Legislature(2009 - 2010)BELTZ 105 (TSBldg)

03/09/2010 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 129 RESIDENTIAL SPRINKLER SYSTEMS TELECONFERENCED
Heard & Held
*+ SB 302 MICROLOAN REVOLVING FUND TELECONFERENCED
Moved SB 302 Out of Committee
+= SB 153 MOBILE HOMES AS REAL PROPERTY TELECONFERENCED
Moved SB 153 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 9, 2010                                                                                          
                           1:34 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Joe Paskvan, Chair                                                                                                      
Senator Joe Thomas, Vice Chair                                                                                                  
Senator Bettye Davis                                                                                                            
Senator Kevin Meyer                                                                                                             
Senator Con Bunde                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 153                                                                                                             
"An Act  relating to  manufactured homes,  including manufactured                                                               
homes  permanently   affixed  to  land,  to   the  conversion  of                                                               
manufactured  homes  to  real  property,   to  the  severance  of                                                               
manufactured   homes  from   real  property,   to  the   titling,                                                               
conveyance,  and  encumbrance  of   manufactured  homes,  and  to                                                               
manufacturers'   certificates  of   origin   for  vehicles;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED SB 153 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 302                                                                                                             
"An Act establishing the Alaska  microloan revolving fund; making                                                               
loans for commercial purposes from  the fund; and relating to the                                                               
fund and loans; and providing for an effective date."                                                                           
                                                                                                                                
     - MOVED SB 302 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 129                                                                                                             
"An   Act  relating   to  state   and  municipal   building  code                                                               
requirements for  fire sprinkler  systems in  certain residential                                                               
buildings."                                                                                                                     
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 153                                                                                                                  
SHORT TITLE: MOBILE HOMES AS REAL PROPERTY                                                                                      
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
                                                                                                                                
03/18/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/09       (S)       L&C, JUD                                                                                               
04/09/09       (S)       L&C AT 1:00 PM BELTZ 211                                                                               
04/09/09       (S)       Scheduled But Not Heard                                                                                
03/09/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 302                                                                                                                  
SHORT TITLE: MICROLOAN REVOLVING FUND                                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/26/10       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/26/10       (S)       L&C, FIN                                                                                               
03/09/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 129                                                                                                                  
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS                                                                                      
SPONSOR(s): MENARD                                                                                                              
                                                                                                                                
02/27/09       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/27/09       (S)       CRA, STA, L&C                                                                                          
03/17/09       (S)       CRA AT 3:30 PM BELTZ 211                                                                               
03/17/09       (S)       Heard & Held                                                                                           
03/17/09       (S)       MINUTE(CRA)                                                                                            
03/19/09       (S)       CRA AT 3:30 PM BELTZ 211                                                                               
03/19/09       (S)       Moved SB 129 Out of Committee                                                                          
03/19/09       (S)       MINUTE(CRA)                                                                                            
03/20/09       (S)       CRA RPT  1DP 2NR                                                                                       
03/20/09       (S)       DP: MENARD                                                                                             
03/20/09       (S)       NR: OLSON, THOMAS                                                                                      
03/24/09       (S)       STA AT 9:00 AM BELTZ 211                                                                               
03/24/09       (S)       Moved SB 129 Out of Committee                                                                          
03/24/09       (S)       MINUTE(STA)                                                                                            
03/25/09       (S)       STA RPT   1DP 2NR 2AM                                                                                  
03/25/09       (S)       DP: MENARD                                                                                             
03/25/09       (S)       NR: MEYER, KOOKESH                                                                                     
03/25/09       (S)       AM: FRENCH, PASKVAN                                                                                    
03/02/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
03/02/10       (S)       Heard & Held                                                                                           
03/02/10       (S)       MINUTE(L&C)                                                                                            
03/09/10       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR HOLLIS FRENCH                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 153                                                                                         
                                                                                                                                
GEORGE GINSBERG, outside counsel to Wells Fargo                                                                                 
McGlinchey & Stafford                                                                                                           
POSITION STATEMENT: Available to answer questions on SB 153.                                                                  
                                                                                                                                
CARL SPRINGER, Registrar                                                                                                        
Division of Motor Vehicles (DMV)                                                                                                
Department of Administration (DOA)                                                                                              
POSITION STATEMENT: Available for questions on SB 153.                                                                        
                                                                                                                              
TIFFANY KALDOR                                                                                                                  
Wells Fargo Home Mortgage                                                                                                       
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported SB 153.                                                                                         
                                                                                                                                
MARC LEFSET, McGlinchey & Stafford                                                                                              
Outside counsel for Wells Fargo Bank &                                                                                          
Vanderbuilt Mortgage Clayton Homes                                                                                              
Chair, Finance Lawyers Committee, Manufactured Housing Institute                                                                
POSITION STATEMENT: Supported SB 153.                                                                                         
                                                                                                                                
JEFF HARRIS                                                                                                                     
Wells Fargo Bank                                                                                                                
POSITION STATEMENT: Supported SB 153.                                                                                       
                                                                                                                                
PAT GREEN                                                                                                                       
Wells Fargo Bank                                                                                                                
POSITION STATEMENT: Supported SB 153.                                                                                         
                                                                                                                                
GREG WINEGAR, Director                                                                                                          
Division of Investments                                                                                                         
Department of Commerce, Community & Economic Development (DCCED)                                                                
POSITION STATEMENT: Supported SB 302.                                                                                         
                                                                                                                                
PAUL MICHELSOHN, Jr.                                                                                                            
Alaska State Homebuilder's Association                                                                                          
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
CHARLES EDWARDSON, Project Manager                                                                                              
Ketchikan Indian Community Housing Authority                                                                                    
Ketchikan, AK                                                                                                                   
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
DAVID OWENS, Building Inspector                                                                                                 
Owens Inspection Services                                                                                                       
Palmer, AK                                                                                                                      
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
ART CLARK                                                                                                                       
Alaska Association of Realtors                                                                                                  
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
DAVID MILLER, Fire Chief                                                                                                        
Sitka, AK                                                                                                                       
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
KELLY NICOLELLO, Deputy Director                                                                                                
Alaska State Fire Marshall's Office                                                                                             
Division of Fire and Life Safety                                                                                                
Department of Public Safety (DPS)                                                                                               
POSITION STATEMENT: No position on SB 129.                                                                                    
                                                                                                                                
DAVE HOE, Fire Chief                                                                                                            
North Tongass Volunteer Fire Department                                                                                         
Ketchikan, AK                                                                                                                   
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
CROSBY GRINDEL, Manager                                                                                                         
Northwest Region                                                                                                                
National Fire Protection Association (NFPA)                                                                                     
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
MICHAEL TILLY, Fire Chief                                                                                                       
City of Kenai                                                                                                                   
Kenai, AK                                                                                                                       
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
LARRY FLOYD, Building Official                                                                                                  
City of Kenai                                                                                                                   
Kenai, AK                                                                                                                       
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
JEFF TUCKER, President                                                                                                          
Alaska Fire Chiefs Association                                                                                                  
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Opposed SB 129.                                                                                           
                                                                                                                                
DENNIS BRAUDIGAN, Director                                                                                                      
Emergency Services                                                                                                              
MatSu Borough                                                                                                                   
POSITION STATEMENT: Opposed SB 129                                                                                            
                                                                                                                                
JEREMY DILLARD, representing himself                                                                                            
MatSu Valley                                                                                                                    
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
DAVE DILLARD                                                                                                                    
Alaska State Building Association                                                                                               
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
JEFF TWAIT, Director                                                                                                            
Alaska State Homebuilding Association                                                                                           
City of Kenai                                                                                                                   
Kenai, AK                                                                                                                       
POSITION STATEMENT: Supported SB 129.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:34:28 PM                                                                                                                    
CHAIR JOE PASKVAN called the Senate Labor and Commerce Standing                                                               
Committee meeting to order at 1:34 p.m. Present at the call to                                                                  
order were Senators Thomas, Bunde, Meyer, and Paskvan.                                                                          
                                                                                                                                
