Legislature(1993 - 1994)
03/31/1994 01:40 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE March 31, 1994 1:40 p.m. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator Steve Rieger, Vice-Chairman Senator Bert Sharp MEMBERS ABSENT Senator Georgianna Lincoln Senator Judy Salo COMMITTEE CALENDAR SENATE BILL NO. 361 "An Act relating to real estate appraisers and the Board of Certified Real Estate Appraisers." SENATE BILL NO. 362 "An Act relating to insurance, to the licensing, accreditation, examination, regulation, and solvency of persons engaged in the insurance business, including insurers, nonadmitted insurers, purchasing groups, risk retention groups, and United States branches of alien insurers; relating to the management of and the filing of reports by persons licensed or otherwise doing business under the insurance code; amending Alaska Rule of Civil Procedure 45; and providing for an effective date." SENATE BILL NO. 346 "An Act requiring that charitable gaming permittees, operators, and vendors may not turn over a pull tab or bingo prize of $50 or more to a person entitled to that prize unless the person provides certain information to the permittee, operator, or vendor and signs a receipt for the prize; requiring the reporting of winners of prizes of $50 or more to the Department of Health and Social Services to ensure that recipients of services provided by the Department of Health and Social Services are reporting charitable gaming winnings and are eligible for those services." SENATE BILL NO. 305 "An Act relating to licensure of landscape architects." SENATE BILL NO. 347 "An Act relating to limited liability companies; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date." SENATE BILL NO. 348 "An Act relating to partnerships; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date." HB 394 (UNIFORM LIMITED PARTNERSHIP ACT UPDATE) was scheduled but not taken up this date. PREVIOUS SENATE COMMITTEE ACTION SB 361 - See Labor & Commerce minutes dated 3/29/94. SB 362 - See Labor & Commerce minutes dated 3/29/94. SB 346 - No previous action to record. SB 305 - No previous action to record. SB 347 - See Labor & Commerce minutes dated 3/24/94. SB 348 - See Labor & Commerce minutes dated 3/24/94. HB 394 - See Labor & Commerce minutes dated 3/24/94. WITNESS REGISTER Fred Ferrara 550 W. 54th Anchorage, AK 99518 POSITION STATEMENT: Supports SB 361 Laura Sasha Hughes Anchorage, AK POSITION STATEMENT: Supports SB 346 Senator Susan Little State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 305 George Davidson 16305 Lena Loop Road Juneau, AK 99801 POSITION STATEMENT: No position on SB 305 Dwayne Adams 13311 Cove Circle Anchorage, AK 99515 POSITION STATEMENT: Outlined concerns in SB 305 William Mendenhall 1907 Yankovich Road Fairbanks, AK 99709 POSITION STATEMENT: Supports amendment to SB 305 Lee Holmes 2522 Arctic, #200 Anchorage, AK 99503 POSITION STATEMENT: Supports SB 305 Jonathan Schilk 1531 Eagle St., #2 Anchorage, AK 99501 POSITION STATEMENT: Supports SB 305 Dave Gardner P.O. Box 196650 Anchorage, AK POSITION STATEMENT: Testified in support of SB 305 Burdett Lent 374 Sarahs Way Wasilla,AK 99645 POSITION STATEMENT: Supports SB 305 Elise Huggins 1534 Norene St Anchorage, AK 99508 POSITION STATEMENT: Supports SB 305 Mike Strunk 18842 Inspiration Circle Eagle River, AK 99577 POSITION STATEMENT: Supports SB 305 Linda Cyra-Korsgaard 1509 P St. Anchorage, AK 99501 POSITION STATEMENT: Supports SB 305 Patrick Krochina 3501 Denali St., #303 Anchorage, AK 99503 POSITION STATEMENT: Supports SB 305 Bob Manley 324 East Cook Anchorage, AK 99501 POSITION STATEMENT: Offered information on SB 347 Charles Schuetze 405 W. 36th, #200 Anchorage, AK 99503 POSITION STATEMENT: Testified on SB 347 Craig Ingham Alaska Bankers Association Fairbanks, AK POSITION STATEMENT: Supports SB 347 and opposes SB 348 Rod Lind 7080 Crooked Tree Drive Anchorage, AK 99516 POSITION STATEMENT: Supports SB 348 ACTION NARRATIVE TAPE 94-22, SIDE A Number 001 CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting g to order at 1:40 p.m. He brought SB 361 (REAL ESTATE APPRAISERS) S) before the committee as the first order of business. FRED FERRARA, a licensed general real estate appraiser testifying from Anchorage, related that when FIREA was initially enacted, which required all the states to put into effect certification for appraisers they are licensing, they followed the legislation and the hours required. In the intervening time, the hours required for the residential appraiser have been changed and, as a result, as of January 1, 1994, any people that they do pass under the present authorized regulations and statutes would not meet the federal requirements. He said it is conceivable that these new appraisers that would be coming into the field would not be able to work in a