Legislature(2011 - 2012)BELTZ 105 (TSBldg)


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Heard & Held
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                        January 24, 2012                                                                                        
                           3:35 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Donald Olson, Chair                                                                                                     
Senator Thomas Wagoner                                                                                                          
Senator Linda Menard                                                                                                            
Senator Johnny Ellis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Albert Kookesh                                                                                                          
OTHER LEGISLATORS PRESENT                                                                                                     
Senator Joe Thomas                                                                                                              
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 154                                                                                                             
"An Act creating a low-interest loan program for homeowners who                                                                 
convert their homes to natural gas-fired heating; and creating                                                                  
the natural gas home heating conversion loan fund."                                                                             
     - HEARD & HELD                                                                                                             
SENATE BILL NO. 122                                                                                                             
"An Act relating to real estate transfer fees and increasing the                                                                
length of time title records must be maintained by a title                                                                      
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 154                                                                                                                  
SHORT TITLE: NATURAL GAS CONVERSION PROGRAM/FUND                                                                                
SPONSOR(s): SENATOR(s) THOMAS                                                                                                   
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       CRA, FIN                                                                                               
01/24/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
BILL: SB 122                                                                                                                  
SHORT TITLE: REAL ESTATE TRANSFER FEES/TITLE PLANTS                                                                             
SPONSOR(s): LABOR & COMMERCE                                                                                                    
04/08/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/08/11       (S)       CRA, L&C                                                                                               
01/24/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
WITNESS REGISTER                                                                                                              
SENATOR JOE THOMAS                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: SB 154 sponsor.                                                                                           
GRIER HOPKINS, Staff to Senator Thomas                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Read a statement and answered questions                                                                   
regarding SB 154.                                                                                                               
DAN FAUSKE, CEO                                                                                                                 
Alaska Housing Finance Corp                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supports SB 154.                                                                                          
JEFF JACOBSON, Chief of Staff                                                                                                   
Fairbanks North Star Borough                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supports SB 154.                                                                                          
JOMO STEWART                                                                                                                    
Energy Project Manager                                                                                                          
Fairbanks Economic Development Corp.                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supports SB 154.                                                                                          
DANA OWEN, Staff to Senator Egan,                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Read a sponsor statement and answered                                                                     
questions regarding SB 122.                                                                                                     
CRYSTAL PELTOLA, Vice President                                                                                                 
Alaska USA Title Agency                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Opposes SB 122.                                                                                           
RAYMOND DAVIS, Vice President                                                                                                   
Old Republic Title Insurance Company                                                                                            
Seattle, Washington                                                                                                             
POSITION STATEMENT: Opposes SB 122.                                                                                           
MICHAEL PRICE, President                                                                                                        
Alaska Land Title Association                                                                                                   
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Supports SB 122.                                                                                          
TERRY BRYAN, Vice President                                                                                                     
First American Title Company                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Supports SB 122.                                                                                          
ROGER FLOERCHINGER, President                                                                                                   
Yukon Title Company                                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Supports SB 122.                                                                                          
ACTION NARRATIVE                                                                                                              
3:35:39 PM                                                                                                                    
CHAIR  DONALD  OLSON called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 3:35 p.m. Present                                                               
at the  call to  order were Senators  Wagoner, Menard,  Ellis and                                                               
Chair Olson.                                                                                                                    
           SB 154-NATURAL GAS CONVERSION PROGRAM/FUND                                                                       
