Legislature(2011 - 2012)BELTZ 105 (TSBldg)

03/27/2012 03:30 PM COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 223 TAX CRED: CONTR. TO HOMELESS SHELT/DETOX
Heard & Held
= HB 131 COMMUNITY AND TRANSPORTATION ADV. BOARD
Moved CSHB 131(TRA) am Out of Committee
= SB 157 CANCEL INSUR. ON CERTAIN VACANT PROPERTY
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 27, 2012                                                                                         
                           4:04 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                                                                                                     
                                                                                                                                
Representative Cathy Munoz                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 223                                                                                                             
"An Act  relating to a  credit against the  net income tax  for a                                                               
contribution made by a taxpayer  to a nonprofit organization that                                                               
provides an emergency shelter for  the homeless or a facility for                                                               
alcohol or drug detoxification."                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 131(TRA) AM                                                                             
"An   Act   establishing   the  Alaska   Community   and   Public                                                               
Transportation  Advisory  Board  and  relating  to  a  long-range                                                               
community and  public transportation  plan; and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED CSHB 131(TRA) AM OUT OF COMMITTEE                                                                                  
                                                                                                                                
SENATE BILL NO. 157                                                                                                             
"An  Act allowing  an insurer  to cancel  an insurance  policy if                                                               
property becomes unoccupied and  the vacancy increases the hazard                                                               
insured against."                                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 223                                                                                                                  
SHORT TITLE: TAX CRED: CONTR. TO HOMELESS SHELT/DETOX                                                                           
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
03/02/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/12       (S)       CRA, FIN                                                                                               
03/15/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/15/12       (S)       Heard & Held                                                                                           
03/15/12       (S)       MINUTE(CRA)                                                                                            
03/27/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: HB 131                                                                                                                  
SHORT TITLE: COMMUNITY AND TRANSPORTATION ADV. BOARD                                                                            
SPONSOR(s): MUNOZ                                                                                                               
                                                                                                                                
