Legislature(1999 - 2000)
04/26/1999 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 167 - REGULATION OF MOBILE HOME DEALERS Number 1850 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 167, "An Act relating to mobile home dealers." The chairman recognized the presence of Representative John Cowdery, the bill sponsor, and indicated the intent is to first take testimony. PETER TORKELSON, Researcher for Representative Cowdery, Alaska State Legislature, came forward briefly and said he would be available to answer questions as they arise. CHAIRMAN ROKEBERG requested the testimony of Mr. Kincaid in Anchorage, questioning what the gentlemen have decided. Number 1887 GALE KINCAID, Owner/Operator, Triad Sales Company, Incorporated, testified via teleconference from Anchorage. He informed the committee there was meeting this morning which did not decide anything. Mr. Kincaid requested the committee's support of HB 167. CHAIRMAN ROKEBERG noted that Mr. Kincaid had sent the committee notification that repealing the entire law or establishing a sunset would be acceptable; he asked if that was correct. MR. KINCAID said that was correct. Number 1922 MAC CAREY, President, Alaska Manufactured Housing Association (AMHA); President, Carey Homes, Incorporated, testified next via teleconference from Anchorage. Mr. Carey suggested that there might be some further study to determine if there might be obstacles to competition with regards to the smaller dealerships. A small dealership may have difficulties obtaining the bond at all. Mr. Carey stated that the Alaska Manufactured Housing Association has voted HB 167 down in light of consumer protection. If a real estate agent does not have a warranty, but does have a bond, then mobile home dealers should be bonded as well. Mr. Carey said that a "yes" vote on HB 167 would leave consumers with no protection. REPRESENTATIVE BRICE asked if Mr. Carey of the association had received any complaints regarding mobile home dealers in general or requests for regulation. Normally, there is a consumer group advocating regulatory oversight of an industry. Representative Brice said that in his six years in the legislature, no organization or constituents have requested oversight [of the mobile home industry]. He questioned if they were hearing things. MR. CAREY answered in the affirmative. The association has a number of mobile home park managers who hear complaints monthly when collecting space rent. The intent of the bill was to help curb those complaints. Number 2055 REPRESENTATIVE MURKOWSKI noted, then, that the complaints are not necessarily directed at the dealer, but are being heard about through the mobile home park managers. She asked what the specific nature of the complaints might be. MR. CAREY specified that the complaints range anywhere from fraud to holding earnest money, titling and taxes. Taxes is a big complaint. REPRESENTATIVE MURKOWSKI asked if those complaints are forwarded to the Division of Occupational Licensing or whether those complaints actually result in any action or claim against any of the dealers. MR. CAREY commented on the small size of some of these dealers, the person might just have a car with a sign on it, and the chances of getting anything from these dealers would be very slight to begin with. Mr. Carey added that some of the mobile home owners are not very sophisticated and are accustomed to being "walked on." However, Mr. Carey indicated he does not want that stigma on people's dealings with his industry. Number 2118 CHAIRMAN ROKEBERG identified one of the main problems as the fact that used dealers only do a small volume in relation to the cost of the bond and the license. He asked if Mr. Carey would consider an amendment which would exempt mobile home dealers that do a specified volume of business. MR. CAREY reiterated that he was willing to return to the association to research the issue further in order to offer more specifics. Mr. Carey felt that new and used dealerships should have the same bonding but he was open-minded. He informed the committee that AMHA, which is comprised of mobile home park managers, owners, suppliers, and new and used dealerships, has 20 members who voted against HB 167. Therefore, Mr. Carey would have to present Chairman Rokeberg's proposal to the association members. CHAIRMAN ROKEBERG explained the legislative process is such that HB 167 has further committee referrals. This legislation would next be heard in the House Finance Standing Committee. House Bill 167 must go through the House Rules Standing Committee and then to the House floor before being forwarded to the Senate. He pointed out that Mr. Carey could certainly appeal to the bill sponsor regarding any further adjustments he (Mr. Carey) would deem necessary. The chairman suggested that Mr. Carey continue working on this issue to attempt to arrive at an industry consensus. Number 2221 REPRESENTATIVE MURKOWSKI asked how many of the association's members are dealers. MR. CAREY believed that there are five or six dealers in the association. REPRESENTATIVE HALCRO noted the question had been why didn't people go to the proper authorities and complain about fraud. Representative Halcro noted Mr. Carey had replied that some of these used dealers are "fly-by-night guys" who drive around with a sign on their car. He requested that Mr. Carey elaborate on that comment. MR. CAREY noted he was not sure he had used the word "fly-by-night." He indicated that such dealers would not have much to lose. Mr. Carey said, "In other words, if I was to go ahead -- if I bought a $20,000 ... or a $80,000 home from them and I went to go ahead and sue them; what am I going to get? With the $50,000 bond, there's something to go after; otherwise, chances are their assets may be very little." Mr. Carey emphasized