03/15/2010 01:30 PM JUDICIARY
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ALASKA STATE LEGISLATURE SENATE JUDICIARY STANDING COMMITTEE March 15, 2010 1:34 p.m. MEMBERS PRESENT Senator Hollis French, Chair Senator Bill Wielechowski, Vice Chair Senator Dennis Egan Senator Lesil McGuire Senator John Coghill MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 244 "An Act providing that, during the governor's term of office, the duty station of the governor is Juneau, and prohibiting payment of certain travel allowances for use of the governor's personal residence." - MOVED SB 244 OUT OF COMMITTEE SENATE BILL NO. 153 "An Act relating to manufactured homes, including manufactured homes permanently affixed to land, to the conversion of manufactured homes to real property, to the severance of manufactured homes from real property, to the titling, conveyance, and encumbrance of manufactured homes, and to manufacturers' certificates of origin for vehicles; and providing for an effective date." - HEARD AND HELD SENATE BILL NO. 284 "An Act relating to state election campaigns, the duties of the Alaska Public Offices Commission, the reporting and disclosure of expenditures and independent expenditures, the filing of reports, and the identification of certain communications in state election campaigns; and providing for an effective date." - HEARD AND HELD PREVIOUS COMMITTEE ACTION BILL: SB 244 SHORT TITLE: GOVERNOR'S DUTY STATION/TRAVEL ALLOWANCES SPONSOR(s): SENATOR(s) STEDMAN 01/29/10 (S) READ THE FIRST TIME - REFERRALS
01/29/10 (S) STA, JUD 02/11/10 (S) STA AT 9:00 AM BELTZ 105 (TSBldg) 02/11/10 (S) Moved SB 244 Out of Committee 02/11/10 (S) MINUTE(STA) 02/12/10 (S) STA RPT 4DP 02/12/10 (S) DP: MENARD, PASKVAN, MEYER, FRENCH 02/24/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 02/24/10 (S) <Bill Hearing Postponed> 03/01/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 03/01/10 (S) Heard & Held 03/01/10 (S) MINUTE(JUD) 03/15/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 153 SHORT TITLE: MOBILE HOMES AS REAL PROPERTY SPONSOR(s): FRENCH 03/18/09 (S) READ THE FIRST TIME - REFERRALS 03/18/09 (S) L&C, JUD 04/09/09 (S) L&C AT 1:00 PM BELTZ 211 04/09/09 (S) Scheduled But Not Heard 03/09/10 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 03/09/10 (S) Moved SB 153 Out of Committee 03/09/10 (S) MINUTE(L&C) 03/10/10 (S) L&C RPT 5DP 03/10/10 (S) DP: PASKVAN, MEYER, THOMAS, BUNDE, DAVIS 03/15/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 284 SHORT TITLE: CAMPAIGN EXPENDITURES SPONSOR(s): JUDICIARY 02/19/10 (S) READ THE FIRST TIME - REFERRALS 02/19/10 (S) STA, JUD 03/02/10 (S) STA RPT 5DP 03/02/10 (S) DP: MENARD, FRENCH, MEYER, PASKVAN, KOOKESH 03/02/10 (S) FIN REFERRAL ADDED 03/02/10 (S) STA AT 9:00 AM BELTZ 105 (TSBldg) 03/02/10 (S) Moved SB 284 Out of Committee 03/02/10 (S) MINUTE(STA) 03/08/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 03/08/10 (S) Heard & Held 03/08/10 (S) MINUTE(JUD) 03/12/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) 03/12/10 (S) Heard & Held 03/12/10 (S) MINUTE(JUD) 03/15/10 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg) WITNESS REGISTER DARWIN PETERSON, Staff to Senator Bert Stedman Alaska State Legislature Juneau, AK POSITION STATEMENT: Introduced SB 244 on behalf of the sponsor. KATE HERRING, Staff to Senator French Alaska State Legislature Juneau, AK POSITION STATEMENT: Was available to answer questions about SB 153. GEORGE S. GINSBERG, Attorney McGlinchey Stafford PLLC POSITION STATEMENT: Provided supporting information related to SB 153. CARL SPRINGER, Registrar Division of Motor Vehicles (DMV) Department of Administration Anchorage, AK POSITION STATEMENT: Testified that DMV does not oppose SB 153, but it has concerns about the requirements it imposes on DMV. BRENDA MIERNYK, Branch Manager Wells Fargo Home Mortgage Anchorage, AK POSITION STATEMENT: Testified in support of SB 153. GEORGE CARNAHAN, representing himself Nikiski, AK POSITION STATEMENT: Testified in opposition to SB 153. ALPHEUS BULLARD, Attorney Legislative Legal and Research Services Legislative Affairs Agency Juneau, AK POSITION STATEMENT: Answered questions about the amendments to SB 284, version R ACTION NARRATIVE 1:34:30 PM CHAIR HOLLIS FRENCH called the Senate Judiciary Standing Committee meeting to order at 1:34 p.m. Senators Egan, Coghill, McGuire, Wielechowski, and French were present at the call to order. SB 244-GOVERNOR'S DUTY STATION/TRAVEL ALLOWANCES 1:34:50 PM CHAIR FRENCH announced the consideration of SB 244. The bill was heard previously at which time public testimony was taken and