Legislature(1993 - 1994)
03/31/1994 01:40 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
March 31, 1994
1:40 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator Steve Rieger, Vice-Chairman
Senator Bert Sharp
MEMBERS ABSENT
Senator Georgianna Lincoln
Senator Judy Salo
COMMITTEE CALENDAR
SENATE BILL NO. 361
"An Act relating to real estate appraisers and the Board of
Certified Real Estate Appraisers."
SENATE BILL NO. 362
"An Act relating to insurance, to the licensing, accreditation,
examination, regulation, and solvency of persons engaged in the
insurance business, including insurers, nonadmitted insurers,
purchasing groups, risk retention groups, and United States
branches of alien insurers; relating to the management of and the
filing of reports by persons licensed or otherwise doing business
under the insurance code; amending Alaska Rule of Civil Procedure
45; and providing for an effective date."
SENATE BILL NO. 346
"An Act requiring that charitable gaming permittees, operators, and
vendors may not turn over a pull tab or bingo prize of $50 or more
to a person entitled to that prize unless the person provides
certain information to the permittee, operator, or vendor and signs
a receipt for the prize; requiring the reporting of winners of
prizes of $50 or more to the Department of Health and Social
Services to ensure that recipients of services provided by the
Department of Health and Social Services are reporting charitable
gaming winnings and are eligible for those services."
SENATE BILL NO. 305
"An Act relating to licensure of landscape architects."
SENATE BILL NO. 347
"An Act relating to limited liability companies; amending Alaska
Rules of Civil Procedure 20 and 24; and providing for an effective
date."
SENATE BILL NO. 348
"An Act relating to partnerships; amending Alaska Rules of Civil
Procedure 20 and 24; and providing for an effective date."
HB 394 (UNIFORM LIMITED PARTNERSHIP ACT UPDATE) was scheduled but
not taken up this date.
PREVIOUS SENATE COMMITTEE ACTION
SB 361 - See Labor & Commerce minutes dated 3/29/94.
SB 362 - See Labor & Commerce minutes dated 3/29/94.
SB 346 - No previous action to record.
SB 305 - No previous action to record.
SB 347 - See Labor & Commerce minutes dated 3/24/94.
SB 348 - See Labor & Commerce minutes dated 3/24/94.
HB 394 - See Labor & Commerce minutes dated 3/24/94.
