Legislature(1999 - 2000)
05/14/1999 03:24 PM House L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 130 - ARCHITECTS/ENGINEERS/LAND SURVEYORS
Number 1506
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 130, "An Act adding limited liability companies and limited
liability partnerships to the organizations that can be authorized
to practice architecture, engineering, land surveying, and
landscape architecture; and relating to state and municipal
contracts for architectural, engineering, land surveying, and
landscape architectural services." He invited Ms. Seitz forward to
explain the legislation.
Number 1524
JANET SEITZ, Legislative Assistant to Representative Norman
Rokeberg, Alaska State Legislature, came forward to present HB 130
as aide to the House Labor and Commerce Standing Committee, the
bill sponsor. Ms. Seitz explained HB 130 adds the business
entities of limited liability companies (LLCs) and limited
liability partnerships (LLPs) to the architects, engineers, and
land surveyors licensing statutes. She noted that the Department
of Commerce and Economic Development has been advised by the
Department of Law that these new entities are not covered under the
current licensing statutes. House Bill 130 would allow the State
Board of Registration for Architects, Engineers, and Land Surveyors
to register LLCs and LLPs in a manner similar to corporations,
where an Alaskan licensee is designated as the responsible
licensee in charge of each entity. [The sponsor statement read:
The State Board of Registration for Architects, Engineers
and Land Surveyors (AELS) has the duty of licensing
architects, engineers, land surveyors or landscape
architects under the provisions of AS 08.48.011. In
addition to individual licenses, the Board has
requirements for certain business entities (corporations)
to register with the AELS and these entities must receive
a license to practice.
During the last several years, the Legislature has
authorized limited liability companies and limited
liability partnerships. The Department of Law has
advised the Department of Commerce and Economic
Development that these new entities are not covered under
the AELS licensing laws.
Limited liability companies (LLCs) are covered in AS
10.50. Alaska's law was adopted in 1994. The entity is
a hybrid form of business structure that combines the tax
advantages of a partnership and the liability safeguards
of a corporation. Limited liability partnerships (LLPs)
are covered in AS 32.05 and were adopted in Alaska in
1996. LLPs are a type of general partnership and provide
a flexible form of organization for small businesses.
HB 130 would allow the Board to register LLCs or LLPs in
a similar manner as corporations with the designation of
an Alaskan licensee as the responsible licensee in charge
of such an entity. Such registration would continue to
provide consumer protection and licensee accountability
for the people of Alaska using the services of these
professionals.
We would appreciate your support of this legislation.]
CHAIRMAN ROKEBERG indicated the legislation simply adds LLCs and
LLPs to the architects, engineers, and land surveyors.
REPRESENTATIVE CISSNA referred to a piece of written material,
noting it had been found that LLPs and LLCs were not authorized for
some reason to do this and that is why this legislation is
required. She would like to understand the reason these entities
are not already included.
Number 1627
MS. SEITZ said that according to the letter from the Department of
Commerce and Economic Development, the Department of Law has
determined that LLC entities are prohibited from practice under
current authorities of AS 08.48. There is currently no ability, as
a corporation does have, for an LLC to obtain authorization from
the board for a license. Limited liability companies would have an
impossibility defense, as it is currently impossible for them to
become registered with the board.
CHAIRMAN ROKEBERG confirmed from Ms. Seitz the reason is that LLCs
and LLPs were never incorporated into the statute, and this is the
only problem. The chairman indicated HB 130 corrects this
omission, adding these forms of business organization to that
chapter.
REPRESENTATIVE CISSNA questioned if there is anyone to testify from
the department, division, or anything like that.
CHAIRMAN ROKEBERG answered in the negative, but stated that, even
better, there is a consumer online.
MS. SEITZ added the committee does have a letter [dated March 1,
1999] from Ms. Reardon [Director, Division of Occupational
Licensing, Department of Commerce and Economic Development]. Ms.
Reardon's letter notes that the board met February 11 through 12 of
this year, voicing support for this legislation and for one other
requested change, adding landscape architecture to a part of the
statute which had been overlooked before. Ms. Seitz indicated the
legislation contains this additional housekeeping change.
REPRESENTATIVE HALCRO asked about the practice of "lightscaping"
which is huge now in Anchorage.
CHAIRMAN ROKEBERG commented this question would be referred to Ms.
