed
real estate agent in the State of Alaska, one must have 20 hours of
pre-licensing education. However, that pre-licensing education
does not address home inspectors. After one is licensed, further
education is not necessary save 20 more hours in the next licensing
period. Although home inspectors provide education for real estate
agents, he was not sure that everyone took that education.
Perhaps, the Anchorage Board of Realtors and the state association
should review this matter. However, if recognition of a competent
home inspector is made mandatory, there are other fields that could
tie up the real estate professional.
CHAIRMAN ROKEBERG requested that Mr. Brady briefly address the
relationship a realtor finds himself/herself in with regard to
disclosure statutes and the home inspector. It was felt that the
relationship was too difficult to address at this juncture, in this
legislation. He asked Mr. Brady to discuss some of the pros and
cons with regard to the relationship between the home inspector and
the state disclosure statutes.
MR. BRADY related his belief that the state's disclosure document
is very good and he believes that it helps with the transaction.
A home inspector is a valuable component to the transaction as
there are many things that are revealed in the home inspection
report which are not in the disclosure report. From past
experience, Mr. Brady commented that home inspectors have kept his
deals together. He pointed out that there are some home inspectors
who feel the need to place things, such as minor painting, on paper
regardless of whether there is a health or safety violation to the
property. On the other hand, some inspectors walk through the
house with the buyer and point out things that need to be done at
some point, although it is not necessary at the time.
MR. BRADY informed the committee that the National Association of
REALTORS, under its code of ethics does include a statute saying
that realtors will not take kick-backs. Therefore, its not as
though realtors are going to funnel business to [a home inspector]
and receive kick-backs to push a certain home inspector. He
commented that every realtor he knows is looking for a competent
home inspector. He reiterated that he believed this legislation
protects the consumer.
Number 2312
CHARLES JEANNET, Professional Engineer (PE), testified via
teleconference from Fairbanks. Mr. Jeannet said that he concurred
with the testimony of Mr. Meurlott. He informed the committee that
he is a professional engineer who works for Northstar Engineering
and Inspection. In his more than 16 years of inspecting for the
government sector and the private sector, he has inspected well
into the thousands of new and existing homes. He mentioned that he
is a supporter and believer in the ICBO inspection program for new
construction. However, he noted his grave reservations with regard
to HB 207 that targets existing homes. He believes that this
legislation is sanctioning inexperienced home inspectors. Mr.
Jeannet did not believe that someone coming to town and taking a
test before hanging a shingle was any better than the current
system. At least now there is reliance on reputation and
experience as well as the reliability of the realtor that refers
that home inspector.
MR. JEANNET turned to the issue of insurance. He said, "I think
one of the major concerns Mr. Brady brought out with regard to this
insurance issue is that realtors are looking for somebody with a
deeper pocket that they can rely on in this transaction." Mr.
Jeannet related his belief that this legislation erroneously
suggests that these inspectors should have that deep pocket via the
insurance. He believes that the home inspectors should be exempt
from the liability similar to the ICBO inspectors. Furthermore, he
believes that it is inappropriate for the Board of Realtors to be
pushing this legislation primarily for that reason [a deeper pocket
in the home inspectors]. There are several qualified inspectors
available and their inspections speak for themselves. The realtors
do not need to recommend those home inspectors that are not
believed to be doing a competent job. Mr. Jeannet pointed out that
the current licensing provisions of the Board of Architects,
Engineers and Land Surveyors prohibits the non-engineers and
architects from performing any design repairs or fixes when they
note defects in a home. Therefore, he believed that this is going
to be problematic in that there will be redundant inspections.
TAPE 00-14, SIDE B
MR. JEANNET indicated that any problems cannot just be swept under
the rug. He said that he had a real problem with underqualified
individuals. He noted that he has spent many hours trying to
diffuse those type of problems. Like the 1992 ICBO inspection
legislation for new residential construction, these inspectors
should be exempted from the liability. It is unusual for the
state's licensing provisions to require and dictate a minimal level
of liability. The subjectivity in the enforcement of the
inspection business will always be an inherent part of inspecting
existing homes in outlying areas. He suspected that the board's
first action will be to create a check list, which he believes will
create many problems for the real estate and finance industries.
In his opinion, the inspectors [under a check list system] will
bring the closing process to its knees. He suspected that numerous
deficiencies will be noted that are unnecessary. He posed a
situation in which an inspector is in a crawl space that is dry and
does not need a ground vapor barrier. The check list will probably
include a ground vapor barrier, which would then create a
requirement regardless of whether or not a ground vapor barrier is
needed.
Number 0095
MR. JEANNET commented that he has some grave reservations about
this. Furthermore, there will clearly be an added cost. There
will be a cost for the additional liability and often there will be
the cost for two inspectors. There will be a very large cost for
the additional repairs that are going to result from the use of the
check list. In summary, Mr. Jeannet predicted that the home buyer
and the home seller will pay more, and there will also be more
bureaucracy between the lenders, underwriters, realtors and
attorneys. The only people who will benefit from this
[legislation] will be the realtors because they will hopefully
deflect some of the liability they currently face. This
legislation, HB 207, is not good legislation.