              SB 153-MOBILE HOMES AS REAL PROPERTY                                                                          
                                                                                                                                
1:36:30 PM                                                                                                                    
CHAIR PASKVAN announced SB 153 to be up for consideration. He                                                                   
said Senator Meyer had identified a concern and had already                                                                     
spoken to the bill's sponsor about it.                                                                                          
                                                                                                                                
SENATOR HOLLIS FRENCH, sponsor of SB 153, read the sponsor                                                                      
statement as follows:                                                                                                           
                                                                                                                                
     SB 129  establishes procedures to  convert manufactured                                                                    
     homes  to  real  property  through  a  defined  process                                                                    
     within  the  Division  of Motor  Vehicles  (DMV).  This                                                                    
     change  will  give  the owners  of  manufactured  homes                                                                    
     better access  to traditional mortgage  financing which                                                                    
     often features  lower interest rates, and  it will help                                                                    
     home  owners  increase  the value  of  their  house  by                                                                    
     allowing them  to convert their manufactured  home into                                                                    
     real  property.  The   legislation  will  also  prevent                                                                    
     clouded  titles that  often  hinder clean  transactions                                                                    
     involving manufactured homes.                                                                                              
                                                                                                                                
     Currently,  when a  manufactured home  is affixed  to a                                                                    
     permanent foundation  on land  owned by  an individual,                                                                    
     the   vaguely   defined   title   surrender   procedure                                                                    
     currently used by the Division  of Motor Vehicles lacks                                                                    
     a record  notice. Without a record  notice, a homeowner                                                                    
     is  often  left  with  an  unmarketable  title  and  an                                                                    
     unperfected  security interest  in their  house placing                                                                    
     all parties in  a real estate transaction  - the buyer,                                                                    
     the lender, and the seller - at risk.                                                                                      
                                                                                                                                
     Many   Alaskans  live   in  manufactured   homes.  This                                                                    
     legislation  will  treat   residents  that  permanently                                                                    
     affix a  manufactured home  to land  they own  the same                                                                    
     way  that traditional  homeowners  are  treated in  the                                                                    
     state. I urge you to support this fair legislation.                                                                        
                                                                                                                                
SENATOR FRENCH  pointed out that  Alaska is  one of the  very few                                                               
states  without a  process similar  to the  one presented  in his                                                               
bill.  While  it  is  a  simple concept,  SB  153  spans  several                                                               
different aspects of state law and requires significant changes.                                                                
                                                                                                                                
SENATOR BUNDE  said he could  think of two kinds  of manufactured                                                               
homes -  one was never  on wheels and  is placed on  a foundation                                                               
and those that  are "trailer houses." He asked  Senator French if                                                               
his definition of "manufactured" covers both types.                                                                             
                                                                                                                                
SENATOR FRENCH said this is meant for "mobile homes" on wheels.                                                                 
                                                                                                                                
SENATOR BUNDE asked  if SB 153 allows  traditional mortgages, but                                                               
does nothing  to compel  a lending agency  to provide  a mortgage                                                               
where it did not feel it was a best business practice.                                                                          
                                                                                                                                
1:39:46 PM                                                                                                                    
SENATOR DAVIS joined the committee.                                                                                             
                                                                                                                                
SENATOR FRENCH  answered, "Exactly, there is  absolutely no state                                                               
sort of arm twisting." SB  153 simply allows mobile homeowners to                                                               
stand on the same footing as  any other mortgagee who goes to the                                                               
bank and asks for financing.                                                                                                    
                                                                                                                                
SENATOR  MEYER  said he  was  still  confused by  the  difference                                                               
between a mobile home and  a manufactured home. He always thought                                                               
a mobile  home as  being something on  wheels and  a manufactured                                                               
home as  being attached to  a foundation.  He asked if  this bill                                                               
was saying they are one and the same.                                                                                           
                                                                                                                                
SENATOR FRENCH  responded that the  definition for both  is found                                                               
in AS 45.29.102.                                                                                                                
                                                                                                                                
1:41:36 PM                                                                                                                    
SENATOR MEYER asked  what kind of certification you  get from the                                                               
DMV if you have a mobile home or trailer.                                                                                       
                                                                                                                                
SENATOR FRENCH  replied that  the point  of the  bill is  to make                                                               
them the same.                                                                                                                  
                                                                                                                                
SENATOR MEYER  asked if this  process change costs  the homeowner                                                               
any more money to get a secure title.                                                                                           
                                                                                                                                
SENATOR FRENCH deferred that answer to Wells Fargo.                                                                             
                                                                                                                                
CHAIR PASKVAN  interjected that  "manufactured home"  was defined                                                               
in AS 45.29.102, subsection 65 as:                                                                                              
                                                                                                                                
     A structure transportable in one  or more sections that                                                                    
     is eight  body feet or  more in width, forty  body feet                                                                    
     or more  in length,  and that is  built on  a permanent                                                                    
     chassis and designed  to be used as a  dwelling with or                                                                    
     without a permanent foundation.                                                                                            
                                                                                                                                
1:43:31 PM                                                                                                                    
SENATOR FRENCH  said he lived  in a mobile  home when he  was 20,                                                               
and it had  wheels that had been placed  underneath the skirting.                                                               
He lived in it for 10 years and  then sold it to someone who took                                                               
it to Girdwood. It was still  able to move after all those years,                                                               
and he thought the chassis was the key aspect.                                                                                  
                                                                                                                                
SENATOR MEYER  said his  potential amendment has  to do  with the                                                               
concern that mobile  home transactions will still  not be covered                                                               
by the Real Estate Surety Fund.                                                                                                 
                                                                                                                                
SENATOR FRENCH said  it would make sense to him  to let consumers                                                               
have access to that Surety Fund.                                                                                                
                                                                                                                                
1:45:50 PM                                                                                                                    
GEORGE GINSBERG, McGlinchey & Stafford,  outside counsel to Wells                                                               
Fargo,  said he  didn't have  prepared testimony,  but wanted  to                                                               
answer one question - that  "mobile home" and "manufactured home"                                                               
refers to  the same  thing. He  explained that  it is  the common                                                               
terminology used particularly in  Department of Housing and Urban                                                               
Development  regulations.  They  are not  talking  about  modular                                                               
homes that are stick built,  prefabricated and assembled on site.                                                               
"These  are mobile  homes that  are made  at a  factory and  then                                                               
either installed  just on blocks  or permanently affixed  to real                                                               
estate."                                                                                                                        
                                                                                                                                
SENATOR BUNDE asked if financing  for the mobile home depended on                                                               
whether it remained on the  chassis or was permanently affixed to                                                               
a foundation.                                                                                                                   
                                                                                                                                
MR. GINSBERG answered  yes. He explained that the  whole point of                                                               
the  bill  is   that  Alaska  currently  has   no  procedure  for                                                               
converting  a mobile  home with  a certificate  of title  to real                                                               
property. A  car it is covered  by a certificate of  title, but a                                                               
home is financed by having the  lender's name listed as a secured                                                               
lien  holder  on  the  title.  Unlike   a  car,  a  home  can  be                                                               
permanently affixed to  the real property on which  it sits. Once                                                               
that  happens, it  is commonly  taxed  as real  property and  the                                                               
intent is to treat it  as real property, which means transferring                                                               
ownership by deed and financing it  by a mortgage. The problem is                                                               
that Alaska currently has no  reliable procedure for converting a                                                               
home covered  by a certificate of  title to real estate,  so that                                                               
it can,  in fact, be transferred  by deed and be  encumbered by a                                                               
mortgage.                                                                                                                       
                                                                                                                                