WITNESS REGISTER
Fred Ferrara
550 W. 54th
Anchorage, AK 99518
POSITION STATEMENT: Supports SB 361
Laura Sasha Hughes
Anchorage, AK
POSITION STATEMENT: Supports SB 346
Senator Susan Little
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Prime Sponsor of SB 305
George Davidson
16305 Lena Loop Road
Juneau, AK 99801
POSITION STATEMENT: No position on SB 305
Dwayne Adams
13311 Cove Circle
Anchorage, AK 99515
POSITION STATEMENT: Outlined concerns in SB 305
William Mendenhall
1907 Yankovich Road
Fairbanks, AK 99709
POSITION STATEMENT: Supports amendment to SB 305
Lee Holmes
2522 Arctic, #200
Anchorage, AK 99503
POSITION STATEMENT: Supports SB 305
Jonathan Schilk
1531 Eagle St., #2
Anchorage, AK 99501
POSITION STATEMENT: Supports SB 305
Dave Gardner
P.O. Box 196650
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 305
Burdett Lent
374 Sarahs Way
Wasilla,AK 99645
POSITION STATEMENT: Supports SB 305
Elise Huggins
1534 Norene St
Anchorage, AK 99508
POSITION STATEMENT: Supports SB 305
Mike Strunk
18842 Inspiration Circle
Eagle River, AK 99577
POSITION STATEMENT: Supports SB 305
Linda Cyra-Korsgaard
1509 P St.
Anchorage, AK 99501
POSITION STATEMENT: Supports SB 305
Patrick Krochina
3501 Denali St., #303
Anchorage, AK 99503
POSITION STATEMENT: Supports SB 305
Bob Manley
324 East Cook
Anchorage, AK 99501
POSITION STATEMENT: Offered information on SB 347
Charles Schuetze
405 W. 36th, #200
Anchorage, AK 99503
POSITION STATEMENT: Testified on SB 347
Craig Ingham
Alaska Bankers Association
Fairbanks, AK
POSITION STATEMENT: Supports SB 347 and opposes SB 348
Rod Lind
7080 Crooked Tree Drive
Anchorage, AK 99516
POSITION STATEMENT: Supports SB 348
ACTION NARRATIVE
TAPE 94-22, SIDE A
Number 001
CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting g
to order at 1:40 p.m. He brought SB 361 (REAL ESTATE APPRAISERS) S)
before the committee as the first order of business.
FRED FERRARA, a licensed general real estate appraiser testifying
from Anchorage, related that when FIREA was initially enacted,
which required all the states to put into effect certification for
appraisers they are licensing, they followed the legislation and
the hours required. In the intervening time, the hours required
for the residential appraiser have been changed and, as a result,
as of January 1, 1994, any people that they do pass under the
present authorized regulations and statutes would not meet the
federal requirements. He said it is conceivable that these new
appraisers that would be coming into the field would not be able to
work in a federally related transaction. SB 361 would give the
board the ability to change the hours in conforming to the FIREA
requirements as they are modified over the years.
Number 047
SENATOR KELLY asked if when an individual is purchasing a house and
is going through a FHA of VA appraisal, does it require a FHA or a
VA authorized appraiser. FRED FERRARA acknowledged that it does
require a FHA or a VA authorized appraiser, and, at present, they
are selected only from the panel of appraisers that are approved by
those agencies. He added that the agency has some proposed changes
underway and draft regulations have been circulated around the
nation.
Number 066
SENATOR RIEGER inquired as to what the definition of "appraisal" is
supposed to describe. FRED FERRARA answered that there are number
of market value definitions that have been adopted by different
states and by different jurisdictions. At one point it did say the
highest, most probable price that would be paid. That definition
was changed in both the national appraisal organizations and in the
additions to FIREA, as well as the uniform standards that have been
adopted by states, which, basically, clarifies that it is the most
probable price.
SENATOR RIEGER asked what the liability was to an appraiser on an
appraisal he has made. FRED FERRARA responded that the most risk
an appraiser is facing is if he is making a factual error. SENATOR
RIEGER said there is a lot frustration that appraisals come in far
lower than actual transaction prices. MR. FERRARA agreed and said
he has had some concerns himself where people are perhaps more
conservative than they should be in some instances, but it is a
judgement situation.
Number 175
SENATOR KELLY asked if the legislation concerns commercial real
estate appraisers as well as residential appraisers. FRED FERRARA
responded that it doesn't, but it would serve to protect that group
also in the future, because there is discussion at the federal
level to raise the required hours from the present 165 hours to 190
hours. As a result, this would give the board the authority to
change those hours when they do go up and conform to the federal
requirement.
Number 190
SENATOR KELLY asked for the will of the committee. SENATOR RIEGER
said he was willing to move the bill out of committee, but he is
still concerned with hearing so many tales of unreasonably low
appraisals. He suggested the board should take a look at the
circumstances that there are numerous reported instances of low
ball appraisals that seem to have been correlated to the banking
crunch over the last decade.
SENATOR RIEGER moved that SB 361 be passed out of committee with
individual recommendations. Hearing no objections, the Chairman
stated the bill would move on to the Judiciary Committee.
Number 210
SENATOR KELLY brought SB 362 (OMNIBUS INSURANCE REFORM) before the e
committee and noted there was a proposed committee substitute
incorporating the amendment proposed by the Division of Insurance
at the last hearing on the bill. However, because the committee
substitute had just been received by the committee, he said it
would be moved to the bottom of the calendar in order to give the
members a chance to review it.
The next order of business to come before the committee was SB 346
(REPORT CHARITABLE GAMING WINNERS).
LAURA SASHA HUGHES, testifying from Anchorage in support of SB 346,
spoke to the problem of some welfare recipients spending most of
their welfare checks in bingo halls, which, she said, is a blatant
abuse of the system.