01/28/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/28/11       (H)       TRA, FIN                                                                                               
03/15/11       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
03/15/11       (H)       Heard & Held                                                                                           
03/15/11       (H)       MINUTE(TRA)                                                                                            
03/22/11       (H)       TRA AT 1:00 PM CAPITOL 17                                                                              
03/22/11       (H)       Moved CSHB 131(TRA) Out of Committee                                                                   
03/22/11       (H)       MINUTE(TRA)                                                                                            
03/23/11       (H)       TRA RPT CS(TRA) 4DP 3NR                                                                                
03/23/11       (H)       DP:    MUNOZ,    PETERSEN,    GRUENBERG,                                                               
                         P.WILSON                                                                                               
03/23/11       (H)       NR: JOHNSON, FEIGE, PRUITT                                                                             
04/14/11       (H)       FIN RPT CS(TRA) 10DP                                                                                   
04/14/11       (H)       DP: GUTTENBERG, T.WILSON, GARA, JOULE,                                                                 
                         NEUMAN, COSTELLO, EDGMON, DOOGAN,                                                                      
04/14/11       (H)       STOLTZE, THOMAS                                                                                        
04/14/11       (H)       FIN AT 8:30 AM HOUSE FINANCE 519                                                                       
04/14/11       (H)       Moved CSHB 131(TRA) Out of Committee                                                                   
04/14/11       (H)       MINUTE(FIN)                                                                                            
04/14/11       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/14/11       (H)       <Bill Hearing Canceled>                                                                                
01/27/12       (H)       TRANSMITTED TO (S)                                                                                     
01/27/12       (H)       VERSION: CSHB 131(TRA) AM                                                                              
01/30/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/12       (S)       TRA, CRA                                                                                               
02/09/12       (S)       TRA AT 1:00 PM BUTROVICH 205                                                                           
02/09/12       (S)       Moved CSHB 131(TRA) am  Out of                                                                         
                         Committee                                                                                              
02/09/12       (S)       MINUTE(TRA)                                                                                            
02/10/12       (S)       TRA RPT 4DP                                                                                            
02/10/12       (S)       DP: KOOKESH, THOMAS, MENARD, HUGGINS                                                                   
02/22/12       (S)       FIN REFERRAL ADDED AFTER CRA                                                                           
03/22/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/22/12       (S)       Heard & Held                                                                                           
03/22/12       (S)       MINUTE(CRA)                                                                                            
03/27/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 157                                                                                                                  
SHORT TITLE: CANCEL INSUR. ON CERTAIN VACANT PROPERTY                                                                           
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       L&C, CRA                                                                                               
01/26/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
01/26/12       (S)       Heard & Held                                                                                           
01/26/12       (S)       MINUTE(L&C)                                                                                            
02/23/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/23/12       (S)       <Bill Hearing Postponed>                                                                               
02/28/12       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/28/12       (S)       Moved CSSB 157(L&C) Out of Committee                                                                   
02/28/12       (S)       MINUTE(L&C)                                                                                            
02/29/12       (S)       L&C RPT CS  5DP      NEW TITLE                                                                         
02/29/12       (S)       DP: EGAN, GIESSEL, DAVIS, PASKVAN,                                                                     
                         MENARD                                                                                                 
03/05/12       (S)       CORRECTED L&C CS RECEIVED NEW TITLE                                                                    
03/05/12       (S)       BILL REPRINTED 3/5/12                                                                                  
03/06/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
03/06/12       (S)       -- MEETING CANCELED --                                                                                 
03/13/12       (S)       CRA AT 4:00 PM BELTZ 105 (TSBldg)                                                                      
03/13/12       (S)       Heard & Held                                                                                           
03/13/12       (S)       MINUTE(CRA)                                                                                            
03/27/12       (S)       CRA AT 3:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DAVID SCOTT, Staff                                                                                                              
Senate Community and Regional Affairs Standing Committee                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained the committee substitute for SB                                                                 
223.                                                                                                                            
                                                                                                                                
REPRESENTATIVE CATHY MUNOZ                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of HB 131.                                                                                        
                                                                                                                                
DANA OWEN, Staff                                                                                                                
Senate Labor and Commerce Standing Committee                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SB 157 on behalf of the L&C                                                                    
Committee.                                                                                                                      
                                                                                                                                
GLENDA FEEKEN, Trustee                                                                                                          
Realtors Political Action Committee                                                                                             
Alaska Association of Realtors                                                                                                  
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Did not support SB 157.                                                                                   
                                                                                                                                
LINDA HALL, Director                                                                                                            
Division of Insurance                                                                                                           
Department of Commerce, Community, and Economic Development                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions and stated that DCCED was                                                              
neutral on SB 157.                                                                                                              
                                                                                                                                
ERROL CHAMPION, President                                                                                                       
Southeast Board of Realtors                                                                                                     
Alaska Association of Realtors                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Did not support SB 157.                                                                                   
                                                                                                                                
DAVID SOMERS, Chair                                                                                                             
Industry Issues                                                                                                                 
Alaska Association of Realtors                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Did not support SB 157.                                                                                   
                                                                                                                                
SHELDON WINTERS, Lobbyist                                                                                                       
State Farm                                                                                                                      
Lessmeier and Winters LLC                                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Supported SB 157.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
4:04:58 PM                                                                                                                    
CHAIR  DONALD  OLSON called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 4:04 p.m. Present                                                               
at the  call to  order were Senators  Wagoner, Menard,  Ellis and                                                               
Chair Olson                                                                                                                     
                                                                                                                                