closed. He asked the prime sponsor's staff to remind the committee about what the bill intends to do. DARWIN PETERSON, Staff to Senator Bert Stedman, explained that SB 244 codifies in statute the administrative requirement that the governor's duty station is Juneau. Currently there is no statutory provision requiring the governor to reside in the capital city during his or her term. CHAIR FRENCH cited the legal memo from Jack Chenoweth responding to the question about whether passing this bill might make a future governor vulnerable to an ethics complaint for living away from the capital. He read the following: The measure does not propose an amendment to the Executive Branch Ethics Act (AS 39.52). While an ethics charge certainly may be initiated against a governor who spends inordinate time away from the duty station designated in the measure, if that assertion is the whole argument offered in support of the claim or complaint, then, in my judgment it would be a complaint without merit. CHAIR FRENCH found no questions or discussion and asked for a motion. 1:37:27 PM SENATOR WIELECHOWSKI moved to report SB 244 from committee with individual recommendations and attached fiscal note(s). There being no objection, SB 244 moved from the Senate Judiciary Standing Committee. At ease from 1:37 p.m. to 1:38 p.m. SB 153-MOBILE HOMES AS REAL PROPERTY 1:38:55 PM CHAIR FRENCH announced the consideration of SB 153. Speaking as the sponsor, he related that the intent is to give homeowners who have mobile homes that are located on real property the ability to convert their homes to real property. Currently mobile homes are titled through the Division of Motor Vehicles (DMV) like a motor vehicle. This change would give the homeowner access to traditional home financing, which often has lower interest rates. Converting the mobile home to real property would increase the value of the home and help to prevent "clouded" titles that often hinder clean transactions involving manufactured homes. KATE HERRING, Staff to Senator French, offered to answer questions about SB 153. SENATOR COGHILL asked for an explanation of the mechanism for combining a motor home title that's with DMV and a title guarantee that is tied to the property. MS. HERRING deferred to Mr. Ginsberg. 1:41:56 PM GEORGE S. GINSBERG, Attorney, McGlinchey Stafford, said his firm is outside council to Wells Fargo. Providing some background he explained that a manufactured home, like a car, is documented for ownership by a certificate of title. That ownership is transferred by a certificate of title, again like a car. Also like a car, financing of a manufactured home is secured by a lien, which is physically noted on the certificate of title. Unlike a car, a manufactured home can be permanently affixed to real property. In Alaska that creates problems. Currently, Alaska law says that the only way for a lender to perfect a security interest in a manufactured home that's been affixed to real property is both to note the lien on the certificate of title and to file a fixture filing under the Alaska Uniform Commercial Code (AUCC). The problem is that the Alaska DMV will not issue a certificate of title to a manufactured home that has been permanently affixed to real estate claiming that it is no longer a vehicle. This places a homeowner who has a manufactured home that is permanently affixed to real estate in no man's land. They cannot sell the manufactured home because there is no way to document the change of ownership and they can't finance it because there is no way to perfect a security interest in the public record. MR. GINSBERG explained that SB 153 is designed to establish a conversion procedure by which a manufactured home would be considered real estate for all legal purposes. This would involve a surrender and cancelation of the certificate of title after which an affidavit of affixation would be recorded on the real estate records. After the affidavit is recorded, a copy would be sent to DMV and any existing certificate of title would be canceled. If there isn't a certificate of title or it can't be found, there is a conversion procedure to accomplish the same purpose. After this happens the manufactured home is part of the real estate; it can be sold by a deed and can be financed by a real estate mortgage. The bill likewise has a procedure to follow in the event that a home is physically detached from the land. The homeowner would file an affidavit of severance and then apply for a title from DMV. It would then be treated as personal property just as it had been before the conversion. SENATOR EGAN