Legislature(2001 - 2002)
04/30/2002 01:40 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR & COMMERCE COMMITTEE
April 30, 2002
1:40 pm
MEMBERS PRESENT
Senator Ben Stevens, Chair
Senator Alan Austerman
Senator Loren Leman
Senator John Torgerson
MEMBERS ABSENT
Senator Bettye Davis
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 27(FIN)
"An Act relating to the registration of individuals who perform
home inspections; relating to regulation of contractors; relating
to registration fees for specialty contractors, home inspectors,
and associate home inspectors; relating to home inspection
requirements for residential loans purchased or approved by the
Alaska Housing Finance Corporation; relating to civil actions by
and against home inspectors and to civil actions arising from
residential unit inspections; and providing for an effective
date."
MOVED CSHB 27(FIN) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 472(JUD) am
"An Act relating to certain persons who buy and sell secondhand
articles and to certain persons who lend money on secondhand
articles."
HEARD AND HELD
CS FOR HOUSE BILL NO. 393(JUD) am
"An Act relating to unfair and deceptive trade practices and to
the sale of business opportunities; amending Rules 4 and 73,
Alaska Rules of Civil Procedure; and providing for an effective
date."
HEARD AND HELD
SENATE CS FOR CS FOR HOUSE BILL NO. 246(JUD)
"An Act relating to regulation of a person providing insurance
for the cost of medical care, to confidentiality of insurance
records, to insurance hearings, to insurance fees, to annual and
quarterly statements by insurers, to managed care insurance, to
taxes on insurance, to insurer certificates of authority, to risk
based capital for insurers, to unauthorized and nonadmitted
insurers, to surplus lines insurance, to health insurance, to
life insurance, to annuity insurance, to consumer credit
insurance, to insurer liquidation, to multiple employer welfare
arrangements, to title insurance, to the Alaska Insurance
Guaranty Association, to hospital and medical service
corporations, and to regulation of insurance producers, agents,
brokers, managers, and adjusters; and providing for an effective
date."
SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
HB 27 - No previous action to record.
HB 472 - No previous action to record.
HB 393 - No previous action to record.
WITNESS REGISTER
Representative Rokeberg
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of HB 27.
Mr. Steven Conn, Executive Director
Alaska Public Interest Research Group
507 E St #213
Anchorage AK 99501
POSITION STATEMENT: Supported HB 27.
Mr. Tom Martin
Kodiak Board of Realtors &
Alaska Association of Realtors
1216 Madsen Ave.
Kodiak AK 99615
POSITION STATEMENT: Supported HB 27.
Mr. Bill Brady
Chairman, Legislative Committee
Alaska Association and Anchorage Board of Realtors
POB 110101
Anchorage AK 99511
POSITION STATEMENT: Supported HB 27.
Mr. Franco Venuti, Certified Building Inspector
POB 3652
Homer AK 99603
POSITION STATEMENT: Supported HB 27.
Ms. Carol Perkins
Active Inspections and Energy Rating
POB 870505
Wasilla AK 99687
POSITION STATEMENT: Opposed HB 27.
Mr. William Bruu
Ti-Le-An Management
HC30, Box 5569
Palmer AK 99645
POSITION STATEMENT: Opposed HB 27.
Mr. David Owens
Owens Inspection
POB 3589
Palmer AK 99645
POSITION STATEMENT: Opposed HB 27.
Ms. Robin Ward
Alaska State Homebuilders Association
POB 91443
Anchorage AK 99509
POSITION STATEMENT: Supported HB 27.
Ms. Laura Achee
Staff to Representative Joe Green
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on HB 472 for Representative Green.
Mr. Norm Blakely
Alaska Trading and Loans
POB 537
Soldotna AK 99669
POSITION STATEMENT: Commented on HB 472.
Lieutenant Julie Grimes
Department of Public Safety
PO Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Supported HB 472.
Representative Gary Stevens
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of HB 393
Ms. Cynthia Drinkwater, Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on HB 393.
ACTION NARRATIVE
TAPE 02-26, SIDE A
Number 001
HB 27-HOME INSPECTORS/CONTRACTORS
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 1:40 pm and announced HB 27 to be up for
consideration.
REPRESENTATIVE ROKEBERG, sponsor of HB 27, said that right now
anyone who wants to call themselves a home inspector can "hang up
a shingle." HB 27 seeks to protect the homeowner and endeavors to
balance the legal responsibilities of the inspectors together
with the consumers and those other people who are a part of a
real estate transaction. The version they are working with, CSHB
27(FIN), adds the home inspector licensures to the specially
contract and endorsement section in statute. He explained that
several versions of this bill have a stand alone board, but the
cost for the biennial fee was in excess of $1,500. So, they have
lowered those costs to $250 by not establishing a board, but
creating an endorsement as a specialty contractor license.
