Legislature(2015 - 2016)BELTZ 105 (TSBldg)

03/03/2016 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
-- Public Testimony --
+= SB 127 INSURER'S USE OF CREDIT HISTORY/SCORES TELECONFERENCED
Moved SB 127 Out of Committee
+= SB 158 REAL ESTATE BROKER LICENSURE REQS TELECONFERENCED
Moved SB 158 Out of Committee
+= SB 126 SMALL SECURITY OFFERINGS TELECONFERENCED
Moved CSSB 126(L&C) Out of Committee
+= SB 161 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Moved CSSB 161(L&C) Out of Committee
+= SB 108 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Moved CSSB 108(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 3, 2016                                                                                          
                           1:33 p.m.                                                                                            
                                                                                                                                
                                                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Kevin Meyer                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Gary Stevens                                                                                                            
Senator Johnny Ellis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 127                                                                                                             
"An Act relating  to actions by insurers based  on credit history                                                               
or   insurance  score;   and  providing   for  an   exception  to                                                               
consideration  by  an  insurer of  credit  history  or  insurance                                                               
score."                                                                                                                         
                                                                                                                                
     - MOVED SB 127 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 158                                                                                                             
"An Act  relating to  real estate  broker licensure;  relating to                                                               
the  real  estate  commission; and  providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED SB 158 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 126                                                                                                             
"An Act  establishing an exemption  for the offering and  sale of                                                               
certain securities."                                                                                                            
                                                                                                                                
     - MOVED CSSB 126(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 161                                                                                                             
"An  Act  relating  to  an   exemption  from  the  regulation  of                                                               
construction contractors."                                                                                                      
                                                                                                                                
     - MOVED CSSB 161(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 108                                                                                                             
"An  Act  repealing and  reenacting  the  Alaska Securities  Act,                                                               
including   provisions   relating   to  exempt   securities   and                                                               
transactions; relating to registration  of securities, firms, and                                                               
agents  that  offer or  sell  securities  and investment  advice;                                                               
relating  to  administrative,  civil,  and  criminal  enforcement                                                               
provisions,  including   restitution  and  civil   penalties  for                                                               
violations; allowing  certain civil penalties  to be used  for an                                                               
investor  training fund;  establishing increased  civil penalties                                                               
for  harming  older  Alaskans;  retaining  provisions  concerning                                                               
corporations organized under the  Alaska Native Claims Settlement                                                               
Act; amending Rules  4, 5, 54, 65, and 90,  Alaska Rules of Civil                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
     - MOVED CSSB 108(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 127                                                                                                                  
SHORT TITLE: INSURER'S USE OF CREDIT HISTORY/SCORES                                                                             
SPONSOR(s): SENATOR(s) HUGGINS                                                                                                  
                                                                                                                                
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        

01/19/16 (S) STA, L&C 02/11/16 (S) STA AT 9:00 AM BUTROVICH 205 02/11/16 (S) Heard & Held 02/11/16 (S) MINUTE(STA) 02/16/16 (S) STA AT 9:00 AM BUTROVICH 205 02/16/16 (S) Moved SB 127 Out of Committee 02/16/16 (S) MINUTE(STA) 02/17/16 (S) STA RPT 4DP 1AM 02/17/16 (S) DP: STOLTZE, COGHILL, HUGGINS, MCGUIRE 02/17/16 (S) AM: WIELECHOWSKI 02/25/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/25/16 (S) Heard & Held 02/25/16 (S) MINUTE(L&C) 03/03/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 158 SHORT TITLE: REAL ESTATE BROKER LICENSURE REQS SPONSOR(s): LABOR & COMMERCE

01/25/16 (S) READ THE FIRST TIME - REFERRALS

01/25/16 (S) L&C 02/04/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/04/16 (S) Scheduled but Not Heard 02/18/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/18/16 (S) Heard & Held 02/18/16 (S) MINUTE(L&C) 03/03/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 126 SHORT TITLE: SMALL SECURITY OFFERINGS SPONSOR(s): COSTELLO

01/19/16 (S) PREFILE RELEASED 1/15/16

01/19/16 (S) READ THE FIRST TIME - REFERRALS

01/19/16 (S) L&C, FIN 02/11/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/11/16 (S) Heard & Held 02/11/16 (S) MINUTE(L&C) 03/03/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 161 SHORT TITLE: EXEMPTION: LICENSING OF CONTRACTORS SPONSOR(s): LABOR & COMMERCE

