Legislature(1993 - 1994)
03/03/1994 08:00 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 3, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Gary Davis Representative Harley Olberg Representative Jerry Sanders MEMBERS ABSENT Representative Bettye Davis Representative Fran Ulmer COMMITTEE CALENDAR HB 378: "An Act relating to the Older Alaskans Commission and staff of the commission; changing the name of the Older Alaskans Commission to the Alaska Commission on Aging and extending the termination date of the commission; relating to the Alaska Pioneers' Homes Advisory Board; relating to services and programs for older Alaskans; and providing for an effective date." PASSED OUT OF COMMITTEE HB 392: "An Act relating to the confidentiality of permanent fund dividend application information; relating to the permanent fund dividend program; and providing for an effective date." PASSED OUT OF COMMITTEE AS A COMMITTEE SUBSTITUTE *HB 400: "An Act relating to administrative proceedings involving a determination of eligibility for a permanent fund dividend or authority to claim a dividend on behalf of another." PASSED OUT OF COMMITTEE *HB 408: "An Act setting a maximum rate of interest that may be charged on a loan guaranteed by the Alaska Industrial Development and Export Authority under its export assistance program; and annulling a portion of a current regulation of the Alaska Industrial Development and Export Authority that establishes the maximum allowable interest on a guaranteed loan to be computed at a different rate." HELD OVER *HB 358: "An Act allowing a mobile home owner to request a certificate of title from the Department of Public Safety." HELD OVER SB 128 "An Act relating to legislative audits." HELD OVER WITNESS REGISTER REPRESENTATIVE JOE GREEN Alaska State Legislature Alaska State Capitol, Room 114 Juneau, AK 99811 Phone: 465-4931 POSITION STATEMENT: Sponsor of HB 400 and HB 408 MELINDA GREENING, Staff Representative Joe Green Alaska State Capitol, Room 114 Juneau, AK 99811 Phone: 465-4931 POSITION STATEMENT: Gave overview of HB 400 JOHN DELANO, Deputy Director of Credit Alaska Industrial Development and Export Authority 480 W. Tudor Anchorage, AK 99503 Phone: 561-8050 POSITION STATEMENT: Answered questions on HB 408 PATRICK LOUNSBURY, Staff Representative Brian Porter Alaska State Capitol, Room 122 Juneau, AK 99811 Phone: 465-4930 POSITION STATEMENT: Gave the sponsor statement for HB 358 TRACI WALKER, Manager Thunder Mountain Mobile Home Park 8479 Thunder Mountain Rd. Juneau, AK 99801 Phone: 789-7555 POSITION STATEMENT: Testified in favor of HB 358 KATE CAMPBELL, Resident Churchill Way Mobile Home Park 5905 Churchill Way #54 Juneau, AK 99801 Phone: 780-4298 POSITION STATEMENT: Testified in favor of HB 358 JUANITA HENSLEY, Chief, Drivers Services Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, AK 99802 Phone: 465-2650 POSITION STATEMENT: Answered questions on HB 358 RICHARD VITALE, Staff Representative Sean Parnell Alaska State Capitol, Room 513 Juneau, AK 99811 Phone: 465-2995 POSITION STATEMENT: Answered questions on HB 392 PREVIOUS ACTION BILL: HB 378 SHORT TITLE: REVISE OLDER ALASKANS COMMISSION SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 01/14/94 2072 (H) READ THE FIRST TIME/REFERRAL(S) 01/14/94 2072 (H) STATE AFFAIRS, HES, FINANCE 01/14/94 2072 (H) -ZERO FISCAL NOTE (ADM) 1/14/94 01/14/94 2073 (H) GOVERNOR'S TRANSMITTAL LETTER 02/24/94 (H) STA AT 08:00 AM CAPITOL 102 02/24/94 (H) MINUTE(STA) BILL: HB 392 SHORT TITLE: PERMANENT FUND DIVIDEND PROGRAM SPONSOR(S): REPRESENTATIVE(S) PARNELL JRN-DATE JRN-PG ACTION 01/21/94 2125 (H) READ THE FIRST TIME/REFERRAL(S) 01/21/94 2125 (H) STATE AFFIARS,JUDICIARY,FINANCE 02/22/94 (H) STA AT 08:00 AM CAPITOL 102 02/22/94 (H) MINUTE(STA) 03/03/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 400 SHORT TITLE: PFD ADMINISTRATIVE PROCEEDINGS SPONSOR(S): REPRESENTATIVE(S) GREEN JRN-DATE JRN-PG ACTION 01/26/94 2154 (H) READ THE FIRST TIME/REFERRAL(S) 01/26/94 2154 (H) STATE AFFAIRS, FINANCE 03/03/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 408 SHORT TITLE: AIDEA EXPORT ASSISTANCE PROGRAM LOANS SPONSOR(S): REPRESENTATIVE(S) GREEN JRN-DATE JRN-PG ACTION 01/27/94 2166 (H) READ THE FIRST TIME/REFERRAL(S) 01/27/94 2166 (H) STATE AFFAIRS, FINANCE 03/03/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 358 SHORT TITLE: MOBILE HOME CERTIFICATES OF TITLE SPONSOR(S): REPRESENTATIVE(S) PORTER,Mulder JRN-DATE JRN-PG ACTION 01/10/94 2021 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2022 (H) STATE AFFAIRS, FINANCE 03/03/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 128 SHORT TITLE: LEGISLATIVE AUDITS SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT JRN-DATE JRN-PG ACTION 02/22/93 440 (S) READ THE FIRST TIME/REFERRAL(S) 02/22/93 440 (S) STATE AFFAIRS, FINANCE 03/10/93 (S) STA AT 9:00 AM BUTRVICH RM 205 03/10/93 (S) MINUTE(STA) 03/17/93 (S) STA AT 9:00 AM BUTRVICH RM 205 03/17/93 (S) MINUTE(STA) 03/18/93 845 (S) STA RPT CS 1DP 3NR SAME TITLE 03/18/93 846 (S) ZERO FISCAL NOTE TO SB & CS (S.STA/GOV) 04/12/93 (S) FIN AT 9:00 AM SENATE FIN 518 04/12/93 (S) MINUTE(FIN) 04/14/93 1353 (S) FIN RPT 6DP 1NR (STA)CS 04/14/93 1354 (S) PREVIOUS ZERO FN (S.STA/GOV) 04/14/93 1353 (S) LETTER OF INTENT W/ FIN REPORT 04/13/93 (S) MINUTE(FIN) 04/14/93 (S) FIN AT 8:30 AM SENATE FIN 518 04/14/93 (S) MINUTE(FIN) 04/14/93 (S) MINUTE(RLS) 04/17/93 (S) MINUTE(SSA) 04/23/93 1693 (S) RULES 3 CAL 1NR 4/23/93 04/23/93 1694 (S) READ THE SECOND TIME 04/23/93 1694 (S) STA CS ADOPTED UNAN CONSENT 04/23/93 1695 (S) ADVANCE TO THIRD READING FAILED Y12 N8 04/23/93 1695 (S) THIRD READING 4/24 CALENDAR 04/24/93 1741 (S) READ THE THIRD TIME CSSB 128(STA) 04/24/93 1741 (S) (S) ADOPTED FIN LETTER OF INTENT 04/24/93 1741 (S) PASSED Y20 N- 04/24/93 1746 (S) TRANSMITTED TO (H) 04/27/93 1552 (H) READ THE FIRST TIME/REFERRAL(S) 04/27/93 1552 (H) STATE AFFAIRS, FINANCE 01/29/94 (H) STA AT 08:00 AM CAPITOL 102 01/29/94 (H) MINUTE(STA) 02/15/94 (H) STA AT 