CHAIRMAN STEVENS asked regarding page 6, line 4, who requests the
inspection.
REPRESENTATIVE ROKEBERG replied that it could be either a buyer,
a seller, a bank "or somebody." It gives ownership of the report
to the person who is purchasing it.
CHAIRMAN STEVENS asked if anybody has the authority to order it.
REPRESENTATIVE ROKEBERG replied that anybody could, but there has
to be consent from the purchaser of the report to pass it on to
someone else. Typically, a buyer wants to make an offer on a
home, puts money down contingent on a home inspection. At that
point a home inspector is hired by the buyer and he produces a
report. In this case, the report is in the buyer's hands.
Typically, he would give that to the seller of the house noting
the items that need repairs before he completes the purchase. The
intent is to keep the seller from being able to pass the report
around to other parties who weren't party to the original
transaction giving them standing to bring an action against the
inspector.
SENATOR TORGERSON asked regarding page 3, line 10, where
"specialty contractor" is defined and noted that it is only used
once.
REPRESENTATIVE ROKEBERG said as he indicated, the home inspector
under this legislation is a specialty contractor under the
contractor's section of the statute, which is already on the
books.
CHAIRMAN TORGERSON noted that the work is good for six months and
asked if that was an industry standard.
REPRESENTATIVE ROKEBERG said that was a standard after
discussions.
MR. STEVE CONN, Executive Director, AKPIRG, supported HB 27, but
said there were several problems with it. Section AS
08.18.061(b), related to the bonding has a long-term problem,
because the bonds, which were set a long time ago, are "woefully
low" in terms of the actual potential damage. "Ten and five
thousand dollars is really almost laughable."
Section AS 08.18.061 talks about the exemptions, because they
speak of non-applicability of certain provisions when the work is
$10,000 or less. He doesn't agree with that, since a roofing job
that cost less than $10,000 should have the same legal right
accorded to it as anything else. "To use that as a jumping off
place for an exemption and at the same time only bond people at
$10,000 and $5,000 seems illogical to say the least."
The section related to limits of liability is also too short. On
existing homes AS 08.18.085 has a one-year provision to bring an
action. A person who has an inspection in the spring might not
find out how inadequate the inspection was until it has
experienced an Alaskan winter. Finally, he thought that cities
like Anchorage and Fairbanks would want to require a bond based
on the realities of their market, if the state is going to allow
inspectors to be under-bonded.
REPRESENTATIVE ROKEBERG responded that this is a business
transaction and it sounds like he wants to protect the public
with a "legal license." The bonding requirement is not intended
to pay for someone's roof. The inspections typically cost about
$350.
People don't understand what constitutes the inspection
report and what liability arrives from these
situations. Heretofore the inspectors have tried to
limit their liability to the amount of the fees, but
the courts in the state of Alaska found them void.
They're not enforceable contracts because they're
against public policy. This particular bill outlaws
that explicitly in the black letter law. But to find
that we need to have the home inspectors by omission as
a matter of factual evidence is a matter that could be
played out in a court. We shouldn't be looking to them
to right all the ills of a particular transaction.
MR. TOM MARTIN, Kodiak Board of Realtors, said he also represents
the Alaska Association of Realtors and they support HB 27.
MR. BILL BRADY, Chairman, Legislative Committee, Alaska
Association Anchorage Board of Realtors, said he is also the
former President of the Alaska Association of Realtors and that
they support HB 27. They strongly believe it is a consumer
protection bill and hope they pass it out of committee today.
MR. FRANCO VENUTI, Certified Combination Building Inspector, said
he has performed in excess of 3,000 inspections and although he
supported HB 27, he had some questions with section 33 that
allows engineers and architects to inspect rural areas for Alaska
Housing Finance Corporation loans. He understands that there is
no insurance requirement for engineers or architects and
inspectors are required to be insured. He was also concerned with
AS 08.18.156, which is the extension for home inspections. Item 8
effectively eliminates the requirement for energy raters to be
licensed under this bill, but energy ratings are a very important
part of the process and they should be held just as responsible
for them as the inspector.
