Legislature(1993 - 1994)
04/18/1994 08:00 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE April 18, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice-Chairman Representative Gary Davis Representative Harley Olberg Representative Fran Ulmer MEMBERS ABSENT Representative Bettye Davis Representative Jerry Sanders COMMITTEE CALENDAR HJR 53: Proposing amendments to the Constitution of the State of Alaska relating to the length of a regular session and establishing a unicameral legislature; and providing for an effective date for each amendment. MOVED FROM COMMITTEE WITH NO RECOMMENDATIONS HJR 51: Requesting the governor to file suit in the United States Supreme Court against the United Sates government alleging violations of the civil rights of Americans listed as prisoners of war or missing in action in Southeast Asia; and requesting the other states to join in this suit." MOVED FROM COMMITTEE AS CSHJR 51(STA) WITH DO PASS RECOMMENDATIONS *HCR 33: Requesting the governor to offer the United States Congress $10,000,000,000 in cash, or other terms that may be negotiated between the state and the federal government, to purchase all federal land, water, or land and water, including any surface or subsurface interests, in Alaska other military reservations and federal offices, to have the federal government relinquish all dominion, control, and regulatory authority over all land, water, or land and water, including surface or subsurface interests, in Alaska other than military reservations and federal offices, and providing a bonus if certain federal agencies are removed from the state within six months of the federal sale to the state and relinquishment of control. HELD IN COMMITTEE SB 342: "An Act relating to risk based capital for insurers; and providing for an effective date." HELD IN COMMITTEE SB 355: "An Act relating to errors in surveys of land." HELD IN COMMITTEE (*First public hearing) WITNESS REGISTER REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Alaska State Capitol, Room 501 Juneau, AK 99811-0460 Phone: 465-3743 POSITION STATEMENT: Sponsor of HJR 51 DAVID WALSH, Director Division of Insurance Department of Commerce & Economic Development P.O. Box 110805 Juneau, AK 99811-0805 Phone: 465-2515 POSITION STATEMENT: Addressed CSSB 342 JOHN GEORGE American Council on Life Insurance National Association of Independent Insurers 9515 Moraine Way Juneau, AK 99801 Phone: 789-0172 POSITION STATEMENT: Supported CSSB 342 KATIE CAMPBELL, Life & Health Actuary Division of Insurance Department of Commerce & Economic Development P.O. Box 110805 Juneau, AK 99811-0805 Phone: 465-2515 POSITION STATEMENT: Answered questions on CSSB 342 ANNE RINGSTAD, Staff Senator Steve Rieger Alaska State Capitol, Room 516 Juneau, AK 99811 Phone: 465-3879 POSITION STATEMENT: Addressed SB 355 for Senator Steve Rieger, Sponsor PREVIOUS ACTION BILL: HJR 53 SHORT TITLE: UNICAMERAL LEGISLATURE/SESSION LIMIT SPONSOR(S): REPRESENTATIVE(S)GREEN,Navarre, Brown,Bunde,Mulder,Hudson,Sitton JRN-DATE JRN-PG ACTION 02/04/94 2255 (H) READ THE FIRST TIME/REFERRAL(S) 02/04/94 2255 (H) STATE AFFAIRS,JUDICIARY,FINANCE 04/16/94 (H) STA AT 08:00 AM CAPITOL 102 04/16/94 (H) MINUTE(STA) BILL: HJR 51 SHORT TITLE: SUIT RE POWS & MIAS AGAINST U.S. & OTHERS SPONSOR(S): REPRESENTATIVE(S) JAMES,Therriault, Martin,Mulder,Hudson JRN-DATE JRN-PG ACTION 01/19/94 2108 (H) READ THE FIRST TIME/REFERRAL(S) 01/19/94 2109 (H) MLV, STATE AFFAIRS 02/09/94 2327 (H) COSPONSOR(S): MARTIN, MULDER 02/10/94 (H) MLV AT 05:00 PM CAPITOL 17 02/10/94 (H) MINUTE(MLV) 02/22/94 2474 (H) MLV RPT CS(MLV) 3DP 1NR 02/22/94 2475 (H) DP: MULDER, KOTT, FOSTER 02/22/94 2475 (H) NR: NAVARRE 02/22/94 2475 (H) -INDETERMINATE FISCAL NOTE (LAW) 2/22/94 02/22/94 2475 (H) REFERRED TO STATE AFFAIRS 02/22/94 2484 (H) FIN REFERRAL ADDED 03/28/94 3028 (H) COSPONSOR(S): HUDSON 04/16/94 (H) STA AT 08:00 AM CAPITOL 102 04/16/94 (H) MINUTE(STA) BILL: HCR 33 SHORT TITLE: PURCHASE FEDERAL LAND FROM THE U.S. SPONSOR(S): STATE AFFAIRS JRN-DATE JRN-PG ACTION 03/29/94 3050 (H) READ THE FIRST TIME/REFERRAL(S) 03/29/94 3050 (H) STATE AFFAIRS 04/18/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 