08:00 AM CAPITOL 102 02/15/94 (H) MINUTE(STA) 03/01/94 (H) STA AT 08:00 AM CAPITOL 102 03/01/94 (H) MINUTE(STA) ACTION NARRATIVE TAPE 94-20, SIDE A Number 000 HB 378 - REVISE OLDER ALASKANS COMMISSION CHAIRMAN AL VEZEY called the meeting to order at 8:03 a.m. Members present were REPRESENTATIVES KOTT, SANDERS, G. DAVIS, and OLBERG. Under bills previously heard, CHAIRMAN VEZEY opened HB 378 for discussion. He stated the committee should have before them a copy of the latest committee substitute. The committee had adopted in a previous meeting, REPRESENTATIVE G. DAVIS's amendment, which would change the person who would chair the committee from being appointed by the Governor, to being elected by the committee. CHAIRMAN VEZEY asked the committee for their opinion of the editing by the statute writer on page 2, line 25, where the word "chairman" has been changed to "chair", and on page 2, line 31, the word "chairperson" has been changed to "chair." REPRESENTATIVE GARY DAVIS replied he was neutral about the changes. CHAIRMAN VEZEY expressed that he did not care for the terminology. He asked the committee's pleasure. (REPRESENTATIVE SANDERS left the meeting at 8:05 a.m.) Number 060 REPRESENTATIVE HARLEY OLBERG stated the bill would be heard again in HESS and should be passed on. Number 072 REPRESENTATIVE G. DAVIS moved CSHB 378 be passed from committee with the fiscal notes attached. Number 085 CHAIRMAN VEZEY recognized the motion, the committee secretary called the roll, and CSHB 378 passed from the House State Affairs Committee. HB 392 - PERMANENT FUND DIVIDEND PROGRAM CHAIRMAN VEZEY opened HB 392 for discussion. A new committee substitute is being prepared, however, it is not yet completed. CHAIRMAN VEZEY said the committee did have a Version O of the committee substitute dated 2/24/94, before them, which incorporated the change from a previous hearing on page 5, line 7. The committee substitute adds the bright-line distinction that an individual is not eligible for a dividend and each of the five dividends preceding that dividend, if the individual is absent for more than 180 days during the qualifying period. He clarified an individual could only have an excused absence for five years. After that time, the dividend would be denied, except for medical reasons as outlined in lines 10-13. CHAIRMAN VEZEY stated another discussed amendment from the previous hearing, however not adopted, was placed into the committee substitute on page 4, line 11. He felt Version O of the committee substitute dated 2/24/94, should not be adopted by the committee, but the committee should vote to adopt the wording found on page 5, lines 7-13, of Version O, of the committee substitute, dated 2/24/94. REPRESENTATIVE G. DAVIS asked if the change was under allowable absences. Number 145 CHAIRMAN VEZEY responded the change was under allowable absences, drawing a bright-line at five years, unless out of the state for medical reasons. Number 147 REPRESENTATIVE G. DAVIS asked if it meant five consecutive years. Number 148 CHAIRMAN VEZEY confirmed REPRESENTATIVE G. DAVIS. He believed the committee was in favor of a bright-line distinction at the last hearing. Number 156 REPRESENTATIVE G. DAVIS felt five years may be too long. He would prefer to "ratchet down" as many allowable absences as possible. Number 171 REPRESENTATIVE OLBERG gave an example of a career military pilot in his district who has no intention of relinquishing his Alaskan residency, but may spend most of 20 years outside of Alaska. He periodically comes back to visit family. CHAIRMAN VEZEY responded, the change states, in essence, if a person is out of the state for five years, they are not eligible for a dividend. Currently, if a person is absent for 180 days a year or more than five years, they are considerably scrutinized by the Permanent Fund Dividend (PFD) Division. Number 191 REPRESENTATIVE OLBERG stated number 6, serving on active duty as a member of the Armed Forces of the United States, is an allowable absence. His constituent, however, is having difficulty getting his dividend. REPRESENTATIVE G. DAVIS clarified that REPRESENTATIVE OLBERG's constituent was active. Number 197 CHAIRMAN VEZEY believed REPRESENTATIVE OLBERG's constituent would have received a dividend under subparagraph 6 of section 5, "serving on active duty as a member of the armed forces," but he has probably been out of the state for five years. The PFD gives considerable scrutiny to those persons. The intent of the change is to merely codify a bright-line at five years, there is no administrative judgment involved. REPRESENTATIVE OLBERG did not have a problem with the change. CHAIRMAN VEZEY stated the new committee substitute would be drafted and he would expect the committee to adopt it and pass it out. HB 378 - REVISE OLDER ALASKANS COMMISSION CHAIRMAN VEZEY explained the committee substitute for HB 378, just passed out of committee had not been formally adopted, therefore, he reopened HB 378. Number 227 REPRESENTATIVE PETE KOTT moved the committee rescind their action on CSHB 378 for the purpose of adopting the committee substitute. CHAIRMAN VEZEY clarified the proper order would not be to rescind, but to reconsider. Understanding REPRESENTATIVE KOTT's intent, the motion was recognized and hearing no objection the CSHB 378 was adopted. CHAIRMAN VEZEY asked if REPRESENTATIVE KOTT would like to move to pass CSHB 378 from the House State Affairs Committee. Number 236 REPRESENTATIVE KOTT so moved. Number 238 CHAIRMAN VEZEY recognized the motion, the committee secretary called the roll, and CSHB 378 passed from the House State Affairs Committee. HB 392 - PERMANENT FUND DIVIDEND PROGRAM CHAIRMAN VEZEY announced HB 392 would be readdressed at a later date. HB 400 - PFD ADMINISTRATIVE PROCEEDINGS CHAIRMAN VEZEY opened discussion on HB 400 and introduced REPRESENTATIVE JOE GREEN. Number 257 REPRESENTATIVE JOE GREEN, sponsor of HB 400, stated MELINDA GREENING from his staff, was available to