Section 41, the transitional licensing provisions, is also
troublesome because it states that licenses would be offered to
someone who has been in the home inspection business in the state
on October 1, 2001 and has passed the Building Inspector
Examination or Property Maintenance and Housing Inspector
Examination given by the International Conference of Building
Officials (ICBO).
Most of the ICBO inspectors who have been doing Alaska
Housing Finance Corporation inspection for properties
are certified combination dwelling inspectors. That was
the certification required when this process went into
effect back in '92. My question on this requirement is
if we hold the combination dwelling inspector
certification that some of us in the business view as
requiring a higher degree of knowledge than a building
inspector exam, I'm wondering why they've reduced that
requirement to only be a building inspector exam.
MR. VENUTTI said he had another concern with section 22 and the
requirement for insurance in AS 08.18.010(1), which is not clear.
It talks about requiring a $20,000 property damage, $50,000
injury including death for one person and $100,000 for injury,
including death for one or more people and he was wondering if
that is the insurance requirement for this bill.
REPRESENTATIVE ROKEBERG replied yes. They are just requiring very
limited liability insurance that any business should have.
The examination that that gentleman has passed is
certainly going to be adequate. The home inspector
examination given by ICBO is meant to be an inclusive
term of art to include the different categories that
the ICBO provides examinations on. So, that should not
be a problem.
He said they considered bringing the energy raters underneath the
bill, but because they don't have the breadth of knowledge, they
were determined to be in a separate category not regulated by
this particular bill. The architects and engineers insurance is
in existing law right now and is up to Alaska Housing. "The
insurance requirements are almost diminimous here, so I don't
think there's any problem."
SENATOR TORGERSON asked if it would hurt to put "equivalent"
after "International Conference of Building Officials."
REPRESENTATIVE ROKEBERG said stated to "pass the building home
inspector examination or property maintenance…" and those would
be established by regulation. There are various types of exams
the ICBO gives.
SENATOR TORGERSON asked Mr. Venuti if he was satisfied that the
language is broad enough to cover an examination that he might
have taken.
MR. VENUTI replied that he wasn't. He wanted to see it in writing
so it wouldn't be interpreted wrong by someone else.
CHAIRMAN STEVENS asked him what he was licensed as.
MR. VENUTI replied that he is a combination building dwelling
inspector. This is the certification that most people now have
who do Alaska Housing Finance Corporation inspections.
SENATOR TORGERSON asked who actually issued the license.
MR. VENUTI replied, "The International Conference of Building
Officials," and added that the examinations in the bill are
entirely different.
SENATOR TORGERSON said that didn't appear to be the case and
asked if they had changed the process or if he was looking at the
same version of the bill. He said that Mr. Venuti referenced
section 41, but he actually was referencing section 43, which
says, "Pass the building inspectors examination on property
maintenance and home inspection issued by the ICBO."
MR. VENUTI responded that those are entirely different
certifications than a combination dwelling inspector, which
includes building inspections, electrical inspections, plumbing
and mechanical inspections.
REPRESENTATIVE ROKEBERG commented, "The housing inspector
examination, as given by the ICBO, are meant to be generic so
they would include all those examinations that are appropriately
given by the ICBO."
He appreciated Mr. Venuti's concern, but the language is meant to
be inclusive.
CHAIRMAN STEVENS asked if his concerns could be addressed in
section 31, the exemptions.
REPRESENTATIVE ROKEBERG replied that he didn't think so. He
referred to section 7 on page 4 and said the language is intended
to be vague.
CHAIRMAN STEVENS asked Mr. Venuti to write his concerns down and
fax them in to his office.
MS. CAROL PERKINS, Partner, Active Inspections and Energy Rating,
said she does new and existing construction and energy ratings
and that she has some questions with the bill. She wanted to know
if the language on page 5, line 21, AS 08.18.023, applied to all
inspections.
REPRESENTATIVE ROKEBERGY replied yes.
MS. PERKINS continued her questioning asking, if that is the
case, it refers to a report that goes back to section under
definitions of reports where it says they have to notify the
purchaser of the inspection as to the limitations of their report
and their coverage.
REPRESENTATIVE ROKEBERG said he wasn't used to being interrogated
by a witness.
MS. PERKINS clarified her question saying that section 32 says
home inspection means a legal examination performed in accordance
with standards of practice adopted by the department…readily
visible heating, plumbing etc. She explained that all new
construction has to be readily visible before they inspect it.
Then there is a list of inspections they are supposed to do for
Alaska Housing and notification they are supposed to give
regarding defects, which relates more to existing housing than it
does to new construction. Other language also applies to existing
construction more than to new construction. She thought that
references to new construction and existing construction needed
to be clarified. She also questioned what was meant by "valid" in
the section regarding the length of time the reports are good.