342 SHORT TITLE: RISK BASED CAPITAL FOR INSURERS SPONSOR(S): LABOR & COMMERCE BY REQUEST JRN-DATE JRN-PG ACTION 03/03/94 3057 (S) READ THE FIRST TIME/REFERRAL(S) 03/03/94 3057 (S) LABOR & COMMERCE, JUDICIARY 03/15/94 (S) L&C AT 01:30 PM FAHRENKAMP ROOM 203 03/18/94 3266 (S) L&C RPT CS 1DP 3NR SAME TITLE 03/18/94 3266 (S) ZERO FN TO SB & CS (DCED) 04/06/94 (S) JUD AT 01:30 PM BELTZ ROOM 211 04/08/94 (S) RLS AT 00:00 AM FAHRENKAMP ROOM 203 04/08/94 3523 (S) JUD RPT 3DP 2NR (L&C)CS 04/08/94 3523 (S) PREVIOUS ZERO FN (DCED) 04/11/94 3556 (S) RULES RPT 3CAL 1NR 4/11/94 04/11/94 3561 (S) READ THE SECOND TIME 04/11/94 3561 (S) L&C CS ADOPTED UNAN CONSENT 04/11/94 3561 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/11/94 3561 (S) READ THE THIRD TIME CSSB 342(L&C) 04/11/94 3562 (S) PASSED Y19 N1 04/11/94 3562 (S) EFFECTIVE DATE SAME AS PASSAGE 04/11/94 3562 (S) Adams NOTICE OF RECONSIDERATION 04/12/94 3609 (S) RECON TAKEN UP-IN THIRD READING 04/12/94 3610 (S) PASSED ON RECONSIDERATION Y18 N1 A1 04/12/94 3610 (S) EFFECTIVE DATE SAME AS PASSAGE 04/12/94 3611 (S) TRANSMITTED TO (H) 04/13/94 3400 (H) READ THE FIRST TIME/REFERRAL(S) 04/13/94 3400 (H) STATE AFFAIRS, JUDICIARY 04/18/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 355 SHORT TITLE: ADJUSTMENTS FOR DEFECTIVE SURVEY SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS JRN-DATE JRN-PG ACTION 03/10/94 3149 (S) READ THE FIRST TIME/REFERRAL(S) 03/10/94 3149 (S) CRA, RES 03/15/94 (S) CRA AT 9:00 AM BUTROVICH RM 205 03/15/94 (S) MINUTE(CRA) 03/16/94 3241 (S) CRA RPT 1DP 2NR 03/16/94 3241 (S) ZERO FISCAL NOTE PUBLISHED (DCRA) 03/30/94 (S) RES AT 3:30 PM BUTROVICH RM 205 03/31/94 3425 (S) RES RPT CS 3DP 1NR SAME TITLE 03/31/94 3425 (S) PREVIOUS ZERO FN APPLIES (DCRA) 04/07/94 (S) RLS AT 09:00 AM FAHRENKAMP ROOM 203 04/11/94 3556 (S) RULES TO CALENDAR 4/11/94 04/11/94 3562 (S) READ THE SECOND TIME 04/11/94 3562 (S) RES CS ADOPTED UNAN CONSENT 04/11/94 3562 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/11/94 3562 (S) READ THE THIRD TIME CSSB 355(RES) 04/11/94 3563 (S) PASSED Y15 N5 04/11/94 3567 (S) TRANSMITTED TO (H) 04/12/94 3367 (H) READ THE FIRST TIME/REFERRAL(S) 04/12/94 3367 (H) STATE AFFAIRS, RESOURCES 04/18/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-49, SIDE A Number 000 CHAIRMAN AL VEZEY called the meeting to order at 9:05 a.m. The meeting had been delayed from 8 to 9 o'clock due to a lack of a quorum. Members present were REPRESENTATIVES KOTT, G. DAVIS and OLBERG. HJR 53 - UNICAMERAL LEGISLATURE/SESSION LIMIT CHAIRMAN VEZEY, under bills previously heard, opened HJR 53. He noted the committee did not have a quorum at the April 16 meeting when it voted to move HJR 53 from committee. Therefore, for technical reasons, the vote would be taken again. CHAIRMAN VEZEY asked for a motion to move HJR 53 with individual recommendations and attached House State Affairs Committee fiscal note. REPRESENTATIVE HARLEY OLBERG so moved. CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, G. DAVIS, OLBERG. OPPOSED: REPRESENTATIVE KOTT. ABSENT: REPRESENTATIVES B. DAVIS, SANDERS, ULMER. MOTION FAILED HJR 51 - SUIT RE POWS & MIAS AGAINST U.S. & OTHERS Number 045 CHAIRMAN VEZEY, under bills previously heard, opened CSHJR 51 for discussion. He stated a the committee had a committee substitute prepared reflecting the amendments adopted April 16. CSHJR 51(STA) was before the committee. REPRESENTATIVE GARY DAVIS commented page 1, line 9, had been one of his concerns in the CSHJR 51(MLV). The language was changed. REPRESENTATIVE OLBERG noted page 1, line 12, the general's name was corrected to read "Kwang." He directed to the letter from the American Legion in the packet and said the four suggested amendments at the bottom had been adopted. Number 092 REPRESENTATIVE PETE KOTT asked if there had been discussion on April 16 as to what the Administration has done that would imply the state has taken this position. He referred to page 1, line 9. CHAIRMAN VEZEY answered he did not believe there was not anything indicating the U.S. government had taken this position. The phrase "implied" was inserted because he believed they