The bill is  designed to create a new section  of real estate law                                                               
which  sets  forth  procedures  for converting  a  home  to  real                                                               
property  and in  order for  that to  happen the  home has  to be                                                               
permanently  affixed  to land,  a  certain  affidavit has  to  be                                                               
recorded in the land records,  certain documents have to be filed                                                               
with the DMV,  and depending upon whether the home  is covered by                                                               
a certificate  of title, a manufacturer's  certificate of origin,                                                               
or neither,  procedures are set  forth to surrender the  title or                                                               
surrender  the  certificate  of  origin  and  have  the  division                                                               
confirm in its records that conversion had occurred.                                                                            
                                                                                                                                
MR. GINSBERG  said the  advantage is  that then  there will  be a                                                               
record,  not only  in the  DMV, but  in the  real estate  records                                                               
where  deeds and  mortgages  are recorded  that  people can  rely                                                               
upon.  After that,  the  home along  with the  rest  of the  real                                                               
estate can  be transferred  by deed  and encumbered  by mortgage.                                                               
Right  now, very  few people  are  willing to  extend credit  for                                                               
purchasing a  mobile home  based on a  mortgage because  there is                                                               
nothing that  establishes the  home as part  of the  real estate.                                                               
Likewise, it can't  be financed as personal  property because the                                                               
division will  not issue a title  to a mobile home  that has been                                                               
permanently affixed to property. The  result is that not only the                                                               
lender, but the owner of the home,  is "in no man's land." He has                                                               
a home  that he can't  sell because there  is no way  to document                                                               
ownership  and he  can't  encumber  because there  is  no way  to                                                               
secure  a   lien  against  it.   It's  really   unmarketable  for                                                               
everybody.                                                                                                                      
                                                                                                                                
SENATOR BUNDE asked  if a mobile home in a  trailer court where a                                                               
space  is  being  rented  and  not  owned  would  qualify  for  a                                                               
mortgage.                                                                                                                       
                                                                                                                                
MR. GINSBERG replied if the  owner had a long-term lease (defined                                                               
in statute  as 20  years or more),  the conversion  process would                                                               
apply to them as well.                                                                                                          
                                                                                                                                
SENATOR  BUNDE said  most mobile  home parks  have month-to-month                                                               
agreements and  not long-term  leases. He said  he had  heard all                                                               
too often  about a  park closing  and people  having no  place to                                                               
take their mobile homes.                                                                                                        
                                                                                                                                
SENATOR BUNDE asked if this  would apply to manufactured homes on                                                               
leased  land,   but  not  to   the  more   normal  month-to-month                                                               
arrangement.                                                                                                                    
                                                                                                                                
MR. GINSBERG replied that was  correct, and chances were that the                                                               
mobile  home park  owner wouldn't  permit it  anyway, because  he                                                               
owns  the real  estate and  doesn't want  anybody else  to own  a                                                               
small piece of it.                                                                                                              
                                                                                                                                
SENATOR  THOMAS  asked   if  these  types  of   homes  are  still                                                               
manufactured, because he had not seen any new ones lately.                                                                      
                                                                                                                                
MR.  GINSBERG replied  yes; in  the  1970s, manufactured  housing                                                               
accounted for 20-25 percent of  new housing starts, but demand is                                                               
way down now.                                                                                                                   
                                                                                                                                
SENATOR THOMAS asked if SB 153  covers everything that is 8 ft. X                                                               
40 ft. or larger.                                                                                                               
                                                                                                                                
MR. GINSBERG answered yes.                                                                                                      
                                                                                                                                
CHAIR  PASKVAN asked  how many  units  converted by  this law  in                                                               
Alaska would likely take advantage of the mortgage loans.                                                                       
                                                                                                                                
MR. GINSBREG said he didn't know.                                                                                               
                                                                                                                                
1:54:29 PM                                                                                                                    
CARL SPRINGER,  Division of Motor  Vehicles (DMV),  Department of                                                               
Administration (DOA), said he was available for questions.                                                                      
                                                                                                                                
1:54:46 PM                                                                                                                    
TIFFANY KALDOR,  Wells Fargo Home  Mortgage, Fairbanks,  said she                                                               
supported SB  153. She said it  would provide a formal  method in                                                               
Alaska   for  eliminating   the   certificate  of   title  to   a                                                               
manufactured home  in converting the  home to real  property when                                                               
the home is  or will be permanently affixed to  real property and                                                               
obtaining  a new  certificate  of title  when  a home  previously                                                               
affixed to real property is later physically severed from it.                                                                   
                                                                                                                                
MS. KALDOR said that Alaska,  unlike the vast majority of states,                                                               
has no  formal statutory procedure for  converting a manufactured                                                               
home to  real property. Under  current Alaska law,  including the                                                               
Alaska Uniform  Commercial Code (UCC),  a security interest  in a                                                               
manufactured home  permanently affixed  to land can  be perfected                                                               
only by noting it on the  home certificate of title and recording                                                               
a  deed  of trust  with  a  fixtures  clause and  an  appropriate                                                               
description of  the home.  The need  for legislation  arises from                                                               
the  fact that  the Alaska  DMV  would not  issue a  title for  a                                                               
manufactured home that  is affixed to a  permanent foundation. It                                                               
has created  an administratively  vaguely defined  procedure with                                                               
no notice  of record.  The result  for many  Alaskan manufactured                                                               
homeowners is  an unmarketable title  to their home and  for many                                                               
lenders an unperfected security interest in their collateral.                                                                   
                                                                                                                                
She said they feel the  bill will help manufactured homeowners in                                                               
the  state increase  the  value of  their  manufactured homes  by                                                               
allowing  them  to  convert  them   to  real  property  including                                                               
manufactured homes  not covered by  certificates of title  or for                                                               
which  the certificate  of title  cannot be  found but  permanent                                                               
affixed  to  real  property  before the  effective  date  of  the                                                               
legislation.  It  would  also  help  lenders  to  gain  perfected                                                               
security  interest in  manufactured  homes and  help  the DMV  by                                                               
putting a  formalized procedure  in place  for canceling  a title                                                               
when a  manufactured home is  put on a permanent  foundation. And                                                               
finally,  it   would  increase  property  tax   revenues  in  the                                                               
municipalities that levy property taxes.                                                                                        
                                                                                                                                
SENATOR  BUNDE asked  if  she  knew of  any  negative aspects  to                                                               
passing this bill.                                                                                                              
                                                                                                                                
MS. KALDOR answered no.                                                                                                         
                                                                                                                                
SENATOR MEYER said  one negative might be how the  owner would be                                                               
able pay  increased property taxes.  He asked on the  other hand,                                                               
if it would  assist people in getting a better  interest rate for                                                               
their mobile home,  since they would have to  pay higher interest                                                               
rate for raw land.                                                                                                              
                                                                                                                                
MS. KALDOR said that was not correct.                                                                                           
                                                                                                                                
SENATOR  MEYER asked  what kind  of loan  he would  get to  buy a                                                               
mobile home on a city lot  - the lower interest loan that someone                                                               
who was  buying a  single family  house would  get or  the higher                                                               
interest loan  that someone  would pay if  they were  just buying                                                               
raw land.                                                                                                                       
                                                                                                                                
MS. KALDOR  answered that  currently a  manufactured home  can be                                                               
financed by Freddie  Mac, Fannie May, FHA or VA,  and possibly by                                                               
AHFC depending  on the type of  foundation and if it  sits on its                                                               
own lot. They insure through  a certification process that a home                                                               
is permanently  affixed to a  foundation and that the  wheels and                                                               
tongue have been  removed. The buyer gets a better  rate and loan                                                               
program than for purchasing raw land.                                                                                           
                                                                                                                                