CHAIRMAN STEVENS said he thought "valid" referred to the
timeframe for any recourse.
REPRESENTATIVE ROKEBERG said he had talked with Ms. Perkins for a
long time and had answered all of her questions before.
MR. WILLIAM BRUU, Owner, Ti-Le-An Management Incorporated, an
inspection firm that has been doing inspections of all types in
the Valley for almost 15 years, he said that he faxed his concern
to the sponsor, but he absolutely refuses to see his point.
There are two types of inspections here that are trying
to be legislated or regulated by one regulation and it
just doesn't work. The home inspector goes out and
looks at an existing home for two to three hours on one
day and he's done. He never goes back. In the meantime,
a new construction inspector goes to a dwelling that is
being constructed from the time the plans are provided
to him until the time the house is finished. He may be
on-site anywhere up to 15 times at that house. Not only
that, but when he provides his final inspection and he
signs off on the paperwork as required by Alaska
Housing, the paperwork becomes a recorded legal
document. His name is attached to that dwelling in
perpetuity. This bill just is so confusing to people
who are inspectors as to where their liabilities are
going to be, what they are going to have to insure
against as far as liabilities are concerned and the
cost as indicated in the fiscal note that's attached to
this is - and I think the sponsor misspoke when he said
the licensing fees would be approximately $250 per
year. Our best estimate for the population of
inspectors that would be licensed in the state of
Alaska is just above 100 people. And if you take the
first year cost of $16,500 as indicated in the fiscal
note and you divide that by 100 people, that drives the
licensing cost to over $800 per person. Not only that,
but you add on top of that that now requires bonding -
and what you've done is you've driven the overhead cost
for an inspector to well over $1,000 per year. That
money is going to have to be paid for by somebody and
it will be the consumers and I don't see how driving
the cost of obtaining a house up significantly for a
consumer is a protection item.
REPRESENTATIVE ROKEBERG interrupted to say the Mr. Bruu has the
wrong information and testimony from the last three people are
from people he has been dealing with for three or four years.
Frankly, I don't think anything will satisfy these
people. As my testimony indicated, this approximate
$250 is going to be spread over 2,100 - 2,200 specialty
contractors. We've changed the bill. He's referring to
an old version - and the fact of the matter is the
distinctions between new construction and existing
construction is understood by me and is accommodated in
this bill. 'The requirements of a homeowner or a lender
will set the requirements for the nature of the
inspection and/or the individual inspector does.' All
he has is the requirement that it be written.
CHAIRMAN STEVENS said he didn't receive Mr. Bruu's fax and asked
him to send it again.
MR. DAVID R. OWENS, Owner, Owens Inspection Services, said he
lived in Alaska since 1962 and had been a building inspector
since 1983. He currently opposed the bill as written and agreed
with the previous speakers regarding further clarification
needing to be done to separate existing inspection and new
construction. He further agreed with Mr. Venuti who pointed out
that it is important to clarify what examination was required for
new construction and for existing construction, because they are
quite different. The combination dwelling inspection test that
ICBO puts out is a more appropriate one for new construction and
that is an important point.
MR. OWENS said that he is also opposed to repealing AS
18.56.300(c), which has important protection language for the
inspector. It was put there 10 years ago by Alaska Housing so
they wouldn't be afraid to do their jobs on new construction by
being bothered with frivolous lawsuits from a minor oversight.
MS. ROBIN WARD, Alaska State Homebuilders Association, explained
that this is a compromise document that industry has worked on
for the past three or four years. She believed this is a good
document. "The industries are equally uncomfortable, but there is
a public benefit to the consumer by this legislation."
TAPE 02-26, SIDE B
SENATOR AUSTERMAN asked why they limited the validity of the
inspections to six months.
REPERESENTATIVE ROKEBERG said the concern is that changing
weather conditions with the seasons could have an impact on the
house. "They are trying to put people on notice that there is not
a length of time to the report."
SENATOR AUSTERMAN asked who he introduced the bill for.
REPRESENTATIVE ROKEBERG replied, "For the people of the state of
Alaska."
He explained that they are repealing immunity that the inspectors
are granted under the law now under the Alaska Housing Finance
Corporation.
Naturally they don't want to loose that. That's what we
heard today. That's where the squeak is, because we're
removing some of the immunities people are operating
under to make sure they are responsible to the public.