had not taken an official position on the disposition of all POWs. REPRESENTATIVE KOTT commented general use of "implied" is the result of some type of action. He felt CSHJR 51 was saying the governmental action was in fact inaction. CHAIRMAN VEZEY clarified the committee interpreted "implied" is default, and not saying otherwise. (REPRESENTATIVE OLBERG left the meeting at 9:11 a.m.) Number 134 REPRESENTATIVE G. DAVIS directed to page 2, line 15, reading "WHEREAS the executive branch of the federal government has not even attempted to negotiate the release of Americans that may still be held in Southeast Asia and is not actively searching for remaining Americans;..." He was not comfortable agreeing with this statement, unless it was in fact the case. This was the amended language. (REPRESENTATIVE OLBERG rejoined the meeting at 9:12 a.m.) REPRESENTATIVE JEANNETTE JAMES, SPONSOR OF CSHJR 51, join the committee table to answer questions. She responded she did not know if there was justification for the statement on page 2, line 15. The problem is that when HJR 51 began certain conditions existed; however, there has been a lot of pressures since then. She had no objection to making the language more gentle. CHAIRMAN VEZEY responded the simplest way to do it would be to extricate it. REPRESENTATIVE JAMES stated from what she had heard in the news, the U.S. government is saying the search is over. She noted there had been testimony, however, which indicated some people were there looking for remains. They are not looking for live people only remains, according to the news. REPRESENTATIVE JAMES said as a side note there had not been testimony from Fairbanks on April 16 because the Legislative Information Office had been closed. Anchorage was also. (REPRESENTATIVE ULMER joined the meeting at 9:15 a.m.) CHAIRMAN VEZEY noted REPRESENTATIVE ULMER's arrival. Number 231 REPRESENTATIVE G. DAVIS moved to delete page 2, lines 15, 16 and 17. CHAIRMAN VEZEY, hearing no objection, passed the motion. REPRESENTATIVE KOTT observed page 1, line 9, and conveyed "implied" would be satisfactory to use. REPRESENTATIVE G. DAVIS clarified he understood "implied" meant implied by the makers of the resolution. CHAIRMAN VEZEY added he interpreted "implied" as it is implied to whomever wanted to listen. Not stated, but implied. REPRESENTATIVE KOTT agreed. He mentioned, based on the WHEREAS clause on page 2, lines 4-8, the committee could use the word "implied." There is an implication based on federal intelligence agencies. CHAIRMAN VEZEY indicated another committee substitute would have to be drawn up; however, he would consider a motion to move CSHJR 51(STA) reflecting the amendment out of committee. He emphasized it was very late in the session and he was sure it would not get another committee hearing. REPRESENTATIVE G. DAVIS moved to pass CSHJR 51(STA), as amended, from committee with individual recommendations. CHAIRMAN VEZEY, hearing no objection, passed the motion. MOTION PASSED Number 299 REPRESENTATIVE G. DAVIS moved to rescind the committee's action on HJR 53, whereby it failed to pass it from committee. REPRESENTATIVE KOTT objected. CHAIRMAN VEZEY clarified the motion to rescind is not correct, as long as a motion to reconsider is available. Therefore, he ruled the motion to rescind out of order. REPRESENTATIVE G. DAVIS could move to reconsider. REPRESENTATIVE G. DAVIS moved to reconsider HJR 53. REPRESENTATIVE KOTT said he maintained his objection. He said he voted against moving HJR 53 from committee because it has two additional committee referrals, one of which is Judiciary. Being so late into the session he assured the committee, as a member of Judiciary, HJR 53 would not be heard. He emphasized Judiciary has already addressed the unicameral legislature and regular session length, therefore it would be frivolous for Judiciary to deal with the issue again. CHAIRMAN VEZEY added he did not think "anyone at the table had illusions of HJR 53 becoming law." The passage was a gesture on the committee's part. REPRESENTATIVE G. DAVIS said he did not disagree with either REPRESENTATIVE KOTT or CHAIRMAN VEZEY; however, he