Legislature(2005 - 2006)BUTROVICH 205
04/27/2005 08:30 AM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB116 | |
| HB81 | |
| HB116 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 127 | TELECONFERENCED | |
| *+ | SB 186 | TELECONFERENCED | |
| *+ | SB 187 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 81 | ||
| = | HB 116 | ||
CSHB(L&C) 81-CONTRACTOR LICENSE ENFORCEMENT
CHAIR RALPH SEEKINS announced HB 81 to be up for consideration.
Mr. JOHN BITTNER, staff to Representative Tom Anderson,
introduced the bill. HB 81 is intended to help enforce Alaska's
current laws. Section 2 gives the Department of Labor and the
Division of Occupational Licensing authority to issue
administrative fines for violations of the law. Section 5 is
intended to preserve Alaskans' rights to build their own home
but not aid them to become unlicensed contractors. The time
limit between building a residential property would be extended
to two years.
9:31:56 AM
Senator Hollis French joined the committee.
MR. BITTNER stated the Alaska State Home Building Association,
the Association of Builders and Contractors, the Department of
Labor and Workforce Development, and the Division of
Occupational Licensing all support HB 81.
SENATOR CHARLIE HUGGINS asked the concerns of the people who
oppose HB 81.
MR. BITTNER admitted there was negative testimony, some of which
was simple misunderstanding of the bill. Section 5 is all
current statute except the change in Paragraph 12.
9:33:56 AM
CHAIR SEEKINS asked whether a person is allowed to start
construction on two different homes during the same time period.
MR. BITTNER said the statute limits construction to one home
every year. HB 81 would propose to change this to one home every
two years.
SENATOR HUGGINS asked whether HB 81 restricts building of a
utility shed.
MR. BITTNER answered no.
SENATOR HUGGINS asked whether HB 81 restricts building of an
addition.
MR. BITTNER answered no.
9:36:08 AM
SENATOR FRENCH asked whether a 5-plex would apply to HB 81.
MR. BITTNER responded yes.
9:37:00 AM
MR. DAVE OWENS, owner, Owens Inspection Services, testified in
support of HB 81. The Mat-Su valley is Alaska's fastest growing
area. There is a large amount of owner/builders building single-
family homes for resale, often with no warranty and not up to
professional standards. These people are competing with licensed
contractors.
9:38:56 AM
MR. PATRICK DALTON testified in opposition of HB 81. He said he
has 25 years of experience in the residential building industry
working mostly for homeowners. HB 81 violates certain
fundamental rights and liberties contained in Article 1, Section
1 of the Alaska State Constitution. HB 81 seeks to hinder the
rights of two classes of people in order to support one class -
the contractors.
9:40:59 AM
MR. DALTON suggested HB 81 is approaching a problem from the
wrong angle. If the state is concerned about the quality of
houses they should enforce building inspection and codes.
9:42:41 AM
MR. MIKE MUSICK, owner, Ester Construction, and president of the
Interior Alaska Builders Association, testified in support of HB
81. He claimed the people speaking against HB 81 are breaking
the law.
9:44:58 AM
MR. WALLY SMITH, owner, Smith Alaska Construction, testified in
support of HB 81. He informed his contracts vary from $50,000 -
$250,000. HB 81 does not change existing law it simply provides
active enforcement of the law.
9:46:32 AM
MR. STEVE GOCHIS, Cut Above Contracting, questioned the outcome
when an unlicensed builder gets injured. Construction companies
are required to carry compensation, liability, and disability
policies. He asked who is responsible if an uninsured contractor
gets injured on a homeowner's property. He suggested the state
and the taxpayers would have to pick up tab. He said it is
getting harder to play by the rules because people are doing
large projects and unfairly competing with contractors.
9:48:30 AM
MR. DAVE DILLARD, builder, 3-2-1 construction, testified that
workman's compensation is getting out of hand and liability
policies are escalating. He suggested the handyman provides a
necessary function so long as they stay limited to the $5,000
project.
9:51:21 AM
MR. TERRY DUSZYNKI, home inspector, testified in favor of HB 81.
He said the state should to do something to curb the non-
licensed homebuilder.
9:52:48 AM
MR. TODD LARKIN testified both sides agree on the better part of
the bill. He said he has no desire to build above the $5,000
limit but has a desire to do all manner of work within that
limit for any customer he pleases. He asserted HB 81 effectively
outlaws independent laborers on all major construction sites. HB
81 would outlaw the act of accepting small amounts of work. HB
81 installs massive enforcement methods against those who are
simply earning a living. The accused should have the same rights
as a person awarded a traffic ticket. The department should have
to provide some type of legal proof to fine a person $1,500 a
day for going to work. Years of state red tape have made the
contractors situation bad, but instead of fixing the situation
they have chosen to make someone else's life just as bad. He
asked why the backers and legislators are so intent on kicking
independent laborers off every substantial job site in Alaska
and taking their right to trial away.
9:57:06 AM
SENATOR FRENCH asked Mr. Larkin why Section 5 Paragraph 8
wouldn't cover an independent laborer.
MR. LARKIN responded a handyman would not be allowed to work on
a project where the total value is larger than $5,000. If a
person even assists on a project undertaken by the same or
different contractor they will be under the enforcement
measures.
9:58:51 AM
SENATOR FRENCH said as he reads Paragraph (8) he does not see
how the independent laborer can't do more than one project
provided they are each less than $5,000. He asked Mr. Bittner
how HB 81 treats independent laborers.