REPRESENTATIVE ROKEBERG said that Alaska Housing has supported
this bill over the years.
SENATOR LEMAN asked on page 14, line 12 and on, regarding any
prohibition on an offer to deliver compensation as inducement or
reward to the owner of the property, if that would prohibit
someone from engaging in traditional business of buying lunch or
giving a trinket.
REPRESENTATIVE ROKEBERG replied that it wouldn't.
SENATOR AUSTERMAN asked if there was a current law that requires
home inspectors.
REPRESENTATIVE ROKEBERG replied that required inspections are for
local building codes and Alaska Housing for new construction, not
for existing.
MR. OWENS said they are trying to regulate an activity,
inspection, but he thought the question is are they really
regulating the whole activity or just taking bits and pieces of
it.
That's what we're doing in this bill. We're not
regulating all people that do inspection work. A good
percentage of them, I'd say more than 50%, are going
unregulated. It's just the people who do existing home
inspections and new home inspections under Alaska
Housing and I'm a little bit unclear whether it would
include other new home inspectors. And commercial
inspectors are left completely out of this, but you
want to regulate an activity, you should regulate the
whole group of people who do inspection work.
CHAIRMAN STEVENS said it was his intent to move this bill on with
stated concerns to the Judiciary Committee.
2:40 pm
SENATOR LEMAN moved to pass CSHB 27(FIN) from committee with
individual recommendations. There were no objections and it was
so ordered.
HB 472-PAWNBROKERS/SECONDHAND DEALERS
CHAIRMAN STEVENS announced HB 472 to be up for consideration.
MS. LAURA ACHEE, staff for Representative Joe Green, sponsor of
HB 472, said that he has prepared a committee substitute that she
would explain.
She explained that there is a statute right now that requires
anyone who buys a secondhand article with the intent of reselling
it or takes a secondhand article as collateral on a loan, not
including banks, to keep a record of every single article they
take in including the name of the person that they purchased it
from. The bill lists what the articles would be rather than
saying any article - like articles with a serial number, article
with a resale value greater than $75 or article presented in a
lot of 10 or more, which would cover CDs and DVDs.
The biggest change in the bill is that in addition to keeping the
records now the secondhand dealers and contractors who conduct
these transactions would have to provide weekly reports to their
local police agency or to the state troopers if they are outside
of a municipality. The version that passed out of the House has
every two weeks for reporting. After speaking with law
enforcement personnel, Representative Green felt that every two
weeks was not frequent enough to track stolen articles.
Representative Green wants to make it clear that the
intent of this bill is not as some people have supposed
- that we found that there's a big problem with
dishonest shopkeepers out there. In fact, that's not
the problem. We've found every shopkeeper we've spoken
to has been very honest and upfront about the fact that
they check I.D. s and they don't want stolen property
in their stores. There are plenty of theft laws on the
books that will help law enforcement shut down any shop
keepers that were known to be taking in hot items and
fencing them. What we're trying to do is make it easier
for police to get the items that are stolen back to the
people to whom they belong and to also have a record of
folks who are repeatedly stealing and selling items to
be used during prosecution.
She said the next change from the version that passed out of the
House is in Section 6, the property-holding requirement. The
House version says that pawn brokers have to hold items for two
weeks before they could sell them allowing them time to correlate
the reports of items taken in with the reports of stolen items.
The CS backs the holding period down a little bit to 72 hours
from the time that the report is submitted so they would have to
hold from the time they take it in until 72 hours after the
report is submitted. They have included secondhand dealers in the
holding provisions.
The next change is in part (b) of this section where it's made
really clear that in the case of a pawned item, the person who
pawned it may redeem that item within the hold period and not be
held to the hold period. AS 08.76.760 has an exemption. In Alaska
especially a lot of people own shops that cover a range of
services like secondhand dealers, pawn brokers, thrift stores,
etc. and they want to make it clear that if a dealer purchases an
item from another dealer, purchases it at auction or purchases it
wholesale, are not subject to the reporting laws, because they
are not items that are likely to be stolen or if they are
secondhand goods that come from another dealer, they're presumed
to have been reported in the original transaction.
Another change in the CS is in section 1, the House version,
which said that they would record 'items' that fall in these
categories. The CS makes it clear that it refers to secondhand
items.
SENATOR AUSTERMAN asked if they know what percentage of pawned
secondhand items are hot.
MS. ACHEE replied that she didn't know that.
SENATOR AUSTERMAN moved to adopt the CS to HB 472 for discussion
purposes. There were no objections and it was so adopted.
