Legislature(2019 - 2020)DAVIS 106
03/22/2020 01:00 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB310 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 310 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 22, 2020
3:15 p.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Zack Fields
Representative Sara Hannan
Representative Andi Story
Representative Mel Gillis
Representative Sara Rasmussen (via teleconference)
MEMBERS ABSENT
Representative Louise Stutes
OTHER MEMBERS PRESENT
Representative Mike Prax
Representative Grier Hopkins
Representative Geran Tarr
COMMITTEE CALENDAR
HOUSE BILL NO. 310
"An Act tolling deadlines for action by the Regulatory
Commission of Alaska during the public health emergency
declaration; relating to disconnection of utility service for
nonpayment; relating to regulatory assets of a utility; relating
to evictions; relating to foreclosures; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 310
SHORT TITLE: TOLL RCA/FORECL./EVICT. ACT FOR COVID-19
SPONSOR(s): LABOR & COMMERCE
03/21/20 (H) READ THE FIRST TIME - REFERRALS
03/21/20 (H) L&C
03/21/20 (H) L&C WAIVED PUBLIC HEARING NOTICE, RULE
23 UC(A)
03/22/20 (H) L&C AT 1:00 PM DAVIS 106
WITNESS REGISTER
TED MADSEN, Staff
Representative Ivy Spohnholz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for HB 310,
on behalf of Representative Spohnholz, prime sponsor.
ANNA BAILEY, Policy Analyst
Center on Budget and Policy Priorities
Washington, D.C.
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
BOB PICKETT, Commissioner
Regulatory Commission of Alaska
Wasilla, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
STUART GOERING, Senior Assistant Attorney General
Office of the Attorney General
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Offered comments on Section 3 of HB 310 and
answered questions.
NOAH KLEIN
Legislative Legal Services
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
310.
ERROL CHAMPION
Alaska Association of Realtors
Juneau, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
DIANE KAPLAN
Anchorage Homelessness Leadership Council
President, Rasmuson Foundation
Anchorage, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
RYAN STRONG, Chief Banking Officer
First National Bank Alaska
President, Alaska Bankers Association
Anchorage, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
KASSANDRA TAGGART
Real Property Management
City & State
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
JOYCE PARKS
Fairbank, Alaska
POSITION STATEMENT: Testified during the hearing on HB 310.
LEE THIBERT, Chief Executive Officer
Chugach Electric Association
Anchorage, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
DEAN THOMPSON
Kemppel, Huffman and Ellis, PC
Anchorage, Alaska
POSITION STATEMENT: Provided testimony during the hearing on HB
310.
ACTION NARRATIVE
3:15:45 PM
CHAIR IVY SPOHNHOLZ called the House Labor and Commerce Standing
Committee meeting to order at 3:15 p.m. Representatives Gillis,
Hannan, Story, and Spohnholz were present at the call to order.
Representatives Fields and Rasmussen (via teleconference)
arrived as the meeting was in progress.
HB 310-TOLL RCA/FORECL./EVICT. ACT FOR COVID-19
3:16:30 PM
CHAIR SPOHNHOLZ announced that the only order of business would
be HOUSE BILL NO. 310, "An Act tolling deadlines for action by
the Regulatory Commission of Alaska during the public health
emergency declaration; relating to disconnection of utility
service for nonpayment; relating to regulatory assets of a
utility; relating to evictions; relating to foreclosures; and
providing for an effective date."
CHAIR SPOHNHOLZ, prime sponsor of HB 310, stated that Alaskans
are afraid right now. She listed the unprecedented public
health measures that have been implemented over the last 11
days, including closing schools; closing in-room dining for
restaurants, bars, and coffee shops; reducing nonessential
travel; closing public spaces; and implementing a 14-day
quarantine for travelers. Unfortunately, she said, for many
Alaskans these efforts have resulted in the inability to work.
The Department of Labor & Workforce Development (DLWD) reported
that they received 600 percent more unemployment insurance
claims this week. Chair Spohnholz explained that [the
legislature] is working to ensure that Alaskans can access
unemployment benefits and small business owners can access low
interest loans for payroll and debt payments authorized by the
Small Business Administration (SBA). She noted that they are
also considering other wage replacement options enabled by the
passage of HR 6201 [Families First Coronavirus Response Act] in
U.S. congress. She asserted that Alaskans need assurance that
they wont lose their heat or electricity or be evicted or
foreclosed upon if they are unemployed as a result of COVID-19.
Subsequently, a piece of legislation was narrowly crafted to
provide Alaskans with protections.