10:01:14 AM
MR. BITTNER said the specific provision does not address
independent laborers. HB 81 is enforcing current law with
respect to independent laborers. Mr. Larkin is correct that he
cannot work for a contractor on a larger job. The issue has to
do with insurance purposes.
SENATOR FRENCH advised Mr. Larkin that HB 81 is aimed at
contractors.
MR. LARKIN explained Paragraph (8) is specifically aimed at the
8101-license holder.
SENATOR FRENCH reported HB 81 is related to contractors. He
asked Mr. Larkin how an independent laborer could fall under the
contractor classification.
MR. LARKIN asserted because of the way the work is classified.
The law could interpret the laborer is contracting his labor.
CHAIR SEEKINS disputed Mr. Larkin's logic and said the
contractor's worker's compensation company would categorize the
laborer as an employee.
MR. LARKIN responded workman's compensation does not have
anything to do with HB 81. He said the fact is he is a self-
employed independent laborer with multiple customers. He has
confirmed through legal channels that his interpretation is
correct and he would immediately be subject to fines if HB 81
were to pass into law.
10:04:57 AM
Senator Gretchen Guess joined the committee.
10:05:19 AM
MR. GREY MITCHELL, director, Labor Standards and Safety
Division, Department of Labor and Workforce Development (DOLWD),
explained the positive thing associated with HB 81 is that it
streamlines enforcement. He explained if an independent laborer
were found to be working on a job that exceeded $5,000 in
aggregate value, he could be charged with a class B misdemeanor
with a $2,000 penalty and possible jail time. HB 81 is an
attempt to take out the criminal penalty and make it an
administrative fine. There will be a hearing process, which
would allow for an appeal to the courts if necessary.
10:07:17 AM
CHAIR SEEKINS stated HB 81 would also stop a contractor from
being able to hire many people to do several individual jobs
valued at $4,999 each in order to avoid having to cover the
people with insurance protection and all the other laws that
pertain to having employees.
MR. MITCHELL agreed.
SENATOR FRENCH said the independent laborers are concerned with
violating AS 08.18.011, which says laborers have to be
registered. He asked Mr. Mitchell whether the DOLWF is mainly
concerned with them being registered.
MR. MITCHELL said yes.
SENATOR FRENCH asked the cost of registering.
MR. MITCHELL explained a two-year license is $200. The
difference is the insurance and bonding. He said Mr. Larkin
would like to be able to work on projects up to $5,000 on bigger
jobs. That is a specialty contractor and they are required to
carry a $5,000 bond and basic liability coverage for property
damage or injuries.
10:10:44 AM
SENATOR FRENCH asked Mr. Larkin for his perspective.
MR. LARKIN asserted what Mr. Mitchell said was untrue. There is
no option whatsoever for an independent laborer to register as
an independent laborer/contractor because there is no such
thing. He said he does not want a specialty because currently he
can be hired for a myriad of things that don't fall under a
specialty. He stated HB 81 is odious because he will be forced
to pick one trade and be isolated to it.
10:12:46 AM
SENATOR FRENCH said Mr. Larkin makes a valid point. He suggested
another exemption under AS 08.18.161.
CHAIR SEEKINS speculated about the possibility for abuse. A
contractor could have several independent laborers working on a
job none of whom have any liability for their actions. He
expressed concern that would be the future business model.
MR. LARKIN commented the business model Chair Seekins detailed
would not be logistically possible.
10:15:30 AM
MR. BRENT LAVALLE, construction lender, testified in support of
HB 81. He said he has seen licensing laws get skirted. He
expressed concern that some lenders such as Fannie Mae and
Freddy Mac do not require finished product inspections.
10:17:48 AM
MR. RANDY DOLL, owner, Set Builders Incorporated, testified he
initially was for HB 81 but is now against the bill. He said he
currently employs 8-10 people but he could turn them into
handymen and save 20 percent. He could continue to build the
homes and have no liability or warranty on the houses.
10:19:40 AM
MR. DAN FOLTZ, rental owner, testified he uses the handyman to
do apartment renovations. He said he would not be able to find a
contractor to do the job for less than $5,000. He also has
projects that are long-term and costs exceed well over $5,000
but he does them in increments he can afford. He has used
contractors in the past and has had problems that had to be
resolved in court. He expressed support for the handyman but
said the $5,000 limit is too small.
10:21:28 AM
MR. BOB HERTING, owner, Eureka Builders, testified in support of
HB 81. He has been building homes since 1977 and carries all the
necessary insurance and bonding. He said HB 81 acts in the best
interest of the consumer.
10:22:43 AM
MR. JEFF DESMIT, licensed builder, represented 160 members of
the Southeast Alaska Builders Association. He asserted people
operating below the licensing laws put contractors out of
business. He was troubled to hear testimony from people who
admit they are operating out of the law. He stated he is not
against legitimate handymen so long as they operate under the
current statutes.
10:27:43 AM
MR. DESMIT claimed the current crisis with insurance is due to
unlicensed builders.
10:28:29 AM
MR. ALLAN WILSON, builder and legislative co-chair Alaska Home
Building Association, said the Association requested the
legislation. They see many complaints of individuals building
multiple homes essentially acting as contractors but calling
themselves homeowner/builders.
10:30:58 AM
MR. WILSON agreed with the $5,000 limit for licensed laborers.
He said it compares with Oregon and Washington.
CHAIR SEEKINS closed public testimony. He held HB 81 in
committee.
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