present HB 400 to the committee. Number 260 MELINDA GREENING, STAFF FOR REPRESENTATIVE JOE GREEN, gave an overview of HB 400. She said HB 400 was prepared because of complaints received from constituents regarding the length of time to process PFD appeals. REPRESENTATIVE GREEN felt the length of time some of his constituents have had to wait in the appeals process was unacceptable. The length of time to process appeals is directly related to the high number of appeals received. She stated, HB 400 addresses the huge number of appeals filed. As of January 1, 1994, there were 9,579 appeals pending, the highest number since the PFD program's inception. She knew of one District 10 resident who has waited 18 months and others may have waited longer. Currently there are ten permanent full-time employees in the PFD Division and three appeals officers, in the commissioners' office, who are working on processing the appeals. Because there is no cost to appeal, other than .29 cents for a stamp, people who are clearly unqualified protest their denials because they have the opportunity to do so at no cost or risk to themselves. The 1994 denial rate was 64 percent, lower than in previous years. MS. GREENING said HB 400 would implement a $25 filing fee for individuals protesting the denial of their permanent fund appeal application. The fee would be refundable if the appeal is successful, and nonrefundable if the denial is not overturned. She said it is anticipated the implementation of a filing fee would discourage individuals clearly unqualified from appealing, thereby reducing costs, which are deducted from the amount of the dividend, and making the appeal process shorter for those with legitimate claims. Since the administrative costs are deducted out of each recipients PFD check, the reduced cost would mean a larger check for each eligible Alaskan. Number 314 CHAIRMAN VEZEY heard no questions and asked the pleasure of the committee. Number 317 REPRESENTATIVE G. DAVIS moved to pass HB 400 from committee with individual recommendations. Number 319 CHAIRMAN VEZEY recognized the motion, the secretary called the roll, and HB 400 passed from the House State Affairs Committee with individual recommendations. HB 408 - AIDEA EXPORT ASSISTANCE PROGRAM LOANS CHAIRMAN VEZEY opened discussion on HB 408. Number 330 REPRESENTATIVE GREEN, sponsor of HB 408, gave a sponsor statement. He said, Chapter 42, SLA 1987, provided for the Alaska Industrial Development Authority to add an Export Financing Guarantee program to its' portfolio, and change the name, at that time, to the Alaska Industrial Development and Export Authority (AIDEA). Six years later, AIDEA has yet to guarantee an export transaction with this program. REPRESENTATIVE GREEN stated HB 408 is an attempt to make the export program work. The problem is that current AIDEA regulations impose a ceiling on the interest commercial lenders may charge when participating in this program. The lesser of the rate charge, under the promissory note, of one percent above the U.S. Treasury Note rate, at 3.5 percent, means commercial banks could charge no more than about 4.5 percent interest on a loan. This restriction effectively kills the program because no commercial lender would lend money at 4.5 percent. REPRESENTATIVE GREEN said, somewhat similar to the export assistance program, AIDEA also has a business assistance program. The interest rate for banks is this program is in the same statute, however, it is substantially higher allowing lenders to charge 2.75 percent above the prime rate. At the current prime rate of six percent, a commercial bank could charge as much as 8.75 percent interest. The Federal Small Business Administration (SBA) program also allows this interest to go to 2.75 percent above the prime rate. REPRESENTATIVE GREEN stated that HB 408 establishes the same interest rate for the export program, as exists for the business assistance program. The export program will become more attractive to commercial lenders. He noted the export assistance program is a loan guarantee, not a state loan. A potential exporter could go to a commercial bank, and if they qualify, get a commercial loan at any time, but if the exporter seems at all risky, the bank could use this program to reduce that risk. AIDEA would assume that risk, because it has a mechanism to reinsure itself which would reduce its exposure. REPRESENTATIVE GREEN stated managers at AIDEA recognize the export program is not working and they have begun to work with banks and the Department of Commerce to fix it. It is his opinion that between these statutory changes and some changes in AIDEA's regulations, banks might be willing to use this program and that would be an important tool for small businesses. REPRESENTATIVE GREEN stated he was serious about fixing the problems and if it could not be done in the regulations, he would try to introduce something to fix it through statute. Number 389 CHAIRMAN VEZEY asked which program under AIDEA is limited to one percent over the six month treasury note. REPRESENTATIVE GREEN replied the export program. He understood the oddity of trying to help a program by increasing its ability to charge more interest. He clarified the problem to be small export potentials, which there are many in Alaska, need to be financed. Number 402 CHAIRMAN VEZEY stated AIDEA is providing the guarantee, not the loan. REPRESENTATIVE GREEN agreed. He gave an example of a man named Jones, who may not have a good enough idea for a very restrictive bank, but it may pass the AIDEA test. AIDEA would guarantee him. If Jones were to then go under, he clarified, AIDEA would not exactly have to pick up the tab, because AIDEA reinsures itself with a .5 percent charge which the applicant pays. If Jones had gotten 8.75 percent, the loan he would have actually been paying would have been at 9 percent, therefore, 25.25 percent would be a reinsurance program that AIDEA would not get stuck with the bill. AIDEA