CHAIR SPOHNHOLZ stated that HB 310 is designed to complement
efforts such as Governor Dunleavys decision to suspend
foreclosures on loans secured by the Alaska Housing Finance
Corporation, as well as the state court systems decision to
suspend evictions and foreclosures for 60 days. She noted that
over the last 24 hours, work has been done with a wide range of
stakeholders, including the Alaska Bankers Association, the
Alaska Realtors Association, the Alaska Housing Finance
Corporation, the Alaska Power Association, Chugach Electric
Association, the Municipality of Anchorage, and the Alaska
Public Interest Research Group. She said the plan is to hear
the bill today, identify ways to make it better, and move it
quickly either through its current form or as part of an
omnibus bill to provide Alaskans with the surety that they
will be secure during these unprecedented times.
3:21:14 PM
TED MADSEN, Staff, Representative Ivy Spohnholz, Alaska State
Legislature, on behalf of Representative Spohnholz, prime
sponsor, provided the sectional analysis for HB 310 [included in
the committee packet], which read in its entirety as follows
[original punctuation provided]:
Section 1
Suspends deadlines for action by the Regulatory
Commission of Alaska during the Novel Coronavirus
Disease (COVID-19) public health disaster emergency:
Notwithstanding contrary provisions of AS 42,
extends all statutory and regulatory deadlines for the
RCA.
Section 2
Moratorium on disconnection of residential utility
service:
Stops disconnection of service by a public
utility defined in AS 42.05.990 to a residence for
bills not paid during the public health disaster
emergency on or after March 11, 2020.
Section 3
Regulatory assets for unpaid utility bills:
Allows a utility certificated under AS 42.05 to
create regulatory assets for residential utility bills
that are not paid during the COVID-19 emergency
declaration.
Section 4
Moratorium on evictions for nonpayment of rent:
Notwithstanding a contrary provision under AS
34.03,
(a) a landlord may not evict a person for
nonpayment of rent during the declared public health
disaster emergency, and,
(b) anyone seeking protection under this section
must provide an affidavit before the emergency
declaration expires that they are experiencing
financial hardship.
Section 5
Moratorium on foreclosures:
Notwithstanding a contrary provision under AS
09.45, AS 34.35 or another law,
(a) a person cannot foreclose on a property of a
person experiencing financial hardship during the
COVID-19 public health disaster emergency, and,
(b) a person seeing protection under this section
must provide the financial institution seeing
foreclosure an affidavit before the emergency
declaration expires that the person is experiencing
financial hardship
Section 6
Repeal
This Act is repealed April 30, 2021.
Section 7
Effective Date
This Act takes effect immediately under AS
01.10.070(c).
3:23:10 PM
REPRESENTATIVE HANNAN asked if the governor's emergency
declaration has an expiration date.
MR. MADSEN said the governors disaster declaration is valid for
30 days unless extended by the legislature through legislation.
3:23:36 PM
REPRESENTATIVE STORY sought clarification on how landlords would
pay their mortgage and utility payments with the proposed
measures in place. She pointed out that if renters are out of
work for six months it will be important for them to implement a
payment plan.
CHAIR SPOHNHOLZ pointed out that she is a landlord herself and
is sensitive to their position. She clarified that this would
only last six months if the emergency disaster declaration were
extended that long. She noted that the Alaska Realtors
Association, which includes landlords, will be testifying today.
3:25:40 PM
REPRESENTATIVE FIELDS asked if the committee's intent is to
allow the Chugach Electric Association and Municipal Light and
Power (ML&P) merger to go forward, given that the city needs
that cashflow.
CHAIR SPOHNHOLZ answered yes, that is the intent. She directed
attention to a letter from Chugach Electric Association
[included in the committee packet]. She noted that there is a
possible amendment to this legislation, which would ensure the
bill would not impact the ML&P purchase by Chugach in any way.
3:26:34 PM
REPRESENTATIVE GILLIS asked how the bill would apply to
squatters.
CHAIR SPOHNHOLZ replied it would not apply to squatters.
[Chair Spohnholz opened public testimony.]
3:27:20 PM
ANNA BAILEY, Policy Analyst, Center on Budget and Policy
Priorities, informed the committee that her work at the Center
on Budget and Policy Priorities a nonpartisan research and
policy institute in Washington, DC focuses on the intersection
of healthcare and affordable housing policy, particularly for
low-income renters. She stated that the spread of COVID-19 is a
stressful time for everyone; however, it is exceptionally harsh
on families that were already struggling to make ends meet and
dont have the savings to weather loss of income. Compounding
the problem, she said, the pandemic is hitting at a time when
the country is facing a nationwide affordable housing crisis.
She reported that since 2001, Alaskas median rent has increased
by 9 percent, while the median income for renters has declined
by 5 percent when adjusted for inflation. She added that data
from 2018 indicates that approximately 42,000 low-income renters
in Alaska are paying more than half their income towards rent
every month, which leaves little for other necessities and no
room for error. She pointed out that the addition of COVID-19
makes life for these individuals and families even more
precarious. She added that the risk of eviction is
significantly heightened right now. She specified that even in
good economic times eviction has severe and immediate
consequences, such as high-risk of homelessness, living in
substandard housing, loss of personal belongings, and absence
from school. Theres also evidence of long-term consequences
from eviction, including tarnished rental and credit history,
which makes it difficult for families to find a decent home to
live in even after their income situation improves. For
families that are barely making ends meet, eviction can trigger
a lasting spiral into poverty; furthermore, for families that
are already living in poverty, it can exacerbate that struggle.