asked if this would affect modular homes. MR. GINSBERG said no. 1:51:38 PM SENATOR WIELECHOWSKI asked if there is a downside to doing this with respect to increasing property taxes. MR. GINSBERG replied he believes the answer would be yes because it would increase the value of the real estate and presumably the real property tax, but that's not necessarily a downside. SENATOR WIELECHOWSKI said if this will increase property taxes for many of the people in his district he would have a problem with that. MR. GINSBERG reminded him that this bill will help the many people who may not pay real estate taxes, but they can't sell or finance their homes. So far we haven't run into opposition from consumer groups in Alaska or other states because it's to their advantage to do this, he said. 1:54:17 PM CHAIR FRENCH informed the members that this will not apply to mobile homes and trailers that are located in a trailer park on rented space. This applies to people who have put a mobile home on a piece of property he or she owns and now wants to affix it to a permanent foundation. The only exception would be to property on which there is a 20 year lease because that term is sufficiently long to qualify for the conversion to real property. MR. GINSBERG concurred. MS. HERRING added that this is voluntary process, it is not mandatory. 1:55:47 PM CARL SPRINGER, Registrar, Division of Motor Vehicles (DMV), Department of Administration, said DMV does not oppose SB 153, but it has concerns about the requirements it imposes on DMV. DMV has expertise in the area of driver licensing and titling and registering motor vehicles. It has no experience in real property law. Currently DMV is required to title a manufactured mobile home if the owner so requests, but the owner is not required to title a manufactured mobile home. Currently there are 8,291 manufactured mobile homes that are titled in this state. He surmised that a healthy percentage have had the wheels removed and been placed on a semi-permanent foundation with skirting. This would possibly qualify the manufactured mobile home as real property, but he imagines that many are located in trailer parks. MR. SPRINGER said SB 153 would have DMV duplicating the efforts of the recorder's office and real estate title insurance agencies. Currently DMV records the primary lien or encumbrance that the owner discloses and this bill would make DMV responsible for determining the existence or non existence of other liens or encumbrances. Essentially it would be performing real property title searches. He said that the attachment severance requirements are of little consequence if the owner can execute these affidavits even if they only intend to permanently affix or sever the manufactured mobile home from real property rather than actually doing it when the event occurs. He said that for these reasons DMV feels that SB 153 needs further clarification. He offered to work with the sponsor to address these concerns. CHAIR FRENCH asked him to let his office know with as much specificity as possible, which sections DMV seeks to amend. 1:58:28 PM BRENDA MIERNYK, Branch Manager, Wells Fargo Home Mortgage, said she is testifying in support of SB 153. She related that Alaska statutes do not meet eligibility requirements for lenders to sell a mortgage loan for a manufactured home to Fanny Mae or Freddy Mac, including the process to legally classify the home as real property and placing the lender in first lien position. Wells Fargo has had to turn away business because of this, she said. If SB 153 were to pass, state definitions of manufactured homes would be aligned with HUD definitions to create a system for title transfer and property conversion. Additionally, it would create a means for titling manufactured homes that have been affixed to property but the title cannot be found. MS. MIERNYK said stated that this bill would 1) help home owners whose manufactured home is already affixed to real property gain better access to credit and make it easier to sell their homes; 2) help increase manufactured home values by allowing the owners to convert them to real property including those not covered by certificates of title or for which a certificate of title cannot be found; 3) help lenders gain a perfected security interest in manufactured homes; 4) help DMV by establishing a formal procedure for cancelling a title when a manufactured home is affixed to a permanent foundation; and 5) increase property tax revenue as a result of manufactured homes being converted to and considered real property. 