acts as an intermediary. Number 415 CHAIRMAN VEZEY did not believe the legislature had the foresight in 1987 to see the short-term interest rates drop so dramatically below the long-term rates. He was concerned that if the number of loan guarantees was increased the reserves for loan losses would have to be increased, requiring a fiscal note. REPRESENTATIVE GREEN responded the AIDEA program does not put up the money, the bank does. If AIDEA is held as a default, they would look to their reinsurer to pay the difference. CHAIRMAN VEZEY asked if AIDEA buys loan insurance. REPRESENTATIVE GREEN confirmed. REPRESENTATIVE G. DAVIS questioned if the insurance was bought from another state agency. Number 437 REPRESENTATIVE GREEN said no, it was more like a "LLoyd's of London type of thing." Number 438 CHAIRMAN VEZEY thought AIDEA would use their investments to secure loans. REPRESENTATIVE GREEN said no, that way state capital is not tied up. Number 440 CHAIRMAN VEZEY commented that if activity is anticipated to increase, increased insurance premiums for loan insurance should be expected. Number 442 REPRESENTATIVE GREEN said an increase in premiums was possible. He speculated, if there were a specific number of loans at a quarter of a percent, and the insurance carriers felt AIDEA was getting too much exposure, and they wanted to raise to a half a percent, there would be some loans with a quarter override and some that are higher interest override. This would be paid by the borrower. HB 408 would bring both the export program and the small business program to equal terms. CHAIRMAN VEZEY clarified HB 408 would annul the one percent above the treasury note in code, not in statute. 3 AAC 99.650 would be annulled. CHAIRMAN VEZEY moved to the Anchorage teleconference site. Number 467 JOHN DELANO, DEPUTY DIRECTOR OF CREDIT, AIDEA, commented and answered questions on HB 408. He felt the problems which HB 408 addresses could be taken care of through regulations. The interest rate is only established by regulation. AIDEA does not have the legislative history or the corporate memory because those involved in suing the regulations are no longer with the authority. There have been attempts by several staff members of AIDEA to meet with banks, OIT, and other interested parties to make the export program more attractive. AIDEA would not have a problem changing the interest rate through regulation. Number 484 CHAIRMAN VEZEY could not see banks wanting to loan at 4.5 percent, even if they could get money from the Federal Reserve banks for 2.5 percent. He believed the low interest rate had been in effect for at least three years. MR. DELANO replied, "at least." CHAIRMAN VEZEY thought it was a regulatory interest rate and [we] seem a little a slow to react to the market. Number 495 MR. DELANO responded the interest rate discussed would be the interest rate AIDEA would pay off in the event they have to honor the guarantee, in the event of default by the borrower. He clarified the bank can charge any rate they choose. The index in 1987 was probably substantially higher, twice as high as it is currently, when the regulation was made. Number 505 REPRESENTATIVE GREEN inquired, if that were the case wouldn't there still be a restriction or difficulty for a borrower if they went to a bank, and the bank may have reservations that AIDEA is not supporting them for the full amount they want to commit their money to. Number 510 MR. DELANO stated this scenario was very possible. That's why AIDEA has absolutely no objection to increasing the rate to be commensurate with the same rate charged in the business assistance program, prime plus 2.75. He felt this may comfort banks so in the event of default, they may know the amount of interest they would collect on the defaulted amount of money. Number 515 CHAIRMAN VEZEY clarified 3 AAC 99.650 sets the interest rates for the loan guarantee and not the loan. MR. DELANO confirmed that was correct. Number 520 CHAIRMAN VEZEY asked what the response is from the commercial lending institutions to 3 AAC 99.650. MR. DELANO replied the concern of banks was they wanted to know the interest rate AIDEA will pay them in the event the guarantee would have to be honored. They felt the interest rate should be raised. AIDEA did not have objections to this. He stated the underwriting by both the bank and AIDEA is generally conservative enough that AIDEA does not view a lot of risk in the guarantees. The moneys guaranteed are contingent liabilities of the AIDEA and under the business assistance program, for example, AIDEA has only had to pay off one guarantee since the program was instituted. They paid off about 25 percent of the total guaranteed amount. Number 540 REPRESENTATIVE GREEN clarified one loan defaulted under the business assistance program and asked how many loans had been granted. Number 543 MR. DELANO answered there are currently 14 or 15 on the books, however, the total amount of outstanding guarantees is just short of $1 million. The export program had not been utilized because it is similar to the U.S. Small Business Administration, a federal guarantee, which is more liberal and banks have used it since the late 1940s. AIDEA's export program is more attractive than the federal program for financing inventory and accounts receivable because of greater limits, $1 million versus $750,000. Number 553 REPRESENTATIVE GREEN commented there are some 15 loans under that program and zero under the export program, and asked if that was because of the difference in the types of people or businesses that would be involved or because they are more apt to get loans from banks with a higher guarantee from AIDEA. Number 560 MR. DELANO responded he thought the export program was partially not used because AIDEA does not know if the participant volume exists in this area. Several people have come in with interest in this area, but in talking to them, their needs tend to fit the business assistance program. Number 575 