CHAIRMAN ROKEBERG commented, "Apparently, you folks up in Fairbanks
aren't aware of what's going on in the rest of the state." He
informed Mr. Jeannet that 95 percent of all the home inspections in
the Mat-Su Valley and the Anchorage area are conducted by
nonprofessional engineers. The home inspection rates are $300-$400
per inspection. He inquired as to the cost of a home inspection by
a professional engineer in Fairbanks. He also asked if Fairbanks
has other inspectors that are not civil engineers.
MR. JEANNET answered that the cost of a home inspection by a
professional engineer in Fairbanks typically runs between
$250-$400. He acknowledged that Fairbanks does have people that
are not civil engineers (CEs) performing home inspections.
However, the non PEs and PEs that are underqualified have typically
not been asked to come back and perform another inspection.
Number 0199
REPRESENTATIVE HALCRO asked if Mr. Jeannet felt that home
inspectors should be exempt from liability period.
MR. JEANNET replied no. He related his belief that home inspectors
should be exempt from being required by government to maintain a
certain level of insurance.
CHAIRMAN ROKEBERG asked if Mr. Jeannet felt that all people driving
automobiles should be exempt from having insurance.
MR. JEANNET answered that automobiles are a different issue.
However, he did not believe other areas of licensure under the
state require mandatory insurance.
CHAIRMAN ROKEBERG indicated his belief that professional engineers
are subject to liability for their work.
MR. JEANNET said that professional engineers may well be subject to
liability, but the State of Alaska does not require that they be
insured. Furthermore, there is no minimum amount established.
Number 0258
MARK LEWIS, Registered Civil Engineer; Home Inspector, Home
Inspection Service; Alaska Chapter of the American Society of Home
Inspectors, testified via teleconference from Anchorage. He
informed the committee that the American Society of Home Inspectors
is probably the preeminent home inspection society in the United
States. The American Society of Home Inspectors is comprised of
disciplines ranging from engineers to electricians to contractors.
From the testimony, Mr. Lewis surmised that the engineers who have
testified would possibly be more accepting of HB 207 if the
requirements for home inspectors were more stringent. Furthermore,
the history of the development of this legislation suggests that a
check list would not be mandatory.
MR. LEWIS informed the committee that he has been performing home
inspections in Anchorage for about 3.5 years. He also informed the
committee that he was not excited about civil engineers and
architects being exempt from this licensing because although one
may be a good engineer, that does not mean that he/she is a good
home inspector. Home inspection is a different discipline. Civil
engineering includes many disciplines. He pointed out that the
civil engineering test for registration in taking the Arctic
engineering course does not test on residential construction.
Therefore, he felt that exempting civil engineers and architects is
not appropriate. "If anything, the civil engineer being a
registered civil engineer carries additional weight and the market
will either prefer or not prefer to use that person because of
their credentials." He did not agree that a civil engineer would
make a good home inspector.
MR. LEWIS referred to page 2, line 21, which he interpreted to mean
that a licensed home inspector cannot be a qualified supervisor
unless that person is also the employer. He asked if that would be
a correct interpretation.
CHAIRMAN ROKEBERG replied no that is not the intention.
MR. LEWIS said that is how the language reads. He understood there
to be two requirements to become a qualified supervisor. If there
is ever a large firm with four or five inspectors, he read the
language to mean that one would have to be the employer in order to
be the person's supervisor. Mr. Lewis then referred to page 3,
line 5, and inquired as to the meaning of the word "practical" in
this context. Does the word "practical" mean "oral" or does it
mean "that it must test competence in relation to Arctic structural
...".
CHAIRMAN ROKEBERG recalled that the drafters may have had a
question at one time with regards to whether there was a physical
practicum or if one had to actually perform an inspection on a
house.
MR. LEWIS commented that if that was the case, the board would have
to address it. There are a couple of schools around the U.S. that
have houses set up for testing students. The creation of such a
house is fairly intensive.
CHAIRMAN ROKEBERG announced that he was open to removing or
modifying that language in order to provide clarity. He said that
he did not want to mandate something to the board [that would
create inflexibility] to make sure they comply with the statutory
language.
Number 0495
MR. LEWIS expressed his belief that the testing and the competence
of the home inspector needs to be more rigorous. He informed the
committee that the test that he took for home inspectors, which is
addressed in the legislation, did not necessarily deal with
conditions in Alaska. The test should include an additional module
in order to test competence for Alaskan conditions.
CHAIRMAN ROKEBERG pointed out that is included in HB 207. This
legislation has been drafted with flexibility in mind in order to
provide the board with full discretion on that level.
MR. LEWIS commented that it would ultimately fall on the board,
which seems to be the case with many things [in this legislation].
He then referred to page 4, lines 16-18, which addresses
advertising and the preparation of business cards. The legislation
requires that all business cards prepared for the home inspector
must include the home inspector's name, mailing address and license
number. He acknowledged that the argument is that other
professionals have to do this. However, upon review of the yellow
pages [in the phone book] only 10-20 percent of the contractors
actually included an address. Therefore, he asked whether this
requirement is necessary, enforceable or is it voluntary. Mr.
Lewis agreed that the home inspector's true name and license number
should be provided.
CHAIRMAN ROKEBERG noted that a license number provides an advantage
over a professional engineer, who does not want to be a licensee.