She further noted that housing instability, eviction, and
homelessness tend to expose children to trauma or adverse
childhood experience, which puts them at high risk for bad
outcomes, like lower education attainment, substance use, mental
or physical health problems, and lower lifetime earnings. The
consequences are already severe, she said, but with the current
public health crisis, a wave of evictions and increased
homelessness could worsen the outbreak itself. She explained
that eviction could make it difficult or virtually impossible to
practice the social distancing that public health officials are
urging everyone to engage in, putting vulnerable families at
greater risk of infection or spreading the virus further. She
indicated that this all creates an urgency to prevent evictions
during the crisis, which many states and jurisdictions are
starting to do.
3:35:58 PM
CHAIR SPOHNHOLZ inquired as to the best practices for placing a
moratorium on evictions.
MS. BAILEY stated that the most promising approaches involve
three elements. First, a broad moratorium on eviction; second,
requiring minimal documentation or bureaucracy to halt
evictions. She explained that evidence from public benefit
programs shows that requiring families in survival mode to
navigate bureaucracy results in preventing people who need help
the most from getting it. She added that its particularly
important not to impose requirements that cost money or require
people to leave their home. The third element, she said, is
that the moratorium lasts for the entirety of the public health
emergency.
CHAIR SPOHNHOLZ asked if Ms. Bailey has any sense of the relief
packages that have been advanced by the federal government and
what they provide for states.
MS. BAILEY stated that her colleagues and partner organizations
are pushing for the inclusion of cash assistance for low-income
families to help them avoid eviction. She offered her belief
that the only way forward is to target significant assistance to
the most vulnerable. She speculated there will be gaps in
relief allocation composed of individuals who dont qualify for
unemployment insurance or federal benefit programs. She further
noted that some action has been taken to give relief to
homeowners with mortgages that are insured by the federal
government; however, the same cannot be said for renters.
3:39:55 PM
REPRESENTATIVE FIELDS asked if the CBPP is working to ensure
that workers who stay employed with less hours can collect
unemployment insurance without those payments offsetting their
wages.
MS. BAILEY said she is unaware of those details, as her field of
knowledge is in health care and affordable housing.
CHAIR SPOHNHOLZ offered her belief that there are provisions in
HR 6201 that allow for vastly expanded unemployment benefits and
wage relief. She added that there may be additional provisions
for wage relief in a forthcoming omnibus package, which will be
important for small business owners and contract employees who
are not eligible for unemployment insurance.
3:41:54 PM
BOB PICKETT, Commissioner, Regulatory Commission of Alaska
(RCA), opined that the House Labor and Commerce Standing
Committee has done a good job in offering HB 310. He said the
bill recognizes the challenges faced by Alaska utility
customers, the utilities themselves, and the RCA during these
difficult times. Addressing Section 1 of HB 310, he suggested
clarifying that the tolling starts on the date of the emergency
disaster declaration and, ideally, doesnt end until the
situation normalizes. He noted that it will be necessary to
prioritize these matters immediately after the resumption of
normal operations to reflect intervening events. Additionally,
he opined that Section 3 would be clarified with the inclusion
of language to the effect of that the prohibition on
disconnection and a requirement for reconnection are not
withstanding in the approved care of provisions to the contrary.
Regulated utilities and [indisc.] unregulated utilizes that may
not have tariffs and are subject to AS 42.05.371 ... The terms
and conditions under which a utility offers its services and
facilities to the public shall be governed strictly by the
provisions of this currently effective tariff. He offered his
belief that without this clarification there may be a dissonance
with the codified law.
3:44:49 PM
STUART GOERING, Senior Assistant Attorney General, Office of the
Attorney General, Department of Law, stated that Section 3
allows public utilities to create regulatory assets. He said
that after reading the sectional analysis and the sponsor
statement, he understands the intention; however, he opined that
the current language may lead to unintended consequences. He
explained that while the legislature can change the way rate
making occurs in the state of Alaska, regulatory assets are
controlled by financial accounting standards set by the
Financial Accounting Standards Board. There is a standard that
applies to regulatory assets and effectively, the accounting
industry does not recognize regulatory assets unless they are
created by regulators. He suggested improving Section 3 by
clarifying that it would be the public utilities commission -
which in this case, is the RCA that is creating the regulatory
asset under specific circumstances. He expressed his concern
that the current language in Section 3 would not allow utilities
to get the financial support they need from the financial
industry based on their own creation of an asset without a
regulatory body intervening.
CHAIR SPOHNHOLZ recounted hearing conflicting opinions on
Section 3. One opinion, she said, is that Section 3 isnt
necessary because the normal accounting practices and standards
for utilities handle this practice. The other opinion called
for potentially amending Section 3 to allow for recouping the
administrative expenses associated with the COVID-19 response.