REPRESENTATIVE GREEN reiterated AIDEA has no objection to modifying the interest rate in regulation. He then asked if [we] could be assured that if HB 400 was not pursued, it would be done in regulations. Number 580 MR. DELANO said yes, AIDEA could do it. Number 581 REPRESENTATIVE GREEN suggested HB 408 be pulled off the table with that assurance. In an effort to make the change more proactive, rather than negative, he offered that page 1, line 7, the (b) portion of the existing regulations which now read, "the authority may not guarantee a loan unless the authority finds that the guarantee is reasonably necessary," should be modified to read, "that the authority may guarantee a loan if the authority finds that the guarantee is reasonably necessary." The thrust would change to more positive wording. Number 597 REPRESENTATIVE G. DAVIS asked MR. DELANO about the previous loan being considered under the export authority, that was later found to fit better under the business assistance program. He could not imagine an export loan that would not fit under the business assistance program and asked if this was why the export program had not been used. Number 605 MR. DELANO responded long-term contracts and revolving credit can fall under business assistance, and he believed the statutes and regulations were written more with the intent of specific transactions. AIDEA felt continuing relationships are served better under the business assistance program because guarantees can be issued for one year, and they can get renewals for four additional years. Number 626 REPRESENTATIVE GREEN asked if AIDEA can handle the exporters through regulation and still get loan requests through small business, is there a need for the export authority. He asked if there were people working in this category. Number 629 MR. DELANO replied no one is specifically working in the export area, but several AIDEA employees are familiar with the program and are trying to work with it. If there was a request to have a designated employee for the program, one of three officers who does underwriting for the authority would be chosen. He stated the need for the export authority had been deliberated over and because of its lack of use and misunderstanding of intent, AIDEA would like to amend the program to be usable or dispense of it and the financing will be taken care of under business assistance. Number 641 REPRESENTATIVE GREEN asked if AIDEA would take care of the export program in the reasonable future. (REPRESENTATIVE OLBERG left the meeting at 8:42 a.m.) Number 645 MR. DELANO answered AIDEA is prepared to make the regulation changes and it should not take too long. They have no objection to making the changes, however, they are not so sure it will induce the banks to make presentations to them. He suggested AIDEA talk to the banks and find out what will make the export program attractive to them. Depending upon the response of the banks, AIDEA could report back the options of whether the program will be changed or dispensed with. Number 661 REPRESENTATIVE GREEN asked if there was currently a director of AIDEA. Number 662 MR. DELANO answered the executive director is Riley Snell. (REPRESENTATIVE OLBERG returned to the meeting at 8:45 a.m.) Number 663 REPRESENTATIVE GREEN asked if the executive director would then refocus his attentions to other duties and AIDEA would not have personnel involved with the export program that would no longer be needed. Number 664 MR. DELANO responded there would not be unnecessary personnel and their workload would not be impacted unless the program was kept. Number 665 REPRESENTATIVE GREEN suggested HB 408 be held until he could receive further information from AIDEA and he would readdress the committee at a later date. Number 675 CHAIRMAN VEZEY accepted REPRESENTATIVE GREEN's suggestion and held HB 408 in the House State Affairs Committee for further study. CHAIRMAN VEZEY called a recess at 8:48 a.m. TAPE 94-20, SIDE B Number 000 HB 358 - MOBILE HOME REGISTRATION & TITLES CHAIRMAN VEZEY reconvened the meeting at 8:57 a.m. CSHB 358 was opened for discussion. CSHB 358: "An Act requiring a mobile home owner to obtain a certificate of title and requiring the Department of Public Safety to issue a certificate of title to a mobile home owner." Number 011 PATRICK LOUNSBURY, STAFF FOR REPRESENTATIVE BRIAN PORTER, gave the sponsor statement for HB 358. He said, in 1992, the Governor's Omnibus and Fee Reduction bill eliminated the mobile registration service and the state's ability to issue titles to mobile home owners. Without a title, there is no certain way to determine a person selling a mobile home is the real owner, or whether they first must pay off a lean holder. HB 358 would give mobile home owners a tool to facilitate honest transactions. He noted dealers, financial institutions, consumers, and owners are all agree they should pay an appropriate fee to maintain the cost of maintaining a title system. Number 049 CHAIRMAN VEZEY noted he did not have a title on his home, which is real property. Number 057 MR. LOUNSBURY responded real property uses another form, rather than mobile homes which currently do not have documentation. Number 066 CHAIRMAN VEZEY pointed out he owns a large amount of expensive equipment which also does not have titles. Number 071 MR. LOUNSBURY stated businesses are required by law to provide titles; however, individuals are not as structured. Therefore, documentation is needed to facilitate the selling of mobile homes. (REPRESENTATIVE SANDERS returned to the meeting at 9:00 a.m.) Number 087 REPRESENTATIVE G. DAVIS responded to CHAIRMAN VEZEY's comment that he did not have a title to his home. He commented that it may be cheaper to receive a title to his home, instead of the process that we currently go through to assure lenders that we do properly own our residences. Number 095 CHAIRMAN VEZEY pointed out a title does not actually guarantee ownership. People often legally buy and