Legislature(2017 - 2018)GRUENBERG 120
04/17/2017 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB100 | |
| HB1 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 100 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 1 | TELECONFERENCED | |
SB 100-MUNICIPAL LIENS: AUTHORITY FOR & PRIORITY
1:04:14 PM
CHAIR CLAMAN announced that the first order of business would be
SENATE BILL NO. 100, "An Act relating to municipal liens."
1:04:46 PM
SENATOR DENNIS EGAN, Alaska State Legislature, explained that he
was asked by city attorneys throughout the state to introduce SB
100 because it fixes an unintended consequence of a "really good
1998 bill" wherein Senator Tim Kelley had stopped people from
using bogus liens to go after elected officials and judges. At
that time, he explained, no one realized it also stopped
municipalities from using liens to collect against debts people
owed the city. Not tax liens, he pointed out, because those are
covered elsewhere in statute. Senator Egan offered that when a
city runs a utility or must abate a hazard, it may need to
record a lien. Importantly, he noted, these liens do not jump
the line because, unlike tax liens that move in front of
everyone else, these liens get in line by date only, similar to
a private business. Senate Bill 100 puts the tool back into the
municipalities' hands and gives liens under municipal law the
same authority as state and federal law.
1:06:35 PM
JESSE KIEHL, Staff, Senator Dennis Egan, Alaska State
Legislature, referred to the detailed sectional analysis
contained in the committee packets, and advised he was available
to take any detailed questions.
REPRESENTATIVE MILLETT referred to Sec. 3, [AS 29.35.010], page
[2], lines 27-28, which read as follows:
(4) to require periodic and special reports
from a municipal department to be submitted through
the mayor;
REPRESENTATIVE MILLETT surmised that the language required a
municipality to put some type of policy in place before the lien
takes place.
MR. KIEHL answered in the affirmative and explained that the
municipality must act by ordinance; therefore, full public
process comes first. Once that policy was in place, if a debt
needed to be secured, it would be available but not before the
policy was in place. The bill does not have a retroactive or
retrospective effect, it is strictly going forward, he noted.
1:07:59 PM
REPRESENTATIVE EASTMAN referred to page 4, [lines 2-10], and the
different types of liens. He paraphrased line 1, "this
paragraph has priority over all other liens except" and asked
why this language chosen because earlier [Senator Egan] had
advised that these liens are not placed in front of other liens
and are in line according to date.
MR. KIEHL responded that this priority language was copied from
elsewhere in the state's lien statute and that there are many
different flavors of lien in statute. When working through this
logic chain, the result is what Senator Egan described, these
liens are in line on equal terms with everyone else. He said he
could walk through that in a couple of pieces, but this is
existing statute language that has that effect, it places these
liens basically in front of everything that isn't in front of
these liens. It is interesting language, but that is its net
effect, he remarked.
1:09:50 PM
REPRESENTATIVE EASTMAN asked the sponsor's thoughts about
including a proviso in the language on page 3, wherein under
this bill, if the state does give municipalities the opportunity
to have liens, that there be required "a sort of opt-out"
[provision]. For example, an Alaska resident preferring to rely
entirely on clean energy or sustainable power could opt-out of a
particular utility. In that manner, he said, the resident would
not use that utility and would not run the risk of a lien being
placed on their property for not paying for a utility they were
not using.
MR. KIEHL answered that the bill is fundamentally a local
control bill, and the question of whether any given municipality
has mandatory use of its utilities, assuming a municipality runs
the utilities, is actually an issue best left to that
municipality and its voters to decide. Home rule
municipalities, he explained, under its home rule powers could
require hook-up to a utility. Currently, there is a statute
elsewhere allowing t any municipality to have mandatory garbage
service, not all municipalities use that option which is
something between those municipalities and their voters to
determine on a local level.
1:11:36 PM
CHAIR CLAMAN opened public testimony on SB 100.
1:12:06 PM
AMY MEAD, Municipal Attorney, City and Borough of Juneau,
offered an example of why this bill would be useful to
municipalities, such that, in 2012, a large historic structure
burned in downtown Juneau. Within a few days the building
official declared the building a public nuisance and issued an
order requiring the property owners to perform certain repairs.
The property owners failed to comply, the building sat for three
years, and a second fire occurred in March 2015. The City and
Borough of Juneau (CBJ) official who inspected the building
found that the property had significantly deteriorated. In May
2015, he declared the building had deteriorated to the point it
was a public hazard and needed to it be demolished, and required
that the property owners demolish the building. Consequently,
she explained, the property owners failed to comply with that
order and the CBJ demolished the building at a cost of over $1.6
million. She pointed out that the CBJ had previously adopted
the International Property Management Code allowing a
municipality to abate a public nuisance at the owners' expense.
Unfortunately, due to current state law, the CBJ could not
secure that debt with a lien, meaning that a prospective buyer
of that now flat piece of buildable property would have no
notice of the debt the CBJ incurred in abating the public
nuisance despite the fact it was a legally permissible debt.
Ms. Mead described that similar to a municipality that provides
for utility services, the CBJ had no way of using that
placeholder to secure its place in line if that property were to
be sold. Consequently, the CBJ had to file a lawsuit for the
right to recover those funds, and this legislation would have
provided an avenue for the CBJ to secure its right in line
should the property have been sold. Ms. Mead advised that a
municipality is not allowed to immediately foreclose on that
debt so the property owner would still have another process to
object to the foreclosure, and object to the placement of the
lien.
