Legislature(2001 - 2002)
03/26/2002 02:39 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 26, 2002
2:39 PM
TAPE HFC 02 - 66, Side A
TAPE HFC 02 - 66, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:39 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
Representative Richard Foster
ALSO PRESENT
Representative Norm Rokeberg; Catherine Reardon, Director,
Division of Occupational Licensing, Department of Community
and Economic Development; Bill Church, Staff, Representative
Ogan; Rebecca Nance Gamez, Special Deputy, Department of
Community and Economic Development.
PRESENT VIA TELECONFERENCE
Franco Venuti, ICBO Inspector, Homer; Dave Owens, Owens
Inspections, Matsu;
SUMMARY
HB 27 An Act relating to the licensure and registration
of individuals who perform home inspections;
relating to home inspection requirements for
residential loans purchased or approved by the
Alaska Housing Finance Corporation; relating to
civil actions by and against home inspectors; and
providing for an effective date.
HB 27 was heard and HELD in Committee for further
consideration.
HB 128 An Act relating to employment of certain minors in
agriculture.
CSHB 128 (L&C) was REPORTED out of Committee with
a "do pass" recommendation and with previously
published fiscal note: LWF #1.
HOUSE BILL NO. 27
An Act relating to the licensure and registration of
individuals who perform home inspections; relating to
home inspection requirements for residential loans
purchased or approved by the Alaska Housing Finance
Corporation; relating to civil actions by and against
home inspectors; and providing for an effective date.
REPRESENTATIVE NORM ROKEBERG, SPONSOR, provided members with
proposed committee substitute 22-LS0136\G, 2/13/02 (copy on
file).
Representative Harris MOVED to ADOPT committee substitute
22-LS0136\G, 2/13/02. There being NO OBJECTION, it was so
ordered.
Representative Rokeberg observed that the conduct and
activity of home inspections are an integral part of many
real estate transactions in the state of Alaska, but anyone
can call himself or herself a home inspector. He maintained
that consumers should have recourse against home inspectors,
but observed that they are not regulated. He stressed that
home inspectors are perceived differently within the state.
He explained that initial discussions regarding the
regulation of home inspectors included requests to establish
a separate home inspector's board. The cost to create a
board for 150 inspectors around the state was estimated
between $1,500 and $1,700 dollars [per inspector]. The
legislation incorporates home inspectors under specialty
contractor licensure in the Division of Occupational
Licensing. This would lower the price to $250 dollars per
biannual license. The real estate practitioners wanted to
shift some of the liability away from them. He concluded
that a shift in responsibility would not be fair. The intent
is to protect the public. The statute of repose and the
statute of limitation were shortened: one year for an
existing home or two years for a new home. Passing around
the inspection report has been prohibited. A tight circle
has been drawn around those that have access to the report.
A home inspector would give the inspection to the client.
Anyone else would have to have approval, including a lender.
Reports would have a limited life. A person could not bring
a cause against an inspector on an old report that they did
not pay for. The legislation would not allow inspectors to
limit liability through contractual language. He concluded
that the consumer and inspectors would be protected; and
other persons associated with inspections would know the
ground rules. The legislation has the support of the Alaska
and local boards of realtors, Alaska Home Builders
Association and the City of Anchorage.
Representative Lancaster referred to a letter by Mike
Taruiainen (copy on file.) He clarified that there would be
an engineer's exclusion.
Representative Rokeberg referred to section 31 on page 16;
and page 15, line 8 and 17. He explained that a licensed
engineer would be exempted from having to be a registered
home inspector. An engineer that is doing home inspections
under the normal course of his duties could not advertise
for home inspections unless he is licensed under the
legislation. He acknowledged that cost of services to
consumers and regulations could be increased. He disagreed
that the cost to the state would be increased.
Representative Hudson asked if lending institutions support
the legislation. Representative Lancaster noted that the
leading banks in the state support the legislation. He
questioned if commercial inspections would be covered.
Representative Rokeberg explained that the legislation would
only cover residential inspections.
Representative Whitaker asked the criteria for a qualified
home inspector. Representative Rokeberg noted that existing
inspectors would be grandfathered in with their existing
experience. An examination would be required after the
legislation takes effect.