sell items without changing the title. Number 112 REPRESENTATIVE KOTT moved to adopt the committee substitute to HB 358, version K. CHAIRMAN VEZEY recognized the motion, the committee secretary called the roll, and the CSHB 358, version K, was adopted. Number 129 REPRESENTATIVE KOTT asked MR. LOUNSBURY to explain the differences between the original HB 358 and CSHB 358. Number 132 MR. LOUNSBURY responded the committee substitute was introduced to tighten up the title, so when it goes over to the Senate, they could not add anything on to it. CSHB 358 reads, "An act requiring a mobile home owner," instead of, "An act allowing." CSHB 358 also raises the fee from $50 to $100 to generate an effective program for the state in terms of cost responsibility, which was approved by the home owners, realtors and banks. Number 154 CHAIRMAN VEZEY pointed out the fiscal note was for the original HB 358. REPRESENTATIVE OLBERG clarified the fiscal note states it is for the sponsor substitute dated March 2, 1994; however, he believed it was intended for the committee substitute. CHAIRMAN VEZEY replied JUANITA HENSLEY signed the fiscal note and the committee would clarify her intent when she testified. Number 172 TRACI WALKER, MANAGER, THUNDER MOUNTAIN MOBILE HOME PARK, testified in favor of CSHB 358. She felt anyone could claim ownership to a mobile home and a system was needed to keep track of them. Mobile homes are taxed by municipalities as real property. She asked if the fee charged for a title would include a history search and if there would be assurance that the chain of title would remain on file. She continued the new types of mobile homes currently fabricated are sturdy, lasting many years, and possibly changing ownership at least a dozen times. She stressed banks were very difficult to deal with without proof of ownership. She stated an example of a couple having bought a mobile home, not transferring the title, fixed it up, sold it again, and the original owner has passed away. The people who are buying the home have paid it off, the middle couple has a title with the deceased's name on it and no bill of sale, and there is no one to prove they bought it. With a title standard, this type of confusion could be avoided. She also felt some people may begin to resell the same mobile home repeatedly and there would not be any proof of who owns it. Number 231 CHAIRMAN VEZEY commented there is also a lot of real property in the state which is in the same dilemma. He asked MS. WALKER if it was her testimony that at this time a title does not guarantee who the owner is? Number 238 MS. WALKER replied, on the surface a title does not. Number 240 CHAIRMAN VEZEY clarified owners, sellers, and operators of mobile home parks need a system to provide a chain of title. Number 244 MS. WALKER agreed. Number 248 CHAIRMAN VEZEY stated ROD HULSE, SWITZER VILLAGE, deferred his testimony, but he was available to testify. Number 257 KATE CAMPBELL, RESIDENT of CHURCHILL WAY MOBILE HOME PARK, testified in favor of CSHB 358. She would like an effective title system which would give security to title owners. She gave an example of her and her husband's own personal experience in buying a mobile home. After they bought their home, they looked for a title transfer. The seller, however, stated the title had been stolen. They have had a very difficult time trying to locate an agency to receive an official title from file. They could only get a computer printout from the Juneau Division of Motor Vehicles (DMV), which stated the seller really did own the mobile home, and after two tries, has now received a legal bill of sale. MS. CAMPBELL would like an official record of the title change and would prefer a computer record at the DMV. She was surprised at the increase in of the fee from $50 to $100. Number 344 CHAIRMAN VEZEY suggested MS. CAMPBELL talk to an attorney to protect her property investment. MS. CAMPBELL preferred to not seek an attorney's help. Number 355 REPRESENTATIVE OLBERG clarified that CHAIRMAN VEZEY was suggesting MS. CAMPBELL should seek an attorney because of the degree of the situation she is in. Number 360 CHAIRMAN VEZEY pointed out there are many options available to protect an ownership interest. CHAIRMAN VEZEY introduced JUANITA HENSLEY, DMV, and asked her if the DMV believes it is a proper function of DMV to act in this role? Number 377 JUANITA HENSLEY, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY, answered questions on CSHB 358. She responded the DMV suggested with the Governor's 1992 Omnibus bill to delete the titling of mobile homes. DMV felt mobile homes were a function of real property, and should be treated as such, as opposed to a vehicle. In meeting with REPRESENTATIVE PORTER and others over the problems in obtaining the proper documentation on mobile homes they agreed, providing the burden was not placed on the DMV and the program would pay for itself, the DMV would reissue titles to mobile homes. During this period there were title searches through a real estate title search and the Recorder's Office was having to do extensive research as well in UCC filings. DMV had requested mobile home titling be deleted from the statute, in 1992, because titling was not required by the owners. There was an immense amount of research to go through, especially in cases where ownership may have changed 4-5 times. Past files had even been purged from the filing system making the process very labor intensive. Prior to the mandate, as proposed in HB 408, DMV issued approximately 200 mobile home titles a year. DMV estimates it would issue 2,500 titles, based on information from the industry. This figure includes the 1,500 new units sold per year statewide by the industry, plus an additional 1,000 from individuals who may sell theirs. DMV suggested the $100 fee believing it would not be too costly, because it would cost more to go through the UCC filing, and also title searches through a real estate company. MS. HENSLEY's