MR. LEWIS said that he did not believe that the regulations for
professional engineers addressed that at all. He then turned to
the errors and omissions insurance and the minimum amount of
$250,000, which he believes is low. With regard to what the
minimum amount [of insurance for the home inspector], he suggested
linking it to the value of a median house price if such a statistic
is produced by the state. In the case of negligent home
inspection, there is always the possibility that the home inspector
could be found to be liable for the death of a family and $250,000
would not even come close to covering that. He informed the
committee that on his company's insurance there is a rider that
covers the company's client's agent.
Number 0660
MR. LEWIS referred to page 7, lines 21-23, and asked if there is
the possibility to limit this to a specific period of time. He
informed the committee that commonly, [a home inspector] will
reinspect homes after a couple of years. That previous report is
used as a background that is often more complete than any sellers
background, that he had read. That previous report will be
reviewed in order to have an idea of where the "hot spots" might be
in order to perform a better job for the client.
CHAIRMAN ROKEBERG said that could be modified.
MR. LEWIS suggested perhaps a time period of 12 months or two
years; although he preferred a year. He explained that after a
year there are no liability expense (indisc.) at least according to
this legislation; the home inspector does not have liability for
what's in the report.
CHAIRMAN ROKEBERG stated then that it could revert to the home
inspector's ownership after a year.
MR. LEWIS answered that at least after a year it [the report] could
be disclosed as it does not have much value after a year. He
continued by referring to page 11, paragraph (2) which refers to
the examinations for the ICBO. He asked if it should be the
combination dwelling inspection.
CHAIRMAN ROKEBERG answered that this was an oversight.
MR. LEWIS surmised then that there is clarification with regard to
which examinations. With regard to educating realtors, many home
inspectors do that and are more than willing to educate anyone.
Furthermore, there is some continuing education which is ongoing on
a monthly basis for those home inspectors in the local chapters of
the American Society of Home Inspectors in Anchorage and Mat-Su
Valley.
CHAIRMAN ROKEBERG asked if Mr. Lewis supported this legislation
with some revisions.
MR. LEWIS replied, "Yeah, for the most part. I don't support
exemption of civil engineers, other than that I think most all the
significant issues have been addressed. But I'm not sure that I
would support it if it kept in [the] civil engineer exemption."
Number 0891
RON HANSEN, Civil Engineer, informed the committee that he is
licensed in Alaska and has performed residential and commercial
inspections for the past 10 years. He understood that almost all
of the inspections in Juneau are performed by engineers, which he
believed to be appropriate. He also understood that in Anchorage
and the Mat-Su areas perhaps 95 percent of the inspections are
performed by non-engineers some of which may be certified by the
ICBO while some merely say they are a home inspector. Mr. Hansen
said that he supported the bill as it will protect the consumer.
With regard to the proposed amendments, he noted support for all of
the proposed amendments save the first one. He understood the
first amendment to restrict this legislation to AHFC, which only
gives out about one-third of the residential loans.
CHAIRMAN ROKEBERG clarified that [the first amendment] only speaks
to the one section that speaks to the activities of AHFC.
MR. HANSEN said, with that explanation, that he supported the
entire bill and the amendments.
CHAIRMAN ROKEBERG commented that he is finding himself in a trap
between those who believe some professions should be exempt and
some should not. He said that he did not want to create a war.
However, it was determined that civil engineers with this
background should be exempt and now there is testimony from civil
engineers that disagree.
MR. HANSEN reiterated that he is a licensed civil engineer and has
performed home inspections. However, he would not attempt to
design a traffic interchange as he is not trained to do so.
Similarly, he felt that those that are competent with the
construction of suspension bridges and traffic would not become
involved with home inspection.
CHAIRMAN ROKEBERG asked then if Mr. Hansen would be offended if the
legislature mandated that he be licensed [as a home inspector] in
order to continue business.
MR. HANSEN answered that licensing is appropriate, in engineering
as well. He interpreted the exemption of civil engineers to mean
that petroleum engineers [could not perform home inspections].
CHAIRMAN ROKEBERG surmised that under the current bill, Mr. Hansen
could continue his home inspection business without being licensed.
MR. HANSEN agreed.
CHAIRMAN ROKEBERG asked if Mr. Hansen would take offense if that
were deleted per Mr. Lewis' testimony.
MR. HANSEN said that he would take offense because he believes it
is appropriate to exempt engineers.
CHAIRMAN ROKEBERG related his understanding of Mr. Hansen's
testimony that although he is a civil engineer, he would not have
the experience and background that a trained home inspector would.
He asked, "So, how do you "square" that [with wanting to exempt
engineers]?"
MR. HANSEN replied, "Just by experience and people wouldn't do it.
Like I wouldn't design a traffic or a Golden Gate bridge. I'm
licensed, but I'm not competent to do that."
CHAIRMAN ROKEBERG commented that the bill may prohibit or create
difficulty for Mr. Hansen to advertise himself as a home inspector.
MR. HANSEN commented that this [the bill] is a good first step. He
indicated that the next steps would be more training and tighter
licensing.
Number 1141
ROBERT CARL, Representative, Mat-Su Homebuilders Association; Home
Inspector, testified via teleconference from the Mat-Su Valley. He
informed the committee that the Mat-Su Homebuilders Association
supports licensing and qualifications for home inspectors.