wanted to be a part of supporting HJR 53 and moving it out of committee. CHAIRMAN VEZEY reiterated the motion to reconsider. He asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, ULMER, G. DAVIS, OLBERG. OPPOSED: REPRESENTATIVE KOTT. ABSENT: REPRESENTATIVES B. DAVIS, SANDERS. MOTION PASSED HCR 33 - PURCHASE FEDERAL LAND FROM THE UNITED STATES Number 345 CHAIRMAN VEZEY opened HCR 33 for discussion. He noted the committee had been waiting for the companion bill in the Senate to come over. He said HCR 33 is calling for the governor to offer the U.S. $10 billion for the federal government's interest in Alaska. REPRESENTATIVE FRAN ULMER commented $10 million would be a great deal, but she was not so sure about $10 billion. CHAIRMAN VEZEY, hearing no more comments, held HCR 33 in committee. (REPRESENTATIVE G. DAVIS left the meeting at 9:27 a.m. to testify on a bill in Finance Committee.) SB 342 - RISK BASED CAPITAL FOR INSURERS Number 370 CHAIRMAN VEZEY opened CSSB 342 for discussion. DAVID WALSH, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT (CED), addressed CSSB 342. He began CSSB 342 is a companion bill to HB 514, which State Affairs has already heard. He said CSSB 342 provides a new system for calculating the solvency of insurance companies. The old law is a "one size fits all" template that is used on companies as large as Allstate and as small as the Alaska Timber Exchange. With the sophistication of financial products and the diversification of assets of all financial institutions over the last 10 years arises the need for a new system. MR. WALSH explained the new formula calculates the various risk, (e.g., asset, underwriting, etc...) that an individual insurance company undertakes. Insurance companies insure different types of people and things, therefore the reserving each company must do is different based upon their asset risk. Likewise their investment risk. Alaskan domestic companies are conservative and tend to invest in T bills, which are very safe with low risk. Other companies tend to invest in higher risk items. Under the old system, each type of company got equal credit on their financial statement for the value of those assets, regardless of where they were invested. Risk based capital would weight them. MR. WALSH stated risk based capital has been worked out on a national basis for the last 5-6 years. Contributors were insurance commissioners with input from consumer groups and also from the industry. CED is very pleased with CSSB 342. MR. WALSH expressed Alaskan companies would be able to expand their distribution of money, and hopefully provide better coverage at lower cost. At 100 percent of risk based capital CED must take the company over, at 150 percent they must have a rehabilitation plan, at 200 CED works out a voluntary way to bring the company back into good health. He said the average solid company in the U.S. has a risk based capital number around 485-500. The 10 Alaska domestic companies range from 934-24,000. Therewith, Alaska has very small conservatively run companies. This value has not been apparent under the old system, however, it would be under the new. He noted CSSB 342 would hopefully result in premium decrease which will make Alaskan companies much more competitive with outside companies who are competing for the same risk. MR. WALSH stated CSSB 342 passed the Senate, 19-1. CED noticed as it passed through there was one additional change they wanted to make. He referred to page 2 where it states whatever system is passed must be substantially similar to that passed by the National Association Insurance Commissioners. He recommended the committee delete this sentence because the sentence is redundant, and they have jealously guarded both the legislative and administrative prerogative to tailor the national models for what is best for the Alaskan marketplace. With its removal, the emphasis would be put on the establishment of risk based capital instructions by regulation in the state, and for the state. Number 445 CHAIRMAN VEZEY mentioned he was surprised because he had only received one letter of support from an insurance company on