Representative Hudson observed that licensees generally pay
their costs. Representative Rokeberg agreed and noted that
statutes require that occupational licensees pay 100 percent
of their costs. He explained that there might be some
increased costs while the first regulations are drafted.
There would be a pay back to adjust costs.
Co-Chair Williams referred to page 5, lines 25 and 26: scope
on intended inspections. Representative Rokeberg noted that
the section is modified by subsection (a), which refers to
home inspections. He further explained that two types of
home inspectors would be regulated [those that inspect
existing homes and those that inspect new homes]. Most home
inspectors of existing homes received they examination under
the National Association of Home Inspectors. Most inspectors
of new homes are licensed under the International Conference
of Building Officials (ICBO), as required for homes financed
by the Alaska Housing Finance Corporation (AHFC). In
addition the legislation would include a joint licensee
provision and an associate home inspector: those persons new
to the industry.
Representative Lancaster noted that areas without code would
also be covered. Representative Rokeberg observed that
Alaska Housing Finance Corporation (AHFC) requires
inspections.
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LICENSING, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT
provided information on the legislation. The Division has
worked with the sponsor to address technical concerns. She
discussed the fiscal costs of the legislation. She noted
that the legislation removes the board, which would reduce
the cost. The fiscal note would be reduced to $64.5 thousand
dollars the first year and $58.5 thousand dollars throughout
subsequent years. Home inspectors would be a type of
specialty contractor. Fee setting would be shared amongst
all contractors.
In response to a question by Representative Hudson, Ms.
Reardon clarified that there are no standards other than
those for a business licenses. In response to a question by
Representative Lancaster, Ms. Reardon acknowledged that
additional regulation would accompany the legislation.
Representative Rokeberg asked the amount of the current
contractor-licensing fee. Ms. Reardon responded that the
current licensing fee is $250 dollars for two years. Adding
home inspectors would increase the fee to $300 - $375 for a
two-year license: a $25 dollar a year increase.
Representative Whitaker understood that an examination would
be required. Ms. Reardon explained that after the
legislation is adopted a standardized test would be given
(through the private sector).
Representative Harris asked if the licenses would support
the cost of the program. Ms. Reardon affirmed and clarified
that the funding source would be receipt-supported services,
as required by law. The general fund obligations would not
be increased.
Representative Rokeberg questioned the cost in the first two
years. Ms. Reardon referred to the fiscal note. She observed
that there would be no funding for travel, since the board
would be eliminated. Fees would be collected and expended
for a half-time licensing examiner and a half-time
investigator.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE provided information
regarding the legislation. In 1992, during the merger of
rural programs with AHFC, there was concern with
construction standards. Legislation was passed, which
required home inspections on homes that were constructed
after June 30, 1992, to ensure that they comply with
standards of the International Conference of Building
Officials (ICBO) before the home could be purchased through
AHFC. Alaska Housing Finance Corporation required that
someone certified by ICBO signed off on newly constructed
homes before AHFC would purchase the mortgage. The system is
still working but it is a separate system. The legislation
proposes that the state license home inspectors. He observed
that AHFC's position is that if the state is going to set up
the system, that the state license inspectors to perform the
AHFC inspections and the ICBO system be replaced so that
there aren't separate systems. In addition, AHFC asks that
the inspectors be licensed to a construction standard that
is the equivalent of an ICBO inspector, to retain standard
quality. Sections 33 and 34 of the bill apply to the
transfer of inspections to state licensed inspectors. The
International Conference of Building Officials program would
be repealed.
Representative Hudson wanted to ensure that the legislation
would provide greater availability of inspectors at a lower
cost to the consumer and that safety would be protected with
liability. He asked how many of the current inspectors would
be disenfranchised.
Mr. Bitney did not know how many ICBO inspectors were in the
state prior to the AHFC requirement. He did not think that
the legislation would reduce the amount of ICBO quality
inspectors.
Representative Hudson asked if inspectors have to carry
liability insurance to be used by AHFC. Mr. Bitney noted
that they are currently protected under the gross negligence
standard, which would be repealed under the legislation.