fiscal note indicates CSHB 358 would bring in $250,000 a year in revenue, at an operating cost of $110,000 to the state. DMV has no objection to titling mobile homes as long as it pays for itself. Number 430 CHAIRMAN VEZEY inquired if the DMV had to do a UCC search to issue a title. MS. HENSLEY responded that the DMV does not do a UCC search. DMV offers a title based on a bill of sale or, if the vehicle is new, documentation from a bank or a manufacturer's certificate of origin. Whenever that vehicle is sold the owner would then be required to change titles just as motor vehicles do. Number 439 CHAIRMAN VEZEY did not feel his constituents, of which many live in mobile homes, would like him to pass a bill which would require them to go in and title their home. He asked if mobile homes were considered as real property if they were sold in improvement to real property. MS. HENSLEY could not answer if mobile homes were treated as real estate property or not. Number 449 CHAIRMAN VEZEY clarified real property refers to the fee simple, a stake in land, and the improvements thereon. He felt CSHB 358 would require a lot of people to have to go and buy a title, when they may have already gone through the recording process for real property. Number 457 MS. HENSLEY was not familiar with the requirements for leans by financial institutions for real property, when a mobile home is set on it. Number 462 CHAIRMAN VEZEY asked if MS. HENSLEY was including UCC agreements, in the category of leans, on mobile homes. Number 464 MS. HENSLEY responded the DMV made the suggestion to the Governor's Omnibus bill because if, for example, a person bought a boat, a UCC filing lean would be required if it is financed. A person would have to pay a filing fee for banks to file a UCC lean on the boat. DMV used to do an immense amount of research. Number 474 CHAIRMAN VEZEY asked the cost of filing or recording a UCC agreement, deed, or bill of sale. He believed it was $10. Number 479 MS. HENSLEY answered, according to information from REPRESENTATIVE PORTER's office, titling through the DMV would be more cost effective to the owners, even at $100. Number 497 CHAIRMAN VEZEY asked why it costs more to record an ownership transaction dealing with real property, than dealing with vehicle property and titles. Number 500 MS. HENSLEY responded real estate companies would require full land recorder title searches and UCC title searches even on mobile homes. Number 514 CHAIRMAN VEZEY clarified DMV could title mobile homes cheaper than the private sector in conjunction with the Recorder's Office. He thought the DMV might be presumptuous in their cost expectations and did not feel the cost of the private sector was fair in comparison to the DMV. Number 526 MS. HENSLEY felt the DMV was efficient and information received back from the sponsor, from a meeting last summer with other legislators and their constituents, regarding mobile home owners and dealers, they felt it was very costly to continue the current process of title acquirement. Number 535 REPRESENTATIVE OLBERG stated the 1,500 new units sold per year would take five minutes for the DMV, noting the efficiency. The 1,000 used mobile home sales per year, everyone who already has a title without too many changes of ownership, would still be relatively simple. There will be some titles extremely complicated. He pointed out UCC searches and title searches are expensive. Number 545 CHAIRMAN VEZEY stated the amount of money spent in insuring land through searches is much more guaranteed than a title received by DMV. He thought a type of insurance policy which guarantees a mobile home title might be helpful. MS. HENSLEY responded a guarantee is not available for mobile home owners. Number 560 CHAIRMAN VEZEY thought the guarantee was available if they own the land the improvement sits on. A mobile home on rented space would not have this option. Number 562 MS. HENSLEY commented, in the municipality of Anchorage, they show 4,884 mobile homes in parks where the land is not usually owned. Fairbanks Community Research Center advised they have 2,268 mobile homes in mobile home parks. Number 570 REPRESENTATIVE OLBERG clarified when a mobile home becomes permanently attached to the ground by foundation on a specific piece of land, it is no longer a mobile home. Number 575 CHAIRMAN VEZEY believed a title company would not issue title insurance unless the owner also had a fee simple interest in the property where the improvement sits. REPRESENTATIVE OLBERG agreed, but the mobile home would only be an improvement and would not relate to the property title. Number 581 MS. HENSLEY pointed out every mobile home without a title, under CSHB 358, would have to get one. She did not have the exact number, and offered CHAIRMAN VEZEY could revise the total cost of the title down further. DMV suggested the $100 fee to pay for the process. New and used mobile home sales, 2,500 per year, would be the focus of the DMV. Number 591 REPRESENTATIVE G. DAVIS stated the large amount of mobile home owners in certain districts was of concern to him. He clarified these owners would not have to rush down and get titles. CSHB 358 states the DMV shall issue a certificate of title to the owner upon application and payment. If an owner wanted to sell their mobile home, a guarantee of ownership could be acquired at the DMV. Number 599 CHAIRMAN VEZEY pointed out CSHB 358 is "an Act requiring" a mobile home owner. CSHB 358 does not distinguish between those renting a space or those who own the property. Number 601 REPRESENTATIVE OLBERG sensed his constituents would not all rush down to obtain a title. He felt the vast majority of mobile homes probably do have titles, because it's been less than a year since the program was in effect. Number 612 CHAIRMAN VEZEY stated mobile homes in his district have sold numerous times, without the proper transfer of titles. In- depth research would be involved. Seeing no more testimony from