this issue. MR. WALSH said he felt likewise. He said he talked with the CEOs or the representatives of probably a half dozen of Alaska's domestic companies and they all said they were in support and would contact the committee. CHAIRMAN VEZEY explained he did not solicit their input. He said he thought SB 342 was an "absolutely outstanding idea" for encouraging competition to come into Alaska and improve the options available to customers. He noted it would be the most major change in insurance since statehood. MR. WALSH agreed, one of them. CHAIRMAN VEZEY further stated he thought they should use a slow approach. He reiterated his concern for little input even from those outside Alaska. MR. WALSH responded everyone on a nationwide basis is "delighted" with CSSB 342. CSSB 342 provides regulators with a much better tool to identify a company as they start to descend and to intervene. He noted the overwhelming majority of the 6,000 insurance companies in the U.S. are not in any trouble at all. The new formula would merely allow everyone to see how strong the companies are. Number 481 JOHN GEORGE, AMERICAN COUNCIL OF LIFE INSURANCE, NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, answered questions on CSSB 342. He explained he had not signed up to testify because he wanted to stay out of the way, thereby expediting CSSB 342 from committee faster. He stated they feel CSSB 342 is good solid regulation and urge its passage. CHAIRMAN VEZEY reiterated his concern about the lack of input because he felt CSSB 342 to be a major piece of legislation. MR. GEORGE agreed. They were trying to stay out of the way because the director was tending to it. He said if they had opposed CSSB 342, they would have made efforts to make amendments or kill it. CHAIRMAN VEZEY observed people think CSSB 342 is more positive than negative. He would like both sides of the story. MR. GEORGE commented the companies he represents are not Alaska domestic companies, they do business on a national basis and are basically domiciled in another state. He believed CSSB 342 would have the greatest impact on Alaska domestics. He has not heard any opposition. CHAIRMAN VEZEY noted CSSB 342 came up fairly late in the session, therefore he was not sure if they should rush into it. He considered waiting for the next legislative session to move it through then. REPRESENTATIVE ULMER questioned if CSSB 342 had another referral. MR. WALSH answered CSSB 342 would be referred to Judiciary next; however, they have indicated they will waive it. He noted REPRESENTATIVE GENE THERRIAULT had heard HB 514 in Labor & Commerce and was supportive. REPRESENTATIVE ULMER noted if CSSB 342 passed with 19 `yes' votes in the Senate it was a fairly good indication there is not a problem it. She stated the packet does not show opposition and there is potential for significant benefit for Alaskans, therefore, she was ready to pass CSSB 342 out of committee. CHAIRMAN VEZEY replied significant risk comes with significant benefits. Number 528 REPRESENTATIVE OLBERG moved to delete on page 2, lines 18, 19 and 20 of CSSB 342(L&C), as recommended by MR. WALSH. CHAIRMAN VEZEY stated a another committee substitute had been prepared reflecting the proposed amendment. REPRESENTATIVE OLBERG, therefore, moved to adopt the House CS for CSSB 342(STA), version J, for purposes of discussion. CHAIRMAN VEZEY, hearing no objection, adopted the HCS for CSSB 342(STA). He recalled MR. WALSH to the table for questions. He questioned MR. WALSH'S reference to the state taking over at 100 percent, whereby he had thought the bill mentioned 70 percent. Number 565 KATIE CAMPBELL, LIFE & HEALTH ACTUARY, DIVISION OF INSURANCE, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT, answered CHAIRMAN VEZEY. She clarified 70 percent was the mandatory control event. MR. WALSH corrected himself and said the formula is based upon 100 percent calculation of risk based capital and 70 percent is the mandatory takeover. CHAIRMAN VEZEY clarified the mandatory control level is 70 percent. MS. CAMPBELL stated the first level where the director is required to take action is at the regulatory action