Legislature(2001 - 2002)
04/02/2002 01:50 PM Senate L&C
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* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
SENATE LABOR & COMMERCE COMMITTEE
April 2, 2002
1:50 p.m.
MEMBERS PRESENT
Senator Ben Stevens, Chair
Senator Alan Austerman
Senator Loren Leman
Senator John Torgerson
Senator Bettye Davis
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 470(L&C)(title am)
"An Act relating to public offering statements required under the
Uniform Common Interest Ownership Act; and providing for an
effective date."
MOVED CSHB 470(L&C)(title am) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 306(L&C)
"An Act authorizing the Department of Community and Economic
Development to issue permits to certain agencies to purchase,
possess, and use certain drugs for euthanizing domestic animals."
MOVED CSHB 306(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 389(CRA)
"An Act eliminating the delayed repeal of a provision authorizing
an exemption from and deferral of municipal property taxes on
certain types of deteriorated property; and providing for an
effective date."
MOVED CSHB 389(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
HB 470 - No previous action to consider.
HB 306 - No previous action to consider.
HB 389 - No previous action to consider.
WITNESS REGISTER
Representative Rokeberg
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of HB 470.
Ms. Robin Ward, Co-Chair
Legislative Affairs
Alaska State Homebuilders Association
PO Box 91443
Anchorage AK 99507
POSITION STATEMENT: Supported HB 470.
Mr. Jess Hall, Builder
PO Box 1987
Palmer AK 99645
POSITION STATEMENT: Supported HB 470.
Mr. Chuck Spinelli
9210 Vangard, #102
Anchorage AK 99507
POSITION STATEMENT: Supported HB 470.
Mr. John Faulkner, President
Land's End Development Corporation
4786 Homer Spit Rd.
Homer AK 99603
POSITION STATEMENT: Supported HB 470.
Ms. Shana Anderson, President
Alaska Animal Control Association
PO Box 307
Valdez AK 99686
POSITION STATEMENT: Supported HB 306.
Mr. Brett Reid
Kenai Animal Shelter
210 Fidalgo Ave.
Kenai AK 99611
POSITION STATEMENT: Supported HB 306.
Ms. Marianne Clark
Soldotna Animal Shelter
177 N. Birch St.
Soldotna AK 99669
POSITION STATEMENT: Supported HB 306.
Ms. Hava Lee, Executive Director
Juneau Gastineau Humane Society
PO Box 22246
Juneau AK 99802
POSITION STATEMENT: Supported HB 306.
Ms. Catherine Reardon, Director
Division of Occupational Licensing
Department of Community and Economic Development
P.O. Box 110806
Juneau AK 99811
POSITION STATEMENT: Commented on HB 306.
Mr. Mike Krieber
Staff to Representative Rokeberg
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on HB 389.
Mr. Marc Marlow
229 Whitney Rd.
Anchorage AK
POSITION STATEMENT: Supported HB 389.
ACTION NARRATIVE
TAPE 02-17, SIDE A
Number 001
HB 470-COMMON INTEREST OWNERSHIP:OFFERING STMTS
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 1:50 p.m. and announced HB 470 to be up for
consideration.
REPRESENTATIVE ROKEBERG, sponsor of HB 470, said there is an
anomaly in the state's common ownership act that was brought to
his attention by a constituent of Senator Torgerson's.
That being during the construction of condominium type
developments, it's necessary under our statute to
provide a public offering statement which requires
certain specific information including such things as a
legal description and other technical matters, which in
fact cannot be fully completed until the unit itself is
completed. What the circumstances were in the Land's
End area of Homer were that high end condominiums were
being built on the two as-built, to-be-built custom
build bases in the cost range of half million to
$750,000, but because of the peculiarity of our
statute, the delivery of the public offerings ticket
couldn't occur until after the units were complete and
at that time, under our statute, the buyer had the
opportunity to back out of the deal. And on top of
that, he had the opportunity to collect 10% of the
value of the transaction. In other words, somebody
could bargain for a very costly unit, back out of the
deal, break his [indisc} contract and thus be rewarded
by our statute to the tune of $75,000.