federally related transaction. SB 361 would give the board the ability to change the hours in conforming to the FIREA requirements as they are modified over the years. Number 047 SENATOR KELLY asked if when an individual is purchasing a house and is going through a FHA of VA appraisal, does it require a FHA or a VA authorized appraiser. FRED FERRARA acknowledged that it does require a FHA or a VA authorized appraiser, and, at present, they are selected only from the panel of appraisers that are approved by those agencies. He added that the agency has some proposed changes underway and draft regulations have been circulated around the nation. Number 066 SENATOR RIEGER inquired as to what the definition of "appraisal" is supposed to describe. FRED FERRARA answered that there are number of market value definitions that have been adopted by different states and by different jurisdictions. At one point it did say the highest, most probable price that would be paid. That definition was changed in both the national appraisal organizations and in the additions to FIREA, as well as the uniform standards that have been adopted by states, which, basically, clarifies that it is the most probable price. SENATOR RIEGER asked what the liability was to an appraiser on an appraisal he has made. FRED FERRARA responded that the most risk an appraiser is facing is if he is making a factual error. SENATOR RIEGER said there is a lot frustration that appraisals come in far lower than actual transaction prices. MR. FERRARA agreed and said he has had some concerns himself where people are perhaps more conservative than they should be in some instances, but it is a judgement situation. Number 175 SENATOR KELLY asked if the legislation concerns commercial real estate appraisers as well as residential appraisers. FRED FERRARA responded that it doesn't, but it would serve to protect that group also in the future, because there is discussion at the federal level to raise the required hours from the present 165 hours to 190 hours. As a result, this would give the board the authority to change those hours when they do go up and conform to the federal requirement. Number 190 SENATOR KELLY asked for the will of the committee. SENATOR RIEGER said he was willing to move the bill out of committee, but he is still concerned with hearing so many tales of unreasonably low appraisals. He suggested the board should take a look at the circumstances that there are numerous reported instances of low ball appraisals that seem to have been correlated to the banking crunch over the last decade. SENATOR RIEGER moved that SB 361 be passed out of committee with individual recommendations. Hearing no objections, the Chairman stated the bill would move on to the Judiciary Committee. Number 210 SENATOR KELLY brought SB 362 (OMNIBUS INSURANCE REFORM) before the e committee and noted there was a proposed committee substitute incorporating the amendment proposed by the Division of Insurance at the last hearing on the bill. However, because the committee substitute had just been received by the committee, he said it would be moved to the bottom of the calendar in order to give the members a chance to review it. The next order of business to come before the committee was SB 346 (REPORT CHARITABLE GAMING WINNERS). LAURA SASHA HUGHES, testifying from Anchorage in support of SB 346, spoke to the problem of some welfare recipients spending most of their welfare checks in bingo halls, which, she said, is a blatant abuse of the system. Number 255 There being no further testimony on SB 346, SENATOR KELLY asked for the will of the committee. SENATOR SHARP moved that SB 346 be passed out of committee with individual recommendations. Hearing no objections, it was so ordered. Number 265 SENATOR KELLY introduced SB 305 (LICENSING OF LANDSCAPE ARCHITECTS) S) as the next order of business, and he directed attention to a proposed amendment to the bill. SENATOR SUZANNE LITTLE, prime sponsor of SB 305, explained the legislation requires landscape architects who design outdoor spaces be licensed in the State of Alaska. Forty-four other states have licensed landscape architects and have asserted the fact that they are another professional group that provides a very vital service to businesses in the state. Senator Little pointed out that because of the lack of licensure in the State of Alaska more landscape architecture work is performed by out-of-state landscape architecture firms than by instate offices. Many federal contracts and private contracts as well require licensed professionals so that excludes the instate professionals unless they happen to be licensed in another state. Senator Little said the amendment to the bill will serve to solve some of the difficulty in "turf" between architects, engineers, and landscape architects. She