However, the bill needs some work.
MR. CARL specified that he was now speaking as an home inspector.
He informed the committee that he is ICBO certified. Mr. Carl read
the bill as lumping together new construction inspectors and real
estate inspectors into one category. He expressed the need to
separate the categories.
CHAIRMAN ROKEBERG said that [separation of the two categories] is
the intention. There is an ICBO for new construction and home
inspection for basically existing structures.
MR. CARL reiterated that the language in the bill has some overlap
between the two.
CHAIRMAN ROKEBERG recognized that could be the case. He said that
some overlap is intended.
MR. CARL reiterated the need to separate the two. He did not
expect a home inspector to perform new construction inspections.
Mr. Carl informed the committee that most home inspectors do have
insurance. This legislation will hurt the home inspector in a
small town, who has five to ten jobs per year; that home inspector
will not be able to bear the cost of this [minimum amount of
insurance]. He predicted that some home inspectors in the small
areas would be lost due to this.
MR. CARL noted that he was willing to work on this bill. Although
he was approached about this bill, it was during his busiest time.
He noted that he has been in business for nine years. Mr. Carl
stated that he was personally opposed to HB 207. In response to
Chairman Rokeberg, he informed the committee that he had been in
construction of 40 years and has been everything from a contractor
to superintendent of (indisc.). When AHFC set up its program, Mr.
Carl took the ICBO test and passed it. He further informed the
committee that he is a certified welding inspector and certified
steel inspector, and (indisc.).
CHAIRMAN ROKEBERG stated that he would appreciate any suggestions
from Mr. Carl that would help gain his support.
MR. CARL specified that he supported the general idea. However, he
opposed the bill as currently written.
Number 1399
WILLIAM BRUU testified via teleconference from the Mat-Su Valley.
He noted that he worked extensively on this draft of HB 207, as did
Mr. Lewis. He echoed some of Mr. Lewis' concerns. He then
referred to page 2, lines 3-4, which refers to the inclusion of
northern/Arctic construction. He strongly supported that
provision. Currently, there are organizations and educational
opportunities within Alaska for individuals who wish to enhance
their education. However, he expressed concern with page 3, lines
1-3. He agreed with Mr. Carl that the bill needs more
clarification in that there are two tracks: new construction and
home inspections. He explained that he would not expect any
builder to expect a home inspector to review and certify new
construction. Existing statutes specify that review and
certification of new construction has to be performed by an ICBO
certified combination dwelling inspector. He believed that to be
appropriate.
CHAIRMAN ROKEBERG agreed that clarification is necessary.
MR. BRUU referred to page 4, lines 12-15. He asked if language
speaking specifically to corporations should be inserted. He
informed the committee that he is established as a subchapter S
corporation in his business of which he is an employee and
corporate officer. In accordance with state law, Mr. Bruu noted
that he does not have to have workers' compensation. He specified
that he basically operates under the corporate name versus his own
personal name.
CHAIRMAN ROKEBERG said that he was not sure that individual meant
corporation, although the word "person" means corporation in the
drafting manual. Chairman Rokeberg offered to check on that
matter.
MR. BRUU related his understanding that this legislation would
require home inspectors to carry errors and omissions insurance at
a minimum amount of a $250,000 for each occurrence. He wondered if
civil engineers or engineers of any variety are required to carry
errors and omissions insurance in the State of Alaska.
CHAIRMAN ROKEBERG responded that he did not think so. However,
after the passage of this legislation they will be required to do
so [carry errors and omissions insurance at a minimum amount of a
$250,000 for each occurrence]. He announced that the bill is going
to be amended.
MR. BRUU referred to page 6, lines 19-20, and commented that
language to be absolutely essential. Without those provisions,
liability of these reports is unlimited and would pass from person
to person. He agreed that there should be a cap [on the time of
liability]. He then turned to the language on page 7, lines 3-6.
He pointed out that there are opportunities for home inspectors,
civil engineers and engineers to perform inspections on
multi-family properties under a program that the Federal Housing
Authority (FHA) [in the U.S. Department of Housing and Urban
Development (HUD)] has. He expressed concern that this portion of
the bill, unless language such as "and other multi-family units"
was inserted, would limit home inspectors' access to that business.
CHAIRMAN ROKEBERG mentioned the HUD requirements that allow
appraisers to perform some home inspections. He noted that work
with U.S. Senator Stevens had led to a moratorium in Alaska on that
for six months. He asked if there had been any other activity.
MR. BRUU answered that he was not aware of any other activity.
CHAIRMAN ROKEBERG commented that the aforementioned issue, the
performance of a home inspection by an appraiser, was one of the
germination features of this legislation. He believes that having
licensure of home inspectors in the state helps clarify this issue
and promotes commerce and the sale of houses, which is one of the
objectives of HB 207.
MR. BRUU pointed out that one of the interesting aspects of the HUD
regulations is that one set of provisions indicates that the roof
is to be clean so that the appraiser could examine the roof in
order to determine how much life is left in the roof. However,
they would not allow removal of snow from the lawn in order to
determine whether the septic system was overflowing.
CHAIRMAN ROKEBERG commented that is what happens when laws for
Alaska are made in Washington, D.C.