3:36:04 PM                                                                                                                  
CHAIR OLSON announced the consideration of SB 154.                                                                              
3:36:29 PM                                                                                                                    
SENATOR  JOE THOMAS,  sponsor  of  SB 154,  said  the bill  would                                                               
create  a  low interest  loan  program  for Alaskan  families  to                                                               
replace  their oil,  coal or  wood  home-heating appliances  with                                                               
natural  gas.  He  said  the   Fairbanks  Borough  was  anxiously                                                               
awaiting  the  arrival  of  more natural  gas  and  that  current                                                               
supplies  were  limited. He  said  in  addition to  Prudhoe  Bay,                                                               
Interior  Alaska  was  hopeful  the Cook  Inlet  subsidized  rigs                                                               
strike gas  and expand supply via  truck or pipeline. He  said SB                                                               
154 would  give families the ability  to plan ahead for  low cost                                                               
energy when access to gas was made available.                                                                                   
He  said the  home heating  change-out mechanism  would create  a                                                               
more  robust  gas distribution  system  in  the Kenai  Peninsula,                                                               
Anchorage  and  Matanuska-Susitna  Valley   areas  where  gas  is                                                               
currently distributed. He said the  recent propane conversions to                                                               
natural gas  in the Kenai  Peninsula had a dramatic  cost savings                                                               
He said  Fairbanks' Golden Valley Electric  Association and Flint                                                               
Hills  Resources' North  Pole Refinery  were considering  natural                                                               
gas supplied from Prudhoe Bay  for their own uses and potentially                                                               
for  distribution  to   homes;  a  decision  would   be  made  by                                                               
September,  2012.  He  said Flint  Hills  Resources'  North  Pole                                                               
Refinery would be able to  lower production costs and provide the                                                               
state with lower priced fuels.                                                                                                  
3:39:17 PM                                                                                                                    
SENATOR THOMAS said the Fairbanks Borough  would be able to get a                                                               
handle on its  air quality problem by changing  over an estimated                                                               
12,000 homes  to natural  gas. He  said it  would also  spark the                                                               
economy, create  local jobs  all across the  state and  keep more                                                               
money circulating  in Alaska  rather than  being spent  on energy                                                               
costs. He noted that developers  in the Fairbanks area have dealt                                                               
with outside companies where projects  were cancelled due to high                                                               
fuel costs.                                                                                                                     
3:40:42 PM                                                                                                                    
GRIER HOPKINS, staff  to Senator Thomas, said the  impetus for SB                                                               
154 was to create a stronger,  more economic instate market for a                                                               
natural  gas  pipeline  or delivery  program  for  the  Fairbanks                                                               
Borough and  Southcentral communities.  He said having  access to                                                               
natural gas  would not  be helpful if  homeowners were  unable to                                                               
use it. He said any natural  gas delivery system would help build                                                               
a more robust gas market,  vitalize local economies and keep more                                                               
local jobs  in the communities.  He said rural  homeowners unable                                                               
to  access  natural  gas would  indirectly  benefit  from  nearby                                                               
natural gas supplied regions where  businesses pass along savings                                                               
from lower energy costs. He  noted that the Fairbanks Borough was                                                               
studying its current natural gas  distribution system to plan for                                                               
future infrastructure build out.                                                                                                
He said SB 154 would  make available a $7,500 furnace replacement                                                               
loan,  at 1  percent  interest, to  be paid  back  over 10  years                                                               
through the  Alaska Housing Finance Corporation  (AHFC). Eligible                                                               
candidates must  own a noncommercial, single  occupancy or duplex                                                               
home,   demolition  was   not  eminent,   substantially  complete                                                               
construction  and   has  access  to  natural   gas  within  their                                                               
community.  He   noted  that  connection   costs  would   be  the                                                               
homeowners' responsibility.                                                                                                     
3:44:33 PM                                                                                                                    
MR. HOPKINS said  the new furnace must become  the home's primary                                                               
source of  heat and  participation is not  subject to  any income                                                               
limitations. He said the state's  Energy Efficient Rebate Program                                                               
was used as  a model for the loan program.  He said an individual                                                               
homeowner applicant  would contact AHFC, request  an Energy Rater                                                               
to for  a change  out estimate  and submit  the report  to Alaska                                                               
USA, AHFC's participating program lender.                                                                                       
He said SB 154 would  also address Fairbanks' air quality problem                                                               