2:00:59 PM GEORGE CARNAHAN, representing himself, Nikiski, said he lives in a home that falls under AS 29.45.070. It is not hooked up to electricity, sewer or other utilities and it is not attached to the ground. Current law dictates that if a property has any of these three elements it is classified as real estate property. He questioned why the existing law should be tossed out the window. This will simply increase taxes and they are already too high, he said. 2:03:12 PM CHAIR FRENCH closed public testimony and held SB 153 in committee. At ease 2:03 p.m. to 2:06 p.m. SB 284-CAMPAIGN EXPENDITURES 2:06:40 PM CHAIR FRENCH announced the consideration of SB 284 and asked for a motion to adopt the proposed committee substitute (CS). It incorporates the amendments that were made to version A during the 3/12/10 hearing. SENATOR MCGUIRE moved to adopt the judiciary work draft CS for SB 284, labeled 26-LS1448\R, as the working document. There being no objection, version R was before the committee. CHAIR FRENCH noted that Mr. Bullard sent a memo pointing out that the provisions on page 6, lines 5-7, and on page 7, lines 28-30, are redundant. He suggested the committee consider removing the redundancy. CHAIR FRENCH moved to adopt Amendment 1. AMENDMENT 1 OFFERED IN THE SENATE TO: CSSB 284(JUD), Draft Version "R" Page 6: Delete lines 5, 6, and 7 SENATOR WIELECHOWSKI objected for discussion purposes. CHAIR FRENCH explained version R adds the requirement in Sec. 15.13.090(a)(2)(E) that the communication must clearly state that it is not authorized, paid for, or approved by the candidate. The existing AS 15.13.135(b)(2), on page 7, lines 28- 30, already provides that requirement. SENATOR WIELECHOWSKI removed his objection to Amendment 1. CHAIR FRENCH found no further objection and announced that Amendment 1 is adopted. He noted that the second point in Mr. Bullard's memo addressed in an amendment proposed by Senator Coghill. CHAIR FRENCH moved Amendment 2, labeled 26-LS1448\R.2, and objected for discussion purposes. AMENDMENT 2 OFFERED IN THE SENATE BY SENATOR COGHILL TO: CSSB 284(JUD), Draft Version "R" Page 7, following line 30: Insert a new bill section to read: "* Sec. 16. AS 15.56.014(a) is amended to read: (a) A person commits the crime of campaign misconduct in the second degree if the person (1) knowingly circulates or has written, printed or circulated a letter, circular, or publication relating to an election, to a candidate at an election, or an election proposition or question without the name and address of the author appearing on its face; (2) except as provided by AS 15.13.090(b), knowingly prints or publishes an advertisement, billboard, placard, poster, handbill, paid-for television or radio announcement, or communication, as that term is defined in AS 15.13.400, intended to influence the election of a candidate or outcome of a ballot proposition or question without the words "paid for by" followed by the name and address of the person [CANDIDATE, GROUP, OR INDIVIDUAL] paying for the advertising or communication and, if a candidate or group, with the name of the campaign chair; (3) knowingly makes a communication, as that term is defined in AS 15.13.400, (A) containing false factual information relating to a candidate for an election; (B) that the person knows to be false; and (C) that would provoke a reasonable person under the circumstances to a breach of the peace or that a reasonable person would construe as damaging to the candidate's reputation for honesty or integrity, or to the candidate's qualifications to serve if elected to office." Renumber the following bill sections accordingly. SENATOR COGHILL said the amendment is based on Mr. Bullard's legal analysis that the phrase "candidate, group, or individual" should be amended to "person" to correspond to the changes the bill made to AS 15.13.090. 2:11:14 PM ALPHEUS BULLARD, Attorney, Legislative Legal and Research Services, explained that the bill amends AS 15.13.135(b) on page 7, line 20, by replacing "individual, group, or nongroup entity" with "person" to correspond with the U.S. Supreme Court holding in Citizens United to capture that universe of people who are now allowed to make communications. The purpose of the amendment is to make a similar replacement in AS 15.56.014(a)(2) for campaign misconduct. CHAIR FRENCH observed that the only change Amendment 2 makes is to replace the phrase "candidate, group, or individual" with the word "person" on page 1, line 15. SENATOR COGHILL said the amendment conforms bill Section 15 to AS 15.56.014(a). MR. BULLARD said that's correct. CHAIR FRENCH asked if the crime of campaign misconduct in the second degree is a class B misdemeanor. MR. BULLARD agreed that it is a class B misdemeanor. CHAIR FRENCH removed his objection to Amendment 2. Finding no further objection, he announced that Amendment 2 is adopted. 