        SB 223-TAX CRED: CONTR. TO HOMELESS SHELT/DETOX                                                                     
                                                                                                                                
4:05:08 PM                                                                                                                    
CHAIR  OLSON  announced the  consideration  of  SB 223,  "An  Act                                                               
relating  to  a   credit  against  the  net  income   tax  for  a                                                               
contribution made by a taxpayer  to a nonprofit organization that                                                               
provides an emergency shelter for  the homeless or a facility for                                                               
alcohol  or  drug detoxification."  He  stated  his intention  to                                                               
introduce a committee substitute (CS)  and set the bill aside for                                                               
further review.                                                                                                                 
                                                                                                                                
DAVID  SCOTT,   Aide,  Senate  Community  and   Regional  Affairs                                                               
Standing Committee  Alaska State  Legislature, identified  the CS                                                               
for SB  223 as version  D. It made  the following changes  to the                                                               
original bill:                                                                                                                  
                                                                                                                                
   1) Language on page 2, line [22], adds a five-year sunset.                                                                   
   2) Page 1, line 9, states that eligible organizations must be                                                                
     established before 1/1/2012. The intent of the bill is to                                                                  
     support existing nonprofits providing these services, not                                                                  
     to encourage the establishment of new nonprofits.                                                                          
   3) Page 2, line 1, subsection (b) the tax credit changes from                                                                
     a dollar-for-dollar match to 50 percent of the cash                                                                        
     contribution.                                                                                                              
   4) Procedural language was added on page 2, line 3, subsection                                                               
     (c) so the department could provide the taxpayer a                                                                         
     preliminary determination as to whether the contribution                                                                   
     qualifies for the tax credit.                                                                                              
                                                                                                                                
MR.  SCOTT noted  that he  distributed sections  of the  FY10 and                                                               
FY11 revenue  source book  regarding tax  credits offered  by the                                                               
state.                                                                                                                          
                                                                                                                                
4:07:39 PM                                                                                                                    
CHAIR  OLSON  asked  why the  dollar-for-dollar  tax  credit  was                                                               
changed to 50 percent of the contribution.                                                                                      
                                                                                                                                
MR.  SCOTT  answered  that  it  conformed  to  other  tax  credit                                                               
programs offered by the state.                                                                                                  
                                                                                                                                
CHAIR OLSON asked if interest by  the private sector would be the                                                               
same with the reduced credit.                                                                                                   
                                                                                                                                
MR. SCOTT  said he did  not have  that impression, but  only time                                                               
would tell if the bill were to become law.                                                                                      
                                                                                                                                
4:08:34 PM                                                                                                                    
CHAIR  OLSON  found no  further  questions  and  held SB  223  in                                                               
committee.                                                                                                                      
                                                                                                                                
         HB 131-COMMUNITY AND TRANSPORTATION ADV. BOARD                                                                     
                                                                                                                                
4:08:50 PM                                                                                                                    
CHAIR  OLSON  announced the  consideration  of  HB 131,  "An  Act                                                               
establishing  the  Alaska  Community  and  Public  Transportation                                                               
Advisory Board and relating to  a long-range community and public                                                               
transportation  plan; and  providing for  an effective  date." He                                                               
noted this was the second hearing in this committee.                                                                            
                                                                                                                                
4:09:04 PM                                                                                                                    
REPRESENTATIVE CATHY MUNOZ, sponsor of HB 131, Alaska State                                                                     
Legislature, paraphrased the following sponsor statement:                                                                       
                                                                                                                                
     House Bill  131 creates an Alaska  Community and Public                                                                    
     Transportation  Advisory Board,  which  will assist  in                                                                    
     the  development  and  procedural  recommendations  for                                                                    
     existing   programs  of   state,  federal,   and  local                                                                    
     agencies  that  provide community-based  transportation                                                                    
     services.  Public   and  community   transportation  is                                                                    
     integral   in    connecting   communities,   supporting                                                                    
     development   and    serving   our    most   vulnerable                                                                    
     constituent.                                                                                                               
                                                                                                                                