What this bill does, Mr. Chairman, is fix that little
anomaly by providing that a preliminary public offering
statement be provided which is very similar in nature
to the final product and also indicates if there is any
award to be made by the courts that it could be up to
10%, not specifically 10%. Therefore giving the judge
the ability to look at the circumstances and facts of
the case.
SENATOR LEMAN said this was a revision to the Uniform Common
Interest Ownership Act and asked if this was one of the uniform
acts that they have adopted that's common across the United
States.
REPRESENTATIVE ROKEBERG replied yes, that he had been working on
a revision with the homebuilders for about three years.
SENATOR LEMAN asked if it was likely that other states would have
the same anomaly unless they had revised the Uniform Act.
REPRESENTATIVE ROKEBERG replied that this usually doesn't come to
light, because mostly when townhouse type condominiums are put
together and marketed, they're not as high ended. So, there's not
as much risk on the part of the developer if the transaction
doesn't close.
This becomes very glaring when you have a high-end
resort type condominium situation, like you do at the
Land's End on the Homer spit, which the letter in the
packet comes from, Mr. Johnson Faulkner, and the
details of that particular plight that he is in.
SENATOR AUSTERMAN asked him to explain how this Act is different
than one from a typical homeowner who custom builds a house.
REPRESENTATIVE ROKEBERG replied that in Alaska the first
statutory act they had was the Horizontal Regime Act, which
allowed for the sales, marketing and legal conveyance of a
condominium or a townhouse and that was superceded 18 years ago
by the Uniform Common Ownership Act and all the newer ones are
under the Common Ownership Act that sets up a different estate in
land where you can convey fundamentally, airspace. for example a
condo can be high rise building and the conveyance of title is
only to any particular unit within that particular building.
SENATOR AUSTERMAN said a single unit home is a contract based
upon building a house, a finite deal and asked if he was saying
that a townhouse is not a finite deal.
REPRESENTATIVE ROKEBERG explained that you could have stand-alone
property and fee simple and the ownership [indisc] fee, but they
have no common ownership. He said it was not uncommon for
detached single-family homes to have homeowner's associations
that may own some land in common.
SENATOR AUSTERMAN said that the high-end complexes are based on
the same decisions as the lower end ones. In more simplistic
terms he thought this sounded like they were protecting them from
themselves.
REPRESENTATIVE ROKEBERG responded:
I think what we're doing is facilitating commerce,
here. What we have is a circumstance where it's an
entirely unilateral right of the consumer or the buyer,
could have the right not only to back out of the
contractual obligations by statute, but they even have
the ability to profit here. It's kind of an unusual
circumstance.
MS. ROBIN WARD, Co-chair, Legislative Affairs, Alaska
Homebuilders Association, said she is a professional association
manager for common interest properties and that they support this
bill. She said there was a model amendment of this Act that was
also enacted in 1994 and this needed to be taken care of in the
state of Alaska.
These are two issues that have really plagued us this
year especially and we felt like we needed to fast-
track these. We pulled these two out of the large bill
to work on. Part of the problem is that the risk is
higher in the higher end units, but the risk is the
same for all developers when they can basically get to
the closing table and someone can back out. It really
does hurt on the financing side of it, but again I'll
let Mr. Faulkner talk a little bit about that.
One of the reasons this is happening this year is that they are
building a lot more of them right now. In Anchorage almost half
of the listings are new construction and half of those fall under
the Community Uniform Common Interest Ownership Act in one form
or another.
Even today in our subdivision, if there is a small
piece of land where a sign sits or any kind of a green
belt, it triggers this law…
In Anchorage the developers are fairly well versed in this law,
but one of the things they're finding out is that in out-lying
areas common interest properties haven't been built before and
they're not aware of this law.
