Legislature(2009 - 2010)BELTZ 105 (TSBldg)

04/06/2010 01:30 PM Senate LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 253 MECHANIC/MATERIALMEN LIENS TELECONFERENCED
Moved HB 253 Out of Committee
+ HB 287 UNIFORM ACT: PROPERTY INTEREST DISCLAIMER TELECONFERENCED
Moved CSHB 287(JUD) Out of Committee
+ HB 354 AK CAPSTONE AVIONICS REVOLVING LOAN FUND TELECONFERENCED
Moved HB 354 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
               HB 253-MECHANIC/MATERIALMEN LIENS                                                                            
                                                                                                                                
CHAIR PASKVAN announced HB 253 to be up for consideration.                                                                      
                                                                                                                                
1:40:04 PM                                                                                                                    
REPRESENTATIVE JAY RAMRAS,  sponsor of HB 253, said  this bill is                                                               
from one  of the  chair's constituents,  Rocky Paby,  a Fairbanks                                                               
boiler technician  and that he  has taken lengthy  testimony from                                                               
small  contractors, an  overhead door  company, and  a couple  of                                                               
boiler  technicians  on  it.  He   said  that  communities  often                                                               
organize regular  maintenance, but many times  workmen are called                                                               
on after hours or for  emergencies. Presently they are subject to                                                               
a 90-day  lean period.  Once the  first 30  days goes  by because                                                               
they don't  have a regular  accounts payable  relationship, these                                                               
bills often  get shuffled to the  bottom of their paper  pile. As                                                               
such,  these  tradesmen  are  losing  their  position  and  their                                                               
ability to lien  jobs. So, HB 253 merely extends  the time within                                                               
which to file a lien from 90 days  to 120 days. This will give an                                                               
additional  30  days  to  work with  property  owners  to  secure                                                               
payment or to negotiate a reasonable payment plan.                                                                              
                                                                                                                                
SENATOR BUNDE said  he assumed you have to be  30 days in arrears                                                               
before  any concern  comes to  the vendor's  attention, and  then                                                               
they have  two more months  to place a  lien. Why isn't  that two                                                               
months adequate?                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAMRAS  answered  that  reasonable  people  don't                                                               
anticipate  that the  bill  is due  when it  is  mailed to  them,                                                               
because  they see  on the  bottom of  the billing  statement that                                                               
it's due  in 30 days. As  a result the contractors  in this class                                                               
of  small business  people find  themselves in  a position  where                                                               
they don't  send a  bill until  time has  passed and  then people                                                               
that they are billing don't often  pay upon receipt of an invoice                                                               
until the next billing cycle.  In a community like Fairbanks that                                                               
still uses  diesel, often people  get into situations  like today                                                               
where the  price of oil has  reached $87/barrel and the  price of                                                               
home heating oil is over  $3/gallon. Families are seeing $1100 in                                                               
fuel  bills for  a monthly  period; they  call out  to get  their                                                               
boiler  man to  do a  repair late  at night  when they  have lost                                                               
their heat for their home and  then that bill takes a seat behind                                                               
the regular  cycle of paying  for their  fuel. As a  result, they                                                               
see the  business owner being  punished passively  simply because                                                               
the  person for  whom  they did  the work  in  a distressed  time                                                               
doesn't have  the money to  pay. So,  if the clock  doesn't start                                                               
running until  after 30  days and  then they  only have  a 60-day                                                               
window with  which to file a  lien, a number of  contractors have                                                               
said that simply isn't an adequate period of time.                                                                              
                                                                                                                                
He said  he has heard a  criticism that perhaps when  the service                                                               
man shows up at the house  they should present to the person that                                                               
they  are doing  work for  a right  to waive  lien, but  then you                                                               
would be accusing  the person of having bad credit  at the moment                                                               
you're  there to  service them  and  that isn't  a good  business                                                               
practice. This is an excellent  compromise to help households and                                                               
not berate customers at the time of service.                                                                                    
                                                                                                                                
1:45:42 PM                                                                                                                    
CHAIR PASKVAN clarified  that it's not the date of  the bill that                                                               
is important to the lien statute,  but the date of the completion                                                               
of the service.  So if the furnace man comes  in and doesn't give                                                               
you the bill  on the day that  he does the job and  gets the bill                                                               
to the customer two weeks later,  it has already been maybe 30-50                                                               
from the  time of the completion  of the work. You  have one more                                                               
cycle and  then you are  almost up against  the 90 days  from the                                                               
completion of  the work.  So the billing  cycle is  distinct from                                                               
the completion of the work trigger date.                                                                                        
                                                                                                                                