1:14:35 PM
REPRESENTATIVE MILLETT surmised that the demolished property was
still being held by the private owner of the building, and asked
why there was a legal avenue for the CBJ to force the property
owner to sell the property allowing the CBJ to receive payment
of the debt.
MS. MEAD responded that the CBJ initiated a lis pendens, a
notice of the lawsuit, to recover those costs because it could
not file a lien. Subsequent to the CBJ recording the lis
pendens, there was an objection to that recording, and the court
ordered the CBJ to withdraw the lis pendens. Consequently, she
advised, in the event the property owner decided today to try to
sell that property there would be no manner in which the title
search would uncover the [$1.6 million] debt. She remarked that
the CBJ has been engaged in that lawsuit for one year and it
would probably be close to another year before the case was
resolved and hopefully, she expressed, the CBJ will ultimately
recover that debt. Initially and ironically, the defendants
filed a Motion to Dismiss arguing that the CBJ should simply
file a lien to secure the debt, and of course, the CBJ was
prohibited to filing a lien due to current state law, she
pointed out.
1:16:04 PM
REPRESENTATIVE LEDOUX asked upon what grounds the court ordered
the CBJ to withdraw the lis pendens.
MS. MEAD responded that the court ordered that the title to the
property was not at issue and not at stake; therefore, the lis
pendens was not an appropriate mechanism.
1:16:58 PM
WILLIAM D. FALSEY, Municipal Attorney, Municipality of
Anchorage, advised that during the Anchorage Assembly's official
legislative program [meeting] a priority items was the issue of
changes to state law state law restoring the traditionally
understood ability of municipalities to protect their law
abiding citizens and taxpayers by recording liens. He offered
that SB 100 would accomplish that goal and the Municipality of
Anchorage transmitted letters of support. He explained that in
some ways this is a clean-up measure designed to address an
overdue maintenance and plumbing problem with the way "our
government is structured" that is coming out of a well-intended
fix to an entirely different problem in the 1990s. He explained
that Anchorage had an instance of several citizens not entirely
happy with its public officials filing liens against their
personal property "so something like 43 liens have been filed
against the mayor and every Anch -- every member of the
Anchorage Assembly." To its credit, the legislature corrected
that problem but did so in a manner that swept up the municipal
liens within its ambit. Moving forward to 2012, the Alaska
Supreme Court found that another jurisdiction could not record a
lien to secure its unpaid utility bills. He added that it would
be somewhat surprising for the legislature to leave
municipalities out of the lien framework because in thumbing
through Title 34.35, the legislature had authorize a whole bevy
of liens to be filed by a whole variety of characters including,
mechanics, those who are performing services on mines and oil
wells, common carriers, folks performing private property
storage, cattle grazers, fish packers, fish processors,
fishermen, attorneys, hospitals, physicians and nurses, hotels
and boarding rooms, lumberjacks and those who work with other
timber operations, common labors of all stripes for their wages,
and even night watchman.
1:19:30 PM
CHAIR CLAMAN, after ascertaining no one wished to testify,
closed public testimony on SB 100.
1:19:59 PM
VICE CHAIR FANSLER thanked Senator Egan for bringing this
legislation forward because it cleans up an issue that offered
true unintended consequences and hurt the state's
municipalities. He commented that anything the legislature
could to do help municipalities help themselves is a good thing
and this bill squarely accomplishes that goal. He said he
supports SB 100.
1:20:26 PM
REPRESENTATIVE EASTMAN commented that he would like time to
draft an amendment related to his earlier, opt-out provision
before placing a lien on someone's property, suggestion. The
sponsor statement specifically referred to municipalities using
a means to collect from people who use services but do not pay,
which is fair. His concern, he said, is that municipalities may
use this to force people to pay and possibly give up their
property for services the people never intended to use.
CHAIR CLAMAN pointed out to Representative Eastman that his
office had forwarded a notice on Saturday that amendments for
this bill were due at 10:00 this morning. While, he said, he
appreciates Representative Eastman's interest, he would not hold
the bill another day to take amendments.
1:21:30 PM
REPRESENTATIVE LEDOUX remarked she did not understand
Representative Eastman's request because, what person would opt-
in to a lien. In the event a person was faced with a lien
because they failed to pay for something, they would not agree
to a lien being issued on their property.
REPRESENTATIVE EASTMAN explained that currently, a person has an
opportunity to use utility services from a municipality, except
not everyone uses sewage services and in some places it is not
even an option. The opt-out provision, he explained, would
allow Alaskans not using and never plan to use, a way to prevent
a lien being placed on their property for utilities they are not
using. He noted this was the first committee hearing on this
bill and there hadn't been an opportunity for discussion on this
topic.
1:23:14 PM
CHAIR CLAMAN surmised that Representative Eastman's concern was
to prevent a lien being put on their property for utilities a
person didn't use, similar to a mechanic's lien or timber lien,
except a utility would not issue a lien if the person did not
actually use the utility. Therefore, he said, if the utility
delivered electricity for two months and a person advised they
did not want to use the electricity any longer and would not pay
for the past two months, that instance would be appropriate to
issue a lien to collect the two months of provided electricity.
1:24:06 PM
REPRESENTATIVE FANSLER moved to report SB 100, Version 30-
LS0709\J, out of committee with individual recommendations and
the accompanying zero fiscal note.
REPRESENTATIVE EASTMAN objected.
A roll call vote was taken. Representatives Kreiss-Tomkins,
LeDoux, Fansler, Millett, and Claman voted in favor of the
passage of SB 100. Representative Eastman voted against it.
Therefore, SB 100 was reported out of the House Judiciary
Standing Committee by a vote of 5-1.