CHAIR  PASKVAN asked  how many  units might  be converted  in her                                                               
area or statewide under this program should it become law.                                                                      
                                                                                                                                
MS. KALDOR answered that she didn't know.                                                                                       
                                                                                                                                
CHAIR PASKVAN  asked the spread  in rates and terms  of financing                                                               
between mobile homes and conventional homes.                                                                                    
                                                                                                                                
MS. KALDOR  deferred that  answer to a  technical expert  who was                                                               
online.                                                                                                                         
                                                                                                                                
2:00:40 PM                                                                                                                    
MARC  LEFSET, McGlinchey  & Stafford,  outside counsel  for Wells                                                               
Fargo  Bank, said  he agreed  with Mr.  Ginsberg's comments.  The                                                               
only  point he  would  add is  that by  creating  a procedure  in                                                               
Alaska  that allows  lenders and  borrowers to  work together  to                                                               
formally convert  a manufactured  home from personal  property to                                                               
real property would make loans  secured by that property eligible                                                               
for sale  to Fannie Mae  and Freddie Mac  as well as  making them                                                               
eligible  for insurance  under FHA  and VA  programs. He  said it                                                               
would  open up  the market  for  better interest  rates that  are                                                               
available for onsite-built homes.                                                                                               
                                                                                                                                
CHAIR  PASKVAN asked  if he  saw any  downside if  this law  were                                                               
enacted.                                                                                                                        
                                                                                                                                
MR. LEFSET said he didn't see any downside.                                                                                     
                                                                                                                                
SENATOR MEYER asked  if he was currently buying a  mobile home on                                                               
a 7000 sq.  ft. lot, would the  loan be primarily for  the lot or                                                               
would  it be  the same  loan as  he would  get for  a residential                                                               
house on the same-sized lot.                                                                                                    
                                                                                                                                
MR. LEFSET  answered if  this bill is  enacted and  the homeowner                                                               
follows the  procedures under  the law to  make the  home legally                                                               
real estate, he would qualify for  the same rates as a site-built                                                               
home.  Now when  the  home  is not  considered  real estate  (not                                                               
affixed to  a permanent foundation)  it is subject to  rates that                                                               
are  typically 3  or  4  points higher  like  the  ones that  are                                                               
available to someone financing a home in a mobile home park.                                                                    
                                                                                                                                
SENATOR MEYER said he thought  this change would assist people in                                                               
his district in buying mobile homes.                                                                                            
                                                                                                                                
MR. LEFSET  offered that  manufactured homes  are often  the only                                                               
viable  form of  new housing  that  is workable  in rural  areas,                                                               
because it is  fully assembled in the factory  and transported to                                                               
the home site and installed  on the foundation. The materials and                                                               
labor are minimal.                                                                                                              
                                                                                                                                
CHAIR PASKVAN  asked Mr. Lefset  if he  did legal work  for other                                                               
financial institutions.                                                                                                         
                                                                                                                                
MR. LEFSET  answered yes,  many financial  institutions including                                                               
most  of the  major manufactured  home lenders  and several  park                                                               
operators.                                                                                                                      
                                                                                                                                
CHAIR PASKVAN  said he wanted  to make sure they  weren't missing                                                               
something that other institutions would find.                                                                                   
                                                                                                                                
MR. LEFSET responded that he is  the chair of the Finance Lawyers                                                               
Committee  of the  Manufactured Housing  Institute, the  national                                                               
trade  association  for manufactured  housing,  and  he has  been                                                               
authorized by them to support SB  153. He said he is also counsel                                                               
to  Vanderbuilt Mortgage  Clayton  Homes,  the country's  largest                                                               
manufacturer  of   manufactured  homes,  who  also   favors  this                                                               
legislation.                                                                                                                    
                                                                                                                                
CHAIR PASKVAN asked if he saw any downside.                                                                                     
                                                                                                                                
MR. LEFSET replied, "Only an upside."                                                                                           
                                                                                                                                
2:06:42 PM                                                                                                                    
CHAIR PASKVAN announced an at ease at 2:06 p.m. to 2:07 p.m.                                                                    
                                                                                                                                
JEFF  HARRIS, Wells  Fargo  Bank,  said he  agreed  with all  the                                                               
previous testimony on SB 153.                                                                                                   
                                                                                                                                
2:07:43 PM                                                                                                                    
PAT GREEN,  Wells Fargo Bank, added  to that SB 153  also has the                                                               
endorsement  of  the  Alaska   Bankers  Association  whose  other                                                               
members  include Alaska  Pacific Bank,  Denali State  Bank, First                                                               
Bank  Ketchikan,  First  National  Bank  Alaska,  Key  Bank,  Mt.                                                               
McKinley Bank, North Rim Bank as well as Wells Fargo.                                                                           
                                                                                                                                
MR. GREEN said from internal  conversations he has had with Wells                                                               
Fargo  people  and  Rod  Jackson, their  area  manager  for  home                                                               
mortgages, they  anticipate this  change affecting  2-3 customers                                                               
per month for  Wells Fargo. So that would translate  out to 24-36                                                               
per year.                                                                                                                       
                                                                                                                                
SENATOR MEYER said he didn't see  a fiscal note, but was ready to                                                               
move it on.                                                                                                                     
                                                                                                                                
Finding  no   further  comments,  Chair  Paskvan   closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
SENATOR  FRENCH  said  he  didn't  think a  fiscal  note  was  an                                                               
absolute requirement, but he pledged to  get one and to work with                                                               
Senator Meyer  to incorporate  his ideas into  the bill.  All the                                                               
members were present and agreed with this understanding.                                                                        
                                                                                                                                
SENATOR  MEYER  moved  to  report  SB  153  from  committee  with                                                               
individual  recommendations and  forthcoming  fiscal note.  There                                                               
were no objections and it was so ordered.                                                                                       
                                                                                                                                
2:13:03 PM                                                                                                                    
CHAIR PASKVAN announced an at ease from 2:13 p.m. to 2:15 p.m.                                                                  
                                                                                                                                
                SB 302-MICROLOAN REVOLVING FUND                                                                             
                                                                                                                                
2:16:04 PM                                                                                                                    
CHAIR PASKVAN announced SB 302 to be up for consideration.                                                                      
                                                                                                                                
2:16:11 PM                                                                                                                    
GREG WINEGAR,  Director, Division  of Investments,  Department of                                                               
Commerce,  Community  &  Economic Development  (DCCED),  said  he                                                               
supported  SB  302.  He  said   it  would  really  benefit  small                                                               
businesses in  the state,  which in turn  would help  the Alaskan                                                               
economy. As  background, he said,  his agency had  administered a                                                               
number of  different state loan  programs for many years  and has                                                               
the infrastructure in place to successfully run this one.                                                                       
                                                                                                                                
MR. WINEGAR explained  that this bill would create  a new program                                                               
aimed  at  helping  small  businesses  access  critically  needed                                                               
capital. This will help them  not only start businesses, but grow                                                               
existing ones.  It is modeled  after a very similar  program that                                                               
is available  through the Small Business  Administration (SBA) in                                                               
46 other  states, but  not Alaska.  The reason  is that  that SBA                                                               
requires having an intermediary lender,  and no one in Alaska has                                                               
stepped  forward  to run  that  program.  This  is an  effort  to                                                               
provide similar  types of  loans for  Alaska businesses  that are                                                               
available through SBA in other states.                                                                                          
                                                                                                                                
He said that essentially the program  could loan up to $35,000 to                                                               
an  individual and  up to  $70,000  to two  or more  individuals;                                                               
applicants need  to be Alaskan  residents. The loan  proceeds can                                                               
be used  for a  variety of things  - working  capital, equipment,                                                               
construction or  other commercial  purposes. The maximum  term is                                                               
six years and they need  to be fully collateralized. The interest                                                               
rate would be based  on prime plus one with a  floor of 6 percent                                                               
and a cap of 8. With  existing interest rates that would work out                                                               
to a 6-percent fixed interest rate.                                                                                             
                                                                                                                                