Number 255
There being no further testimony on SB 346, SENATOR KELLY asked for
the will of the committee.
SENATOR SHARP moved that SB 346 be passed out of committee with
individual recommendations. Hearing no objections, it was so
ordered.
Number 265
SENATOR KELLY introduced SB 305 (LICENSING OF LANDSCAPE ARCHITECTS) S)
as the next order of business, and he directed attention to a
proposed amendment to the bill.
SENATOR SUZANNE LITTLE, prime sponsor of SB 305, explained the
legislation requires landscape architects who design outdoor spaces
be licensed in the State of Alaska. Forty-four other states have
licensed landscape architects and have asserted the fact that they
are another professional group that provides a very vital service
to businesses in the state.
Senator Little pointed out that because of the lack of licensure in
the State of Alaska more landscape architecture work is performed
by out-of-state landscape architecture firms than by instate
offices. Many federal contracts and private contracts as well
require licensed professionals so that excludes the instate
professionals unless they happen to be licensed in another state.
Senator Little said the amendment to the bill will serve to solve
some of the difficulty in "turf" between architects, engineers, and
landscape architects. She said another architect could continue
doing their landscape drawings that they have been doing in the
past. They would not need to employ a landscape architect in order
to complete those drawings.
Senator Little urged the committee's favorable consideration of SB
305 and expressed her willingness to work with those concerned to
iron out any remaining wrinkles in the bill.
Number 335
SENATOR KELLY asked if the legislation provides a registration fee
structure. SENATOR RIEGER said if this comes under occupational
licensing, they have a blanket policy that every profession has to
raise fees to cover their own licensure. JOSH FINK, committee
aide, referred to page 2, line 23, which, he said, deals with the
registration fees collected.
Number 350
GEORGE DAVIDSON, representing the Architects, Engineers & Land
Surveyors Board, said the board has not had the opportunity to
discuss the impacts of the registration of landscape architects and
how those impacts would affect current professions that they have.
He noted the board has sent a letter to the committee asking for
some time to work with landscape architects to come to a resolution
of concerns, and to not increase the size of the AELS Board, nor
designate a specific seat for the landscape architects.
Speaking to the amendment to add a subsection (b) to AS 48.281, Mr.
Davidson said it would help to clarify some of the concerns that
the board had. Also, he thought the definition of "landscape
architecture" would help clarify the issue.
Number 402
DWAYNE ADAMS, representing Land Design North in Anchorage, said the
timing of the requirement date for the submittal of the bill
unfortunately got in the way of their ability to work with the
registration board and to set up a dialogue because it was before
the board met.
Addressing the fiscal note to the bill, Mr. Adams said the addition
of one staff person should be shared amongst all the professions
that are regulated, and that travel to two meetings per year should
not be a requirement. Also, the fiscal note addresses testing on
a biannual basis, and he said very few states truly test twice a
year. Many states, especially states with low populations, test
once every two years, and some states test once every three years.
Speaking to the addition of a person on registration board, Mr.
Adams pointed out that of the 45 registration boards that exist in
the Council of Landscape Architects registration boards, only one
of those, South Dakota, has no position for the landscape
architect, but they are currently addressing legislation to include
that person as a member of their board.
Number 465
SENATOR KELLY inquired as to the educational requirements to be a
landscape architect. DWAYNE ADAMS replied that it is a four or
five year degree and varies across the nation.
Number 516
WILLIAM MENDENHALL, a member of the Board of Architects, Engineers
& Land Surveyors testifying on his own behalf from Fairbanks,
stated his support for Senator Little's amendment to SB 305. He
also stated that increasing the membership on the board to 11
members will be a significant cost. He suggested the bill be
tabled so that the board can consider it at their next meeting in
order to come up with a position either in support or opposition to
it.
Number 560
LEE HOLMES, a licensed mechanical engineer testifying from
Anchorage on behalf of the Alaska Society of Professional
Engineers, stated they are in favor of licensing landscape
architecture, and they support Senator Little's amendment because
it helps clarify some of the controversy that was in the original
bill. However, they are opposed to increasing the size of the
board to 11 people because they believe a nine-member board is
adequate. A landscape architect could be assigned to the board in
one of the architectural positions on the board.