Reardon to see if "lightscaping" is under landscape architecture.
The chairman expressed that he does not think it is.
Number 1746
JIM STEVENS, President, Kuskokwim Architects and Engineers,
testified via teleconference from Anchorage in support of HB 130.
Mr. Stevens said his company would like to provide A&E
[architectural and engineering] services through a limited
liability company in order to avoid paying taxes twice (indisc.)
the owners.
CHAIRMAN ROKEBERG commented that Mr. Stevens had brought this to
his attention. The chairman requested that Mr. Stevens explain why
he thinks this omission should be clarified. The chairman asked if
it is correct that Mr. Stevens' firm wants to adopt this type of
business.
MR. STEVENS agreed. In the past A&E firms have been owned by the
individuals providing architectural or engineering services.
However, more and more companies are organizing these design firms
and would rather not have to pay taxes twice on the firm's
earnings. Mr. Stevens noted the margins are small enough in this
business and they would like to retain more of the revenues they
generate for their services. As the chairman mentioned earlier, it
is simply an omission in the existing law which prevents LLCs and
LLPs from providing these services. Mr. Stevens commented that in
no way, shape, or form do they feel allowing LLPs or LLCs would
compromise public safety or the safety of the public of (indisc.).
CHAIRMAN ROKEBERG confirmed, then, it is Mr. Stevens' testimony
that his business is presently incorporated and would change into
an LLC if allowed statutorily. The chairman additionally confirmed
from Mr. Stevens that this would save Mr. Stevens' firm money in
taxes and limit liability.
Number 1879
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development, came forward to
address Representative Halcro's question regarding "lightscaping."
REPRESENTATIVE HALCRO noted he is aware of a growing industry in
Anchorage, with the "City of Lights" promotion, called
"lightscaping." He questioned, "Some landscaping - architecture
landscaping firms do 'lightscaping' in the winter. Does this
incorporate them?"
MS. REARDON responded she does not believe the legislation expands
those required to obtain licensure at all. The legislation
provides more options for how a company can legally be organized.
Ms. Reardon added that both the board and the department support
the legislation.
CHAIRMAN ROKEBERG said he believes the question was: Are
"lightscapers" included under landscape architecture?
REPRESENTATIVE HALCRO indicated the chairman is correct.
MS. REARDON replied she does not believe so, considering the
definition of "landscape architecture." She indicated the
definition is fairly long and she would want to review it before
providing a definite answer.
CHAIRMAN ROKEBERG indicated this was not necessary.
REPRESENTATIVE HALCRO agreed, noting he had simply been curious.
Number 1923
REPRESENTATIVE MURKOWSKI referred to the last portion of the
sponsor statement, noting the LLPs and LLCs would be registered in
a manner similar to the corporations ["HB 130 would allow the Board
to register LLCs or LLPs in a similar manner as corporations with
the designation of an Alaskan licensee as the responsible licensee
in charge of such entity."]. Representative Murkowski questioned
if there would be any consequence to the State Board of
Registration for Architects, Engineers, and Land Surveyors for just
making this kind of corporate change.
MS. REARDON responded the board might need to approve the licenses
but she indicated any costs, like additional paperwork or
correspondence, would be minimal and would be absorbed by the
department.
CHAIRMAN ROKEBERG noted, however, in this area the state licenses
the companies, not just the individuals. The chairman asked, then,
if there would be any impact because there is a change, indicating
he thought this had been Representative Murkowski's question.
MS. REARDON answered yes, in that the board will now be able to
license businesses which are organized in this manner. Currently
the board has to deny these businesses [licensure] if they are not
regular corporations. This will provide more options for how the
board licenses and will probably trigger a regulation change -
including this in the regulations as well. However, Ms. Reardon
communicated that the board is in favor of the legislation because
it wants to allow these types of new tax organizations. She noted
that yes, the law does require that the business actually be
licensed, not just the individual engineer. Ms. Reardon indicated
this is unique to a couple of the division's professions.
CHAIRMAN ROKEBERG confirmed there were no further questions for Ms.
Reardon.
Number 1998
REPRESENTATIVE HALCRO made a motion to move HB 130 out of committee
with individual recommendations and the attached zero fiscal note.
There being no objection, HB 130 moved out of the House Labor and
Commerce Standing Committee.
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