Legislature(2001 - 2002)

04/30/2002 01:40 PM L&C

Audio Topic
* first hearing in first committee of referral
+ 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.                                                                                           
                                                                                                                                

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