level. This means the company action the company has to take. CHAIRMAN VEZEY clarified the regulatory action event was at 150 percent. MS. CAMPBELL said correct. She noted 200 percent is where the company has to file a financial plan of action. MR. WALSH explained one of the problems with the current formula is that it is subject to varying interpretations. He gave the example of Executive Life, whereby there was serious debate as to whether or not the company was "underwater" when it was taken over. Some argue it was "underwater" a year earlier. MR. WALSH expressed risk based capital sets up a fair and more certain formula. There is no question that at 200 percent of risk based capital the company must come into the regulator with a plan. This plan is then shared with all the regulators from the states in which that company writes. If the company continues descent to 150 percent, some regulatory action is required. CED would put in a plan. When the company reaches the mandatory 70 percent level, CED shuts the company down. There would be no debate as there has been with Executive Life. He noted the failure of the old system with Executive Life provided the impetus to resolve a better system. Number 609 CHAIRMAN VEZEY observed the formula, which was not before him, was a rather complex algorithm of accounting evaluation. MR. WALSH affirmed CHAIRMAN VEZEY. He had attended numerous meetings with experts and has confidence in the formula. He said he does not have the educational background or capability to explain in any form other than the most general policy terms. CHAIRMAN VEZEY asked MR. GEORGE to join the table again. He inquired who MR. GEORGE was representing. MR. GEORGE answered the American Council of Life Insurance (ACLI), a trade association of life insurance companies, and the National Association of Independent Insurers (NAII), a property/casualty insurance company trade association. He noted Allstate, USAA, Progressive and Nationwide. CHAIRMAN VEZEY clarified he did not represent major carriers such as Great Northwest, Aetna, Blue Cross and Willis Corroon, within the state. MR. GEORGE replied Aetna is a member of the ACLI. Major property/ casualty insurance companies such as the Firemen's Fund, Aetna Property & Casualty and Continental Casualty, are not members of the NAII. He noted a large portion of the property insurance in the state is written by the NAII. Members of the ACLI write virtually all of the life and health insurance in Alaska. CHAIRMAN VEZEY explained there is an imposed deadline of April 20 for moving Senate Bills, therefore, he would hold HCSCSSB 342 in committee because he did not feel comfortable with it yet. He would like assurance from the industry. Number 643 REPRESENTATIVE ULMER asked CHAIRMAN VEZEY to identify which companies he would like to hear from. MR. GEORGE stated he did not represent any of the domestic companies such as Alaska National, and others formed in the state of Alaska. CHAIRMAN VEZEY asked if MR. GEORGE was referring to the underwriters as opposed to the brokers. MR. GEORGE clarified he did not represent the brokers. CHAIRMAN VEZEY asked for names of the some of the underwriters he did not represent. MR. GEORGE answered Firemen's Fund, Industrial Indemnity and Aetna Property & Casualty. He noted there are major companies on the national basis he did represent, however, he had not heard opposition from them. Those companies would be members of the American Insurance Association, which does have a lobbyist. He assumed if they were in opposition they would have been present. CHAIRMAN VEZEY stated he believed the committee should move with due deliberation because of the complex subject matter. CSSB 355 - ADJUSTMENTS FOR DEFECTIVE SURVEY Number 690 CHAIRMAN VEZEY opened CSSB 355, sponsored by Senate Community & Regional Affairs, for discussion. TAPE 94-49, SIDE B Number 000 ANNE RINGSTAD, STAFF, SENATOR STEVE RIEGER, addressed CSSB 355. She stated CSSB 355 provides that a person or a local governing body, upon the resolution of a local governing body can request a resurvey and replat of a manifestly defective survey of subdivision lines, and