In terms  of capitalization, Mr.  Winegar said, his  division had                                                               
submitted a  fiscal note  for $3.5 million  that would  come from                                                               
AIDEA.  This  funding mechanism  is  actually  contingent on  the                                                               
passage of either SB 301 or its companion, HB 411.                                                                              
                                                                                                                                
He said the fiscal note also  had some operating expenses for one                                                               
loan officer to process the  requests, some start up expenses and                                                               
a small  amount of travel. He  said they tried very  hard to keep                                                               
the fiscal note as low as  possible, because they wanted the loan                                                               
fund to "cash-flow"  and be successful. They  anticipate about 75                                                               
loans in  the first  year and  about 100 in  the second;  then 25                                                               
loans thereafter.                                                                                                               
                                                                                                                                
2:20:36 PM                                                                                                                    
SENATOR BUNDE asked how this  loan program would be any different                                                               
than the current  AIDEA program that helps  businesses that can't                                                               
get loans through conventional means.                                                                                           
                                                                                                                                
MR. WINEGAR  replied that  this is  a smaller,  much shorter-term                                                               
program. The  maximum term  is six years  and it  doesn't require                                                               
going  through  a  bank,  which  an  AIDEA  loan  requires.  It's                                                               
targeted to smaller businesses that  need a little bit of working                                                               
capital.                                                                                                                        
                                                                                                                                
SENATOR BUNDE asked if rampant  inflation occurs and the interest                                                               
rate goes  above 8 percent the  state would be in  a situation of                                                               
either subsidizing  these loans or  not being able to  make them,                                                               
so why the cap?                                                                                                                 
                                                                                                                                
MR. WINEGAR replied that the  thinking was to provide an interest                                                               
rate that  wouldn't get out of  hand. The cap could  be taken off                                                               
and the rate  could be just prime-plus 1. The  division felt that                                                               
it could successfully  administer the program for  much less than                                                               
that.                                                                                                                           
                                                                                                                                
SENATOR BUNDE said while he  was confident they wouldn't go above                                                               
8 percent,  but if it did,  that would either prevent  loans from                                                               
being  granted or  the dollars  that would  subsidize them  would                                                               
come from  some other essential  state service. He  was concerned                                                               
about the  state having  limited dollars  in the  relatively near                                                               
future.                                                                                                                         
                                                                                                                                
MR.  WINEGAR responded  that he  should have  clarified that  the                                                               
original  $3.5 million  is actually  set up  as a  revolving loan                                                               
fund,  so it  won't need  additional funding.  The program  would                                                               
continue  based on  the  interest it  collects  from the  initial                                                               
capitalization.                                                                                                                 
                                                                                                                                
SENATOR BUNDE  asked if  for some reason  the interest  rate went                                                               
above  8, would  running the  program  cost them  more than  they                                                               
would be taking in.                                                                                                             
                                                                                                                                
MR. WINEGAR replied  that the funding is already  there. The loan                                                               
officer  position over  time might  go  up slightly,  but he  was                                                               
comfortable  that the  program  could be  administered  at the  6                                                               
percent level including risk.                                                                                                   
                                                                                                                                
SENATOR  BUNDE said  the  $3.5 million  to  capitalize this  loan                                                               
program comes as  an AIDEA dividend and is money  that could have                                                               
been used somewhere  else, and asked where that  money would have                                                               
potentially been used.                                                                                                          
                                                                                                                                
2:24:34 PM                                                                                                                    
MR. WINEGAR  replied that basically it  reduces AIDEA's dividend,                                                               
and he  is correct that it  could be used by  AIDEA for something                                                               
else. But  this program  ties into AIDEA's  purpose, which  is to                                                               
promote economic development and help small businesses, as well.                                                                
                                                                                                                                
CHAIR PASKVAN  said the interest rate  is tied to the  concept of                                                               
being fully collateralized. What does that mean?                                                                                
                                                                                                                                
MR.  WINEGAR replied  that they  wanted to  make sure  if someone                                                               
ends up  in a default situation,  that the division has  a way to                                                               
recover  those  funds for  the  state.  So  they  left a  lot  of                                                               
flexibility  in terms  of collateral  to  secure each  individual                                                               
project as  best they  can. It  could be  a variety  of different                                                               
things and loan  terms plays into that. It could  be secured with                                                               
inventory,  but that  is fairly  high risk.  Others might  have a                                                               
building or a second deed of trust on a home.                                                                                   
                                                                                                                                
2:26:15 PM                                                                                                                    
CHAIR PASKVAN closed public testimony.                                                                                          
                                                                                                                                
SENATOR BUNDE  said the micro-loan  idea has done well  in third-                                                               
world countries, but  his hesitancy comes from what  he has heard                                                               
that inventories have  been left sitting and  public funds hadn't                                                               
been adequately protected.                                                                                                      
                                                                                                                                
CHAIR PASKVAN  said he  believed it  was a  good bill  and should                                                               
move forward.                                                                                                                   
                                                                                                                                
SENATOR THOMAS asked what the definition of a small business is.                                                                
                                                                                                                                
MR. WINEGAR answered  that the bill has  a residency requirement;                                                               
other than that it is pretty general.                                                                                           
                                                                                                                                
SENATOR THOMAS  asked if it  mentioned businesses over  a certain                                                               
gross amount of sales.                                                                                                          
                                                                                                                                
MR. WINEGAR answered no.                                                                                                        
                                                                                                                                
2:29:51 PM                                                                                                                    
SENATOR  BUNDE asked  for an  estimate  of the  demand for  these                                                               
loans.                                                                                                                          
                                                                                                                                
MR.  WINEGAR  answered  that  the  division  estimated  about  75                                                               
applications in the first year and  about 100 in the second year.                                                               
This capitalization would  allow them to continue at  the rate of                                                               
about 25 loans per year.                                                                                                        
                                                                                                                                
2:30:58 PM                                                                                                                    
SENATOR BUNDE  asked for  an example  of some  typical businesses                                                               
that might be interested.                                                                                                       
                                                                                                                                
MR. WINEGAR replied  all types of little retail  outlets, mom and                                                               
pop  businesses that  need  working capital  or  help putting  in                                                               
leasehold improvements, and things like that.                                                                                   
                                                                                                                                
SENATOR  BUNDE   remembered  subsidizing  the  "made   in  Alaska                                                               
program."                                                                                                                       
                                                                                                                                
CHAIR PASKVAN said  he thought it would be important  to hear how                                                               
the program is doing in one and two years.                                                                                      
                                                                                                                                
MR. WINEGAR  answered that  was an excellent  point. He  said the                                                               
division has  some experience with other  small business programs                                                               
like  the  small  business   economic  development  program  that                                                               
involves EDA money,  and a rural development  initiative fund; he                                                               
could provide delinquency rates on  those programs, but they have                                                               
been very successful.                                                                                                           
                                                                                                                                
CHAIR PASKVAN  noted letters of  support in members'  packets and                                                               
read one from the Fairbanks Economic Development Corporation.                                                                   
                                                                                                                                
2:33:55 PM                                                                                                                    
SENATOR  MEYER  moved  to  report  SB  302  from  committee  with                                                               
individual  recommendations and  attached  fiscal note(s).  There                                                               
were no objections and it was so ordered.                                                                                       
                                                                                                                                
2:34:18 PM                                                                                                                    
CHAIR PASKVAN announced an at ease from 2:34 p.m. to 2:38 p.m.                                                                  
                                                                                                                                