Number 580
JONATHAN SCHILK, a landscape architect testifying from Anchorage in
support of licensing landscape architects, said he is a fairly new
resident to the State of Alaska and he has found that landscape
architects who practice in Alaska probably know a little bit more
about what they need to do for Alaskans than landscape architects
outside of Alaska. He suggested minimum quality and minimum
standards should be maintained to protect the health, safety and
welfare of the public.
Number 018
DAVE GARDNER said he provides the Parks and Recreation Community
Development Program for the Municipality of Anchorage, and they
contract with landscape architects for park and trail development
and projects. One of the things that would help protect the public
health, safety and welfare is to have minimum proficiency
requirements for those professionals, and the registration of
landscape architects would help him do his job and address that
issue.
Number 035
BURDETT LENT, a Wasilla landscape architect with over 30 years
experience in the field, two degrees and two licenses, voiced
support for passage of SB 305. He also was a member of the ASLA
committee in California, and during his tenure the registration of
landscape architects was challenged, however, that registration was
found to be in the public interest and was strengthened as a result
of considerable testimony and effort. He stressed the importance
of Alaska having licensed landscape architects because of its
pristine and underdeveloped state, and it would beneficial to the
public to have the participation of landscape architects located
locally in Alaska who are familiar with the conditions.
Number 060
ELISE HUGGINS, a board member of Friends of Neighborhoods in
Anchorage, stated their support for the licensing of landscape
architects. She noted she is also a landscape architect and owns
her own business in Anchorage, and she spoke to the importance of
licensing landscape architects for the health, safety and welfare
of the public.
Number 085
MIKE STRUNK, Chapter President of the Alaska Chapter of American
Society of Landscape Architects, as well as Chief of Planning and
Landscape Architecture for the National Park Service, stated his
support for SB 305. He said in his practice of landscape
architecture he has found that it is necessary to start with the
development process as it applies both in the private sector and
government in land use planning issues.
Number 115
LINDA CYRA-KORSGAARD testified in support of SB 305 and Senator
Little's proposed amendment. She pointed out specific areas of
expertise that landscape architects design for such as parks,
playgrounds, scenic vistas, trails and natural habitat. She noted
that as part of the requirements for taking the test to be licensed
in Alaska, all landscape architects are required to complete the
course of arctic engineering offered in the State of Alaska.
Number 170
PATRICK KROCHINA, President of the Alaska Chapter of American
Institute of Architects (AIA) testifying from Anchorage, voiced
support for the registration of landscape architects. He also
supports having indigenous landscape architects that live and were
brought up in the state practice landscape architecture in the
state, and whatever it would take to allow that to have an
advantage over outside firms coming to the state.
Number 220
SENATOR KELLY agreed with previous testifiers that adding two
members to the board is going to cost more money, and that when
there is a board that registers 4,800 people, he wasn't certain
that 50 people deserve a seat of their own on the board. SENATOR
LITTLE expressed willingness to keep the same number of board
members if there is an acceptable way to do so. However, she added
that if an individual's landscape architecture license is called
into question, it would be a great comfort to know that at least
one member on that board has some landscape architecture background
to make some judgements about that person's professional
activities.
Number 255
There being no other witnesses wishing to testify on SB 305,
SENATOR KELLY suggested the bill be held over so that a committee
substitute could be drafted, keeping the size of the board at nine
members. He said the bill would be back before the committee at
the Thursday, April 7 meeting.
Number 300
SENATOR KELLY brought SB 362 (OMNIBUS INSURANCE REFORM) before the e
committee. He said staff has looked at the proposed committee
substitute and they cannot find any errors, so he suggested moving
it on to the next committee of referral.
SENATOR SHARP moved that CSSB 362(L&C) be passed out of committee
with individual recommendations. Hearing no objections, it was so
ordered.
Number 308
SENATOR KELLY then announced the committee would stand in recess
for approximately 10 minutes.
