05/09/1994 08:00 AM House STA

  SB 227 - MOTOR VEHICLE RENTAL TERMINALS                                      
                                                                               
  CHAIRMAN VEZEY opened SB 227 for discussion.                                 
                                                                               
  (REPRESENTATIVE KOTT joined the meeting at 10:33 a.m.)                       
                                                                               
  Number 017                                                                   
                                                                               
  CAROL CARROL, STAFF, SENATOR JAY KERTTULA, PRIME SPONSOR,                    
  addressed SB 227.  She stated SB 227 puts in statute a                       
  clause saying terminal rental adjustment clauses and                         
  commercial leases, in and of themselves, do not create a                     
  security interest in assets for the lessee.                                  
                                                                               
  CHAIRMAN VEZEY inquired if "terminal" meant end of lease, or                 
  a place to dock a truck.                                                     
                                                                               
  MS. CARROL said this bill would clarify in law that just                     
  because these kinds of clauses are in a lease, doesn't                       
  necessarily create a security interest for the lessee.  It's                 
  important in cases of bankruptcy, in particular, because                     
  sometimes courts decide that they do, thereby tying up the                   
  assets of the lessor.  SB 227 makes this clarification.                      
                                                                               
  CHAIRMAN VEZEY clarified courts have determined these types                  
  of lease arrangements constitute a security interest.                        
                                                                               
  MS. CARROL responded, in some cases, yes.                                    
                                                                               
  CHAIRMAN VEZEY observed the lease holder's interests are                     
  being treated as a debtor in the total bankruptcy, or as an                  
  unsecured debtor.                                                            
                                                                               
  MS. CARROL replied yes.                                                      
                                                                               
  REPRESENTATIVE HARLEY OLBERG commented the problem is that                   
  in some cases it has been interpreted to be a security                       
  interest.                                                                    
                                                                               
  MS. CARROL added on the part of the lessee.                                  
                                                                               
  CHAIRMAN VEZEY questioned how a security interest compared                   
  to a secured interest.                                                       
                                                                               
  (REPRESENTATIVE ULMER joined the meeting at 10:35 a.m.)                      
                                                                               
  Number 065                                                                   
                                                                               
  REPRESENTATIVE OLBERG replied he felt they were essentially                  
  the same thing.                                                              
                                                                               
  REPRESENTATIVE OLBERG moved to pass SB 227 from committee                    
  with accompanying fiscal notes and individual                                
  recommendations.                                                             
                                                                               
  CHAIRMAN VEZEY clarified the zero fiscal notes were from the                 
  Department of Transportation and Public Facilities, and from                 
  Department of Public Safety.                                                 
                                                                               
  CHAIRMAN VEZEY called for a roll call vote.                                  
                                                                               
  IN FAVOR:      REPRESENTATIVES VEZEY, KOTT, ULMER, G. DAVIS,                 
                 SANDERS, OLBERG.                                              
  ABSENT:        REPRESENTATIVE B. DAVIS.                                      
                                                                               
  The MOTION PASSED.