3:48:22 PM
MR. GOERING said both observations are accurate. He explained
that utilities account for delinquent accounts by carrying them
in their accounts receivable until they become uncollectable.
Normally, he said, there is an allowance for bad debts built
into the revenue requirement of the utility that is part of
thats built into the base rates that those utilities charge.
He added that in this case, people are anticipating that both
the number and amount of uncollectable accounts might become
larger after this crisis is over. It is those extraordinary
costs that will eventually have to be recovered through a
regulatory asset. He went on to say that right now, people who
have not paid their utility bills are currently in the utilitys
accounts receivable as an asset on their balance sheets. HB 310
as it currently exists, would allow utilities to move all those
account receivables into a regulatory asset. He noted that it
wouldnt necessarily be only the uncollectable amounts it
could potentially be more than that. Currently, he said,
Section 3 isnt immediately necessary because the unpaid
accounts are in the utilities assets as accounts receivable.
Furthermore, he pointed out that if there are additional costs
associated with this, they must be approved for inclusion in
future rates because generally, future rates do not account for
past losses. He reiterated that if there are costs in addition
to bad debts, those would have to be placed into some kind of
regulatory asset that would be collected over time in the future
through rates, which would normally involve a petition to the
RCA.
CHAIR SPOHNHOLZ surmised that the question is whether to get rid
of Section 3 or to add more to it. She asked what Mr. Goering
recommends.
MR. GOERING opined that in its current form, Section 3 is
unnecessary. Nonetheless, he said utilities would like to have
a streamlined process for the creation of regulatory assets, so
they can have assurance that they can collect in future rates,
which will allow them to borrow money from financial markets to
sustain their current operations. He offered his belief that
something needs to go in where Section 3 is, but in a different
form than is currently there. He noted that he has some
suggested language that would address concerns without having
the ambiguity of whether the regulatory assets would be
recognized by the accounting and financial industries.
CHAIR SPOHNHOLZ said that would be helpful.
3:53:08 PM
REPRESENTATIVE HANNAN asked for an example of what a regulatory
asset is apart from a bad debt.
MR. GOERING pointed out that typically, bad debts are not
regulatory assets. He added that regulatory assets are usually
for extraordinary things. He said, for example, a utility could
ask for a regulatory asset to be created for costs incurred for
uninsured earthquake damage or for a once-in-a-generation
windstorm." He added that in this case, if the state suspends
the disconnection of service for nonpayment it would be an
extraordinary thing that the utilities would need to recover.
REPRESENTATIVE HANNAN sought to clarify whether the confusion in
Section 3 is that it creates a regulatory asset of bad debt from
COVID-19 related circumstances, which wouldnt usually qualify
as a regulatory asset. She added, and if in doing so, we need
to be cautious and make sure its narrow enough that it doesnt
in perpetuity create bad debt as a regulatory asset under
statute just as a temporary in these circumstances, allowing
those to be regulatory assets. She asked if that is correct.
MR. GOERING said it's not the nature of the regulatory asset
that is concerning. The concern is who is creating the
regulatory asset. He turned attention to Section 3, which
currently asserts that the certificated utility may create
regulatory assets; however, typically, regulatory assets are
created by regulators. He reiterated that the concern is who
creates the regulatory asset, not what the regulatory asset is
recovering the cost of.
REPRESENTATIVE HANNAN asked if Section 3 would satisfy legal
concern if it were to clarify that the RCA would determine the
bad debt as a regulatory asset under COVID-19 related
circumstances.
MR. GOERING answered yes. He suggested inserting the following
language in Section 3:
A utility certificated under AS 42.05 may petition
the Regulatory Commission of Alaska to create a
regulatory asset or assets recovered through general
rates or a sur charge for costs, including residential
utility bills uncollectable due to the public health
emergency declared by the governor and the extension
of that emergency declaration by the legislature
without the filing of a general rate case."
CHAIR SPOHNHOLZ said she appreciates the clarification.
3:58:54 PM
MR. PICKETT added that the RCA will work as hard and
cooperatively as they can with the utilities. He noted that as
of tomorrow, the majority of the RCA staff will be working
remotely and given the complex engineering, financial, legal and
regulatory issues, its absolutely critical to keep things
moving.
3:59:40 PM
REPRESENTATIVE HANNAN sought clarification as to whether
creating a regulatory asset from COVID-19 related debt means
rate payers will pick up that bad debt in the future.
MR. PICKETT replied short of federal assistance specifically
targeted towards that type of bad debt, that is the only way it
can be recovered.
CHAIR SPOHNHOLZ said that underscores the necessity of measures
meant to prevent people from accruing debt. She emphasized the
importance of making sure that in the short term, people are not
getting their heat or lights turned off because they are
underemployed due to COVID-19.