     The designation of this board  is a recommendation from                                                                    
     the Governor's  Coordinated Transportation  Task Force,                                                                    
     which    was   released    in    the   February    2010                                                                    
     Recommendations   Report.  The   board  will   continue                                                                    
     efforts to address  public and community transportation                                                                    
     and   help  fill   the   gap   in  transportation   for                                                                    
     individuals  who  require  more  specialized  travel  -                                                                    
     senior citizens,  low-income individuals,  persons with                                                                    
     disabilities, and those who are transit-dependent.                                                                         
                                                                                                                                
     The board  will consist of 13  members from departments                                                                    
     within state and  local governments, Denali Commission,                                                                    
     Alaska Mental  Health Trust Authority,  nonprofits, and                                                                    
     those  with  expertise   in  transportation  needs  for                                                                    
     senior   citizens,  persons   with  disabilities,   and                                                                    
     transit-dependent  individuals.  This  broad  range  of                                                                    
     membership    will    facilitate   communication    and                                                                    
     strategies that will benefit communities of all sizes.                                                                     
                                                                                                                                
     HB 131 has support  from the Alaska Mobility Coalition,                                                                    
     the  Governor's  Council  on Disabilities  and  Special                                                                    
     Education,  Advisory  Board   on  Alcoholism  and  Drug                                                                    
      Abuse, the Alaska Commission on Aging, Alaska Mental                                                                      
      Health Trust Authority, Alaska Brain Injury Network,                                                                      
     and the Alaska Suicide Prevention Council.                                                                                 
                                                                                                                                
4:10:34 PM                                                                                                                    
SENATOR  MENARD asked  the  sponsor  to speak  to  the letter  of                                                               
intent.                                                                                                                         
                                                                                                                                
REPRESENTATIVE MUNOZ  responded that during the  previous hearing                                                               
Senator  Wagoner expressed  concern  about  committing very  busy                                                               
commissioners to serve on yet  another board. He wanted to insert                                                               
language to  ensure that a  commissioner designee would  fill the                                                               
position. She said  the language was already in the  bill and the                                                               
intent  language was  ready to  insert, but  she understood  that                                                               
Senator Wagoner did not want to include it at this time.                                                                        
                                                                                                                                
SENATOR WAGONER indicated the intent letter was not necessary.                                                                  
                                                                                                                                
CHAIR OLSON  found no public  testimony and no  further committee                                                               
discussion. He asked the will of the committee.                                                                                 
                                                                                                                                
4:12:15 PM                                                                                                                    
SENATOR WAGONER moved  to report CSHB 131(TRA)  am from committee                                                               
with individual recommendations and attached fiscal note(s).                                                                    
                                                                                                                                
CHAIR OLSON  announced that without  objection, CSHB  131(TRA) am                                                               
moved  from the  Senate Community  and Regional  Affairs Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
4:12:44 PM                                                                                                                    
At ease 4:12 to 4:14.                                                                                                           
                                                                                                                                
        SB 157-CANCEL INSUR. ON CERTAIN VACANT PROPERTY                                                                     
                                                                                                                                
4:14:23 PM                                                                                                                    
CHAIR  OLSON  announced the  consideration  of  SB 157,  "An  Act                                                               
allowing an  insurer to  cancel an  insurance policy  if property                                                               
becomes unoccupied  and the vacancy increases  the hazard insured                                                               
against." He noted the bill was heard previously.                                                                               
                                                                                                                                
4:14:48 PM                                                                                                                    
DANA OWEN, Staff to Senator Dennis  Egan and the Senate Labor and                                                               
Commerce  Committee,  Alaska   State  Legislature,  reminded  the                                                               
committee  that  the current  version  of  SB 157  represented  a                                                               
compromise.  The  original  proposal  was  to  provide  insurance                                                               
companies the ability to cancel  insurance policies on homes that                                                               
were  unoccupied  or  vacant.  The   Senate  Labor  and  Commerce                                                               
Standing Committee members  were opposed to the  idea of policies                                                               
being canceled on unoccupied  dwellings because Alaskans commonly                                                               
leave their homes for long  periods. The current version kept the                                                               
provision of "vacancy" and defined the term.                                                                                    
                                                                                                                                