Number 1893
JOSEPH NOTKIN, Registered Professional Architect, testified via
teleconference from Fairbanks. He recognized that there are
problems with certain home inspectors and there is a lack of
enforcement. Although Mr. Notkin is an architect, he informed the
committee that he does not perform home inspections. The
residential and multi-family portion of his practice is less than
about 25 percent per year. He did note that he occasionally
retains home inspectors and recommends a short list to clients.
Mr. Notkin believes it is important to maintain the exemption in
this bill for separate examinations for professional architects and
engineers. "Basically, I do think that the gentleman's comments
about perhaps an electrical engineer might not have the amount of
expertise necessary to do an inspection. However, that decision
should be left to the individual licensed architect or engineer."
He said that the AELS board has enough ability to regulate
incompetent and unstandard practices. Therefore, he believed that
the architectural engineers (AE) are already held to a higher
standard. If an AE feels confident to practice in this area,
he/she should not have to take a second license. He noted that
most AEs spend four or five years in school, four or five years in
a regulated internship program and an exam. Therefore, he felt it
was important to leave incompetent practice up to the AELS board.
MR. NOTKIN expressed concern with the insurance provisions of the
bill. He referred to page 5, line 5, and noted that he had errors
and omissions insurance with a large carrier, CNA. He explained
that the additional premium for him to have house inspections
covered is quite substantial. Therefore, he wondered if the policy
being considered here would afford any real protection for the
consumer, the realtor or the financial agency. Typically, an
errors and omissions policy would fall between 3-5 percent of the
annual gross receipts. He asked if a home inspector making $80,000
per year would be willing to pay $2,000-$4,000 for a policy.
CHAIRMAN ROKEBERG inquired as to the limit on such a premium.
MR. NOTKIN explained that it relates to whether the policy is
$250,000 or $400,000. He restated his question with regard to what
type of protection and premiums are envisioned with this bill.
Typically, when insurance companies write errors and omissions
relative to professional actions, they review the standard of care
and the experience of the individual. He informed the committee
that he had been informed that there is some insurance available
through a home insurance club. Therefore, Mr. Notkin encouraged
investigation of the premium and coverage envisioned under this.
CHAIRMAN ROKEBERG said that it has already been determined that the
majority of the non civil engineer groups already have coverage.
MR. NOTKIN interjected that typically, A&Es will have coverage if
they are doing a government project.
CHAIRMAN ROKEBERG clarified that he was referring to non A&Es or
mixes of them.
MR. NOTKIN reiterated the need to review what sort of premium is
envisioned based on a level of income for an individual.
Furthermore, what sort of protection and exclusions would the
insurance company write into that. With regard to enforcement, he
noted that the AELS board has difficulty having enforcement actions
taken. The amount of money the [AELS] has budgeted for AG
[Attorney General] support is such that something has to be so
egregious in order for something to happen within the two year time
frame. Therefore, he expressed concern with the fiscal note which
only has 30 hours of AG time budgeted. If 30 hours is the amount
of support envisioned, not much will be gained in the realm of
enforcement. He urged the committee to review that issue.
TAPE 00-15, SIDE A
CHAIRMAN ROKEBERG commented that as Chairman of the House Labor &
Commerce Committee, he viewed himself as the keeper of occupational
licensing. He noted that Ms. Reardon is present today and that he
had discussed occupational licensing in the budget subcommittee
this morning. He further noted that he would try to make an
adjustment with regard to how occupational licensing is handled in
the budget in order to ameliorate some of the problems.
MR. NOTKIN interjected that is great. If the goal is to have real
enforcement where it is needed, that should be reviewed.
CHAIRMAN ROKEBERG related his understanding that this concern would
be taken care of as an amendment to a bill in the Senate.
Number 0083
MR. NOTKIN expressed another concern with the fiscal note. He
asked if it was correct that the initial expenditures or collection
of receipts from examinations and licensures in the first year is
projected at $67,000.
CHAIRMAN ROKEBERG replied no and stated that would be reviewed and
lowered.
MR. NOTKIN commented that if the fee ends up being more than
several hundred dollars, many people will be lost.
CHAIRMAN ROKEBERG said that he was a aware of that. He indicated
that testimony had spoken to a prior version.
MR. NOTKIN concluded by saying that he was not advocating for a
blind acceptance of architects and engineers, but only those
architects and engineers who are qualified by means of training and
experience. The enforcement of them would really occur in the AELS
board. Therefore, he felt it appropriate to exempt architects and
engineers in Alaska.
CHAIRMAN ROKEBERG announced that he would be considering the nature
of commerce and the concept of a level playing field between civil
engineers, architects and licensed home inspectors in future
versions of the bill. He indicated that if the exemption for
architects and civil engineers is maintained, then the legislation
would mandate that they be in the same competitive position with
other requirements such as errors and omissions insurance.
Number 0283
RICK JARVIS, RE/MAX properties, testified via teleconference from
Anchorage. Mr. Jarvis supported HB 207 and noted that he has been
advocating such legislation for the past three years. He was
pleased with the efforts on all levels. He referred to page 2,
lines 2-5, and commented that education and continuing education
are necessary for general home inspectors, civil engineers and
architects if they take on the duties of a home inspector. To give
carte blanche to civil engineers is not acceptable. He understood
the civil engineer's view that they have a general educational
background as well as experience. However, he believes the
continuing education of all home inspectors is absolutely necessary
for the protection of the home buyer and seller.