4:01:06 PM
REPRESENTATIVE HANNAN inquired as to the legal definition of
affidavit.
4:02:13 PM
NOAH KLEIN, Legislative Legal Services, explained that an
affidavit is a signed statement without a specific notarization
requirement that is confirmed by an oath or an affirmation.
4:02:49 PM
ERROL CHAMPION, Alaska Association of Realtors, thanked the
committee for bringing HB 310 forward to provide important
protection to Alaskans. He offered several suggestions for the
bill, mostly to Section 4. He noted that rentals cannot be
presumed as only residential, as all properties, including
residential and commercial, will be impacted by this pandemic.
He added that the majority of commercial property in this state
belong to small business owners. Additionally, he said he is
reassured that the [rental payment] obligation is a deferment
rather than a forgiveness as the federal wage replacement effort
reaches Alaskans. He offered his belief that forgiving the
obligation would only transfer the economic hardship or burden
onto small business property owners, other tenants, or mortgage
investors. Furthermore, he requested a clarification that the
provisions [in HB 310] apply only to real financial hardships
directly related to COVID-19 and are not used to circumvent
eviction actions or violations of the condition of the Landlord
Tenant Act. He applauded the legislatures efforts in moving
swiftly to provide protections for Alaskans in light of this
pandemic.
4:06:23 PM
REPRESENTATIVE STORY agreed with Mr. Champions observation on
the deferment of rental payments and how it might affect
landlords. She asked if he had any suggestions on how to remedy
it.
MR. CHAMPION suggested clarifying that [financial hardships]
must be specifically related to COVID-19.
4:08:31 PM
CHAIR SPOHNHOLZ noted that page 2, lines 19-21, specifically
state during the public health disaster emergency declared by
the governor on March 11, 2020, and an extension of that
emergency declaration by the Alaska State Legislature, which is
directly referring to the COVID-19 emergency disaster
declaration. She said that is the element of the bill made
clear in every section that relates to this specific public
health emergency and not to the myriad of other reasons why
people might not pay rent. She added that HB 310 does not
change the landlord tenant laws in any other way. Furthermore,
she stated that page 2, lines 24-25, clarify that a person
seeking protection as a result of the disaster declaration must
provide the landlord with an affidavit promising under penalty
of perjury that his or her financial hardship is related to
COVID-19. She added that there are a cascading series of
effects that are part of the reason that the bill includes the
mortgage foreclosure element in combination with the eviction
piece, as the two go hand in hand.
REPRESENTATIVE STORY acknowledged that there will be bad debt
whether its from the renters or the mortgage owner.
4:12:07 PM
REPRESENTATIVE RASMUSSEN questioned whether the affidavit would
be accompanied by a document that verifies a notice of layoff
from the employer to protect both parties from potential
lawsuits.
CHAIR SPOHNHOLZ said there is currently nothing in HB 310
requiring that. She pointed out that people who are temporarily
underemployed will not have a layoff notice. She welcomed any
suggested language that Representative Rasmussen might have.
REPRESENTATIVE RASMUSSEN said she would follow up with the
requested information.
REPRESENTATIVE STORY noted the RCA mentioned a way they could
recoup bad debt by raising rates. She questioned whether
landlords could do the same by charging higher rental fees.
CHAIR SPOHNHOLZ asked Mr. Champion if the industry has a
standard practice for situations where tenants cannot pay their
rent for several months.
4:14:06 PM
MR. CHAMPION said landlords do not increase the rental rates for
other tenants when there are natural vacancies. He offered his
belief that the practice would not change for the current
situation.
CHAIR SPOHNHOLZ said the RCA does have provisions for recouping
costs and allowing utilities to pass on cost increases, whereas
landlords do not have the same level of regulation or oversight.
REPRESENTATIVE STORY said no one wants to pass on bad debt. She
restated the problem this presents for owners of duplexes and
apartment buildings. She asked what can be done for owners if
they dont have the ability to collect payments that have not
been made.
CHAIR SPOHNHOLZ clarified that there is nothing in this bill
that absolves people who cannot pay their rent from the
obligation to make good on that liability at a later date;
however, they will not be responsible for those payments
immediately.
REPRESENTATIVE HANNAN added that she does not want to create the
unnecessary burden of having to prove that, for example, someone
cannot open their business and pay rent because cruise ships are
not operational until July. She said she supports the current
requirement of an affidavit under risk of perjury. She opined
that leaving certain rental situations flexible while ensuring
that families arent evicted during this time of economic
hardship is the right scope of intent.
4:19:21 PM
DIANE KAPLAN, Anchorage Homelessness Leadership Council;
President, Rasmuson Foundation, stated that its easier and less
costly to keep people that are currently housed than to house a
person who is homeless. She added any action the state can take
to keep families and individuals who have lost their income from
falling into homelessness would be welcome. She reported that
in Anchorage, any additional person that falls into homelessness
puts added pressure on the citys resources, the Ben Boeke Ice
Arena and the Sullivan Arena facilities, which are already over
capacity. She further noted that real estate and landlords are
represented on the Anchorage Homelessness Leadership Council.