              SB 129-RESIDENTIAL SPRINKLER SYSTEMS                                                                          
                                                                                                                                
2:38:16 PM                                                                                                                    
CHAIR PASKVAN announced SB 129  to be up for consideration. [CSSB
129  (L&C), labeled  26-LS0679\M, was  before the  committee.] He                                                               
said he  was contacted earlier  today and was offered  a building                                                               
code  adoption procedure  for all  of the  relevant jurisdictions                                                               
around Alaska,  and he  would distribute it  to the  committee so                                                               
they could see what procedures are in place currently.                                                                          
                                                                                                                                
2:39:34 PM                                                                                                                    
PAUL  MICHELSOHN, Jr.,  Alaska  State Homebuilder's  Association,                                                               
said he has been a builder  in Anchorage for 34 years. He belongs                                                               
to  National Association  of  Homebuilders, is  a  member of  the                                                               
Construction,  Codes  and  Standards (CCNS)  Committee,  and  has                                                               
served  on   the  Municipality   of  Anchorage's   Building  Code                                                               
Committee for  17 years  where his primary  purpose is  to decide                                                               
which code to go  with if there is an argument.  He added that he                                                               
sat  on the  International Code  Conference (ICC),  its Fire  and                                                               
Life Safety Code for two  years and the International Residential                                                               
Code (IRC) for four years. He  had been involved with code review                                                               
in Anchorage for seven code cycles.                                                                                             
                                                                                                                                
He  said he  had heard  how the  code process  today is  fair and                                                               
equitable to all  concerned, but he disagreed  with that, because                                                               
"being involved for seven code  cycles, the public has never been                                                               
notified." He said that notices  are posted, but the average home                                                               
owner doesn't care about code  until it directly affects them. He                                                               
said he has been involved with  the sprinkler issue on a national                                                               
level for 10 years.                                                                                                             
                                                                                                                                
2:42:40 PM                                                                                                                    
MR. MICHELSOHN  explained that at the  ICC level, the way  a code                                                               
is developed and adopted is that  one is appointed to a committee                                                               
and the codes  then are submitted and proposed  and the committee                                                               
votes  on them.  After  that they  are passed  on  to the  mother                                                               
committee  that  is  made  up  of  fire  and  building  officials                                                               
throughout  America.   Again,  he   said,  there  is   no  public                                                               
involvement, and these  individual decide which codes  will be in                                                               
the  code book  and which  ones won't.  If it  was a  true public                                                               
awareness and a  true public process, he didn't  think they would                                                               
be here today.                                                                                                                  
                                                                                                                                
In  the fall  ICC board  meeting, he  stated, the  Fire Coalition                                                               
shipped in  an additional 1800 people  for one vote, the  vote on                                                               
this  issue. Ten  minutes before  the vote  was taken  385 people                                                               
were in  audience; when this vote  came up there were  1890. When                                                               
this vote was over seven minutes later 402 remained.                                                                            
                                                                                                                                
MR. MICHELSOHN said he has heard  a lot about cost, but the issue                                                               
of  cost is  not  relevant. Costs  will be  what  they are;  once                                                               
sprinklers  are mandated  they will  have the  potential to  rise                                                               
immediately.                                                                                                                    
                                                                                                                                
MR. MICHELSOHN  said he was  asking for transparency in  terms of                                                               
preparing  a  cost  analysis  and  other  listed  items  for  any                                                               
jurisdiction  that   chose  to   mandate  installation   of  fire                                                               
sprinklers in  one and  two family  dwellings. He  estimated that                                                               
installing sprinklers in  800,000 units in the  United States for                                                               
a year would cost $1.7 million - and "to save one life."                                                                        
                                                                                                                                
2:45:29 PM                                                                                                                    
MR. MICHELSOHN  said the  Homebuilders are  asking to  have three                                                               
public  hearings,  and the  reason  is  that  the public  is  not                                                               
notified and  they are not aware  of the process. This  will give                                                               
the  homebuilders,  industry  and  real  estate  agents  time  to                                                               
educate and bring  people forward for a chance  to decide whether                                                               
they  want sprinklers  or not.  He asked  if the  process was  so                                                               
transparent why so many organizations are against it.                                                                           
                                                                                                                                
2:46:41 PM                                                                                                                    
SENATOR BUNDE  said Arizona  was quoted  on how  using sprinklers                                                               
reduced property damage  and saved lives, and it  occurred to him                                                               
that a potential downside is if  the power goes out in your house                                                               
and your pipes freeze and you have a sprinkler system.                                                                          
                                                                                                                                
MR.  MICHELSOHN answered  that installing  fire sprinklers  has a                                                               
lot of  downside. The  size of  the water line  would have  to be                                                               
increased  from the  state's  requirement of  .75  inches to  1.5                                                               
inches, and right now Anchorage has a 1-inch minimum.                                                                           
                                                                                                                                
Sometimes pumps will  be needed, he said, and  the Fire Coalition                                                               
states that most fires are  electrical. If you have an electrical                                                               
fire and  the power shuts off,  you don't have power  to pump the                                                               
system.  The  first thing  the  fire  department does  when  they                                                               
approach a  house or fire  is shut the power  off so no  one gets                                                               
electrocuted.  He said  the  Alaska  Homebuilders have  supported                                                               
using smoke  detectors and educating  people on how to  use them.                                                               
Sprinkler  systems  save  buildings and  fire  sprinklers  aren't                                                               
necessarily lifesaving issues.                                                                                                  
                                                                                                                                
2:48:58 PM                                                                                                                    
Another downside is  the needed increase in the  service lines in                                                               
jurisdictions that already don't  have adequate service to supply                                                               
the houses with the water they might need.                                                                                      
                                                                                                                                
SENATOR  BUNDE  asked  about people  with  onsite  water  systems                                                               
instead of continuous services like in town.                                                                                    
                                                                                                                                
MR.  MICHELSOHN  replied  that he  had  installed  six  sprinkler                                                               
systems in  houses in the last  10 years and the  cost has ranged                                                               
from $25,000 to $38,000. On one  project he was asked to bring in                                                               
and  eight-inch  water main;  that  alone  cost $12,000.  Another                                                               
project  with  an off-site  well  needed  two 350-gallon  storage                                                               
tanks for water to operate the fire system.                                                                                     
                                                                                                                                
He also pointed out that these  systems need to be inspected, but                                                               
of all  the ones  he had  installed, he asked,  and none  of them                                                               
have had their systems inspected. They  range from 7 years to 2.5                                                               
years old.                                                                                                                      
                                                                                                                                
2:51:03 PM                                                                                                                    
CHARLES  EDWARDSON, Project  Manager, Ketchikan  Indian Community                                                               
Housing  Authority,  Ketchikan,   said  he  teaches  construction                                                               
technology  at  UAA and  is  a  treasurer  for the  Alaska  State                                                               
Homebuilders Association.  He said he  supported SB 129.  He said                                                               
the rural  challenges are too numerous  to list in both  cost and                                                               
logistics. He  agreed with Mr.  Michelson that most  people don't                                                               
know what their local community is adopting.                                                                                    
                                                                                                                                
He said they  have learned there are two sides  to an issue. When                                                               
the Fire Marshall tried to get  this adopted by the City Council,                                                               
the  issue   went  away   altogether  because   the  Homebuilders                                                               
Association brought in some facts and figures of their own.                                                                     
                                                                                                                                
CHAIR  PASKVAN  remarked  that  it sounds  like  the  process  in                                                               
Ketchikan worked.                                                                                                               
                                                                                                                                
MR. EDWARDSON  said it wouldn't  have worked if  the Homebuilders                                                               
hadn't  intervened. They  maintain that  the science  hasn't been                                                               
proven yet and that smoke detectors save more lives.                                                                            
                                                                                                                                