01/27/16 (S) READ THE FIRST TIME - REFERRALS

01/27/16 (S) L&C, FIN 02/09/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/09/16 (S) Heard & Held 02/09/16 (S) MINUTE(L&C) 03/03/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) BILL: SB 108 SHORT TITLE: AK SECURITIES ACT; PENALTIES; CRT. RULES SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR 04/13/15 (S) READ THE FIRST TIME - REFERRALS 04/13/15 (S) L&C, JUD, FIN 02/09/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/09/16 (S) Scheduled but Not Heard 02/11/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/11/16 (S) Heard & Held 02/11/16 (S) MINUTE(L&C) 02/18/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) 02/18/16 (S) Heard & Held 02/18/16 (S) MINUTE(L&C) 03/03/16 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg) WITNESS REGISTER JANEY HOVENDEN, Director Division of Corporations, Business and Professional Licensing Department of Commerce, Community and Economic Development Juneau, Alaska POSITION STATEMENT: Answered questions related to SB 158. WESTON EILER, Staff Senate Labor and Commerce Committee and Senator Costello Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Explained the changes in the CS for SB 126; the CS for SB 161; and the CS for SB 108. JAMES SQUYRES, representing himself Rural Deltana, Alaska POSITION STATEMENT: Testified in opposition to SB 161. PAM GOODE, representing herself Rural Deltana, Alaska POSITION STATEMENT: Testified in opposition to SB 161. RICHARD CARR, BEMA Construction Wasilla, Alaska POSITION STATEMENT: Testified in support of SB 161. KEVIN ANSELM, Director Division of Banking and Securities Department of Commerce, Community and Economic Development Anchorage, Alaska POSITION STATEMENT: Recapped the reasons for SB 108. ACTION NARRATIVE 1:33:31 PM CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing Committee meeting to order at 1:33 p.m. Present at the call to order were Senators Meyer, Giessel and Chair Costello. SB 127-INSURER'S USE OF CREDIT HISTORY/SCORES 1:34:25 PM CHAIR COSTELLO announced the consideration of SB 127. JEANNE MUNGLE, Deputy Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), offered to answers to questions related to SB 127. CHAIR COSTELLO found no questions or input from the sponsor's staff and solicited a motion. SENATOR GIESSEL moved to report SB 127, version 29-LS0529\W, from committee with individual recommendations and attached fiscal note(s). 1:35:58 PM CHAIR COSTELLO announced that without objection, SB 127 is reported from the Senate Labor and Commerce Standing Committee. 1:36:01 PM At ease SB 158-REAL ESTATE BROKER LICENSURE REQS 1:37:16 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 158; "An Act relating to real estate broker licensure; relating to the real estate commission; and providing for an effective date." She noted this is the second hearing. She asked Ms. Hovenden if she wanted to add anything to her previous testimony. 1:37:38 PM JANEY HOVENDEN, Director, Division of Corporations, Business and Professional Licensing, Department of Commerce, Community and Economic Development (DCCED), said she provided the committee follow up information to the questions that were asked during the first hearing. CHAIR COSTELLO asked if the administration had a position on the legislation. MS. HOVENDEN said the Real Estate Commission supports the bill and the department supports it because it provides additional public protections. CHAIR COSTELLO found no questions and solicited a motion. SENATOR GIESSEL moved to report SB 158, labeled 29-LS1303\W, from committee with individual recommendations and attached fiscal note(s). 1:38:59 PM CHAIR COSTELLO announced that without objection, SB 158 is reported from the Senate Labor and Commerce Standing Committee. 1:39:16 PM At ease SB 126-SMALL SECURITY OFFERINGS 1:42:47 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 126; "An Act establishing an exemption for the offering and sale of certain securities." She stated the intent is to conclude public testimony, adopt a committee substitute and look to the will of the committee. Finding no public testimony, she closed it. SENATOR GIESSEL moved to adopt the CS for SB 126, labeled 29- LS1284\W, as the working document. CHAIR COSTELLO objected for an explanation of the changes. 