She said none of them want to evict people and are trying to
work with tenants. She offered her understanding that most of
the current evictions are people who cause life/safety risks at
properties, such as domestic violence, rather than because of
financial issues. She added that in most cases, landlords are
asking residents to complete a payback agreement to stay in
their unit, which generally extend 12-18 months or longer if
there are extenuating circumstances. She opined that the
proposed approach under HB 310 would preserve the existing
workforce housing without increasing the number of people that
are unhoused.
4:21:44 PM
REPRESENTATIVE FIELDS pointed out that the governor recently
vetoed millions of dollars in funding for the Homeless
Assistance Program (HAP) and Special Needs Housing Grants
(SNHG). He asked Ms. Kaplan to talk about the impact of those
vetoes.
MS. KAPLAN clarified that there are two lines of funding that
are concerning: $1.25 million that was vetoed from Alaska
Housing Finance Corporation (AHFC) in this years capital
budget, and $2 million that was originally in the budget for
2021. Altogether, that is $3.25 million less than [AHFC] was
hoping to have available over the next six months for the
current homelessness crisis.
REPRESENTATIVE FIELDS suggested re-appropriating that money to
give the governor another chance not to veto it in light of the
significant risk of homelessness during this crisis.
MS. KAPLAN recounted that the governor communicated he would not
veto the $1.25 million from this years budget if it were
restored. She indicated that Representative Rasmussen received
the same communication.
4:23:31 PM
REPRESENTATIVE RASMUSSEN noted that she has an amendment drafted
to restore the $1.25 million.
4:24:03 PM
RYAN STRONG, Chief Banking Officer, First National Bank Alaska;
President, Alaska Bankers Association, opined that the bill is
well intentioned and requires certain activities that banks are
already doing today, such as postponing foreclosures.
Additionally, he said, banks are actively working with borrowers
to modify loan payments to allow them to work through this
difficult time. Regarding the specifics of HB 310, he observed
that the bill doesnt define the term person." He said it
appears to mean a natural person rather than a corporation, LLC,
or the like. He offered his belief that using the term natural
person would clarify the intent of the bill. He went on to
address [Section 4 and Section 5] of the bill. He said the
intent is relatively clear that the financial hardship should be
a result of the COVID-19 pandemic and the states emergency
declaration; however, it doesnt clearly state that. He
recommended removing potential ambiguity by including language
to clarify that the borrower or tenants financial hardship is a
result of the COVID-19 pandemic. He expressed concern from the
banking community that this prohibition on foreclosure activity
could extend well into the future, long after the main activity
from the pandemic has impacted Alaskas economy. He conveyed
that if the prohibition were to extend past the main impacts of
the emergency declaration, it would impair lenders ability to
manage treble debt and recover from the pandemic themselves. To
conclude, he explained that banks are here to work with their
customers to ensure mutual success, adding that banks do not
want to foreclose in the midst of a pandemic.
4:26:41 PM
REPRESENTATIVE FIELDS asked what would be most helpful in terms
of stabilizing banks and preventing them from going under during
this crisis.
MR. STRONG explained that borrowers are going to need liquidity
more than anything else during this crisis. He restated that
banks are already actively modifying loans to push payments into
the future. He said anything the state can provide to help
would be a positive.
4:27:52 PM
REPRESENTATIVE HANNAN questioned whether the ABA is of the
opinion that HB 310 should be narrowly construed to apply to
residential properties rather than commercial properties.
MR. STRONG said the ABA does not yet have a formal position on
the bill. Nonetheless, he stressed the importance of
understanding how the bill will define the term person.
CHAIR SPOHNHOLZ agreed. She said in introducing HB 310, her
intention was to ensure that people wouldnt lose their
residence because of COVID-19. She added that [the bill] came
to her because of the closure of restaurants and bars and
because people who work in those industries are living paycheck
to paycheck. She pointed out that Alaska already has a big
enough problem with homelessness as it is. She suggested that
Mr. Klein could discuss different ways in which the bill could
achieve the goal of protecting both small businesses and
individual Alaskans without opening it up to large corporate
entities.
REPRESENTATIVE FIELDS noted that his preference is to protect
small businesses. He reported that economic literature suggests
one of the biggest dangers from this crisis is losing numerous
small businesses from a lack of cash flow, which would magnify
and extend the economic impact. He offered his belief that
helping small businesses survive is sound economic policy.
4:33:13 PM
MR. KLEIN explained that person is defined in Title 1 of
Alaska Statutes for the entire body of Alaska law unless the
context requires otherwise. He said the definition includes a
corporation, company, partnership, firm association,
organization, business trust, or society, as well as a natural
person. He argued that if a court were interpreting the term
person in the uncodified law, it would include small
businesses and could also include larger businesses. He
suggested defining the term financial hardship" in the bill,
which would allow a discussion of which types of financial
hardship are being protected.