SENATOR  MENARD  said she  struggled  with  the bill  because  it                                                               
addressed real  estate problems  in the Lower  48 and  Alaska had                                                               
not had problems of that magnitude.  She said she continued to be                                                               
uncomfortable and realtors were, too.                                                                                           
                                                                                                                                
MR.  OWENS responded  that Senator  Egan's office  was discussing                                                               
with realtors possible amendments to the bill.                                                                                  
                                                                                                                                
4:17:35 PM                                                                                                                    
GLENDA FEEKEN, Realtor, Alaska Association  of Realtors, said the                                                               
association understood  and supported  business, but not  SB 157.                                                               
In  its current  form, it  was not  in the  best interest  of the                                                               
public. On  the Kenai  Peninsula she  had seen  policies canceled                                                               
because  the   home  was   vacant,  but   not  abandoned   or  in                                                               
foreclosure.  This was  an emotional  and financial  hardship for                                                               
the public, she said.                                                                                                           
                                                                                                                                
SENATOR  MENARD asked  if  it was  a matter  of  the house  being                                                               
vacant because the  previous owners were waiting for  the sale to                                                               
close.                                                                                                                          
                                                                                                                                
MS. FEEKEN  answered that  people sometimes  have to  move before                                                               
their  house   sells.  These  homeowners  did   not  abandon  the                                                               
property, but insurance companies  have sometimes interpreted the                                                               
situation  differently and  cancelled the  policy. The  homeowner                                                               
doesn't necessarily have  the resources to fight it  and the bank                                                               
imposes its more expensive insurance.  She reiterated that unlike                                                               
the  Lower  48,  Alaska  had  not  had  too  many  problems  with                                                               
foreclosures                                                                                                                    
                                                                                                                                
SENATOR MENARD  commented that while  she had sympathy  for those                                                               
situations, homes  that were  vacant in the  winter could  end up                                                               
with  frozen  and  broken  pipes and  that  costs  the  insurance                                                               
company money.                                                                                                                  
                                                                                                                                
MS.  FEEKEN responded  that  when a  property  has actually  been                                                               
abandon the  bank is aware  that payments aren't being  made. The                                                               
bank steps in and puts the utilities in its name.                                                                               
                                                                                                                                
4:20:25 PM                                                                                                                    
SENATOR WAGONER asked how she would fix the problem.                                                                            
                                                                                                                                
MS.  FEEKEN   suggested  holding  discussions  with   the  Alaska                                                               
Association of  Realtors and others  in the know to  clarify what                                                               
constitutes a  vacant property and what  constitutes an abandoned                                                               
property.                                                                                                                       
                                                                                                                                
CHAIR OLSON  asked Ms.  Hall if  the state  had a  definition for                                                               
"vacant" versus "abandoned."                                                                                                    
                                                                                                                                
4:21:51 PM                                                                                                                    
LINDA  HALL,  Director,  Division  of  Insurance,  Department  of                                                               
Commerce, Community  and Economic  Development (DCCED),  said no.                                                               
Most states do not define "vacant,"  but there was some case law.                                                               
She opined that if SB 157 were  to pass, it would probably be one                                                               
of the  more rigid  definitions, because  it had  requirements of                                                               
what constitutes vacant.                                                                                                        
                                                                                                                                
CHAIR   OLSON  asked   if  the   state  had   a  definition   for                                                               
"abandonment."                                                                                                                  
                                                                                                                                
MS. HALL answered no.                                                                                                           
                                                                                                                                
SENATOR WAGONER  questioned why the  bill was put  forward, since                                                               
Alaska did  not have problems  with foreclosures or  high vacancy                                                               
rates.                                                                                                                          
                                                                                                                                