CHAIR  PASKVAN encouraged  him to  focus  on the  CS that  talked                                                               
about the process.                                                                                                              
                                                                                                                                
MR. EDWARDSON encouraged preparing  the cost benefit analysis for                                                               
new residential  fire sprinkler systems  so that the  process has                                                               
transparency.  Another  point  he  raised  is  that  the  housing                                                               
authority  he works  for  provides low  income  housing for  many                                                               
people.  They  just  completed   a  24-unit  housing  project  in                                                               
Ketchikan  and   that  wouldn't  have  been   possible  with  the                                                               
additional cost of sprinkler installation.                                                                                      
                                                                                                                                
2:56:22 PM                                                                                                                    
DAVID  OWENS,  Building  Inspector,  Owens  Inspection  Services,                                                               
Palmer, requested  that his email  become part of the  record. He                                                               
said  he didn't  think it  was unreasonable  to ask  for numerous                                                               
public  meetings  on big  ticket  items  like sprinkler  systems.                                                               
Providing a  cost analysis on something  that will cost a  lot of                                                               
money  is also  not  unreasonable. As  a  building inspector,  he                                                               
said,  he gets  the brunt  of  things when  they get  "railroaded                                                               
through."  For example,  the last  electrical code  - it  had one                                                               
public hearing  over the holiday  period and the next  thing they                                                               
know, its  law. Now they  have to put arch-weld  circuit breakers                                                               
in all of  their houses; they had something to  say about it, but                                                               
didn't get the opportunity.                                                                                                     
                                                                                                                                
2:58:33 PM                                                                                                                    
ART CLARK, Alaska Association of  Realtors, said using the safety                                                               
issue as a way to get  something passed quickly is very seductive                                                               
especially when people  don't get a chance to  understand all the                                                               
implications. He  supported SB 129,  because it would  allow time                                                               
for a better understanding of things.                                                                                           
                                                                                                                                
SENATOR BUNDE asked  if he could speculate on the  value of homes                                                               
with sprinkler  systems versus and  those without. Would  it have                                                               
an impact  on resale value  of the  non sprinkler homes  or would                                                               
the  cost of  the  new homes  be  so high  it  wouldn't make  any                                                               
difference?                                                                                                                     
                                                                                                                                
MR. CLARK  said it  might be  a little bit  of both.  Perhaps the                                                               
resale value of  homes without sprinklers would  be impacted, but                                                               
on the  other hand he  couldn't see  new buyers paying  that much                                                               
more for  it. So the  people who  paid for the  initial sprinkler                                                               
system possibly wouldn't  be able to get those dollars  out of it                                                               
down the road.                                                                                                                  
                                                                                                                                
3:00:51 PM                                                                                                                    
DAVID MILLER, Fire Chief, Sitka, opposed  SB 129 and said let the                                                               
communities  decide  for  themselves.  He said  that  most  local                                                               
communities have the process established already.                                                                               
                                                                                                                                
3:02:17 PM                                                                                                                    
KELLY NICOLELLO,  Deputy Director,  Alaska State  Fire Marshall's                                                               
Office, Division  of Fire and  Life Safety, Department  of Public                                                               
Safety (DPS), said he did not  have a position on SB 129, because                                                               
as written  it has no effect  on the state. He  offered to answer                                                               
questions.                                                                                                                      
                                                                                                                                
3:02:53 PM                                                                                                                    
DAVE HOE,  Fire Chief, North  Tongass Volunteer  Fire Department,                                                               
Ketchikan, opposed  SB 129. He  said the idea that  the sprinkler                                                               
system  saves  lives  is   irrefutable.  For  instance,  numerous                                                               
studies have  shown that kids don't  wake up to the  normal smoke                                                               
detectors;  they have  also  shown  that by  the  time the  smoke                                                               
detector goes  off late  at night,  the disorientation  of coming                                                               
out  of a  deep sleep  to  the sound  of  an alarm  going off  is                                                               
disorienting at best.  A lot of times the heat  and smoke by then                                                               
can make escape a significant challenge.                                                                                        
                                                                                                                                
MR. HOE explained that years ago  fire fighters could wear an air                                                               
pack  and could  get  inside  houses with  six  or eight  minutes                                                               
before   "flashover"   occurred,   but  now,   because   of   new                                                               
construction techniques  and the use of  synthetic fibers, houses                                                               
are much tighter and the flashover  time has dropped to less than                                                               
three minutes  - not  a lot  of time.  Fire sprinklers  will give                                                               
people more  time to get  out. He  didn't think the  state should                                                               
become  involved in  the debate  about  whether to  make it  more                                                               
difficult  of the  local municipalities  to  decide whether  they                                                               
should be able to enact an ordinance or not.                                                                                    
                                                                                                                                
He  stated that  all SB  129 does  is add  cost and  bureaucratic                                                               
challenges to  communities that  may not have  the ability  to do                                                               
deal with them to the point that they won't even try.                                                                           
                                                                                                                                
3:05:52 PM                                                                                                                    
CROSBY  GRINDEL,   Northwest  Regional  Manager,   National  Fire                                                               
Protection Association  (NFPA), said  the Association  opposed SB
129.  He said  the Association  had  worked to  advance life  and                                                               
safety issues for more than  100 year through research, education                                                               
and  development  of  consensus  codes and  standards.  The  most                                                               
recent advances  in residential sprinkler  technology bring  in a                                                               
new era of home fire safety.                                                                                                    
                                                                                                                                
He explained  that several  factors have  conspired to  cause the                                                               
greatest risk  of fire  death and  injury to be  in the  home. In                                                               
fact, 83 percent  of fire deaths and 89 percent  of fire injuries                                                               
occur in  the home as  per their 2008  fire loss report.  He said                                                               
the NFPA  believes that residential sprinklers  are the solution.                                                               
They support  the desire of the  fire service to have  the option                                                               
to utilize  this national  standard life  safety device  in their                                                               
efforts  to  protect  their   communities  from  the  devastating                                                               
effects  of  fire. He  also  pointed  out that  residential  fire                                                               
sprinklers  are  significantly  different  than  those  found  in                                                               
commercial buildings, and they are now in all national codes.                                                                   
                                                                                                                                
3:08:31 PM                                                                                                                    
MICHAEL  TILLY, Fire  Chief, City  of Kenai,  said he  opposed SB
129. He  said he  would be  negligent not  to consider  adding or                                                               
utilizing a technology  that would make his  community safer, but                                                               
this bill is  not about a technology that  is already recognized,                                                               
accepted  and  proven  in  many  communities  across  the  United                                                               
States.  SB  129 attempts  to  alter  the  way a  community  does                                                               
business and  targets a single  idea or technology that  his city                                                               
may want to use by  adding unnecessary cost and stumbling blocks.                                                               
He said  that communities are  deferred for particular  reasons -                                                               
one being that  they know their community and  the best processes                                                               
to educate their populace of potential changes in law.                                                                          
                                                                                                                                
MR. TILLY  said that Kenai  has adopted  many fire codes  and the                                                               
standing  process the  City Council  uses has  been in  place and                                                               
seems to  have worked well over  the years. He failed  to see why                                                               
this  topic  needed  additional legislation  from  the  State  of                                                               
Alaska. The  2006 IBC  Codes have hundreds  of fire  and building                                                               
codes  that a  deferred  municipality either  adopts or  excludes                                                               
from  their municipal  codes. Not  once have  they been  burdened                                                               
with doing a cost benefit analysis for any other codes.                                                                         
                                                                                                                                
He said  these codes are  adopted for their community  with local                                                               
input  from   city  building  officials,  fire   officials,  city                                                               
management, city  council, and the  State Fire  Marshall's Office                                                               
through  an already  established procedure  that includes  public                                                               
input and  adheres to AS  29.25. Feasibility,  enforceability and                                                               
applicability  to  the  community  are all  considered  prior  to                                                               
adoption.                                                                                                                       
                                                                                                                                