CHAIR SPOHNHOLZ sought clarification regarding the definition of
financial hardship.
MR. KLEIN suggested placing dollar amounts on financial hardship
or a timeframe for an amount owed leading up to the potential
for eviction or foreclosure. He said that might allow the
legislature to put more sideboards on who would be eligible to
receive the benefit.
CHAIR SPOHNHOLZ proposed referencing specific bullets from the
definition of person in Title 1.
MR. KLEIN confirmed that option; however, he explained that
those types of corporations don't specify size. He added that
if the intent is to address the size of a company, either
further defining person or further defining the type of
financial hardship would suffice.
4:35:40 PM
REPRESENTATIVE HANNAN asked if the legal definition of person
in Alaska codified law includes a reference to corporations that
have been chartered and resident in Alaska.
MR. KLEIN directed attention to AS 01.10.060(a)(8), which reads:
"person" includes a corporation, company, partnership,
firm, association, organization, business trust, or
society, as well as a natural person
MR. KLEIN in response to Representative Hannan, noted that
the definition is not limited to anything incorporated or
established in Alaska.
4:37:20 PM
REPRESENTATIVE STORY asked if the current language in HB 310
clarifies that the prohibition of evictions is not a forgiveness
of the obligation to pay rent.
MR. KLEIN said the bill doesn't explicitly grant forgiveness to
any amount owed, whether its rent or debt leading to
foreclosure. He suggested adding subsections to Section 4 and
Section 5 to clarify the bills intention.
CHAIR SPOHNHOLZ indicated that a court would not allow
forgiveness unless it was explicitly defined [in the bill].
4:38:59 PM
KASSANDRA TAGGART, Real Property Management, said many mortgage
companies and landlords understand that they need to help and
are already playing their part; however, directly impacted
tenants will still need protection. She offered her belief that
HB 310 would start that conversation and encourage the court to
consider reopening for forceful entry and detainer (FED)
evictions, which would allow landlords to manage squatters and
the destruction of property. She went on to address specific
elements of the bill. She opined that the definition of the
term person needs to be further clarified. Additionally, she
explained that numerous commercial properties in Alaska
encompass small local businesses, many of which had to close
during this time. She said they should be considered within
this bill as they also face potential eviction. Furthermore,
she recommended further defining financial hardship as it
relates to COVID-19. She expressed concern that people would
take advantage of the bill as its currently written, causing
further hardships to landlords and financial institutions. She
also suggested enhancing what the affidavit is required to say,
as well as requiring the provision of a document showing reduced
work hours or a doctors note, for example. She observed that
the bill does not specifically acknowledge that rent is still
due, even if the payment is postponed via a continuance to a
future date. She suggested adding a clause that addresses
deferment. In closing, she shared a personal anecdote.
4:43:45 PM
REPRESENTATIVE HANNAN sought clarification on the acronym FED.
MS. TAGGART said it stands for Forceful Entry [and] Detainer,
which has been shut down in Anchorage and the valley until
March 31.
REPRESENTATIVE HANNAN asked if [FED] is a step in the process of
eviction or if its a type of court.
MS. TAGGART offered her understanding that a tenant must be
served a notice for an eviction to take place. After the notice
is served, the parties appear in [the District Court], which
processes small claims, including FED evictions. She said that
is phase one of an eviction, which issues a writ of possession
of the property.
MS. TAGGART responding to a follow-up question from
Representative Hannan, explained that at this time, the courts
are still open; however, in order to limit the amount of people
in the courthouse, FED evictions are currently suspended. She
pointed out that FED eviction proceedings could be done
telephonically, which is what she is advocating for. She
further noted that judges can ask if the tenant and landlord
have entered into a prepayment arrangement" to give the tenant
time to honor the payment plan.
REPRESENTATIVE HANNAN pointed out that the bill clearly states
that any financial hardship must have started on or after March
11, 2020, when the governor issued the public health disaster
emergency. She asked if Ms. Taggart concluded that the courts
might not understand that.
MS. TAGGART offered her belief that the individual judges would
not understand the current language. She reiterated that judges
typically ask if the landlord and tenant have attempted a
payment arrangement. She said that can be used to draft
something around deferments in order to protect people that are
truly impacted.
4:48:34 PM
JOYCE PARKS suggested adding an automatic emergency extension
for an additional year or more to prevent the legislature from
having to meet at a later date. She added that its hard to
know who will be impacted and how long this crisis will last.
Additionally, she inquired as to the criteria for determining
when the public health disaster emergency will be lifted.
4:50:38 PM
LEE THIBERT, Chief Executive Officer, Chugach Electric
Association, stated that Chugach Electric Association has been
working with the committee to find good solutions to this
problem. He said he submitted written testimony to the
committee.
CHAIR SPOHNHOLZ noted that the letter submitted by Mr. Thibert
provided comments on Section 1 and expressed support for Section
2 and Section 3.