2:14:21 PM CHAIR FRENCH moved to adopt Amendment 3, labeled 26-LS1448\R.1, and objected for discussion purposes. AMENDMENT 3 OFFERED IN THE SENATE BY SENATOR COGHILL TO: CSSB 284(JUD), Draft Version "R Page 5, line 18, through page 6, line 7: Delete all material and insert: "Sec. 15.13.090. Identification of communication. (a) All communications shall be clearly identified by the words "paid for by" followed by the name and address of the person [CANDIDATE, GROUP, NONGROUP ENTITY, OR INDIVIDUAL] paying for the communication. In addition, a person shall clearly (1) provide the person's address, or the address of the person's principal place of business; (2) for a person other than an individual or candidate, include (A) the name and title of the person's principal officer; (B) a statement from the principal officer approving the communication; and (C) the name and city and state of residence or principal place of business, as applicable, of each of the person's three largest contributors under AS 15.13.040(e)(5), if any, during the 12-month period before the date of the communication; and (3) for a candidate, include (A) the name of the candidate; and (B) a statement from the candidate approving the communication [CANDIDATES AND GROUPS MAY IDENTIFY THE NAME OF THEIR CAMPAIGN CHAIRPERSON]." Page 6, lines 19 - 20: Delete "(a)(2)(C) of this section and, if applicable, (a)(2)(D)" Insert "(a)(1) and (a)(2)(C)" Page 6, line 29: Delete "AS 15.13.090(a)(2)(D)" Insert "AS 15.13.090(a)(2)(C)" SENATOR COGHILL said the amendment deletes and rewrites much of Section 11, basically making three changes. First, it requires identification in all circumstances; second, it deletes the redundant subparagraph (E) on page 6, which was already accomplished with the adoption of Amendment 2; and third, it changes the requirement to identify the top five contributors to require identification of the top three contributors. SENATOR COGHILL said that he supports full disclosure but he objects if that's all that people will hear during a campaign advertisement. All these campaign finance contributions will have to be reported in the aggregate of over $100 in the campaign finance disclosure anyway so this requirement is onerous, he said. Thus, reducing the number to three is appropriate. 2:17:30 PM CHAIR FRENCH referred to lines 17-19 of the amendment and asked if the idea is that in every normal campaign advertisement a candidate would be required to state their name and that they approve the message SENATOR COGHILL said yes and version R on page 5, lines 18-22, basically says that. SENATOR MCGUIRE offered the view that the amendment attempts to replace subparagraph (E) on page 6 by putting it in the affirmative and said she would argue that doing so makes it unduly burdensome and possibly an interference. 2:19:53 PM CHAIR FRENCH called a point of order; lines 9-16 of the amendment describe the disclosure requirements for a corporation, union, or group. SENATOR COGHILL agreed. SENATOR MCGUIRE said she understood. CHAIR FRENCH noted that version R requires that those disclosures be audible in radio or television advertisements. He asked Senator Coghill if he envisions lines 9-16 of the amendment to be text on a screen or audible. SENATOR COGHILL replied he believes that a different section of the statute requires disclosures to be audible for radio. CHAIR FRENCH agreed; Section 12 of the current draft modifies AS 15.13.090 adding a new subsection to jibe with (a)(2)(C). CHAIR FRENCH said his understanding is that the amendment requires identification of the three largest contributors instead of the top five tracked over a 12 month period and it adds a requirement that the candidate approve his or her own campaign advertisements. He asked Mr. Bullard if he agrees. 2:23:35 PM MR. BULLARD replied it also shifts the disclosure. First, the amendment drops the provision that the candidate or group may identify the campaign chair. It requires that all persons are required to provide the identifying information. In the current draft it was only a person other than a candidate, individual, or political party who was required to do that. Then it tracks in a similar, but not exact, fashion all the requirements of the bill except the top five contributors are narrowed to the top three. The 12 month period is the same in both the amendment and the bill. The requirement that candidates name themselves and provide a statement approving the communication is new. CHAIR FRENCH commented that he likes the idea that everybody provides the person's address or principle place of business, but not much else. SENATOR WIELECHOWSKI said he could support the amendment with some modifications, but not as currently written. CHAIR FRENCH suggested the committee vote on the amendment and depending on the outcome the bill might need further amending before it is passed along to the next committee. 