MS. HALL answered that she did not propose the bill.                                                                            
                                                                                                                                
SENATOR WAGONER asked if she felt that the bill was necessary.                                                                  
                                                                                                                                
MS. HALL responded that she  had indicated that she could support                                                               
the bill. She  said the role of the Division  of Insurance was to                                                               
balance  the   protection  of   consumers  against   the  healthy                                                               
competitive  marketplace  and  needs of  insurers.  The  division                                                               
involves itself in the correct  interpretation and application of                                                               
the statutes and regulations.                                                                                                   
                                                                                                                                
SENATOR  MENARD  asked about  the  possibility  of the  insurance                                                               
company  documenting vacancies  and then  communicating with  the                                                               
mortgage company to determine whether  the homeowner was "in exit                                                               
mode."                                                                                                                          
                                                                                                                                
MS.  HALL said  she  imagined that  privacy  laws would  prohibit                                                               
banks from releasing that kind of information.                                                                                  
                                                                                                                                
SENATOR MENARD commented that she was not happy with the bill.                                                                  
                                                                                                                                
4:27:34 PM                                                                                                                    
ERROL  CHAMPION, President,  Southeast Alaska  Board of  Realtors                                                               
and  member, Alaska  Association of  Realtors, said  he did  some                                                               
research  after he  testified last  on  SB 157  and learned  that                                                               
insurance companies in the state  of Washington attach a rider on                                                               
policies that say that if the  home becomes vacant - according to                                                               
a precise definition, the insurance  company can cancel coverage.                                                               
It is done with a rider,  not a law. A Snohomish County insurance                                                               
broker looked at the bill  and felt the definitions for "vacant,"                                                               
"abandoned," and "unoccupied" needed work.                                                                                      
                                                                                                                                
MR. CHAMPION questioned  why the holder of  the mortgage wouldn't                                                               
be  singled  out  for  notification.  In  an  actual  foreclosure                                                               
situation, the person  who defaulted probably doesn't  care if he                                                               
gets  notice of  cancelation,  he  said. The  real  loser is  the                                                               
investor that owns  the mortgage. Freddie Mac and  Fannie Mae own                                                               
most  mortgages, so  the public  loses if  there is  no insurance                                                               
coverage. He  related a personal  situation regarding  an estate.                                                               
The  home  was  unoccupied  and  winterized and  had  not  had  a                                                               
mortgage on it in 40 years, but  if the bill were to pass someone                                                               
could decide  there was  no insurance and  the estate  could lose                                                               
everything, probably without notice.                                                                                            
                                                                                                                                
MR.  CHAMPION urged  the committee  to take  the time  to develop                                                               
better  definitions  and  pass  a law  that  protected  both  the                                                               
residents of the state and the investment in real property.                                                                     
                                                                                                                                
4:31:08 PM                                                                                                                    
DAVID  SOMERS,  Industry  Issues  Chair,  Alaska  Association  of                                                               
Realtors, said the testimony of  both Ms. Feeken and Mr. Champion                                                               
were spot  on. He  said the association  appreciated the  work in                                                               
the previous  committee, but more  was needed. He  cited examples                                                               
of the people  the bill would place at risk  and observed that in                                                               
each  instance it  would  be  easy for  an  insurance carrier  to                                                               
determine that the home was vacant.                                                                                             
                                                                                                                                
He urged  the committee to do  more work and emphasized  that the                                                               
Alaska Association of Realtors wanted  to work with the insurance                                                               
industry  to find  a  way  to protect  both  the  public and  the                                                               
insurance business.                                                                                                             
                                                                                                                                
CHAIR OLSON asked if any  entities other than insurance companies                                                               
supported the bill.                                                                                                             
                                                                                                                                
MR. SOMERS said  he had not heard of anybody  else that supported                                                               
the bill.                                                                                                                       
                                                                                                                                