SENATOR AUSTERMAN said he assumed there was a big problem with
secondhand stores that requires these reporting restrictions.
MS. ACHEE explained that this bill came from the fact that the
Municipality of Anchorage has a law that requires pawn brokers to
make weekly reports and it has been helpful in tracking stolen
items. They have a constituent who had a number of items stolen
and the Anchorage Police Department checked the local stores and
couldn't find them. They then thought the items had gone out of
Anchorage to the Valley and sent an officer out once or twice to
check the records and all of the stores. Ultimately, the items
were never recovered even though they had an idea of where they
went. This constituent thought a statewide reporting system would
improve the process. In Anchorage, alone, there is one police
officer whose entire job is checking pawn shops and secondhand
stores looking for stolen items.
SENATOR TORGERSON said the only part of the bill he doesn't like
is the reporting every week to the Police Department. He asked
why they can't just go in and inspect the records, which existing
statute allows them to do.
MS. ACHEE replied that he was correct about the records already
being open to law enforcement agencies, but there is a manpower
issue and they don't have the time.
SENATOR TORGERSON asked how many pawnbrokers and secondhand
stores are in Alaska that are required to report. Another
question he has was what happens when you have the municipal
police and the borough state troopers who both need it then. It
sounds to him like it's a never-ending thing where everyone needs
to report.
MS. ACHEE replied that with regard to reporting, it would be to
the presiding jurisdiction. And if an item has to be recorded
when it's taken in and that's the only time it has to be
recorded. The volume of information going to police departments
isn't going to change if you're reporting it weekly versus
reporting it every two weeks.
It's going to be the same number of transactions being
recorded. It's just how frequently the reports come in.
In a situation, especially with hold requirements that
in the version that came out of the House were
identical to the reporting times, it gives the law
enforcement no time to correlate their reports for
stolen property with these reports of items that have
been pawned or sold to see if any matches occur unless
the frequency is greater.
SENATOR TORGERSON said he understands the situation, but he
thought it was an over-burdened position to put pawn brokers and
secondhand dealers in when their books are already open for
inspection. "Also, this information is going to pile up in a
corner somewhere. I can't think they're going to have a dedicated
person look through this stuff to see if somebody's serial number
or item shows up on a list. Maybe they will."
MR. NORM BLAKELY, Alaska Trading and Loans on the Kenai
Peninsula, said he had some questions about this bill. He
voluntarily does this in his shop on the Peninsula for about
three or four months and finally their officer told them that
they just didn't have the manpower to take care of the reports
and go through them. So they no longer needed to do it. He said
that his was the only shop that volunteered to do the reports and
that there were others that didn't. He didn't see how this would
work.
MR. BLAKELY also said that most of the time what happens in these
cases that he can see are family disputes. He thought they should
think this bill through and make it a little more equitable for
everyone.
SENATOR TORGERSON asked if he gave his information to the
troopers as well as the City of Soldotna.
MR. BLAKELY replied that Chief Gifford was in the loop they were
working with and the troopers were supposed to come by and pick
them up, but they didn't have the time to do it. Nobody came by
to pick the reports up and it was time consuming to do.
LIEUTENANT JULIE GRIMES, Department of Public Safety, said she
thought the bill was "a step in the right direction."
People who are victims of theft would benefit from the
way this bill is written and law enforcement will
definitely have an easier time in doing their job
identifying stolen property that has been pawned and
then trying to get it back to the rightful owner, but
more importantly actually identifying who has the
professional stolen items and trying to make arrests
and do a good case investigation. We do believe it is a
step in the right direction.
SENATOR TORGERSON asked if his concern about the volume of
information that might be coming was a concern of hers.
LIEUTENANT GRIMES replied:
I'm not going to represent that we have scads of
resources that could be dedicated to it right now, but
at the same time, it is not something that will sit in
the corner. I understand your concern. The information,
for instance, I think there's four or five shops in
Mat-Su Valley, the information that they would provide
would come in electronically or by hard copy paper to
the trooper office and it would be - it's not a big
chore to categorize and file it - and those troopers
working burglaries would certainly have access to that.
We'd be going through it. When you've got a case going
and you're trying to determine where the property might
be, that's just part of your investigation - is to
check that stuff. So, it's certainly not going to go
away. That information is real valuable and it would be
attended to by the troopers or other law enforcement
departments that have active…
SENATOR TORERGSON said that it is a class A misdemeanor if the
guy knowingly violates that section. "I just have a problem with
that."