that he is not merely concerned with the mobile home dealers today, he is also concerned with what will happen in the future. Currently, manufactured housing comprises 30 percent of all new [housing] permits in the Lower 48. Therefore, Mr. Carey would suspect that the manufactured housing industry would blossom in Alaska as well. Therefore, today's new home would be tomorrow's used home. Number 2297 REPRESENTATIVE CISSNA asked if the manner in which the smaller dealers operate has some kind of negative spin-off on others in the industry. MR. CAREY answered in the negative. He clarified that the size of the dealership is not important, mentioning George Reed who testified at the previous hearing [April 23] as an example of an very reputable small dealer. He emphasized he would not want to hamper any small business. Mr Carey did not like HB 167 as it is because it takes away the accountability from the agents for the small and the large consumer. He emphasized the importance of having some recourse for the consumer. CHAIRMAN ROKEBERG requested that Mr. Carey inform the committee of the consumer protection provided before HB 436 [Nineteenth Legislature]. MR. CAREY explained that the DMV [Department of Motor Vehicles] had a $10,000 bond in order to go into business. That $10,000 bond was not reinstated when the dealer went out of business. The manufactured and mobile home industry did determine that there should be a bond and that a $50,000 is not all that much. Upon discussions with George Reed this morning, Mr. Carey stated, "Maybe there is some room, if a guy can't spend $2,000 a year and trust me $2,000 a year to go into this business is not much; $2,000 a year to get his bonds, but his financial make-up may not be substantial enough to get that bond. Maybe we should reevaluate that." CHAIRMAN ROKEBERG asked if Mr. Carey's testimony was that there is no longer any DMV bond which was the reason for the passage of the statute in the first place. MR. CAREY said that was correct. Number 2453 BEN MARSH, Executive Secretary, Alaska Manufactured Housing Association, testified next via teleconference from Anchorage. Mr. Marsh stated, "I might just reiterate what Mr. Carey said and point out that at our meeting this morning, ... we did not have any meeting of the minds as to what would by the proper level of a bond. Maybe [$]50,000 isn't the right figure. We wanted to talk about that some more, maybe 25 [$25,000], maybe 15 [$15,000]..." [TESTIMONY INTERRUPTED BY AUTOMATIC TAPE CHANGE] TAPE 99-46, SIDE B Number 0001 MR. MARSH continued, "...controls, you know don't know he doesn't have to have a trust account, for example. He doesn't have to segregate money that is put in his car for earnest money. He doesn't have to check on what the taxes are owed on the unit that he's selling. Maybe the buyer finds out about it through his (indisc.) a little later." Mr. Marsh said that the volume of complaints is unknown. Perhaps, there are not many complaints made against the bond merely because there is a bond requirement. Mr. Marsh said that something should be in place. No industry dealing with the public without recourse should be allowed to proceed totally unregulated. Number 0059 REPRESENTATIVE MURKOWSKI noted that there is a fax, dated April 26, 1999, in the committee packet from Mr. Kincaid. That fax requests continuing the hearing today and sunset HB 167. A second fax signed by Mr. Marsh, states that the fax is from Mr. Kincaid, Mr. Carey, Mr. Reed, and Mr. Marsh. The second fax requests that the committee postpone action on HB 167. MR. KINCAID clarified that he wanted the committee to pass HB 167 with a sunset as discussed last Friday, March 23, 1999. Therefore, repealing the legislation. He said that his inclusion on the fax requesting the postponement of HB 167 was an error. CHAIRMAN ROKEBERG asked if Mr. Kincaid believed it appropriate to include an exemption regarding the level of sales per units per year. MR. KINCAID said that the volume of business is not the problem. He explained that most used dealers cannot qualify to be bonded. Mr. Kincaid believed that he was the only used dealer that is licensed and bonded. CHAIRMAN ROKEBERG closed the public testimony. He noted that the committee should have an amendment proposed by the sponsor. Number 0163 MR. TORKELSON explained, as the sponsor's representative, that after last Friday's March 23 meeting, the language sunsetting HB 167 was drafted in case that was the will of the committee. Mr. Torkelson said he understands that it is technically not possible to sunset the current statutes because no board is involved. Therefore, Mr. Torkelson interpreted that to mean repealing the Section requiring current licensure and dealer structure. Number 0190 CHAIRMAN ROKEBERG called an at-ease from 4:25 p.m. The committee came back to order at 4:26 p.m. Number 0196 CHAIRMAN ROKEBERG noted that this a complete repealer. He asked if there should be an effective date. MR. TORKELSON said that point was discussed with the Division of Occupational Licensing. Many of the licenses are for a two-year period and many would expire August 31, 1999. He explained that should HB 167 pass this year, the default 90-day effective clause would make this bill effective around August 20, 1999, to August 30, 1999, depending upon when the bill would be signed by the Governor. The language was eliminated in order to leave it open to the committee or to utilize the default. Number 0238 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development came forward. She noted that the division administers this program. In response to the chairman's question, Ms. Reardon said that she believed if the intent is to repeal this law, it would be best to do so before August 31, 1999, so no one would have to spend $500 [for the licensing