MR. JARVIS referred to page 5 and the $250,000 cap, which he
believes should be raised to perhaps $50 million. He recognized
that it would cost a little more. He informed the committee that
15-17 states have similar legislation regulating home inspectors,
which he did not believe substantially increased the fees.
However, he asked whether the committee in its research had any
information regarding whether those states experienced a
substantial increase in the fees. Mr. Jarvis said that he opposed
the exemption of civil engineers. He recalled hearing that the
civil engineers would be required to have insurance. If that is
the case, then the civil engineers should also be required to have
continuing education.
Number 0504
MR. JARVIS recalled an earlier question with regard to how a home
inspection affects a home seller or a home buyer. From his
perspective, Mr. Jarvis said that a home inspection, good or bad,
is attached to the property. There is a strong possibility that
the home inspection has to be disclosed to any potential new buyers
and would taint the salability of the home. The notion behind
regulating home inspectors is to create a level field for the home
buyer and seller in order to know that they will receive a
competent home inspection.
CHAIRMAN ROKEBERG inquired as to how home inspections began to
impact the Anchorage real estate market; was it the result of the
statutory requirement for disclosure or the desire of real estate
licensees to protect themselves or shift their liabilities
elsewhere?
MR. JARVIS stated that the impact on the Anchorage real estate
market was none of the notions mentioned by Chairman Rokeberg. He
informed that committee that in the late 1980s and the early 1990s,
the oil companies coming in requested that employees retain home
inspections on homes that they purchased. This was done in order
to have a buy out program when they [the oil companies/employees]
left. He explained that the company would guarantee the sale or
the purchase of that home in order for the employee to be able to
move to whatever location the employee was transferred to. The
[oil] companies were trying to protect their interest in that
property. As that situation grew, the concept of having home
inspections grew within the general public as well. He guessed
that at least 9 percent of home sales have some sort of home
inspection.
REPRESENTATIVE CISSNA interpreted testimony to indicate different
needs in different portions of the state due to the varying markets
across the state.
CHAIRMAN ROKEBERG pointed out that financial institutions have
picked up on the need, desirability and mandate for home
inspections. Therefore, this issue cuts across all kinds of house
financing and thus home inspections are a growing portion of the
real estate commerce across the state. He informed the committee
that in Fairbanks and Juneau civil engineers predominately perform
home inspections, which is not the case in the Anchorage and Mat-Su
Valley areas. In the rural areas, the ICBO qualified people
perform the home inspections. In response to the various
requirements across the state, the bill is intended to be two
track. He explained that the one track would be the ICBO who would
relate to the more rural or new construction track and the home
inspections would be the home track. However, it is not entirely
clear due to the overlap in the bill.
Number 0884
DAVID OWENS, Owner and Operator, Owens Inspection Services,
testified via teleconference from Anchorage. He informed the
committee that Owens Inspection Services is based in Palmer. He
also informed the committee that he has been a building inspector
since 1983; he holds nine ICBO certifications, one AIA (ph)
certification and one (indisc.) certification. Mr. Owens opposed
HB 207 as written. The cart is being placed before the horse in
that Alaska does not even have a state building code for
residential construction, which he indicated should come first. It
seems that the focus is on residential constructions. He noted
that he performed residential and commercial work. Specifically,
he could inspect a high rise building without any insurance/bonding
requirements. However, with HB 207 inspections of a single family
home would require Mr. Owens to put out a substantial amount of
money for insurance. That discrepancy is of concern. Mr. Owens
said that he was in support of the idea of having some regulations
for building inspectors, but this seems a bit early.
CHAIRMAN ROKEBERG asked if Palmer, Wasilla or the Mat-Su Borough
had any building officials or building codes.
MR. OWENS answered that City of Palmer has adopted building codes,
but Wasilla has not. Basically, Alaska has fragmented building
codes spread over 23 different departments of which most applies to
commercial work.
CHAIRMAN ROKEBERG acknowledged that. He indicated that the cost of
implementing a statewide code enforcement program is prohibitive.
He noted that [the state] does have building codes in the areas of
plumbing, electricity, et cetera. He noted that the state does not
have enforcement of the adoption of the primary building codes. He
explained that one of the intentions with this legislation is to
provide a level of competency, particularly to those in areas
without municipal building inspections. This would address areas
such as the Wasilla and Mat-Su Valley area from which he has
received scores of complaints. Due to the lack of building
inspection, the consumers in the Wasilla and Mat-Su Valley area are
not being well protected. Chairman Rokeberg likened HB 207 to a
"stop-gap measure" because the state cannot afford a full-blown
statewide building inspection program.
MR. OWENS commented that it is difficult to inspect without a
standard. Currently, most inspections are for bank finding
purposes. Therefore, he inquired as to what standard he should
look to. It would be helpful if something [a building code] was
adopted at the state level. Mr. Owens said that it is questionable
whether the electrical code and plumbing code all apply to
residential construction.
Number 1188
RON JOHNSON, Realtor, testified via teleconference from the Kenai.
He mentioned the concept of eliminating the board and making
everything a civil violation in order that it become a Department
of Law enforcement issue. He noted that he did not see any term
lengths; is that established elsewhere?
