Legislature(1999 - 2000)

05/14/1999 03:24 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
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.                                                                                                    
                                                                                                                                

Document Name Date/Time Subjects