CHAIRMAN STEVENS said the bill says a lot of the recording will
now be done by data based management and asked if that would help
them access the information with less manpower. "Do you envision
developing some sort of data based management for that?"
LIEUTENANT GRIMES replied that right now the Department doesn't
have the resources to actually create a state wide information
management system, but it is something they could work towards in
the future. "For now we would probably use just a hard copy file
and a trooper actually reviewing those files looking for his
evidence."
SENATOR AUSTERMAN asked how she anticipated the interaction
between the Anchorage Police Department and the Alaska State
Troopers.
LIEUTENANT GRIMES replied that she didn't think the interaction
between the law enforcement agencies was a problem. Currently,
property crimes investigators all over the state network with
each other, because they realize how quickly stolen items can
leave their city and be pawned in another city.
SENATOR AUSTERMAN asked if she knew the percentage of hot items
that is involved.
LIEUTENANT GRIMES replied that she couldn't give him an accurate
answer.
SENATOR LEMAN said it would be to everyone's advantage to have a
web page with the standardized format so people could submit this
information electronically.
I can't imagine getting all this hard copy…I think
you'd be better off to pay the secondhand dealers in
the pawn shops $1 if they submit a report
electronically according to the right format to provide
an incentive to them and be money ahead.
He said he knows they mean well.
CHAIRMAN STEVENS said he thought that was a valid point.
MS. ACHEE said she thought Representative Green would whole
heartedly support a data based system, but this just isn't the
right fiscal year to be asking for more money.
SENATOR AUSTERMAN said he didn't see where it says they need to
maintain the records for one year and it talks about a seven-day
period. He asked if that was for the new items.
MS. ACHEE replied that new items are not explicitly stated, but
that's not the intent, which is that only the new records since
the last report need to be recorded. She said that could be
clarified.
MR. BLAKELY commented that he had no problem with Representative
Green's concern that families get their property returned to
them, but if then they need to think about restitution for the
people who have purchased the property. This has been a real
problem that should be addressed.
MS. ACHEE responded that without this bill, if an individual
finds an item in a store that they can legitimately claim belongs
to them and the police recover it, they'll get it back and the
shop keeper will unfortunately be out the money. Under this bill
the shop owner could bring a civil action against the person who
took it and gave him their name and age.
SENATOR AUSTERMAN said he was having a hard time with this bill
especially if it stays in the same form it's in now.
I think it steps too far out on the limb of creating
new laws that create new work that are a burden on
everybody. Unless they can show me that this is really
a big problem that we need to address through creating
new laws, I'm going to have a hard time moving this out
of committee.
CHAIRMAN STEVENS said they would hold the bill.
HB 393-SALES OF BUSINESS OPPORTUNITIES
CHAIRMAN STEVENS announced HB 393 to be up for consideration.
REPRESENTATIVE GARY STEVENS, sponsor of HB 393, said this is a
consumer bill introduced at the request of the Department of Law.
He said the idea is to protect Alaskans from lots of consumer
scams that are out there (called "busops" - short for business
opportunities). He just received about 25 examples from Edna
March, a Juneau lady, of "business opportunities." He said they
are targeted toward people who are over 50, those who have to
stay at home, etc.
This bill is not intended to harm any legitimate
businessman, but it does place requirements on those
that may not be quite on the up and up. The busops are
very high pressure as you'll see from reading through
some of these…They promise huge earnings; they scam the
vulnerable among us…
HB 393 requires that the busops register with the state so they
can find them. Right now they can't locate them. It also requires
them to disclose information to the buyers, they would have to
use an escrow account to make sure that things people buy
actually arrive and gives the customer the 30 day right of
cancellation. He said that about half the states have similar
regulations and his bill exempts the legitimate businesses they
are familiar with, like Avon and Amway and Mary Kay.
If they don't pass this bill, these scams will continue and it
will take a great deal of time and money to track them down. It
will protect Alaska businessmen and women and will let the
Department of Law take preventative action before people are
scammed.
SENATOR LEMAN said they had talked privately about this and his
opinion is that the change made on the House floor on page 13,
lines 5 - 8, are unnecessary and probably damage this
legislation. He intended to offer an amendment at the appropriate
time to delete it. Another item is that he thought they should
raise the exemption from $250 to $500, as it is in other states.
Finally, after reviewing some letters that he received, he said a
lot of these are legitimate businesses and the exemptions in line
15 - 17 don't cover them adequately. "You say they do; they say
they don't. I want to make sure that gets clarified."