3:11:08 PM                                                                                                                    
LARRY FLOYD,  Building Official, City  of Kenai, said  he opposed                                                               
SB 129. He  didn't see the issue as being  sprinklers, but rather                                                               
that  they,  as  building  officials, know  the  needs  of  their                                                               
community and  they should have  the authority to  determine what                                                               
is reasonable and necessary within it.                                                                                          
                                                                                                                                
3:11:53 PM                                                                                                                    
JEFF   TUCKER,  President,   Alaska   Fire  Chiefs   Association,                                                               
Fairbanks,  who  opposed SB  129,  said  he  would stand  by  for                                                               
questions.                                                                                                                      
                                                                                                                                
3:12:16 PM                                                                                                                    
DENNIS  BRAUDIGAN, Director,  Emergency Services,  MatSu Borough,                                                               
said  he opposed  SB 129.  They  strongly believe  in the  public                                                               
process, and  their board strives  to be transparent  in enacting                                                               
every  borough code.  An enhanced  public process  already exists                                                               
for  those  codes  carrying greater.  In  fact,  their  selection                                                               
process for the  new Goose Creek Correctional  Center resulted in                                                               
a  national   award  because  of  its   transparency  and  active                                                               
involvement by the public. Mandating  local government to enhance                                                               
the  public hearing  process for  a single  issue is  onerous and                                                               
unnecessary.                                                                                                                    
                                                                                                                                
MR.  BRAUDIGAN  said  currently  if the  Matsu  Borough  were  to                                                               
mandate  residential fire  sprinkler  systems  the proposed  code                                                               
would be  required to go  through the borough's  planning process                                                               
by  virtue  of  the  Matsu Borough's  second  class  municipality                                                               
status as dictated  by the 2008 Supreme Court  ruling in Griswold                                                               
v. City of Homer. He said  this proposed code would be thoroughly                                                               
reviewed by the  borough's planning commission as well  as by all                                                               
borough community  councils and all  fire service area  boards of                                                               
supervisors,   all  commissions,   councils  and   boards  giving                                                               
adequate  public notice  and allowing  for public  hearings. Once                                                               
the  comments  are heard  the  commissions,  councils and  boards                                                               
forward their  respective recommendations  to the  Assembly prior                                                               
to  public   hearings.  This  represents  a   very  thorough  and                                                               
transparent public hearing process.                                                                                             
                                                                                                                                
He said the  Matsu Borough believes that SB 129  is not necessary                                                               
and is  trying to address a  process that already takes  place on                                                               
an ongoing basis; therefore they oppose it.                                                                                     
                                                                                                                                
SENATOR BUNDE  remarked that  they already  go through  the hoops                                                               
that SB 129 would make them go  through, and yet he is opposed to                                                               
it.                                                                                                                             
                                                                                                                                
MR.  BRAUTIGAN  replied  that  the  hearing  process  is  already                                                               
addressed at a local level.                                                                                                     
                                                                                                                                
SENATOR  BUNDE  retorted  that  they  already  go  through  these                                                               
processes,  but  they want  the  option  to  not go  through  the                                                               
process if they choose to.                                                                                                      
                                                                                                                                
MR.  BRAUTIGAN replied  certainly nothing  less than  what is  in                                                               
state statute.  If this is a  process that should be  done, maybe                                                               
it  should be  done for  every public  notice they  have had.  He                                                               
noted  that  they have  had  many  multi-million dollar  projects                                                               
throughout   the  borough   recently,  and   their  process   was                                                               
transparent and had sufficiently engaged the public.                                                                            
                                                                                                                                
3:16:09 PM                                                                                                                    
JEREMY DILLARD, representing himself, said  he lived in the MatSu                                                               
Valley and supported SB 129.                                                                                                    
                                                                                                                                
3:16:36 PM                                                                                                                    
DAVE DILLARD,  Alaska State Building  Association, asked  why the                                                               
fire department is against having  more public testimony. He said                                                               
sometimes the  public doesn't  know what  is going  on; requiring                                                               
sprinklers is a new thing that  will be thrown on to the builders                                                               
and the  cost has to  be recognized.  He said builders  in Alaska                                                               
build better  than most everybody  else in the United  States. He                                                               
has a  budget when  he builds a  house and this  would be  a line                                                               
item in  it. He said  maybe people  can only afford  $250,000 and                                                               
wouldn't be  able to buy anything  with the additional cost  of a                                                               
sprinkler  system. The  Building Association  wants to  have more                                                               
time to teach their clients about what they are getting.                                                                        
                                                                                                                                
CHAIR PASKVAN  asked how this  would affect what is  currently in                                                               
place in Interior Alaska.                                                                                                       
                                                                                                                                
MR. DILLARD  answered that Mr. Tilly  represents the Homebuilders                                                               
through the commission  at the city now. Since  Alaska is usually                                                               
a  few years  behind on  issues,  this probably  won't become  an                                                               
issue until  maybe 2011. The  difference with the other  codes is                                                               
that Alaskan builders already build  beyond them, so people don't                                                               
need to be concerned.                                                                                                           
                                                                                                                                
CHAIR PASKVAN remarked  that the issue for  the committee members                                                               
is what  the local municipal control  is. The CS is  a procedural                                                               
requirement.                                                                                                                    
                                                                                                                                
MR.  DILLARD said  he  thought  the public  needed  more time  to                                                               
become educated about this issue. Word has to get out.                                                                          
                                                                                                                                
3:22:20 PM                                                                                                                    
JEFF  TWAIT,  Director,  Alaska State  Homebuilding  Association,                                                               
City of Kenai, said he supported  SB 129. He said for some reason                                                               
or  another,  some people  don't  get  a  chance to  voice  their                                                               
opinions  with  only  three   meetings.  Transparency  is  really                                                               
important.                                                                                                                      
                                                                                                                                
3:24:20 PM                                                                                                                    
CHAIR PASKVAN  asked how  this process  would modify  the current                                                               
process, if at all.                                                                                                             
                                                                                                                                
MR. TWAIT  said he wasn't  sure what  the current process  is and                                                               
didn't  know if  any  public testimony  was  taken from  building                                                               
officials  on the  current code.  But  this bill  would at  least                                                               
allow public testimony to be heard.                                                                                             
                                                                                                                                
3:25:10 PM                                                                                                                    
CHAIR  PASKVAN,  finding  no   further  comments,  closed  public                                                               
testimony on CSSB 129().                                                                                                        
                                                                                                                                
3:25:50 PM                                                                                                                    
SENATOR MEYER said the previous bill  had to do with mobile homes                                                               
and  knew that  in Anchorage  a large  percent of  fires were  in                                                               
mobile homes.  If mobile homes are  going to be treated  the same                                                               
as residential homes and new ones  were getting built, he said he                                                               
assumed they  would have to  meet the same requirements  with the                                                               
sprinkler systems.                                                                                                              
                                                                                                                                
3:27:43 PM                                                                                                                    
CHAIR PASKVAN said  given the fact that people  wanted to present                                                               
more information to them, he would  hold SB 129 and adjourned the                                                               
meeting at 3:27 p.m.                                                                                                            

Document Name Date/Time Subjects
CS SB 129 Bill Packet.pdf SL&C 3/2/2010 1:30:00 PM
SL&C 3/9/2010 1:30:00 PM
SB 129
SB 153 Bill Packet.pdf SL&C 3/9/2010 1:30:00 PM
SB 153
SB 302 Bill Packet.pdf SFIN 3/23/2010 9:00:00 AM
SL&C 3/9/2010 1:30:00 PM
SB 302
CS for SB 129 Side-by-Side.pdf SL&C 3/9/2010 1:30:00 PM
SB 129