said another architect could continue doing their landscape drawings that they have been doing in the past. They would not need to employ a landscape architect in order to complete those drawings. Senator Little urged the committee's favorable consideration of SB 305 and expressed her willingness to work with those concerned to iron out any remaining wrinkles in the bill. Number 335 SENATOR KELLY asked if the legislation provides a registration fee structure. SENATOR RIEGER said if this comes under occupational licensing, they have a blanket policy that every profession has to raise fees to cover their own licensure. JOSH FINK, committee aide, referred to page 2, line 23, which, he said, deals with the registration fees collected. Number 350 GEORGE DAVIDSON, representing the Architects, Engineers & Land Surveyors Board, said the board has not had the opportunity to discuss the impacts of the registration of landscape architects and how those impacts would affect current professions that they have. He noted the board has sent a letter to the committee asking for some time to work with landscape architects to come to a resolution of concerns, and to not increase the size of the AELS Board, nor designate a specific seat for the landscape architects. Speaking to the amendment to add a subsection (b) to AS 48.281, Mr. Davidson said it would help to clarify some of the concerns that the board had. Also, he thought the definition of "landscape architecture" would help clarify the issue. Number 402 DWAYNE ADAMS, representing Land Design North in Anchorage, said the timing of the requirement date for the submittal of the bill unfortunately got in the way of their ability to work with the registration board and to set up a dialogue because it was before the board met. Addressing the fiscal note to the bill, Mr. Adams said the addition of one staff person should be shared amongst all the professions that are regulated, and that travel to two meetings per year should not be a requirement. Also, the fiscal note addresses testing on a biannual basis, and he said very few states truly test twice a year. Many states, especially states with low populations, test once every two years, and some states test once every three years. Speaking to the addition of a person on registration board, Mr. Adams pointed out that of the 45 registration boards that exist in the Council of Landscape Architects registration boards, only one of those, South Dakota, has no position for the landscape architect, but they are currently addressing legislation to include that person as a member of their board. Number 465 SENATOR KELLY inquired as to the educational requirements to be a landscape architect. DWAYNE ADAMS replied that it is a four or five year degree and varies across the nation. Number 516 WILLIAM MENDENHALL, a member of the Board of Architects, Engineers & Land Surveyors testifying on his own behalf from Fairbanks, stated his support for Senator Little's amendment to SB 305. He also stated that increasing the membership on the board to 11 members will be a significant cost. He suggested the bill be tabled so that the board can consider it at their next meeting in order to come up with a position either in support or opposition to it. Number 560 LEE HOLMES, a licensed mechanical engineer testifying from Anchorage on behalf of the Alaska Society of Professional Engineers, stated they are in favor of licensing landscape architecture, and they support Senator Little's amendment because it helps clarify some of the controversy that was in the original bill. However, they are opposed to increasing the size of the board to 11 people because they believe a nine-member board is adequate. A landscape architect could be assigned to the board in one of the architectural positions on the board. Number 580 JONATHAN SCHILK, a landscape architect testifying from Anchorage in support of licensing landscape architects, said he is a fairly new resident to the State of Alaska and he has found that landscape architects who practice in Alaska probably know a little bit more about what they need to do for Alaskans than landscape architects outside of Alaska. He suggested minimum quality and minimum standards should be maintained to protect the health, safety and welfare of the public. Number 018 DAVE GARDNER said he provides the Parks and Recreation Community Development Program for the Municipality of Anchorage, and they contract with landscape architects for park and trail development and projects. One of the things that would help protect the public health, safety and welfare is to have minimum proficiency requirements for those professionals, and the registration of landscape architects would help him do his job and address that issue. Number 035 BURDETT LENT, a Wasilla landscape architect with over 30 