MR. JESS HALL, Mat-Su Valley Builder, said he and a few others
had done developments out there and have found that they had done
condos in the mid-80s that had fallen in the Horizontal Property
Regimes Act. Since then there hasn't been too much of that kind
of building going on. More recently he did a subdivision, but it
wasn't in exactly the right form to be called a public offering
statement and if you don't hand out a public offering statement,
you're liable for 10% of the sale price of the property. His
development is all single-family fee simple and there are no
common elements in terms of the houses that can be built or the
lot sales, but the water system is common and falls under this
act. This act could also apply to a tiny piece of property of 10
x 10 with a subdivision sign on it. If a public offering
statement was not given to each of the homeowners, they are
liable for 10% of the sales prices of their house. He thought it
made sense to at least go to a point where a judge could state
what the real cost was of negligence was on the part of the
developer. He added that more revisions were needed than just
this one Representative Rokeberg mentioned.
MR. CHUCK SPINELLI, Anchorage Homebuilders Association, said he
had been building in Eagle Crossing Subdivision for the last 15
years and although the look of the whole subdivision hadn't
changed much, the law has. In the beginning they didn't have to
worry about public offering statements and there was some land
held in common, green belts, etc. and people were paying about
$15 - $20 per month. When the UCIOA law came through, they were
inundated with regulations and expense. The new sections at Eagle
Crossing cost about $5 - $7,000 to create this monster 2 inch
thick volume of work called the public offering statement. For
every one they hand out to a buyer, it costs another $175 per
copy. It basically describes the CT&R for the subdivision, etc.
and at the very end, it tells them the amount of dues they should
expect. At Eagle Crossing the dues are generally less than $15
per month. In most of the sections they have reserved development
rights and have never collected any dues, but in the event that
they do collect them, they'd be about $180 per year. The penalty
for not advising people that they were going to be responsible
for $180 per year for dues would be 10% of the home price. Their
average sales price is $180,000, which would make about $18,000.
This would be the penalty if they forgot to give someone a public
offering statement. He also said that current statute doesn't
outline how the amount is remitted.
He concluded that he supported HB 470 although more work was
needed to be done on the Act.
MR. JOHN FAULKNER, President, Land's End Development Corporation,
said he is developing a high-end custom condominium project
adjacent to land at the resort at the tip of Homer Spit. He saw
this as a clarification, not a substantive change.
The clarification is needed because the law is unclear
and this does not serve anybody's interests. The reason
it's unclear is that you can give a public offering
statement to a buyer in full compliance with the intent
of the act, let's just say, in July, and the 15 day
clock starts to run. You can have the mutual intent to
build a high-end custom condominium, proceed with
construction financing and construction all the way
through completion and then you have to survey the
building - and I want to go back at this point to Mr.
Austerman's question about what is different between a
condominium and a typical home. One of the differences
- we have to survey these things, we have to survey the
blocks, the airspace that Representative Rokeberg was
referring to. We need that survey to go into the final
recorded document that really defines the person's
legal description. That, in turn, is used to determine
their percentage of ownership of these common areas.
So, back to my original scenario where this 15-day
statutory requirement of the right of rescission, let's
call it, starts to run in July. You build the building,
you get to closing or get to the point of completion
and you have to survey and finalize your declaration
and update your public offering statement to reflect
that finality or that final square footage allocation
that determine ownership. In a lot of cases they're the
same. It doesn't change, but custom homes that change
during construction can alter things. The point I'm
trying to make here is that the law is not clear that
you can issue a POS in good faith and full compliance
with what I believe is the intent, yet get to final
completion and a buyer could technically argue that
this public offering statement is not the original
public offering statement and the 15-day clock starts
at this point, i.e. after construction and, therefore,
they have a right of rescission when as a developer,
you have 100% invested. So, that is what Representative
Rokeberg's bill HB 470 does. It clarifies that the
original public offering statement is issued in good
faith and is substantially the same as what is finally
recorded and you're in compliance with the law. I think
that serves the consumer's best interest. I think it
serves general commerce best interests and the best
interests of all parties. I'll say one other thing and
that is really don't think the framers of this law
intended a buyer to be able to back out of a deal at
the eleventh and a half hour. So, I can't imagine that
something that onerous was the original intent.