Someone pointed out that product inventory may be sold to the
buyer at something other than a wholesale price and that may then
cause that exemption not to activate.
TAPE 02-27, SIDE A
REPRESENTATIVE STEVENS said the amendment on page 13, line 5,
begins with "except" and that establishes an aggregate up to
$10,000. He has a hard time defending that and wouldn't be
concerned if they deleted it.
The $250 - $500 is more interesting. Some people have told him
that there shouldn't be any level and, if people are scammed,
they should be protected whatever the amount is over. But he
thought that you have to draw a line somewhere and he thought
$250 was a reasonable line to draw. If you draw it at $500, you
would have a lot of companies who are targeting people at $495
and still do quite well financially, but be taking advantage of
lots of people. They have found states that have gone to the
higher figure of $500, but now wish they were at $250.
On Senator Leman's third point regarding the exemption on lines
15 - 17 he explained that those were legitimate businesses like
Mary Kay and Avon. He understands this does indeed protect those
people and takes them out of this section entirely saying he
talked extensively with the Direct Sellers Association and they
agreed that this section does exempt the direct sellers.
SENATOR TORGERSON asked if the Attorney General was the one who
brings the complaint in relation to the court rule amendments
copies section (page 17). He asked if they are assuming someone
else brings the complaint.
MS. CYNTHIA DRINKWATER, Assistant Attorney General, said the
indirect court amendments they are referring to specifically
address AS 45.6.120. When you look at that section of the bill,
you'll see that that is a reference to claims against the escrow
account. These complaints most likely would be brought by a
purchaser of busop who had been defrauded and the department
wants copies of those complaints. Similarly, in the preceding
section there is also a requirement that sellers who do escrow
accounts provide notice of where those escrow accounts are to the
Department of Law. This section is just for an additional
tracking mechanism.
CHAIRMAN STEVENS asked her to address the concern about the $500
threshold.
MS. DRINKWATER said that originally they had requested a $200
threshold because they wanted to provide as much protection for
consumers as they could while at the same time recognizing that
there has to be a diminimous level where it wouldn't be cost
effective for the department to monitor all these kinds of
business opportunities. This is a line that is based on what
other states have done, although $200 is at the lower end.
However, nine states have thresholds of $200 - $300. Thirteen
states have a $500 threshold amount. A model Business Opportunity
Act has a $250 amount. Several states have started with either
$500 or $300 thresholds and have found that it is advantageous to
consumers to lower it to $250.
SENATOR AUSTERMAN asked if they pass this law, could he call the
Department of Law to see if the stack he was just handed were
licensed to do whatever in the state.
MS. DRINKWATER said yes. The registration requirement would work
similar to the telemarketing statute that's in effect now, as
well as our charitable organization statutes. In both of those
cases there is a requirement that solicitors register with the
department. That information is available on their website, so
consumer can look it up and see which telemarketers, charities or
solicitors are registered.
SENATOR AUSTERMAN asked what happens if they are not registered.
MS. DRINKWATER replied then it would be reasonable to think that
activity wouldn't be a good idea to be involved in.
SENATOR AUSTERMAN said his point is what does the department do
when someone isn't registered.
MS. DRINKWATER responded that they would probably first of all
send out a cease and desist letter, which informs the business
entity that they are in violation of a law and that they have to
be registered in the state. Sometimes they get immediate response
and sometimes they don't. Depending on the complaint that's
filed, they would take additional action. "One of the advantages
of this legislation is that it would give us an ability to take
action prior to consumers loosing money…"
REPRESENTATIVE STEVENS said that someone asked about page 13,
number 5, which gives an exemption for the legitimate Mary Kay
type of business and asked her to comment.
MS. DRINKWATER said:
Almost all the other states that have a business
opportunity registration statute like this one have an
exemption that is designed to exempt out direct sellers
such as we've been discussing. The language in our
proposed statute is very similar to every other state.
It's also language that the direct sellers requested be
included in a federal trade commission rule on business
opportunities and franchises. Certainly our intent is
to provide an exemption that would allow Mary Kay folks
and Tupperware folks to carry on their business…
SENATOR LEMAN moved on page 13, line 5, to delete everything from
the comma following the $250 up to the semicolon and asked for
unanimous consent. There were no objections and it was adopted.
CHAIRMAN STEVENS explained that the amendment returned the bill
to its original state as it came to the House Judiciary
Committee. He said they would set the bill aside until Thursday
and adjourned the meeting at 3:30 pm.
| Document Name | Date/Time | Subjects |
|---|