Representative Rokeberg explained that current home
inspectors are subject to common law and police law. They
endeavor to insulate themselves by contract, which limits
liability to the amount of the contract. The courts have
rejected that shield. Under current law, ICBO inspectors
have full impunity because of the difficulty of showing that
a faulty report resulted in gross negligence. The standard
would be lowered. The statute of limitation has been reduced
to two years for new construction and one year for existing
structures. There is also an assurity bond of $5 thousand
dollars.
In response to a question by Vice-Chair Bunde,
Representative Rokeberg stressed that the intent is not to
provide a target for consumers that make a bad decision. He
noted that the inspection does not certify that the
foundation or roof are sound. The inspection is only a
visual inspection to alert a potential homeowner of the need
to repair.
Ms. Reardon noted that the cost of the ICBO home inspector
exam is $170 dollars and the Alaska State Housing Authority
(ASHA) exam is $195 dollars. The exams are offered in
Anchorage and may be available in Fairbanks.
Ms. Reardon discussed the fiscal note. She observed that
there would be $6 thousand dollars for one time cost for
office supplies and computer equipment. Most of the cost
would be for personnel services. There is one part-time
examiner position. There would also be a half time
investigator position to address complaints. She explained
that the new fiscal note would not require $6.3 thousand
dollars for travel.
Representative Whitaker noted that fees would pay the cost.
The cost would be $300 to $350 dollars for a 2-year license.
The bill treats home inspectors in the category of specialty
contractors. Ms. Reardon pointed out that the majority of
licenses under the division do not require liability
insurance or bonding.
Representative Rokeberg asked how many employees are
currently assigned to the contractor program. Ms. Reardon
noted that the contractor program covers 500 licenses. There
are two and a half licensing examiners working with the
program.
TAPE HFC 02 - 66, Side B
Ms. Reardon noted that there is a portion of an investigator
position associated with the program. She explained that
there is not as much investigator activity because the
construction licensing law does not allow revocation or
fines for incompetent work. The only follow up is to refer
complainants to the bond. Under the legislation, there would
be an ability to investigate and discipline licensees. The
Department of Labor and Workforce Development receives a
$200 hundred thousand dollar RSA from the division each year
for unlicensed inspector investigations.
Representative Rokeberg pointed out that for an addition of
th
one 20 of the licensees that the request would increase the
inspector staff by one-sixth. He questioned the cost
assumptions.
Ms. Reardon explained that a new program costs more than
adding additional persons to an existing program. The
regulations and applications forms already exist for an
existing program. She pointed out that it is difficult to
hire a quarter time worker. She pointed out that the program
is already using more resources than it used to.
Representative Rokeberg pointed out that there are 150
inspectors, which would only result in an application every
other day. Ms. Reardon anticipated that the 150 applications
would be received immediately. She pointed out that if the
fiscal note is not approved, but that the staff is still
required, the program will still get the actual costs and
the fee would remain the same. What is spent on them would
be reflected in the fee.
FRANCO VENUTI, ICBO INSPECTOR, HOMER, testified via
teleconference in opposition to the legislation. He
expressed concern with the proposed committee substitute. He
maintained that inspectors do not support the legislation.
He observed that the impetus for the bill has come from
outside of the industry. He had not heard anyone testifying
in support of the legislation from the Builder's
Association. He noted that it would cost up to $2 thousand
dollars a year to receive a license. He asked why the
legislation is limited to home inspectors for the Alaska
Housing Finance Corporation properties. He reiterated that
the legislation is not supported by the industry and
expressed concern regarding the added cost to the consumer
and added bureaucracy.
DAVE OWENS, ICBO INSPECTOR, OWENS INSPECTIONS, MATSU,
testified via teleconference. He expressed support for cost
cutting revisions, which would transfer the function from
the Department of Labor to the Department of Community and
Economic Development. He expressed concern with the repeal
of AS 18.56.300 contained on page 21, line 31. He pointed
out that AHFC inspectors are code inspectors. He stressed
the need to separate code inspectors from home inspectors.