subsequent changes in individual lots through Superior Court action. CSSB 355 provides a remedy for grossly incorrect subdivision surveys. MS. RINGSTAD indicated the municipality of Anchorage requested CSSB 355 to correct two manifestly defective surveys in the Anchorage area, although it applies to surveys statewide. She stated CSSB 355 is the only practical solution to offer assistance to property owners in correcting this defect and establish their ownership status. The municipality of Anchorage has recently changed their municipal ordinances to include a special assessment district for resurvey and replatting of manifestly inaccurate surveys of record. They are also in the process of petitioning the property owners of record of two particular subdivisions. She stated by this legislation they must also pass a resolution supporting this action before any action can be taken. The cost of the resurvey will be allocated by the court and could be on a per lot, or mil basis. MS. RINGSTAD mentioned the municipality of Anchorage, William Mendenhall, Patrick Kalen, and various land title companies support CSSB 355. MS. RINGSTAD commented she understood, from their constituents in the subdivisions, that about 20 years ago there was a very notorious surveyor, who has since left the state. He surveyed the outside subdivision lines of the properties, thereby manifestly incorrect. Therefore, there are about 300 lots in those two subdivisions that cannot claim clear title until the matter is resolved. She noted, in some cases, the property lines are 20 feet off. CHAIRMAN VEZEY expressed there is nothing new about that occurrence because it happens everyday. He stated there is nothing in CSSB 355 that cannot be accomplished under existing law. Therefore, why incorporate defective surveys into a statute that "equates to acts of God." He commented there have been defective surveys in the matters of equity for going on 4,000 years. The court system deals with this routinely. He believed there was nothing in CSSB 355 to correct why defective surveys occur. He noted the packet did not include information from the Alaska Professional Surveyors Association (APSA) stating their support. He failed to see the purpose of CSSB 355. MS. RINGSTAD replied the municipality of Anchorage has been working for a long time to remedy this situation. Number 088 CHAIRMAN VEZEY interjected the example of Nome, whereby it replatted the entire townsite without the law proposed in CSSB 355. The problem arises when there are arguments between the affected property owners. If adjoining owners agree, the problem can be worked out technically. However, if they disagree, the courts intervene, which they do routinely. MS. RINGSTAD explained they had argued that point with legal services and the municipality of Anchorage, however, they still felt CSSB 355 was necessary. There are apparent problems throughout the two subdivisions. In order for them to go to court, each party would have to provide a suit, which would enjoin all of the owners of record to go into one suit to remedy the problem. (REPRESENTATIVES OLBERG and ULMER left the meeting at 10:00 a.m.) CHAIRMAN VEZEY stated there are still surveyors in Alaska who do poor work. Therefore, he could not see how CSSB 355 would be to anyone's benefit. He interpreted CSSB 355 as excusing surveyors for malpractice. MS. RINGSTAD interjected, in this case, the surveyor is no where to be found and may not even be alive anymore. She noted there are remedies if the survey was done within the past two years; however, it has been more than two years in this case. CHAIRMAN VEZEY responded it would not matter if the survey was done 100 years ago. The courts deal with this problem even if they do not like to. Lacking better support for CSSB 355, he said he could not let it pass from committee. He commented CSSB 355 might cause people to abrogate their existing rights. MS. RINGSTAD mentioned Patrick Kalen had said the APSA would support CSSB 355. CHAIRMAN VEZEY agreed if the APSA knew about CSSB 355 they would have provided a letter. He suggested the National Society of Professional Engineers. He