linked to smoke  from wood burning, a  less expensive alternative                                                               
to heating with  oil. He noted that homeowners can  save up to 50                                                               
percent  by  burning  wood  versus  heating  oil.  The  Fairbanks                                                               
Borough  hired Sierra  Research to  do an  air quality  study and                                                               
found that  12,000 homes  would have to  be converted  to natural                                                               
gas  to  meet the  Environmental  Protection  Agency's (EPA)  air                                                               
quality mandate.                                                                                                                
3:47:06 PM                                                                                                                    
MR. HOPKINS said the Fairbanks'  current natural gas market is at                                                               
capacity  with  1108 customers.  He  noted  that Senator  Wagoner                                                               
inquired about  possible federal  programs available  for natural                                                               
gas  conversion  and  that  a recent  $1500  federal  tax  credit                                                               
expired in 2010.                                                                                                                
3:48:37 PM                                                                                                                    
CHAIR  OLSON asked  how many  homes would  participate the  first                                                               
year and during the life of the loan program.                                                                                   
3:48:56 PM                                                                                                                    
SENATOR  THOMAS answered  that 1000  homes would  participate for                                                               
initial   hook-up   starting   with   Fairbanks'   high   density                                                               
neighborhoods.  He  noted  that   Fairbanks  Natural  Gas  had  a                                                               
distribution  system  setup in  the  borough  but could  not  add                                                               
customers due to a lack of supply.                                                                                              
3:49:46 PM                                                                                                                    
CHAIR  OLSON said  1000 homes  borrowing  $7500 each  was a  fair                                                               
amount of money going out as capital.                                                                                           
SENATOR THOMAS agreed.                                                                                                          
CHAIR OLSON  said a 1 percent  interest rate was a  low return on                                                               
SENATOR THOMAS agreed.                                                                                                          
3:50:24 PM                                                                                                                    
CHAIR  OLSON asked  if there  were similar  state programs  to SB                                                               
SENATOR THOMAS  answered that  there may  be several  current and                                                               
suggested programs.                                                                                                             
3:51:00 PM                                                                                                                    
MR. HOPKINS  answered that the  Alaska Energy Rebate  Program was                                                               
available,  it  had  distributed   $90  million  to  over  14,600                                                               
homeowners who saved up to 33 percent in energy costs.                                                                          
He said SB 154  was not a grant program and  allowed the state to                                                               
get some return on investment.  Other programs include the AHFC's                                                               
rebate  on   buying  a   five  star   plus  energy   rated  home,                                                               
weatherization assistance for  low-income renters and homeowners,                                                               
and the Alaska Second Mortgage Program for Energy Conservation.                                                                 
3:52:33 PM                                                                                                                    
CHAIR OLSON commented that  the Weatherization Assistance Program                                                               
was  statewide  and  that  SB   154  would  only  concentrate  on                                                               
Southcentral and Fairbanks.                                                                                                     
SENATOR MENARD  asked if AHFC  had addressed adding staff  to run                                                               
the program in SB 154.                                                                                                          
CHAIR OLSON said further testimony  would answer Senator Menard's                                                               
question and  asked if homeowners  who have already  converted to                                                               
natural gas would benefit.                                                                                                      
3:53:35 PM                                                                                                                    
MR. HOPKINS answered no. He  said a homeowner could receive funds                                                               
to upgrade  their home  heating appliance  or access  the current                                                               
Energy Efficient Rebate Program.                                                                                                
SENATOR  WAGONER asked  if SB  154  strictly covers  the cost  of                                                               
replacing the heating appliance.                                                                                                
MR. HOPKINS  answered yes. He said  running a gas line  to a home                                                               
is not covered.                                                                                                                 
SENATOR MENARD asked  what the homeowner's costs would  be to run                                                               
gas line to their home.                                                                                                         
MR.  HOPKINS  answered  that  NorthStar   Gas  in  the  Fairbanks                                                               
currently charges $17.64 per foot for  the main line to get close                                                               
to the home and  $930 for the first 100 feet  of feeder line from                                                               
the main line  to the home plus an additional  charge per foot if                                                               
3:56:06 PM                                                                                                                    
CHAIR  OLSON   asked  if  the  loan   program  accommodated  home                                                               