He expressed concern that there is no code for residential
inspections in the state of Alaska. He emphasized that the
contractors do not build the buildings and don't always see
everything.
Representative Rokeberg stated that he had met with a
variety of home inspectors and tried to keep them informed
regarding changes to the legislation. He acknowledged that
some home inspectors have problems with the legislation. He
noted that the standard in statute is gross negligence. He
felt that the fiscal note was too high. He expressed concern
that the existing specialty contractors would balk at the
increase in fees cased by the addition of the home
inspectors.
Representative Lancaster spoke in support of the
legislation.
In response to a question by Representative Whitaker,
Representative Rokeberg explained that the legislation would
only add regulation to the existing structure. He observed
that inspections are required for new homes financed by
AHFC.
Mr. Bitney noted that the AHFC mortgages account for 45
percent of the market. The legislation only applies to new
construction. He did not know the number of new homes being
financed.
Representative Whitaker stressed that another layer was
being added. He questioned the cost of the consumer in
relationship to the value. Representative Rokeberg explained
that the current inspection fee is typically $350 dollars.
The biannual license fee is $350 dollars; the bonding fee is
$500 dollar; and there is a liability fee. He estimated that
inspectors would do between 50 and 350 inspections a year.
The licensure would increase the cost of the inspection by
$10 to $20 dollars.
Representative Mulder observed that the only way to have a
home built without ICBO [inspections] is to have it self
financed.
Representative John Davies clarified that the legislation
does not require inspections.
Representative Rokeberg noted that the Board was removed and
the licensure was added to the home specialty.
HB 27 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 128
An Act relating to employment of certain minors in
agriculture.
BILL CHURCH, STAFF, REPRESENTATIVE OGAN, testified in
support of the legislation on behalf of the sponsor. In late
2000, Representative Ogan was made aware that Alaskan
farmers were having problems with the permitting process
when hiring minors for seasonal employment. Alaskan farmers
need to be able to hire workers at a moments notice when the
crop is at its peak and the weather is cooperating. Minors
make up the bulk of a ready pool of summer workers to help
the farmers. Problems have occurred in the past when the
Department of Labor and Workforce Development have not been
able to provide timely approval of the work permit request.
House Bill 128 streamlines the approval process between the
department and employers wanting to hire minors. Under this
bill an employer may secure pre-approval from the department
to hire a minor, who is at least 14 years of age, to perform
a specific set of job duties in advance of an actual job
offer to a minor. Mr. Church maintained that the
legislation benefits any employer - from farming, fishing to
fast food restaurants.
The protection of minors remains paramount with this
proposal. Once an employer hires a minor to perform the
pre-approved job:
· The department work permit request form, must be signed
by a parent or legal guardian of the minor, and filed
with the commissioner within seven calendar days after
the minor begins working,
· The work permit is valid only for the job and listed
duties specified on the pre-approved consent,
· The work permit is valid for the calendar year in which
it is executed, in the case of a written consent
executed in December, the permit is valid for that
calendar year, the next calendar year, or both,
depending on the terms of the written consent, and
· A minor cannot begin any changed or new job duties
until the department approves the changes.
Mr. Church observed that the legislation does not remove the
current work permit process for those employers who wish to
use it.
REBECCA NANCE GAMEZ, DEPUTY COMMISSIONER, DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT, stated that the
department has worked with the sponsor and now supports the
legislation. The fiscal note addresses the costs for legal
service, public notices, hearing space rental and revising
and reprinting posters.
Representative John Davies asked if the legislation would be
applicable to all employers. Ms. Nance affirmed that it
would be available for all employers that wish to use it.
Vice-Chair Bunde MOVED to report CSHB 128 (L&C) out of
Committee with the accompanying fiscal note. He spoke in
support of the legislation and felt that it would help
minors to find employment. Representative John Davies
agreed. There being NO OBJECTION, it was so ordered.
CSHB 128 (L&C) was REPORTED out of Committee with a "do
pass" recommendation and with previously published fiscal
note: LWF #1.
ADJOURNMENT
The meeting was adjourned at 4:02 PM
| Document Name | Date/Time | Subjects |
|---|