1:44:01 PM WESTON EILER, Staff, Senate Labor and Commerce Committee and Senator Costello, Alaska State Legislature, said the CS makes two substantive changes. The first deletes subsection (c) on page 4, lines 8-13. The reason is that it the Department of Commerce, Community and Economic Development has more flexibility if this rule is handled through regulations. CHAIR COSTELLO asked if the bill allows the department to draft those regulations. MR. EILER answered yes. He said the second change adds a new subsection (d) on page 4, lines 11-15. It states that if someone is subject to a disqualifier or has violated the Dodd-Frank Wall Street Reform and Consumer Protection Act, they can't use this exemption for crowd funding in Alaska. This disqualifier was requested by the administration. MR. EILER referenced a question Senator Giessel asked during the last hearing about the Department of Revenue conducting a report on how Alaskans can become investors in the AKLNG project and the gasline. He related that it's the department's intention to initiate a report once a commercial agreement is presented to the legislature. CHAIR COSTELLO asked if that would be in this section of statute. MR. EILER replied it would likely be in a different set of statutes. This bill is a securities exemption regulated by DCCED and fiscal terms dealing with the AKLNG project and oil and gas are regulated by the Department of Revenue. CHAIR COSTELLO removed her objection and finding no further objection, version W was adopted. 1:49:07 PM SENATOR GIESSEL moved to report the CS for SB 126, version 29- LS1284\W, from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO announced that without objection, CSSB 126(L&C) is reported from the Senate Labor and Commerce Standing Committee. 1:49:20 PM At ease SB 161-EXEMPTION: LICENSING OF CONTRACTORS 1:51:00 PM CHAIR COSTELLO reconvened the meeting and announced consideration of SB 161. She relayed that this is the second hearing, public testimony is open, and there is a proposed committee substitute (CS). 1:51:27 PM JAMES SQUYRES, representing himself, Rural Deltana, Alaska, testified in opposition to SB 161. He said the bill tries to close a contractor loophole, but it has an unintended consequence. Many people living in rural areas build their own homes and move in before they are finished. Should SB 161 pass, an owner/builder who wants or needs to sell within the two-year timeframe would have to demonstrate to the department's satisfaction that they are not a contractor. He described this new burden as a liberty bite. He maintained the bill does not fix the problem; it does unintentionally affect one man's liberty; and it will impact state finances. He suggested the bill needs a fiscal note because new regulations and enforcement will be needed. He mentioned previous versions of the bill and claimed that it keeps coming up because of the contractor's lobby that tenaciously chips away at the people. He urged the committee to hold SB 161. CHAIR COSTELLO told the committee that SB 161 is different than the versions just described. Additionally, the committee substitute clarifies the two-year timeframe and the period of construction. 1:56:03 PM PAM GOODE, representing herself, Rural Deltana, Alaska, testified in opposition to SB 161. She said this is the third year in a row she has had to testify against this bill. She noted this is a Labor and Commerce Committee bill and listed entities that may be pushing it. She maintained that the people of Alaska should not have to file anything with the state in order to sell their homes. It goes against an individual right. She urged the committee to hold SB 161. 1:58:44 PM RICHARD CARR, BEMA Construction, Wasilla, Alaska, testified in support of SB 161. He said he is a homebuilder who specializes in disaster restoration and remodeling so he has a better perspective than most about the need for this legislation. He frequently receives calls from homeowners who are upset and heartbroken that their new home has faulty plumbing or electrical breakers that keep tripping. Sometimes the homeowner is unable to find out who built the home. SB 161 does not prohibit someone from building their own home, but it will impede unscrupulous builders and protect Alaska consumers. 2:00:31 PM CHAIR COSTELLO closed public testimony on SB 161 and solicited a motion to adopt the committee substitute (CS). SENATOR GIESSEL moved to adopt the CS for SB 161, labeled 29- LS1319\W as working document. CHAIR COSTELLO objected for an explanation of the changes. WESTON EILER, Staff, Senate Labor and Commerce Standing Committee and Senator Costello, explained that the CS replaces the term "ends" with "begins" in two places. These appear on page 1, line 11 and page 3, line 4, of the CS. The consensus of the Department of Commerce, Community and Economic Development and stakeholders is that two years after construction ends is a more nebulous timeframe than two years after construction begins. The practical implication is that the two year clock begins when the foundation and footings of a residential structure are put in place. CHAIR COSTELLO asked if an owner/builder would be affected by the bill