Legislature(1993 - 1994)

03/31/1994 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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            
 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                
 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              
 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                 
 Number 265                                                                    
 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           
 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               
 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                      
 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            
 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                  
 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
 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                                                                    
 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.                                            

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