MR. HOPKINS  answered that  the program  was strictly  for single                                                               
occupancy homes and duplexes, but up  to 25 percent could be used                                                               
for commercial purposes.                                                                                                        
CHAIR OLSON asked if a summer home residence would qualify.                                                                     
MR.  HOPKINS answered  only for  an owner-occupied  home, but  he                                                               
would ask AFHC to verify.                                                                                                       
3:57:22 PM                                                                                                                    
DAN  FAUSKE,   CEO,  Alaska  Housing  Finance   Corp.,  said  the                                                               
following  details need  to be  worked out:  loan terms,  program                                                               
management,  distribution  development  and the  home  conversion                                                               
process. He  said there are  approximately 30,000  potential home                                                               
conversions in the  Fairbanks area which equates  to $200 million                                                               
in required capital.                                                                                                            
CHAIR  OLSON asked  where funding  would come  from at  1 percent                                                               
interest. He noted management costs were not included.                                                                          
3:59:50 PM                                                                                                                    
MR. FAUSKE answered  that SB 154 would have to  be a state-funded                                                               
4:01:06 PM                                                                                                                    
JEFF  JACOBSON, Chief  of Staff,  Fairbanks  North Star  Borough,                                                               
said SB  154 would  assist households that  are burdened  by high                                                               
fuel prices.  He said the borough  has used state grant  funds to                                                               
conduct  a  natural  gas  distribution  study  to  determine  the                                                               
economics  of  expanding  its limited  natural  gas  distribution                                                               
system. He said in the event  natural gas was delivered by truck,                                                               
bullet-line or pipeline, the borough  residents need the means to                                                               
convert their homes.                                                                                                            
He said the EPA designated  Fairbanks as a Nonattainment Area for                                                               
Particulate  Matter   (PM-2.5)  and   mandated  an   air  quality                                                               
improvement plan  to be in  place by 2014.  He said SB  154 helps                                                               
the borough  meet EPA's air  quality goals by  allowing residents                                                               
to switch away from heating oil and wood.                                                                                       
MR.  JACOBSON said  natural gas  supplied to  the Interior's  two                                                               
refineries  would  lower  their operating  costs  and  ultimately                                                               
provide Alaskans with lower priced fuel.                                                                                        
4:04:54 PM                                                                                                                    
CHAIR  OLSON asked  about the  distribution plan  for the  12,000                                                               
home conversions  needed to  meet EPA  air quality  standards and                                                               
the hookup accessibility for the 30,000 homes.                                                                                  
MR. JACOBSON answered  that if nothing else was  done but convert                                                               
12,000  homes to  natural gas,  the  borough would  meet the  EPA                                                               
mandated  air quality  attainment standards.  He said  Fairbank's                                                               
distribution  plan  combines  direct pipelines  to  high  density                                                               
neighborhoods and  independent distribution  to remote  areas. He                                                               
said  along  with  natural  gas  conversion,  the  borough  would                                                               
continue  to educate  the population,  assist homeowners  to burn                                                               
drier wood and  offer the Wood Stove Exchange  Program to replace                                                               
wood stoves and boilers with qualified heating devices.                                                                         
4:07:06 PM                                                                                                                    
CHAIR  OLSON  asked  what the  anticipated  infrastructure  costs                                                               
MR. JACOBSON  answered that data from  the Fairbanks Distribution                                                               
Study would provide preliminary information.                                                                                    
4:07:36 PM                                                                                                                    
SENATOR  WAGONER said  NorthStar Gas  did a  study on  a pipeline                                                               
installation  project in  Homer; the  cost was  $3.5 million.  He                                                               
said Fairbanks  was 10 times the  size of Homer and  asked if the                                                               
borough had a good start on distribution line installation.                                                                     
SENATOR THOMAS answered yes.                                                                                                    
MR. JACOBSON answered yes.                                                                                                      
4:08:14 PM                                                                                                                    
JOMO   STEWART,  Energy   Project  Manager,   Fairbanks  Economic                                                               
Development Corp.,  said he  was in charge  of the  Fairbanks Gas                                                               
Distribution System  Report and  concurred with  prior testimony.                                                               
He said SB 154 would be  a useful and welcomed component to allow                                                               
the  borough to  tap into  the benefits  of natural  gas when  it                                                               
becomes available.                                                                                                              