if it takes him/her four years from the beginning to the end of construction. MR. EILER answered no; it only affects individuals who build a home and advertise to sell it within two years of the start of construction. In that situation, the individual would be required to file a form to satisfy the department that they are not a contractor. The intent is to provide oversight of individuals who are taking advantage of the owner/builder exemption provided in state law. CHAIR COSTELLO asked why there is no fiscal note. MR. EILER explained that DCCED issued a zero fiscal note because they don't anticipate that processing the forms that owner/builders file will have a fiscal impact. CHAIR COSTELLO asked him to speak to the public value the bill intends to promote. MR. EILER explained that this is a consumer protection bill for those who are buying homes in Alaska. The legislative intent is to maintain the owner/builder exemption while ensuring that individuals that should have a contractor license aren't able to take advantage of the exemption. CHAIR COSTELLO removed her objection to the adoption of the CS and solicited a motion. SENATOR GIESSEL moved to report the CS for SB 161, labeled 29- LS1319\W, from committee with individual recommendations and attached zero fiscal note. CHAIR COSTELLO announced that without objection, CSSB 161(L&C) is reported from the Senate Labor and Commerce Standing Committee. 2:06:19 PM At ease SB 108-AK SECURITIES ACT; PENALTIES; CRT. RULES 2:09:43 PM CHAIR COSTELLO reconvened the meeting and announced consideration of SB 108. She relayed that this is the third hearing and the intent is to take public testimony, adopt a committee substitute, and look to the will of the committee. Finding no public testimony on SB 108, she closed it. SENATOR GIESSEL moved to adopt the work draft CS for SB 108, labeled 29-LS1060\W, as working document. CHAIR COSTELLO objected for an explanation of the changes. WESTON EILER, Staff, Senate Labor & Commerce Committee and Senator Costello, Alaska State Legislature, said a non- substantive change is that the CS reorders sections beginning with the amendments to Title 6 and concluding with the amendments to Title 45. The CS also makes two substantive changes. 2:12:17 PM At ease from 2:12 p.m. to 2:17 p.m. CHAIR COSTELLO reconvened the meeting and recapped that Mr. Eiler was explaining the changes in the CS for SB 108. MR. EILER said the first substantive change removes the term "variable annuity" that appears on page 88, line 8, of version A. The administration requested this change so variable annuities will continue to be regulated by the Division of Insurance. The second substantive change removes the entire Sec. 45.56.220 starting on page 13, line 24 through page 16, line 12. That is inherently crowd funding, which is advancing through SB 126. CHAIR COSTELLO removed her objection. Finding no further objection, version W was adopted. She asked Ms. Anselm to give the committee the 30 thousand foot rationale for the bill. 2:20:08 PM KEVIN ANSELM, Director, Division of Banking and Securities, Department of Commerce, Community and Economic Development (DCCED), recapped the reasons to modernize the Alaska Securities Act: to recognize and incorporate current securities industry terms and standards; synthesize with other state laws to make it easier for businesses, entrepreneurs and investors to understand their rights, responsibilities and opportunities in Alaska; deter investment scams; enhance penalties for harming older Alaskans; and separate the securities statutes from the Alaska Native Claims Settlement Act statutes to reduce confusion and improve understanding of both the Securities Act and the ANCSA Proxy Settlement Act. CHAIR COSTELLO thanked Ms. Anselm for her diligent work. SENATOR GIESSEL moved to report the CS for SB 108, labeled [29- GS1060\W], from committee with individual recommendations and attached fiscal note(s). CHAIR COSTELLO announced that without objection, CSSB 108(L&C) is reported from the Senate Labor and Commerce Standing Committee. 2:22:49 PM There being no further business to come before the committee, Chair Costello adjourned the Senate Labor and Commerce Standing Committee meeting at 2:22 p.m.

Document Name Date/Time Subjects
CS for SB 161 (L&C) Ver. W.pdf SL&C 3/3/2016 1:30:00 PM
SB 161
CS SB 126 (L&C) Ver. W.pdf SL&C 3/3/2016 1:30:00 PM
SB 126
CS SB 108 ver. W.pdf SL&C 3/3/2016 1:30:00 PM
SB 108
DOR Response to Senate Labor and Commerce Committee - 2.25.16.pdf SL&C 3/3/2016 1:30:00 PM
SB 127 - Div of Insurance SEN. STA Q&A.PDF SL&C 3/3/2016 1:30:00 PM
SB 127
SB 127 - Follow-Up Letter J. Kinsey.pdf SL&C 3/3/2016 1:30:00 PM
SB 127
SB 158 - Follow-Up DCCED.pdf SL&C 3/3/2016 1:30:00 PM
SB 158