Back when this law was framed, I believe condominium
development was really confined for the most part to
large say - 50 unit plus buildings that were not as
customized and certainly less expensive than what I'm
doing. So, loosing one deal maybe at the eleventh hour
wasn't as onerous to a developer or as damaging, but
clearly, I'm building three at a time and my bank is
certainly aware of this loophole and it has impacted my
ability to get financing to the point where they're
requiring unreasonable amounts of cash, in some cases,
100% to be set aside in escrow with absolutely iron-
clad language that restricts a buyer's ability to back
out. So, it is impeding commerce at this point and I
believe it's a needed clarification and one that we
deserve because I can't imagine the intent of this
language was to allow a willing buyer and a willing
seller to come to an agreement before custom
construction and then again at the eleventh hour decide
some minor revision that couldn't be avoided that they
have the right to back out.
CHAIRMAN STEVENS asked if the bank brought this to his attention.
MR. FAULKNER replied that this was pointed out by his attorney,
Sandra Wicks, one of the most knowledgeable about the Common
Ownership Act. It has never been litigated. "The problem is that
the probability, as low as it might be, times the risk of it
happening is absolutely still disproportional…"
He said it may happen once in a million years, but that one time
it's going to happen, it's going to devastate the developer.
CHAIRMAN STEVENS asked if anyone had had a problem with this that
he knew of.
MR. FAULKNER said he didn't know of anyone, but he thought it was
a "prudent precaution."
SENATOR LEMAN moved to pass CSHB 470(L&C)(title am) out of
committee with individual recommendations and the accompanying
fiscal note. There were no objections and it was so ordered.
HB 306-EUTHANASIA FOR DOMESTIC ANIMALS
CHAIRMAN STEVENS announced HB 306 to be up for consideration.
REPRESENTATIVE LANCASTER, sponsor of HB 306, said in Alaska the
animal control agencies do not have the authority to purchase,
possess or use certain drugs to perform the most humane method of
euthanasia for domestic animals. Right now a veterinarian has to
be called to do this or the animal would have to be taken to a
veterinarian facility. If an animal is brought in suffering,
nothing can be done until the vet gets there and this could take
hours. If HB 306 were to pass, injured animals would not have to
suffer these hours and the process would be more humane. During
business hours a veterinarian might be busy with other animals
and unable to respond immediately or sometimes there isn't one
available in small villages, which have access to veterinarians
only occasionally and have to resort to harsher methods of
euthanasia. If an animal is brought in in the middle of the
night, it would take longer for a vet to respond. Pet owners
would still have the option of bringing their animals to a vet.
The goal of HB 306 is not to take business away from
veterinarians, but to provide a more humane cost-
effective method to treat sick or abandoned animals.
Not only would it be more efficient and humane, it will
also save municipalities money. With the fiscal
situation the state is in, finding areas to save money
is essential. In the Mat-Su alone, the animal shelter
is spending $34,000 and up per year to contract for the
service with the local veterinarian.
In Fairbanks, it costs up to $85 per case. He said that agencies
in this program will be under the self sufficiency act, so this
would not cost the state of Alaska any money. Agencies wishing to
apply will have certain guidelines to follow in order to obtain
and keep these permits. Those who will be administering these
drugs will have completed a euthanasia technician certification
course that is approved by the National Animal Control
Association, the American Humane Association, and Public Humane
Society of the United States.
Testimony in the House revealed that there were concerns that
drugs would be available to untrained individuals, but any agency
that applies for the permit will have to follow the rules in
effect for possession of drugs for veterinarians. They will have
to be kept under lock and key and licensed supervision. The DEA
has indicated there has been very few investigations of these
drugs and those were because of improper storage. Thirty-one
other states have laws allowing animal control leagues to use the
right to apply for a permit to purchase, possess and use drugs
for euthanasia of domestic animals.
MS. SHANA ANDERSON said she has been the animal control officer
in Valdez for almost 13 years and she is also the president of
the Alaska Animal Control Association. She supported HB 306,
explaining that right now she has a very good working
relationship with a veterinarian, but that isn't always the case.