4:09:51 PM                                                                                                                    
SENATOR THOMAS  commented on  cost concerns  and said  the intent                                                               
was to  keep the  project cost  as low as  possible. He  said the                                                               
proposed loan  interest rate  might not be  high enough  to cover                                                               
administrative costs and  conceded that 1 percent  was a starting                                                               
point.  He said  the appliance  cost  of converting  fuel oil  to                                                               
natural gas is relatively close  to projections, but wood burning                                                               
system  conversion  and  gas-line installation  was  a  different                                                               
4:10:54 PM                                                                                                                    
CHAIR OLSON said he would hold SB 154 in committee.                                                                             
         SB 122-REAL ESTATE TRANSFER FEES/TITLE PLANTS                                                                      
4:11:15 PM                                                                                                                  
CHAIR OLSON announced the consideration of SB 122.                                                                              
4:11:25 PM                                                                                                                    
DANA  OWEN, staff  to  SB  122 sponsor,  said  the bill's  second                                                               
section  bans  the  use  of   transfer  fee  covenants  that  are                                                               
contractual obligations  imposed upon any subsequent  sale of the                                                               
land. He  noted that more than  half of the states  currently ban                                                               
transfer fee  covenants; the earliest  was New York in  1852 when                                                               
the courts  noted the  practice as a  "vestige of  feudalism." He                                                               
said the  second section  of SB  122 has  no opposition  from the                                                               
title insurance industry.                                                                                                       
MR. OWEN said  the first section of SB 122  extends the length of                                                               
time spanned by a "title plant,"  which comprises of a record for                                                               
all  transactions  or  conditions  that  affect  titles  to  land                                                               
located in a  specific area. He said the length  of time would be                                                               
extended from 25  years to 50 years. He said  the proposed change                                                               
is  controversial within  the title  insurance industry  and work                                                               
was being done to find new  language to satisfy all parties via a                                                               
committee substitute.                                                                                                           
4:14:02 PM                                                                                                                    
CHAIR  OLSON  asked  when  the   committee  substitute  would  be                                                               
MR. OWEN replied by the next meeting.                                                                                           
CHAIR  OLSON  asked  how substantially  different  the  committee                                                               
substitute would be.                                                                                                            
MR. OWEN answered  that minor changes would be made.  He said the                                                               
focus was on protecting customers  from title insurance companies                                                               
located outside of Alaska without limiting competition.                                                                         
4:15:37 PM                                                                                                                    
CHAIR OLSON asked  why there was opposition to  allow more people                                                               
into  the  title insurance  market.  He  noted that  buying  real                                                               
estate was  one of the  biggest expenditures an  individual would                                                               
have and allowing competition should bring down prices.                                                                         
MR. OWEN  answered that  the idea  was not  to limit  people from                                                               
getting into the  title insurance market; the intent  was to keep                                                               
out companies that are not able  to give the kind of service that                                                               
Alaskan-based title insurance companies could provide.                                                                          
CHAIR  OLSON  commented that  upcoming  testimony  would be  from                                                               
companies  with  a  financial   interest  rather  than  a  public                                                               
interest. He  said it is  important to keep  what is in  the best                                                               
interest of Alaskan residents first.                                                                                            
4:17:29 PM                                                                                                                    
MR. OWEN said  that the committee was very  concerned that public                                                               
interest be  protected. He said the  first step was to  make sure                                                               
there was  agreement within the title  insurance industry without                                                               
taking sides.                                                                                                                   
CHAIR OLSON asked if Mr.  Owen was suspicious from the infighting                                                               
within the title insurance industry.                                                                                            
MR. OWEN answered yes.                                                                                                          
4:19:42 PM                                                                                                                    
CRYSTAL  PELTOLA,  Vice  President/General  Manager,  Alaska  USA                                                               
Title Agency,  said the current  title plant law has  worked well                                                               
for decades and  there was no value to the  industry or consumers                                                               
by changing  something that  was not broken.  She said  the title                                                               
search process  was dictated by  underwriters, not by  the number                                                               
of years  title plant documents  were statutorily required  to be                                                               