CHAIR OLSON asked where title companies stood.                                                                                  
                                                                                                                                
MR. SOMERS responded they did not take a position.                                                                              
                                                                                                                                
4:33:28 PM                                                                                                                    
SHELDON  WINTERS, Lobbyist,  State  Farm,  Lessmeier and  Winters                                                               
LLC, said State Farm had worked hard  on the bill and had come up                                                               
with the narrowest definition in the  country. He said it was not                                                               
that  Alaska  had high  foreclosure  rates.  The issue  was  that                                                               
everybody pays when uninsurable property  stays in the risk pool.                                                               
Insurance  becomes   more  expensive   and  less   available  for                                                               
everyone.  He disagreed  with previous  testimony  that adding  a                                                               
rider to  the policy could  solve the problem. Under  current law                                                               
and according  the interpretation  by the Division  of Insurance,                                                               
insurance companies cannot cancel  the insurance in the situation                                                               
of a  home where the door  was open, the utilities  were off, and                                                               
the  pipes were  freezing.  That  was the  reason  for the  bill.                                                               
Insurance  companies  want to  be  able  to  cancel in  the  most                                                               
extreme  situations. He  noted that  the  previous committee  had                                                               
concerns with  the original, broader  bill and State  Farm worked                                                               
very hard to address those concerns.                                                                                            
                                                                                                                                
SENATOR WAGONER  asked if in the  case of an abandoned  home, the                                                               
insurance company was required to  notify the mortgage company of                                                               
the decision to cancel the insurance.                                                                                           
                                                                                                                                
MR. WINTERS  said current statute required  the insurance company                                                               
to give  30-days written  advance notice  of cancellation  to the                                                               
insured,  not the  lender. State  Farm  does give  notice to  the                                                               
lender, but because  of privacy laws it does not  give the reason                                                               
for the  cancellation. He suggested addressing  notification in a                                                               
separate bill.  The policy  call in SB  157 was  whether insurers                                                               
should be allowed to cancel abandoned property.                                                                                 
                                                                                                                                
MR. WINTERS  disagreed with  a letter that  realtors sent  to the                                                               
committee. He  said it was  State Farm's understanding  that with                                                               
the  very  narrow definition,  none  of  the situations  in  that                                                               
letter  would   constitute  vacancy  or  abandonment.   The  only                                                               
situation the bill was trying to address was true abandonment.                                                                  
                                                                                                                                
4:39:55 PM                                                                                                                    
SENATOR WAGONER  asked how many  times in the last  several years                                                               
had State Farm had to cancel an insurance policy.                                                                               
                                                                                                                                
MR. WINTERS  said the  technical answer was  zero because  it was                                                               
against the  law. However, between  2007 and 2011 State  Farm did                                                               
not  renew  369  policies  because the  property  was  abandoned,                                                               
vacant, or unoccupied.                                                                                                          
                                                                                                                                
4:41:26 PM                                                                                                                    
CHAIR  OLSON commented  that trailer  houses  were probably  more                                                               
likely to be abandoned than a mansion.                                                                                          
                                                                                                                                
SENATOR WAGONER disagreed with the statement.                                                                                   
                                                                                                                                
MR.  WINTERS  continued to  say  that  State Farm  believed  this                                                               
definition of "abandonment"  was the most specific  and narrow in                                                               
the country.  If it were any  more specific, it would  render the                                                               
statute meaningless.                                                                                                            
                                                                                                                                
MR. WINTERS  said contrary  to what the  realtors have  said, the                                                               
proposed amendment  provides six  protections. Upon  discovery of                                                               
potential abandonment, the agent will  try to contact the insured                                                               
to  determine  the status  of  the  property  and work  with  the                                                               
insured to maintain coverage. The  home would have to be entirely                                                               
abandoned. The vacancy must increase  the hazard insured against.                                                               
The insurer  had to  give the insured  30-days written  notice of                                                               
cancellation.  Finally,  the  Division of  Insurance  watches  to                                                               
ensure that  the statute and  regulations are  not misinterpreted                                                               
or misapplied.                                                                                                                  
                                                                                                                                