CHAIRMAN ROKEBERG said that he believes it is statute.
MR. JOHNSON commented that a real estate broker is a necessary part
in this because the real estate broker is severely impacted by the
actions of the appraiser. He suggested that [the board] should
include a real estate broker and a public member or a real estate
broker or an appraiser, as a public member. He suggested another
alternative of having a board of seven with four members being
inspectors, one real estate broker, one real estate appraiser, and
one public member.
CHAIRMAN ROKEBERG interjected, "Can't afford that."
MR. JOHNSON said that he understood that and thus he suggested
making it a civil issue rather than a board mandated under the Real
Estate Commission.
CHAIRMAN ROKEBERG pointed out that the first version of the bill
did go that route, but those in the business expressed the need for
more control. Therefore, the current more formal board was
utilized.
MR. JOHNSON said that the idea of the board is great, but the
Department of Law blocks the actions of the Real Estate Commission
on activities relative to punishment or disciplinary action. Mr.
Johnson asked if the members of the board would be appointed from
various jurisdictions or randomly appointed.
CHAIRMAN ROKEBERG answered that there will be no jurisdictional
appointments as that causes problems. In response to an earlier
question, Chairman Rokeberg informed everyone that according to
statute, AS 08.01.35, the board members would be appointed with
staggered four year terms.
MR. JOHNSON specified, in response to Chairman Rokeberg, that he
supported HB 207 in concept and no one should be exempt.
CHAIRMAN ROKEBERG announced that HB 207 would not be moved from
committee today and the committee would continue to hear from
witnesses.
Number 1367
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation, noted that he would address the amendment. He
informed the committee that AHFC does not have a problem with the
amendment. The AHFC's support of that [the amendment] is premised
on the concept that AHFC is trying to assist the bill as AHFC
supports the concept of the bill. In response to Chairman
Rokeberg, Mr. Bitney agreed that AHFC had requested that the ICBO
instructors be part of the legislation. With regard to the notion
that this legislation would negatively impact those in smaller
communities, Mr. Bitney said that AHFC has been encouraging ICBO
people to become established and licensed in small communities. He
stressed that they [ICBO certified inspectors] are not readily
available today and thus such people would have to be flown to the
rural areas. Through a number of initiatives, AHFC has tried to
improve that; however, it is a continuing problem. He did not
believe HB 207 makes the situation any worse. He agreed with
Chairman Rokeberg that most of the people in the larger population
centers are qualified. In these smaller communities, builders are
probably building out-of-pocket and thus not having the property
inspected during construction.
MR. BITNEY replied, in further response to Chairman Rokeberg, that
AHFC does require an ongoing inspection during construction in
order to obtain a new construction loan. That inspection is done
by an ICBO certified inspector. In the case of the small
communities, those inspections can be performed by inspectors when
in municipalities that have jurisdiction.
CHAIRMAN ROKEBERG surmised then that the passage of the amendment
would allow inspection by an architect or engineer.
MR. BITNEY informed the committee that currently destructive
inspections are allowed. The law speaks to buildings that were
built after 1992. Therefore, with a building constructed after
1992, the destructive inspection applies. He noted that this is an
expensive process.
CHAIRMAN ROKEBERG asked if that was for financing existing homes.
MR. BITNEY responded yes and specified that it would apply to homes
built after 1992. With regard to Chairman Rokeberg's question, Mr.
Bitney said that a pre-certified engineering report for a house
built after 1992 would be acceptable.
CHAIRMAN ROKEBERG said that Mr. Bitney is sending a message to
everyone in the state. If one wants to build outside a
jurisdiction with a building official and municipal building code
and inspector, then there should be an engineering report and/or an
ICBO inspection that is certified in order to have a marketable
home.
MR. BITNEY agreed.
Number 1617
MS. REARDON informed the committee that she believed this is a good
idea. However, she expressed concern with the examination. She
informed the committee that the development of examinations
specific to Alaska is very expensive because there are not many
license holders to spread the cost among. Therefore, she
encouraged the committee to delete the descriptive examination on
page 3. The board would then, through regulation, have the ability
to choose one of the examinations that is already available. With
that option, the applicants would pay directly to the organization.
Although that may not be the ideal, she hoped that the training
requirements on page 2, line 4, might cover some of the Alaska
concerns.
CHAIRMAN ROKEBERG said that he understood that there is a course
given under the auspices of the (indisc.).
MS. REARDON explained that in order to obtain an engineering or
architectural license in Alaska, one must have taken a course in
Arctic engineering. She pointed out that there is another suitable
model, to become a residential contractor requires a special
contracting license and that person must have passed an Alaska
craftsman construction course or the Arctic engineering. She
suggested review of requiring training versus an exam. She said
that she had reviewed the ICBO materials and the other two
organizations. It seems that they all offer exams through ASI, a
testing service which does offer exams in Anchorage. If there is
going to be an Alaskan test, Ms. Reardon requested that there be
two test models. She explained that the person could take a
national exam along with an Alaskan test that could be open book or
written by the board.
CHAIRMAN ROKEBERG indicated agreement with Ms. Reardon's two test
model suggestion.