on record. She  said SB 122 would be  anticompetitive by limiting                                                               
the number of  title agencies, doubling startup  costs and adding                                                               
time to acquire additional years of records.                                                                                    
She  said  increasing  the title  plant  requirement  would  only                                                               
benefit a  few agencies, most  of which were the  main proponents                                                               
of  SB 122.  She said  the length  of records  retained in  title                                                               
plants had no bearing on  claims or loses. She said technological                                                               
change  has provided  broader access  to  electronic records  and                                                               
allowed more  competition to keep  down costs for  consumers, and                                                               
that  SB 122  would  mandate a  step back  in  time by  requiring                                                               
older, outdated title plants to be expanded.                                                                                    
4:23:14 PM                                                                                                                    
CHAIR OLSON asked about mortgages that go longer than 25 years.                                                                 
MS.  PELTOLA  answered that  the  length  of  any claim  of  lien                                                               
mechanics, mortgage or  judgment, had no bearing on  how far back                                                               
a  search was  done. She  said there  was no  correlation between                                                               
length  of  mortgage  and  title record  search  and  that  title                                                               
insurance underwriters  are the  ones who  dictate the  length of                                                               
CHAIR  OLSON  asked  how  the  consumer  would  be  protected  if                                                               
hazardous materials  were found  from WWII when  a 25  year title                                                               
plant was used.                                                                                                                 
4:24:22 PM                                                                                                                    
MS.  PELTOLA   answered  that  underwriting   contracts  dictated                                                               
searches,  there was  no bearing  on  the search  process by  the                                                               
amount of records statutorily required to have in a title plant.                                                                
4:25:19 PM                                                                                                                    
RAYMOND  DAVIS,  Vice  President, Old  Republic  Title  Insurance                                                               
Company, said  he was Alaska  USA Title Agency's  underwriter and                                                               
provided  the financial  backing behind  the title  policies that                                                               
were issued in Alaska.                                                                                                          
He said  SB 122 would give  unfair advantage to two  companies in                                                               
Anchorage that  have 50-year title  plants; it  would affectively                                                               
give them a monopoly on all future business in Anchorage.                                                                       
He  said in  anticipation of  SB 122  passing, the  two Anchorage                                                               
title  companies have  considered charging  subscription fees  to                                                               
the other title companies at $7500 per month, $90,000 per year.                                                                 
MR. DAVIS  said technology allowed  title insurance  companies to                                                               
go directly to  government records and search  titles without old                                                               
title plant  mandates. He said  the goal  should not be  to limit                                                               
competition;  the goal  should be  to expand  competition without                                                               
allowing "fly  by night" operators.  He said the real  threat was                                                               
to companies that had big investments in old title plants.                                                                      
4:29:36 PM                                                                                                                    
CHAIR  OLSON asked  about  Old Republic  Title  being located  in                                                               
Seattle and  the impact  on the consumer  having to  legally deal                                                               
with an out-of-state company.                                                                                                   
MR. DAVIS answered  that Old Republic Title  only issues policies                                                               
through  Alaska-based companies.  He said  the majority  of title                                                               
policies  in Alaska  are underwritten  by out-of-state  insurance                                                               
4:31:01 PM                                                                                                                    
MICHAEL PRICE,  President, Alaska  Land Title  Association (ALTA)                                                               
said he owned several title  insurance companies in the Anchorage                                                               
area and was a real estate  lawyer. He said ALTA supports banning                                                               
transferring covenant fees but he  disagreed with prior testimony                                                               
regarding title plants.                                                                                                         
He said the  title plant change in SB  122 addressed out-of-state                                                               
examiners  who are  not  licensed  in Alaska.  He  noted that  13                                                               
states within the past four years had adopted similar changes.                                                                  
He  said the  title  plant section  of SB  122  would require  an                                                               
Alaskan resident and licensed title  examiner to examine and sign                                                               
preliminary commitments for policies being issued.                                                                              
He  said  the  SB  122  controversy comes  down  to  two  things,                                                               
changing plant law from 25 years  and allowing two types of title                                                               
insurance companies to operate in Alaska.                                                                                       
He  said  changing plant  law  from  25 to  40  or  50 years  was                                                               