said he felt CSSB 355 was a very poor piece of legislation, however, he could stand to be corrected. CSSB 355 states what the courts already have the power to do. His first suspicion was that someone was trying to coerce someone else into a binding arbitration situation. Number 208 MS. RINGSTAD expressed she would get various testimony, including from the municipality, and bring it back to the committee. CHAIRMAN VEZEY commented some of the best experts on land law are some professional surveyors. They might be better than some attorneys in the area. He mentioned Robert Hicks in Anchorage, who did the legal work for the city of Nome. MS. RINGSTAD added she would seek testimony from William Mendenhall who supported CSSB 355, as well. CHAIRMAN VEZEY said he would be interested in hearing from him. Number 234 REPRESENTATIVE KOTT referred to the sponsor statement which reads the municipality has exhausted all their aspects of law to correct this problem, and finds that the legislation is the only practical solution. He inquired who developed this position in the municipality. MS. RINGSTAD answered George Newsham, Assistant Municipal Attorney. REPRESENTATIVE KOTT asked if there was a letter of support from him in the packets. MS. RINGSTAD replied the letter from George Newsham in the packet only serves to correct a provision in CSSB 355. He had contacted Senator Rieger's office for the drafting of the bill. REPRESENTATIVE KOTT said he felt a letter from Mr. Newsham, articulating why he felt CSSB 355 was the only solution would be beneficial. The letter may dispel concerns. CHAIRMAN VEZEY interjected the letter might complicate the concerns because CSSB 355 is not a subdivision specific piece of legislation. CSSB 355 is generic Alaska law. MS. RINGSTAD agreed. She noted in the packet an approved ordinance change by the Anchorage assembly to specifically address resurvey and replatting of manifestly inaccurate surveys in record. CHAIRMAN VEZEY explained certain words, such as "manifestly inaccurate" or "reasonably diligent searches," would have to be defined. The law would go back to the courts to be defined. MS. RINGSTAD agreed. She expressed CSSB 355 was left open for the court to define it. In some cases where the property line is only a couple of feet off, it is up to the court to decide whether it is manifestly defective or not. In most cases it is not; therefore, should not be changed. She emphasized only in the cases where the property lines are completely off does CSSB 355 apply. CHAIRMAN VEZEY commented the nature of property ownership is external boundaries cannot be changed without going to court. Internal boundaries can shift substantially. MS. RINGSTAD agreed, and noted the internal boundaries are off because the external boundaries are off. The community cannot even line up the roads because the external boundaries are off. She explained that until this problem is resolved, they cannot realign a number of roads in that area. CHAIRMAN VEZEY pointed out this has happened before. If property owners are obstructions and uncooperative, then the process can be difficult. He suspected the impetus for CSSB 355 came from property owners who are surrounded by a lot of land that is not able to be developed because of defective lot lines. Therefore, they have a private park and do not want to see it corrected. Those who own the undeveloped property want to see it corrected. He noted he could be wrong. MS. RINGSTAD pointed out none of the property owners there can be afforded clear title until the problem is solved. Therefore, anyone who wants to sell their property cannot because they have no clear title. CHAIRMAN VEZEY clarified everyone is eager to solve the problem. MS. RINGSTAD affirmed CHAIRMAN VEZEY. CHAIRMAN VEZEY further stated then there would be no problem. The problem would be taken care of technically. MS. RINGSTAD suggested when MR. NEWSHAM presents his support to CSSB 355 that he also include the circumstances of the case. CHAIRMAN VEZEY held CSSB 355 in committee. ADJOURNMENT Number 319 CHAIRMAN VEZEY, having no more business before the committee, adjourned the meeting at 10:10 a.m.