MS. REARDON pointed out that when it is a board written exam, that
is a challenging exam that people may fail. Those exams are not
very legally defensible. She noted that part of this will be
merely reviewing tests that already exist and determining whether
it should be left to the board or the legislature to decide.
MS. REARDON referred to page 2, line 25, which speaks to an
associate. She assumed that the intent was to make the
registration valid for two years not that registration is not
available to someone who has worked this year and next year
unlicensed, before the licensing law goes into effect. Therefore,
she suggested the following statement: "This registration is valid
for two years and may not be renewed."
MR. BRUU informed the committee that AHFC should have a bank of
questions that specifically address Alaska's building conditions.
Those were part of the initial ICBO certifications; it was called
the Alaska module. He believes that it still exists.
MS. REARDON commented that this version is clearer than the first
with regard to whether the legislation licenses individuals versus
their business. Still, there are some confusions on that topic,
most of which deal with the insurance requirement. She referred to
page 4, workers' compensation, and pointed out that it is usually
purchased by a partner and/or corporation, and the business
receives the workers' compensation insurance. However, the
remainder of the bill makes it look as if two home inspectors were
in a partnership, it seems to say that each would need workers'
compensation insurance or the errors and omissions insurance.
Therefore, she suggested clarification in that regard.
CHAIRMAN ROKEBERG said that the business would have the errors and
omissions insurance.
MS. REARDON then suggested language that such as, "a home inspector
must work for a business that has errors and omissions insurance."
She indicated that the workers' compensation section may need to be
deleted entirely because the state law will require workers'
compensation. In that case, the home inspector would not have to
illustrate that he/she has workers' compensation to the Division of
Occupational Licensing.
Number 2010
MS. REARDON referred to page 5, line 16, and suggested the
insertion of the word "immediately" before "suspended." Otherwise,
she believed that the division would have to go through the
exercise of charging someone and proving that he/she did not have
insurance before suspending that person's license. Ms. Reardon
turned to page 7, lines 3-6, and asked if that language is only
intended to apply to the inspection report or the entire bill. She
had the sense that it referred to the entire bill in which case she
believes the language "the provisions of this chapter" would be
appropriate. She pointed out that the issue of individuals versus
the company the individual works for arises again on page 7, line
7. She expressed the need to review how these companies or
corporations that employee home inspectors would be controlled.
MS. REARDON turned to page 9, the AHFC section. She pointed out
that when the law goes into effect, the two options on lines 17 and
18 look as if they will not really exist any longer. Since the
division's licensing law will say that it will no longer be legal
to be a home inspector without a license. Although AHFC statute
says that an inspection by an unlicensed ICBO person or by an
individual from the International Association of Electrical
Inspectors (IAEI) is acceptable, the division will say that it is
against the law for those people to perform that inspection.
Therefore, she suggested the deletion of lines 18 and 19 on page 9.
MR. BITNEY pointed out that he referenced this situation in his
testimony. "At some point in time, I don't know if we would want
to exclusively just recognize the individuals that are licensed by
the state and eliminate ICBO from Alaska Housing or whether we
would just exempt ICBOs."
CHAIRMAN ROKEBERG said that the inspections performed by the
International Association of Electrical Inspectors would be for
electrical inspections.
MR. BITNEY stated that he was not aware of where IAEIs were being
used. He offered to review whether any IAEI reports had been
accepted. He informed the committee that currently, AHFC almost
exclusively accepts ICBOs.
MS. REARDON pointed out that if ICBOs are exempted from licensure,
then most of the licensees are probably lost.
CHAIRMAN ROKEBERG commented that "we" have to have them and the
agency wants ICBOs too. He agreed that one section could be
deleted; however, their scope of work goes back to page 8, lines
13-14. That is problematic.
MS. REARDON said that she did like Chairman Rokeberg's idea to be
specific.
CHAIRMAN ROKEBERG interjected that he was not sure that could
happen without placing "ourselves" in a box. He did agree that
some clarification is necessary.
MS. REARDON suggested that the committee consult with the
legislative drafters because she believes that there is a legal
principle "that if another licensing law allows you to do it, then
you're still allowed to do it."
CHAIRMAN ROKEBERG said, "Do we want to allow them to do the job ...
under the scope of their licensure, but by definition of home
inspection as provided for in this chapter."
MS. REARDON commented that she felt that if you look to the scope
of architecture and engineering, especially with architects
[,engineers] and land surveyors issues, people may well be able to
say that home inspection falls within their realm.
CHAIRMAN ROKEBERG clarified that is why their exemption would be
maintained.
Number 2286
MS. REARDON inquired as what the different statutory references
were on page 11, Section 10. She suggested that the bill become
effective July 1, 2002, in order to give people a year to comply
and obtain licenses. She felt that the current effective date of
July 1, 2001, would be the date that the board would get its
regulations in place.
CHAIRMAN ROKEBERG pointed out that there is a transition provision
in the bill.
MS. REARDON acknowledged that, but pointed out that it spoke to
existing people. Still, she expressed the need for new people
coming in to be ready. She suggested maybe [an effective date]
that provided another six months. Again, she said that it would
probably take a year from the passage of this bill for regulations
governing new entrants to the profession to be set up.
CHAIRMAN ROKEBERG announced that HB 207 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Labor & Commerce Standing Committee meeting was adjourned at 5:45
p.m.
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