recommended due  to Alaska not having  curative title provisions.                                                               
He said adding years to the  title plant does not put unnecessary                                                               
burden on title insurance companies  and was not anticompetitive;                                                               
records can be downloaded directly  from the Recorder's Office at                                                               
a relatively small fee.                                                                                                         
4:36:49 PM                                                                                                                    
MR. PRICE said the second  issue addressed a legislative decision                                                               
from 2002 that designated two  types of title companies; a single                                                               
company required to  have a title plant and a  joint-plant of two                                                               
or more  companies that was not  required to have a  title plant,                                                               
e.g., Old Republic Title and Alaska USA Title's arrangement.                                                                    
He said  ALTA, not for  anticompetitive reasons,  believes Alaska                                                               
should return  to a  "title plant  state." He said  as far  as he                                                               
knew,  Alaska was  the  only state  which  allowed two  different                                                               
types of title  companies where one was required to  have a title                                                               
plant. He  noted that Old  Republic Title  was based in  a "title                                                               
plant  state"  and  the  company's president  told  him  that  he                                                               
believed in title plants.                                                                                                       
He  said  he  disagreed  with  prior  testimony  which  indicated                                                               
consumer costs would  increase. He noted that prices  were set by                                                               
the Division of Insurance.                                                                                                      
He  said Alaska  should  protect  the public  and  not allow  the                                                               
limited  underwriters in  the  US to  dictate  search policy.  He                                                               
referenced  Countrywide  Home Loans  as  an  example of  a  large                                                               
mortgage lender  which no longer  existed and it was  the largest                                                               
in the  country five years  ago. He noted  that it only  takes $1                                                               
million to  become an underwriter  in Alaska and one  claim could                                                               
wipe that out.                                                                                                                  
4:41:49 PM                                                                                                                    
CHAIR  OLSON asked  if  it was  true what  Mr.  Davis brought  up                                                               
regarding a possible monopoly with  only two land plant companies                                                               
in the state of Alaska.                                                                                                         
MR. PRICE  said there were over  20 title plant companies  in the                                                               
state and  Mr. Davis may  have referred  to the two  companies in                                                               
the  Anchorage Recording  District. He  said there  were actually                                                               
more than two companies in the Anchorage area.                                                                                  
CHAIR OLSON  asked what  the normal  subscription rates  were for                                                               
title plant information.                                                                                                        
MR. PRICE  answered that  the monthly  subscription was  $7000 to                                                               
$8000  for a  joint-plant company  and $10,000  to $12,000  for a                                                               
single owned company.                                                                                                           
4:43:02 PM                                                                                                                    
CHAIR  OLSON asked  if Mr.  Davis's claim  was accurate  that his                                                               
subscription fees were in the $7,500 per month range.                                                                           
MR. PRICE answered yes for a joint-plant organization.                                                                          
4:43:26 PM                                                                                                                    
CHAIR OLSON expressed interest in  protecting the public. He said                                                               
real  estate market  suspicion was  justified after  the economic                                                               
problems caused by the 2008 housing crisis.                                                                                     
4:43:55 PM                                                                                                                    
MR. PRICE  responded that the  title industry only  insures loans                                                               
and  has  nothing   to  do  with  making  loans.   He  said  anti                                                               
competition  is   not  the  issue   when  title   companies  have                                                               
relatively low  entrance and  startup costs.  He said  the public                                                               
would be better served by  title agencies that have more invested                                                               
into their industry and access to every document.                                                                               
4:45:31 PM                                                                                                                    
TERRY BRYAN,  Vice President, First American  Title Company, said                                                               
he operated as a title  and underwriting company in approximately                                                               
10 Alaskan  communities. He said  Alaska is a "file  and approve"                                                               
state; title  insurance prices are  not set by the  state, prices                                                               
are submitted to the Department of Insurance for approval.                                                                      
4:47:15 PM                                                                                                                    
MR.  BRYAN  referenced  Oregon  and  Washington  as  states  with                                                               
mandatory title  plant laws between 40  and 50 years. He  said he                                                               