MR. WINTERS emphasized  that State Farm had heard  no evidence of                                                               
abuse of  these laws in the  Lower 48. He urged  the committee to                                                               
move the bill forward.                                                                                                          
                                                                                                                                
4:46:32 PM                                                                                                                    
CHAIR  OLSON  offered  his understanding  that  the  Division  of                                                               
Insurance was not totally in favor of the bill.                                                                                 
                                                                                                                                
MR. WINTERS  responded that he  heard the  testimony differently.                                                               
He  understood  that  the  division  didn't  believe  it  was  an                                                               
overwhelming  issue,  but  that  amending the  statute  could  be                                                               
useful.                                                                                                                         
                                                                                                                                
CHAIR OLSON acknowledged that.                                                                                                  
                                                                                                                                
SENATOR MENARD commented that risk  pools were the price of doing                                                               
business.  She discussed  medical risk  pools and  then expressed                                                               
concern  about military  personnel  who have  sales fall  through                                                               
after they deployment.                                                                                                          
                                                                                                                                
MR. WINTERS responded that under  the definition in the bill that                                                               
was  not entire  abandonment. If  that were  actually a  problem,                                                               
there  would  be  some  evidence  of that  in  this  hearing.  He                                                               
reiterated that  State Farm was  only getting pushback  in Alaska                                                               
about cancelling  entirely abandoned property. He  then explained                                                               
the  difference  between  a  medical risk  pool  and  a  property                                                               
insurance risk  pool. Health insurance  assumes people  are going                                                               
to get  sick; the  homeowner risk pool  does not  assume property                                                               
abandonment.                                                                                                                    
                                                                                                                                
4:51:36 PM                                                                                                                    
CHAIR OLSON asked  why he would suppose that so  many people have                                                               
appeared to oppose the bill.                                                                                                    
                                                                                                                                
MR. WINTERS answered that State  Farm reached out after receiving                                                               
the  realtor  letter and  tried  to  explain that  the  insurance                                                               
company did  not intend  to cancel  property in  any circumstance                                                               
other than actual abandonment. He  reiterated that he worked hard                                                               
on the definitions  and didn't believe it could  be more definite                                                               
without  rendering the  statute  meaningless.  The realtors  were                                                               
well intention, but the evidence did not support their concerns.                                                                
                                                                                                                                
CHAIR  OLSON mentioned  Mr. Champion's  example  and asked  about                                                               
protecting a vacant home while the estate was being settled.                                                                    
                                                                                                                                
MR.  WINTERS   highlighted  the  six  protections   he  mentioned                                                               
earlier.                                                                                                                        
                                                                                                                                
CHAIR OLSON asked Ms. Hall if she had closing comments.                                                                         
                                                                                                                                
4:54:33 PM                                                                                                                    
MS.  HALL  said  Mr.  Winters   was  probably  correct  that  the                                                               
definition was the most stringent  in the country. "I'm all right                                                               
with it," she  said. The division had the ability  to enforce the                                                               
definition  knowing  the  intent.  With  regard  to  notice,  she                                                               
explained  that frequently  an insurance  policy was  endorsed to                                                               
have a  loss payee  and that  endorsement, by  contract, required                                                               
notice to  the lender  that the policy  was being  canceled. With                                                               
regard to an  estate, it can well protect itself  by changing the                                                               
name of  the insured on a  policy to the estate  of the deceased.                                                               
That was common practice.                                                                                                       
                                                                                                                                
CHAIR OLSON announced he would hold SB 157 in committee.                                                                        
                                                                                                                                
4:56:52 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Olson  adjourned the Senate Community  and Regional Affairs                                                               
Standing Committee meeting at 4:56 p.m.                                                                                         

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