Other agencies have had problems being able to purchase drugs.
"Anyone in this field who performs euthanasia are professional
people, they're compassionate people…"
MS. ANDERSON said that she wished she could be put out of
business and that euthanasia wasn't needed. Many times it is
necessary because animals don't have homes.
MS. LAURA HOOD, Manager, Fairbanks North Star Borough, Division
of Animal Control, supported HB 306.
Unfortunately, thousands of animals are euthanised in
shelters in the state of Alaska each year. This bill
allows animal shelter workers to legally purchase,
maintain and use the drug which is accepted as the best
euthanasia method that we have available to us. This
bill will save municipalities money as they become able
to purchase these drugs directly from the
manufacturers. They will no longer have to rely on the
services of a veterinarian to purchase or administer
the drug, which can cause the municipalities thousands
of dollars each year. It will protect veterinarians by
removing responsibility of these drugs when used in
animal shelters from the veterinarians and placing it
with the animal sheltering agencies. It will allow
communities without veterinarians to practice modern,
safe and humane animal control. It will allow humane
euthanasia for injured pets in emergencies that may
occur day or night. The euthanasia technician
certification requirement will set a state wide
standard for the level of care that pets receive in
their last moments of life and will raise the level of
professionalism in animal control workers providing
this service. I really urge you to support this bill.
Thanks.
MR. BRETT REID, Kenai Animal Shelter, supported HB 306. He wanted
to clarify that the "tool" they need to conduct euthanasia is
basically a controlled overdose that does require some training.
The course for using it is offered 20 times in the coming year
and will probably be offered in Juneau, as well. The federal
record keeping is pretty well established, so the wheel doesn't
have to be reinvented on that issue. This is not a blank ticket
to buy drugs as the bill lists specific ones that can be used.
MS. MARIANNE CLARK, Soldotna Animal Shelter, said she had been in
this field for over 25 years and supported HB 306. "This is a
very important tool for us to use. It is the most humane method
of euthanising the animals…"
MS. NANCY BUCKMASTER, Sitka Animal Control Officer, said she runs
the animal shelter and is the euthanasia technician. She has been
certified for almost four years and has a good working
relationship with the two veterinarians that work there. She
supported this bill. She said it's more of a timing issue for
those that have good working relationships with veterinarians. If
she is not able to get drugs when she needs them, the process has
to wait.
Anyone who performs euthanasia usually has to be
mentally ready and when those tools are not available
for us, we then again have to redo our mental state and
get prepared again to euthanise an animal. It's not an
easy process, but the timing has to be there. I would
ask that you support this bill for not only us, but all
the smaller communities that are in the Alaska area.
MS. HAVA LEE, Executive Director, Juneau Gastineau Humane
Society, supported HB 306. She said that everyone in this
business knows that euthanasia is a difficult topic, but it is
part of their job and there is training available. The procedure
is not to be taken lightly. There is nothing in the bill that
says that organizations would have to discontinue using a
veterinarian for this service and probably in Juneau they would
continue. This bill provides options that allow qualified
individuals to have access to euthanasia drugs. In instances
where a veterinarian is not available, this could mean the
difference between a humane death or hours or even days of
endless agony for an animal. Supporters of this bill including
humane societies and animal shelters and animal control officers
throughout the state do not see this bill as a cheap way to
reduce the animal populations. Animal organizations have an
aggressive spay and neuter program. Humane societies and animal
shelters do not create domestic over populations, but they are
responsible for dealing with the problems of pets when they
populate too much.
In Juneau, as in most if not all animal shelters,
animals are euthanised if there is no possibility that
they will be adopted. We do euthanise animals that are
severely injured, old and too sick to recover and/or
vicious and like most animal welfare organizations, we
go out of our way to find homes for adoptable animals.
We do not have a list of people who want to adopt a 17-
year old cat that sprays and has diabetes. That's just
the reality.