MS. HENSLEY, CHAIRMAN VEZEY let MS. WALKER readdress the committee. Number 627 MS. WALKER asked MS. HENSLEY if it would be possible to set up some kind of fee scheduling, whereby those requiring less research could pay a lesser amount. Number 635 CHAIRMAN VEZEY answered anything was possible and a subcommittee would be formed to create a bill of useful commercial purpose, and not offensive to the public. CHAIRMAN VEZEY asked MR. LOUNSBURY to join the table. The committee understands the intent of CSHB 358. CHAIRMAN VEZEY suggested a subcommittee be formed and MR. LOUNSBURY be a part of it. He would like to meet with those knowledgeable of the legal ramifications of establishing ownership. MR. LOUNSBURY stated, in reference to CHAIRMAN VEZEY's constituents, that he was informed by staff of Les Fickes, Riverview Mobile Home Park Owner, that he would be in favor of a bill like CSHB 358. MR. LOUNSBURY said he had no objection with forming a subcommittee. Number 666 CHAIRMAN VEZEY knew both Mr. Fickes and Mr. Rahoy who own mobile parks in his districts, but believed there was a general lack of understanding in commercial standards and legality of ownership. He thought the committee should have "an expanded picture." Number 674 REPRESENTATIVE OLBERG thought "when ownership changes" could be added to the title of the CSHB 358. Number 679 CHAIRMAN VEZEY responded this change would make CSHB 358 more palatable. He pointed out those who buy and sell real property are not required to record their transactions. Number 683 REPRESENTATIVE OLBERG thought the requirement would also not be 100 percent complied with, either. Number 684 REPRESENTATIVE G. DAVIS proposed the title might be changed to read, "An Act relating to a mobile home owner to obtain," instead of, "requiring." He noted "requiring" is the word the committee is having problems with. Number 689 CHAIRMAN VEZEY stated the original bill is "An Act allowing a mobile home owner." Number 691 REPRESENTATIVE OLBERG liked the original title better, but questioned the concern that it was too broad. Number 692 REPRESENTATIVE KOTT inquired if the was a companion Senate Bill in the Senate presently. Number 698 CHAIRMAN VEZEY paused the committee to change the tape. TAPE 94-21, SIDE A Number 000 CHAIRMAN VEZEY resumed the meeting. Number 002 REPRESENTATIVE G. DAVIS felt eliminating the word "requiring" would satisfy his concerns with CSHB 358. There will always be those individuals who do not follow the transfer process. He moved page 1, line 1, to read, "An Act relating to a mobile home owner to obtain a title." Number 034 CHAIRMAN VEZEY interjected he could entertain the motion, however, he would like more testimony on CSHB 358 before it is passed out of committee. He did agree flexibility needed to be created in CSHB 358. CHAIRMAN VEZEY stated CSHB 358 would be rescheduled in the near future. REPRESENTATIVE G. DAVIS withdrew his motion. Number 054 REPRESENTATIVE KOTT commented the subcommittee should also examine the fee schedule. He believed 2,500 titles at $45 would cost $112,000, which would be more appropriate. Number 063 CHAIRMAN VEZEY referred to the time, risk and liability, involved in doing title searches as MS. HENSLEY had mentioned. He noted a title search could not be bought for $100 for property. Number 079 REPRESENTATIVE KOTT commented there may be constitutional problems in varying the fees for those requiring less research. Number 088 CHAIRMAN VEZEY felt if a person could establish qualified ownership and have it recorded for posterity, then a $100 fee would not be unreasonable. CSHB 358 was held in committee to be rescheduled. Number 119 SB 128 - LEGISLATIVE AUDITS REPRESENTATIVE KOTT moved to reopen SB 128 for the purpose of discussing it and moving it out of committee. SB 128 deals with the Office of Management and Budget (OMB) and provides they be responsible for implementation of discrepancies discovered in recommendations made by Legislative Budget and Audit. CHAIRMAN VEZEY agreed to discussion, but he was not prepared to move it out of committee yet. He found the fiscal notes not realistic and the costs needed to be investigated more. Number 139 REPRESENTATIVE KOTT withdrew his motion to reopen SB 128. HB 392 - PERMANENT FUND DIVIDEND PROGRAM CHAIRMAN VEZEY opened the discussion on the new Version O, dated 3/3/94 of committee substitute (CS) for HB 392. The amendments to the CS allow exemptions for individuals outside the state receiving medical treatment and individuals outside the state accompanying a minor who is receiving medical treatment. Number 167 RICHARD VITALE clarified the CS, presently before the committee, is the final version according to the Permanent Fund Dividend Division. Number 172 CHAIRMAN VEZEY understood the committee could take action on the CS for HB 392 if the committee desires. Under the current CS for HB 392, the only persons who would be eligible for a dividend under category 9, if absent from the state for 180 days a year, or five years or more, would be a member of the U.S. Congress from Alaska. Number 208 REPRESENTATIVE OLBERG stated on page 5, line 8, allows absences under categories 7-9. Number 216 CHAIRMAN VEZEY clarified category number 9 is serving as a member of the United States Congress. An absence under categories 7-9 is a waiver of the five year line. Number 227 REPRESENTATIVE G. DAVIS moved to adopt Version O, dated 3/3/94 of CSHB 392, to the House State Affairs Committee. Number 240 CHAIRMAN VEZEY recognized the motion, the secretary called the roll, and the CSHB 392 was adopted by the House State Affairs Committee. Number 245 REPRESENTATIVE G. DAVIS moved CSHB 392 be passed from committee with individual recommendations. Number 250 CHAIRMAN VEZEY recognized the motion, the committee secretary called the roll, and CSHB 392 was passed from the House State Affairs Committee with individual recommendations. Having no more business before the committee, CHAIRMAN VEZEY adjourned the meeting at 9:54 a.m.