years experience in the field, two degrees and two licenses, voiced support for passage of SB 305. He also was a member of the ASLA committee in California, and during his tenure the registration of landscape architects was challenged, however, that registration was found to be in the public interest and was strengthened as a result of considerable testimony and effort. He stressed the importance of Alaska having licensed landscape architects because of its pristine and underdeveloped state, and it would beneficial to the public to have the participation of landscape architects located locally in Alaska who are familiar with the conditions. Number 060 ELISE HUGGINS, a board member of Friends of Neighborhoods in Anchorage, stated their support for the licensing of landscape architects. She noted she is also a landscape architect and owns her own business in Anchorage, and she spoke to the importance of licensing landscape architects for the health, safety and welfare of the public. Number 085 MIKE STRUNK, Chapter President of the Alaska Chapter of American Society of Landscape Architects, as well as Chief of Planning and Landscape Architecture for the National Park Service, stated his support for SB 305. He said in his practice of landscape architecture he has found that it is necessary to start with the development process as it applies both in the private sector and government in land use planning issues. Number 115 LINDA CYRA-KORSGAARD testified in support of SB 305 and Senator Little's proposed amendment. She pointed out specific areas of expertise that landscape architects design for such as parks, playgrounds, scenic vistas, trails and natural habitat. She noted that as part of the requirements for taking the test to be licensed in Alaska, all landscape architects are required to complete the course of arctic engineering offered in the State of Alaska. Number 170 PATRICK KROCHINA, President of the Alaska Chapter of American Institute of Architects (AIA) testifying from Anchorage, voiced support for the registration of landscape architects. He also supports having indigenous landscape architects that live and were brought up in the state practice landscape architecture in the state, and whatever it would take to allow that to have an advantage over outside firms coming to the state. Number 220 SENATOR KELLY agreed with previous testifiers that adding two members to the board is going to cost more money, and that when there is a board that registers 4,800 people, he wasn't certain that 50 people deserve a seat of their own on the board. SENATOR LITTLE expressed willingness to keep the same number of board members if there is an acceptable way to do so. However, she added that if an individual's landscape architecture license is called into question, it would be a great comfort to know that at least one member on that board has some landscape architecture background to make some judgements about that person's professional activities. Number 255 There being no other witnesses wishing to testify on SB 305, SENATOR KELLY suggested the bill be held over so that a committee substitute could be drafted, keeping the size of the board at nine members. He said the bill would be back before the committee at the Thursday, April 7 meeting. Number 300 SENATOR KELLY brought SB 362 (OMNIBUS INSURANCE REFORM) before the e committee. He said staff has looked at the proposed committee substitute and they cannot find any errors, so he suggested moving it on to the next committee of referral. SENATOR SHARP moved that CSSB 362(L&C) be passed out of committee with individual recommendations. Hearing no objections, it was so ordered. Number 308 SENATOR KELLY then announced the committee would stand in recess for approximately 10 minutes. Number 502 SENATOR KELLY called the meeting back to order and brought SB 347 (LIMITED LIABILITY COMPANIES) before the committee as the next order of business, and noted there was a proposed Labor & Commerce CS for its consideration. Number 510 BOB MANLEY, Chairman, Working Group on Limited Liability Companies composed of members of the Tax & Business Law Sections of the Alaska Bar Association, said they have been working on proposed limited liability company legislation as a committee for the last year or so. Their work was drawn primarily from the American Bar Association Prototype Act. Mr. Manley pointed out that, currently, 37 states have limited liability company legislation, and it is likely that all 50 states will have it by next year. He stressed the importance of passing LLC legislation promptly because, if not, Alaska will be at a significant disadvantage against other states in attracting capital from other places in the United States and also from foreign investors. Mr. Manley related that limited liability companies are basically a