TAPE 02-17, SIDE B
MS. CATHERINE REARDON, Director, Division of Occupational
Licensing, said her division staffs the Veterinary Board. She has
reviewed and worked with the sponsor so they would be able to
administer the bill if it passes and she didn't have any
technical problems with it.
MS. REARDON said that the Veterinary Board is not totally
comfortable with the bill, because they are concerned about
whether there would be sufficient insurance that the euthanasia
drugs would be kept secure in community settings. They are also
concerned about "pre-medication," meaning that sometimes animals
need to be given a soothing drug before they can be euthanised
because they are agitated by their situation. They are concerned
about those drugs having potentials to become street drugs.
SENATOR DAVIS asked if the Board of Veterinarians brought this up
on the House side.
MS. REARDON replied that she thought it was mentioned in House
Labor and Commerce.
SENATOR AUSTERMAN asked if the concern of the Board was that the
control of the drug was not going to be tight enough.
MS. REARDON replied yes.
SENATOR AUSTERMAN asked if it was true that veterinarians
controlled the drug now and there is no problem.
MS. REARDON replied yes. DEA has rules about tracking the drugs
and locking them up and things like that. The veterinarians' DEA
permits are on the line if they don't adhere to those
regulations.
SENATOR AUSTERMAN said he assumed that municipalities would fall
under those same rules.
MS. REARDON said she thought the concern was with the smaller
communities who might not have the resources or staff to adhere
to all the requirements.
SENATOR TORGERSON moved to pass CSHB 306 (L&C) out of committee
with individual recommendations and accompanying fiscal note.
There were no objections and it was so ordered.
HB 389-MUNI TAX EXEMPTION: DETERIORATED PROPERTY
CHAIRMAN STEVENS announced HB 389 to be up for consideration.
REPRESENTATIVE VIC KOHRING, sponsor of HB 389, said it is an
amendment to Title 29 that would allow for certain types of
property exemptions that would enable deteriorated properties
that are subject to rehabilitation to have greater odds in terms
of financing of those properties. He said the McKay Building in
downtown Anchorage had been an eyesore for many years and had
been purchased by Marlow Development Corporation, which was
attempting to upgrade the building, but they need more financing.
This legislation would enable them and other similar properties
to obtain that financing, because a tax exemption puts them in
better position to get dollars from investment institutions.
This bill actually adds to the existing law on properties that
are granted a tax exemption. In 1996-97 a bill was passed
addressing this issue, but it sunsets on July 1, 2002. Instead of
extending the sunset this legislation deletes the sunset clause.
SENATOR LEMAN said he understands the reasons behind this
legislation and asked why he didn't just extend the sunset date.
REPRESENTATIVE KOHRING replied that his original legislation had
a time certain of 2005, but the Community and Regional Affairs
Committee amended the legislation and they felt it was better to
drop the exemption.
MR. MIKE KRIEBER, Staff to Representative Kohring, agreed and
said they did the same thing a few years ago when it came
through. Representative Halcro had put in language relating to
local community control that he felt were adequate so no one
would receive unfair economic benefit - the rationale the
committee used to remove the sunset extension that Representative
Kohring's original bill proposed.
SENATOR AUSTERMAN asked if AS 29.45.05 actually exempts
deteriorated buildings and does it go on until the renovation is
completed.
MR. MARC MARLOW, Marlow Development Corporation, said the goal of
the previous legislation was to develop a way for local
communities to extend property tax relief to deteriorated
properties for up to five years of an outright exemption followed
by up to five years of deferred property taxes. This would
provide flexibility in financing a renovation. The local assembly
must first by ordinance designate a property that would benefit
from this statute as a deteriorated property and the developer
could request exemptions based on need. The mayor and assembly
would then approve it or reject it.
SENATOR TORGERSON said he, like Senator Leman, wanted a date
certain.
SENATOR DAVIS moved to pass CSHB 389(CRA) from committee with
individual recommendations and the attached fiscal note. There
were no objections and it was so ordered.
CHAIRMAN STEVENS adjourned the meeting at 2:50 p.m.
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