MR. THIBERT confirmed that.
4:52:12 PM
REPRESENTATIVE STORY asked how Mr. Thiberts comments on Section
1 differ from the bill as its currently written.
4:52:48 PM
MR. THIBERT referring to his written testimony, suggested
including except those where the timeline has been extended for
good cause by order of the commission pursuant to AS
42.05.715(f) prior to March 11, 2020, to ensure that existing
regulatory processes continue without further extension.
4:53:40 PM
CHAIR SPOHNHOLZ responding to Ms. Parks, clarified that the
public health disaster emergency would end when the governor
receives a recommendation from the Department of Health and
Social Services (DHSS). She noted that currently, the emergency
declaration is for a 30-day time period; however, HB 310 allows
for the possibility of an extension - without putting an
artificial number on it by both the governor and the
legislature. She expressed her hope that public health disaster
emergency will be concluded in under a year.
4:56:42 PM
DEAN THOMPSON, Kemppel, Huffman and Ellis, PC, informed the
committee that he is testifying on behalf of the Alaska Power
Association (APA), to whom his firm serves as outside council.
He direction attention to Section 3 of the bill, suggesting a
broader inclusion of regulatory assets, such as other
extraordinary expenses that result from the COVID-19 disaster.
He indicated that there could be significant unanticipated costs
that would not otherwise occur, and under general ratemaking
rules would not be recoverable in rates. This would allow
utilities to record those expenses as regulatory assets and
recover them over time as approved by the RCA. He explained
that it would help utilities meet their debt covenants and
financial ratio requirements. He recommended that the bill
authorize a streamlined process for regulatory assets to allow
utilities to avoid a formal proceeding with the RCA during this
crisis.
CHAIR SPOHNHOLZ sought clarification on the process for a
utility with individual rate payers who cannot fulfill their
obligatory payments. She asked what the current internal
process is for carrying over a debt.
MR. THOMPSON explained that utilities have a reserve for bad
debt on their balance sheet. He said, based on year-to-year
adjustments of their bad debt level, a certain amount of bad
debt expense will be recorded on the income statement. He
stated when utility customer does not pay, it ultimately ends up
being reflected as a bad debt expense in electric utility rates.
He added that if there were a significant increase in customers
that dont pay, it would be reflected as an increase in rates
for all customers as part of the revenue requirement for the
utility when they adjust their rates.
5:04:54 PM
REPRESENTATIVE HANNAN sought to clarify whether Mr. Thompson is
asserting that [HB 310] should grant authority for the RCA for
every utility to be able to keep track of those extraordinary
expenses related to COVID if theyre ever able to recover them
or have insurance recover that cost. She asked if that is
correct.
5:05:34 PM
MR. THOMPSON suggested language clarifying that if the expense
is extraordinary and a result of COVID-19, the utility would be
allowed to book that cost as a regulatory asset on its balance
sheet instead of an expense on its income statement - and in
doing so, ensure that those costs would be recoverable.
CHAIR SPOHNHOL asked Mr. Picket to comment on Mr. Thompsons
proposal.
5:07:34 PM
MR. PICKETT said he would want to see the proposal in writing.
CHAIR SPOHNHOLZ noted that she is inclined to include that
provision as a change to Section 3 because the RCA would still
have to consider whether the expenses are justifiably
extraordinary and related to COVID-19. She said this would
allow utilities that are potentially restructuring the way they
do business in response to the public health crisis to recoup
those costs later.
5:09:36 PM
REPRESENTATIVE HANNAN asked if there is a standard period of
time for recouping regulatory assets.
MR. PICKETT said it varies. He added that its factually
intensive depending on the nature of the regulatory asset.
REPRESENTATIVE HANNAN asked whether it would be helpful or a
hindrance to put a timeframe on that process.
MR. PICKETT said it would depend on how long the public health
disaster emergency lasts. He added that the timeframe for
recovery needs to be adjusted accordingly.
CHAIR SPOHNHOLZ noted that the bill as its currently crafted
would go through April 2021. She said that her inclination is
to leave the timeframe as it is. She added that if the pandemic
lasts that long, there will an opportunity to make any necessary
changes in January 2021.
5:14:01 PM
CHAIR SPOHNHOLZ closed public testimony.
[HB 310 was held over]
5:14:20 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
[5:14] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 310 Fiscal Note DCCED-RCA 03.21.2020.pdf |
HL&C 3/22/2020 1:00:00 PM |
HB 310 |
| HB 310 Sectional Analysis 03.21.2020.pdf |
HL&C 3/22/2020 1:00:00 PM |
HB 310 |
| HB 310 AKPIRG Comment 03.22.2020.pdf |
HL&C 3/22/2020 1:00:00 PM |
HB 310 |
| HB 310 Sponsor Statement 03.22.2020.pdf |
HL&C 3/22/2020 1:00:00 PM |
HB 310 |