SENATOR THOMAS asked if the  small businesses he spoke to thought                                                               
the 120 days  was a good number. He knew  that invoicing is often                                                               
delayed because shops are small and people are busy.                                                                            
                                                                                                                                
REPRESENTATIVE   RAMRAS  replied   that  sometimes   these  small                                                               
business people are  drawn into work because they  have a passion                                                               
for it. Sadly some of his  closest friends who have a passion for                                                               
repairing your stuff show less of  an interest in billing you for                                                               
it promptly and  even less of an interest in  collecting it. They                                                               
are excellent trades  people but not such  great business people.                                                               
This would  be an extra  buffer, an  opportunity for them  to not                                                               
suffer so much from their own procrastination.                                                                                  
                                                                                                                                
1:48:27 PM                                                                                                                    
GRACE RUDY,  owner, Overhead Door  Co., Fairbanks,  AK, testified                                                               
that a lot of times when she  tries to collect bills after the 30                                                               
days is passed - which is really  when the bill is due - she gets                                                               
anything from  the people just don't  have the money and  want to                                                               
make payments to maybe  you can't get hold of them  at all for 60                                                               
days and  after you get  a hold of them,  they let you  know that                                                               
they have  been on vacation for  a month and now  they don't have                                                               
any more money.  By the time the  90 days is up  you're trying to                                                               
work  with  them,  because  you   don't  want  to  alienate  your                                                               
customers, but 90 days often is  not enough time. Another 30 days                                                               
would be very valuable for  the customers and the business people                                                               
for many reasons.                                                                                                               
                                                                                                                                
1:50:13 PM                                                                                                                    
SANDRA  HEMBREE, Alaska  Best  Plumbing  and Heating,  Fairbanks,                                                               
Co.,  added  that  one  situation  that comes  up  quite  a  bit,                                                               
especially  in the  winter time,  is when  they are  dealing with                                                               
insurance  claims   for  expensive  damage.  In   most  of  those                                                               
situations they  are dealing  with tens  of thousands  of dollars                                                               
rather than  hundreds of dollars, and  it takes at least  90 days                                                               
before  they  even consider  processing  payments.  She knows  of                                                               
several instances  where the  home owner gets  the check  and the                                                               
business never  sees the  money because they  decide to  take off                                                               
with it. Businesses don't have  any recourse because they have to                                                               
wait  for the  insurance adjusters  to do  their fractions,  then                                                               
they submit  that to the  mortgage company; the  mortgage company                                                               
wants to  do their  own inspections. It's  a very  time consuming                                                               
process.                                                                                                                        
                                                                                                                                
MS. HEMBREE said  they don't have problems  with their customers,                                                               
but they  do have  cases where  they set up  a payment  plan, and                                                               
then the people don't pay and  then they have to track them down.                                                               
By the  time they  realize they  are just not  going to  pay it's                                                               
past that 90 day mark.                                                                                                          
                                                                                                                                
CHAIR PASKVAN  asked if  the insurance  company doesn't  make the                                                               
check out as dual payee.                                                                                                        
                                                                                                                                
MS. HEMBREE answered  they are supposed to but in  a lot of cases                                                               
they  don't. In  most  cases they  make it  out  to the  mortgage                                                               
company and the home owner, so  then they have to send the checks                                                               
to the mortgage company and  get an inspection. Then the mortgage                                                               
company  will  release  the  money to  the  homeowner.  They  are                                                               
outside that chain in most cases. The dual check is very rare.                                                                  
                                                                                                                                
SENATOR  BUNDE said  he wanted  businesses to  be paid  for their                                                               
services and promptly  and asked if there is any  danger that the                                                               
word will go out that someone  can drag their feet for another 30                                                               
days.                                                                                                                           
                                                                                                                                
MS. HEMBREE  answered no; she  has found  if you're going  to pay                                                               
your bill you will.                                                                                                             
                                                                                                                                
MS. RUDY agreed 100 percent.                                                                                                    
                                                                                                                                
SENATOR BUNDE asked if they can  begin the lien process sooner if                                                               
they felt these were scofflaws.                                                                                                 
                                                                                                                                
REPRESENTATIVE RAMRAS  answered that  you can  file a  lien right                                                               
away, but probably not on repeat customers.                                                                                     
                                                                                                                                
CHAIR PASKVAN closed public testimony.                                                                                          
                                                                                                                                
1:55:20 PM                                                                                                                    
SENATOR  THOMAS  moved  to  report HB  253  from  committee  with                                                               
individual  recommendations  and  attached zero  fiscal  note(s).                                                               
There were no objections and it was so ordered.                                                                                 
                                                                                                                                

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