2:26:38 PM SENATOR COGHILL said he's willing to withdraw the amendment, but he would like an opportunity to try to establish what should be a requirement for both a candidate and a corporation because he foresees a legal entanglement involving unequal treatment if there is no similarity between the requirements. CHAIR FRENCH asked if he is withdrawing the amendment. SENATOR COGHILL withdrew Amendment 3. 2:28:53 PM SENATOR WIELECHOWSKI said he'd like to hear from legislative legal about whether or not there is an equal protection argument for having different requirements for candidates versus corporations. MR. BULLARD responded he wasn't prepared to offer an off-the- cuff legal response, but he would have an answer on Wednesday. 2:29:44 PM CHAIR FRENCH asked if the committee had additional concerns or suggestions. SENATOR WIELECHOWSKI asked if Mr. Bullard could comment on whether or not they could restrict campaign activities of corporations or unions that have foreign shareholders. MR. BULLARD explained that federal law already prohibits foreign nationals from involving themselves in federal, state, and local elections. In some cases this extends to American corporations or American subsidies of foreign corporations where foreign nationals are directing decisions regarding how they involve themselves in the U.S. electoral processes. There are possible federal preemption arguments if the state were to involve itself in attempting to regulate or govern American corporations with foreign ownership or some portion of foreign ownership in this same field. There is no immediate and clear answer to the question, he concluded. 2:31:29 PM SENATOR WIELECHOWSKI said his concern is that a foreign government or foreign corporation could set up in Alaska and attempt to influence elections in the state. He asked if he's saying that there's nothing the Legislature can do about that. MR. BULLARD replied that situation is already prohibited by federal law. An American subsidiary of a foreign corporation has to use proceeds from its American operations to fund any sort of involvement in an American election. If the American subsidiary receives direction on how to proceed from overseas or if it is being reimbursed by the foreign parent corporation, electioneering involvement would be prohibited. This is a new issue in Alaska since corporations were previously prohibited absolutely. I don't know if we can prohibit this as a state, I'm just alerting the committee to the possible preemption argument, he said. 2:33:22 PM CHAIR FRENCH asked about the possibility of restricting corporate involvement in Alaska elections only to those U.S. corporations that are domiciled in Alaska. MR. BULLARD offered to provide an opinion on the topic. CHAIR FRENCH asked him to do that and to look into some of the concerns Senator Wielechowski expressed. I share those concerns, he said. We have a right to be concerned about a shell corporation trying to manipulate voters and if we need state statutes to deal with that, then now is the time to do it, he said. 2:34:48 PM SENATOR WIELECHOWSKI said he'd like to go a step further and to the extent possible prohibit corporations that have foreign shareholders that hold X percentage or X dollars of stock. For years the federal government has had a policy of not allowing foreign nationals to participate in elections and now this Supreme Court case has opened the backdoor to allowing foreign nationals to participate in and influence elections. "I would be very interested in trying to pursue methods [so] that we can prevent that sort of thing," he said. CHAIR FRENCH said he shares the sentiment but the clock is ticking toward adjournment and he doesn't want to miss the opportunity of passing a bill that solves a large portion of the problem. CHAIR FRENCH found no comments from Holly Hill and Jason Brandeis with APOC or John Ptacin with DOL. He announced that the committee would continue to work on SB 284. 2:36:32 PM There being no further business to come before the committee, Chair French adjourned the meeting at 2:36 p.m.