blend of corporate and partnership characteristics. They provide a collectible operating system as well as income tax advantages to Alaska citizens. Number 617 SENATOR RIEGER inquired how a member can get out of a limited liability company if he does want out. BOB MANLEY referred to Sec. 10.50.185 on page 17, which provides that a person's membership terminates if a person withdraws voluntarily from the company. However, when an individual enters into a limited liability company, if all the people coming in decide that they don't want anyone to be allowed to withdraw they can do so. That is important primarily in an estate planning context. Number 664 MIKE MONAGLE of the Department of Commerce & Economic Development stated the department's support for CSSB 347(L&C). Number 680 CHARLES SCHUETZE, a member of the Working Group on Limited Liability Companies of the Alaska Bar Association testifying from Anchorage, stressed that the legislation was originally created largely because of the tax considerations. He noted that countries like Germany have had limited liability companies for many decades. TAPE 94-23, SIDE A Mr. Schuetze outlined various provisions contained in CSSB 347(L&C). Number 016 CRAIG INGHAM, testifying from Fairbanks, stated that with the current substitute bill, the Alaska Bankers Association is no longer opposed to the legislation. With all of the work that has gone into rewriting the bill, we have an entity that has similar safeguards that we have with corporations and that is why they no longer oppose the bill, he stated. Number 035 SENATOR SHARP asked what the tax ramifications would be to the State of Alaska if there is a switch from corporations to limited liability companies. BOB MANLEY didn't think that there will be any loss of state corporate income tax. He added that the tax cost and the transfer cost of changing a corporation to a limited liability company is going to be so significant that if the company is making any money and paying taxes, it is not going to do it. Number 136 SENATOR RIEGER asked if these companies have boards of directors. BOB MANLEY answered that they can be run as either as a general partnership, such that all the partners speak to the management, or there can be a manager to manage a liability company, in which case, they select one, two, three, four board managers who will, in effect, act as the board of directors. SENATOR RIEGER then pointed out on page 10, line 16, language containing the word "director." BOB MANLEY responded that it should be removed from the bill. Number 160 SENATOR RIEGER moved that on page 10, line 16, delete the word "director" and replace it with the word "person." Hearing no objection, the motion carried. SENATOR KELLY stated it was his intent to direct staff to refer a copy of the committee substitute to the Department of Revenue and ask for their comments concerning the tax consequences to the State of Alaska on establishing this type of a company under the new committee substitute. SENATOR RIEGER moved that CSSB 347(L&C) version "K", as amended, be adopted. Hearing no objection, the motion carried. SENATOR KELLY stated CSSB 347(L&C) would be back before the committee at its Thursday, April 7 meeting. Number 200 SENATOR KELLY brought SB 348 (LIMITED LIABILITY PARTNERSHIPS) before the committee as the final order of business. CRAIG INGHAM, representing the Alaska Bankers Association and testifying from Fairbanks, stated their opposition to SB 348. The legislation would change the Limited Partnership Act, which has been adopted by the State of Alaska, by providing for an exception as to joint and civil liability of partners. The association feels that with the bill, in its current form, poses significant risk to the general public who may be doing business with a registered limited liability partnership. The association also believes that the law could be interpreted quite broadly and could result in the partnership being able to deplete the access of the partnership and leave creditors high and dry. Number 248 ROD LIND, Alaska Society of CPA's, testifying from Anchorage, said a limited liability partnership is, in fact, a general partnership with one change, and that change is that a partner in a limited liability partnership is not personally liable for the misconduct of another partner. The partnership itself continues to be subject to all claims. He pointed out that no one from the public has objected to this change, and he questioned if the banking community should decide what form of business individuals can operate. Number 280 SENATOR KELLY stated that because committee members had other committee meetings to attend, SB 348 would be back before the committee at its next meeting. There being no further business to come before the committee, the meeting was adjourned at 3:35 p.m.