was not  aware of title insurance  underwriting contract language                                                               
that  required  a specific  age  of  title  plant. He  said  most                                                               
underwriting  contracts  identified   certain  reasonable  search                                                               
criteria and  standards, but no chronological  identification due                                                               
to unique differences  in each state. He said  ALTA recommends 40                                                               
years as a required title plant based upon Alaska's history.                                                                    
He noted that the title  insurance industry was probably the only                                                               
part of the  real estate industry that came  through the mortgage                                                               
crisis unscathed and was portrayed as the good guy in the media.                                                                
4:49:10 PM                                                                                                                    
CHAIR OLSON asked  if the reason for the  positive media coverage                                                               
was due to having better legal representation.                                                                                  
MR. BRYAN  replied that the title  insurance industry facilitates                                                               
the   transaction  and   does  not   negotiate   or  barter   the                                                               
transaction.  He confirmed  that  $7500 was  the correct  monthly                                                               
subscription rate for a joint-plant organization.                                                                               
4:50:23 PM                                                                                                                    
CHAIR OLSON asked how many claims against title companies occur.                                                                
MR. BRYAN  answered that he did  not know. He said  when compared                                                               
to other  types of insurance,  title insurance claims occur  at a                                                               
very low percentage.                                                                                                            
4:51:34 PM                                                                                                                    
CHAIR OLSON  asked him  to explain  prior testimony  regarding $1                                                               
million required for underwriters.                                                                                              
MR. BRYAN answered that the state  required a $1 million bond for                                                               
licensing. He  added that dramatic obligations  through civil and                                                               
legal  courts provided  added coverage  for  consumers who  dealt                                                               
with Alaska based companies.                                                                                                    
4:52:32 PM                                                                                                                    
ROGER  FLOERCHINGER, President/Owner,  Yukon Title  Company, said                                                               
his  company   insured  conveyances  in  the   most  northern  11                                                               
recording  districts  and  dealt  directly with  buyers  of  real                                                               
estate in  villages and  small communities.  He said  contrary to                                                               
Mr. Davis' testimony,  his company was not  solely a distribution                                                               
system  for  title  underwriting  companies.  He  disagreed  with                                                               
testimony that  consumer prices would  increase from a  change in                                                               
title plant law by requiring  all companies to have title plants.                                                               
He said  he believed it  was in  his customer's best  interest to                                                               
operate his company with a title  plant. He noted that a proposed                                                               
committee substitute  included a  grandfather clause  for current                                                               
companies that operate without a title plant.                                                                                   
4:55:41 PM                                                                                                                    
CHAIR  OLSON asked  what was  wrong with  companies consolidating                                                               
subscription on identical services to save money.                                                                               
MR. FLOERCHINGER  answered that  consolidating was fine.  He said                                                               
the  issue was  allowing  companies to  operate  without a  title                                                               
4:56:39 PM                                                                                                                    
CHAIR  OLSON asked  if  SB 122  was  a good  bill  for his  rural                                                               
constituents in Shishmaref or Shaktoolik, for instance.                                                                         
MR.  FLOERCHINGER   answered  that  he  does   insure  titles  in                                                               
Shishmaref and Nome.                                                                                                            
CHAIR OLSON  commented that  there was  a big  difference between                                                               
Nome  and Shishmaref;  Nome has  been incorporated  for over  100                                                               
years  while Shishmaref  was eroding  away.  He asked  if he  was                                                               
indeed insuring  titles in Shishmaref  and if  he did not  know a                                                               
customer's  name, what  the difference  was between  him and  Mr.                                                               
Davis in Seattle.                                                                                                               
4:57:37 PM                                                                                                                    
MR.  FLOERCHINGER  answered that  he  does  have insurance  title                                                               
plants in  Shishmaref and  would have to  review his  title order                                                               
4:58:15 PM                                                                                                                    
CHAIR OLSON  announced he would hold  SB 122 for the  next Senate                                                               
Community and Regional Affairs Standing Committee meeting.                                                                      
4:59:10 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Olson adjourned the Senate Community and Regional Affairs                                                                 
Standing Committee at 4:59 p.m.                                                                                                 

Document Name Date/Time Subjects