fee]. She asked, in terms of ending the program, if the desire would be to have all the bonds run out August 31, 1999, or if it would be the desire hold onto the bonds in order to cover fraudulent acts that may have occurred this spring. CHAIRMAN ROKEBERG commented that would be an area for the sponsor to determine. If some already do not have the bonds, the chairman indicated it would be appropriate to refund the amount of the premium to the others when the program is repealed. He remembered Ms. Reardon's testimony to be that if HB 167 passed, the number of licensees would be diminished to the point that it would be appropriate to end the program. MS. REARDON agreed that continues to be her position. CHAIRMAN ROKEBERG requested that the amendment be offered as a conceptual amendment in order to provide the drafter with the ability to make necessary corrections and conforming language. REPRESENTATIVE BRICE said that he believed the drafter will request the bonding issue to be addressed. He asked if the intent is to have immediate return of the bonds. CHAIRMAN ROKEBERG answered in the affirmative. Therefore, an effective date would be appropriate. REPRESENTATIVE BRICE indicated the other option of requiring the bonds be returned when the program is terminated. Number 0354 REPRESENTATIVE HALCRO expressed concern regarding an individual who purchased a mobile home two or three weeks before the program is terminated. She asked what recourse that individual would have. CHAIRMAN ROKEBERG said there would be no recourse. That is the public policy issue being faced. MS. REARDON pointed out that this may be a weakness in the initial law. Other laws that hold bonds or certificate of deposit were directed in the law to keep the bond for three years past the last license date in order to allow folks to move through the courts. Ms. Reardon was not certain that there is a way to prevent someone who chooses not to renew their license or bond on August 31, 1999, and leaves town under the current law. Perhaps, that could be corrected at this time. REPRESENTATIVE JOHN COWDERY, Alaska State Legislature, sponsor of HB 167, commented that such issues could be addressed in the next committee of referral, the House Finance Standing Committee. He said he would like the legislation to move forward if possible. Number 0410 REPRESENTATIVE BRICE suggested that the amendment be offered as written with a note attached requesting the bonding be addressed in the House Finance Standing Committee. CHAIRMAN ROKEBERG indicated that another route could be the following. He said, "Or do we want to do a conceptual amendment and attach it to this regarding the bonding? Then you can have a CS [committee substitute] ... it can save those guys some time." He questioned the committee's wishes regarding the bonding which could be terminated as of August 31, 1999, or July 1, 1999. REPRESENTATIVE BRICE recommended the bonding be terminated as of the effective date of HB 167. CHAIRMAN ROKEBERG asked then if Representative Brice wished to have a conceptual amendment to the amendment which would terminate the bonding on the effective date. REPRESENTATIVE BRICE agreed. CHAIRMAN ROKEBERG clarified that would make the default the effective date. Number 0482 REPRESENTATIVE HALCRO moved that the committee adopt Amendment 1. Amendment 1, an unlabeled printed amendment, read: Page 1, Line 1 Delete all material Insert: "An act repealing the registration requirement for mobile home dealers." Page 1, Lines 3-7 Delete all material Insert: "Section 1. AS 08.67.010 - AS 08.67.080 is repealed." CHAIRMAN ROKEBERG noted that there is a conceptual amendment to Amendment 1. REPRESENTATIVE BRICE explained, "That the amendment to Amendment 1 would state that the bonding requirements under this title would end and the bonds would be returned upon the effective date of HB 167." REPRESENTATIVE MURKOWSKI indicated the need to add language regarding the fact that the bond would not be released if there is a claim pending against the bond. REPRESENTATIVE BRICE agreed and indicated the amendment to Amendment 1 would include Representative Murkowski's suggestion. REPRESENTATIVE CISSNA asked if the testimony indicated that those 14 licensed and bonded dealers do not care that they are not bonded. Number 0539 CHAIRMAN ROKEBERG said that the testimony was that 10 of those dealers did not want bonding. REPRESENTATIVE CISSNA said that she did not interpret the testimony that way. REPRESENTATIVE COWDERY agreed with Chairman Rokeberg's understanding of the testimony. Number 0562 CHAIRMAN ROKEBERG asked if there are any objections to the amendment to Amendment 1 which reads as follows: "Bond requirements under this title would end and returned upon the effective date of HB 167 unless there is a claim pending against the bond." There being no objection, the amendment to Amendment 1 was adopted. CHAIRMAN ROKEBERG asked if there were any objections to Amendment 1 as amended. There being no objection, Amendment 1 as amended was adopted. Number 0590 REPRESENTATIVE HALCRO made a motion to move HB 167, as amended, out of committee with individual recommendations and the accompanying zero fiscal note. CHAIRMAN ROKEBERG objected to comment. He announced for those on the teleconference that this would just be the beginning of their fight. The chairman suggested that the teleconference participants continue the discussions with other members of the industry to attempt to attain consensus. He explained that what has been done is repeal the entire chapter. There being no further objection, CSHB 167(L&C) moved out of the House Labor and Commerce Standing Committee. Number 0647 CHAIRMAN ROKEBERG called a brief at-ease at 4:37 p.m. The committee came back to order at 4:39 p.m.
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