Number 502
SENATOR KELLY called the meeting back to order and brought SB 347
(LIMITED LIABILITY COMPANIES) before the committee as the next
order of business, and noted there was a proposed Labor & Commerce
CS for its consideration.
Number 510
BOB MANLEY, Chairman, Working Group on Limited Liability Companies
composed of members of the Tax & Business Law Sections of the
Alaska Bar Association, said they have been working on proposed
limited liability company legislation as a committee for the last
year or so. Their work was drawn primarily from the American Bar
Association Prototype Act.
Mr. Manley pointed out that, currently, 37 states have limited
liability company legislation, and it is likely that all 50 states
will have it by next year. He stressed the importance of passing
LLC legislation promptly because, if not, Alaska will be at a
significant disadvantage against other states in attracting capital
from other places in the United States and also from foreign
investors.
Mr. Manley related that limited liability companies are basically
a blend of corporate and partnership characteristics. They provide
a collectible operating system as well as income tax advantages to
Alaska citizens.
Number 617
SENATOR RIEGER inquired how a member can get out of a limited
liability company if he does want out. BOB MANLEY referred to Sec.
10.50.185 on page 17, which provides that a person's membership
terminates if a person withdraws voluntarily from the company.
However, when an individual enters into a limited liability
company, if all the people coming in decide that they don't want
anyone to be allowed to withdraw they can do so. That is important
primarily in an estate planning context.
Number 664
MIKE MONAGLE of the Department of Commerce & Economic Development
stated the department's support for CSSB 347(L&C).
Number 680
CHARLES SCHUETZE, a member of the Working Group on Limited
Liability Companies of the Alaska Bar Association testifying from
Anchorage, stressed that the legislation was originally created
largely because of the tax considerations. He noted that countries
like Germany have had limited liability companies for many decades.
TAPE 94-23, SIDE A
Mr. Schuetze outlined various provisions contained in CSSB
347(L&C).
Number 016
CRAIG INGHAM, testifying from Fairbanks, stated that with the
current substitute bill, the Alaska Bankers Association is no
longer opposed to the legislation. With all of the work that has
gone into rewriting the bill, we have an entity that has similar
safeguards that we have with corporations and that is why they no
longer oppose the bill, he stated.
Number 035
SENATOR SHARP asked what the tax ramifications would be to the
State of Alaska if there is a switch from corporations to limited
liability companies. BOB MANLEY didn't think that there will be
any loss of state corporate income tax. He added that the tax cost
and the transfer cost of changing a corporation to a limited
liability company is going to be so significant that if the company
is making any money and paying taxes, it is not going to do it.
Number 136
SENATOR RIEGER asked if these companies have boards of directors.
BOB MANLEY answered that they can be run as either as a general
partnership, such that all the partners speak to the management, or
there can be a manager to manage a liability company, in which
case, they select one, two, three, four board managers who will, in
effect, act as the board of directors. SENATOR RIEGER then pointed
out on page 10, line 16, language containing the word "director."
BOB MANLEY responded that it should be removed from the bill.
Number 160
SENATOR RIEGER moved that on page 10, line 16, delete the word
"director" and replace it with the word "person." Hearing no
objection, the motion carried.
SENATOR KELLY stated it was his intent to direct staff to refer a
copy of the committee substitute to the Department of Revenue and
ask for their comments concerning the tax consequences to the State
of Alaska on establishing this type of a company under the new
committee substitute.
SENATOR RIEGER moved that CSSB 347(L&C) version "K", as amended, be
adopted. Hearing no objection, the motion carried.
SENATOR KELLY stated CSSB 347(L&C) would be back before the
committee at its Thursday, April 7 meeting.
Number 200
SENATOR KELLY brought SB 348 (LIMITED LIABILITY PARTNERSHIPS)
before the committee as the final order of business.
CRAIG INGHAM, representing the Alaska Bankers Association and
testifying from Fairbanks, stated their opposition to SB 348. The
legislation would change the Limited Partnership Act, which has
been adopted by the State of Alaska, by providing for an exception
as to joint and civil liability of partners. The association feels
that with the bill, in its current form, poses significant risk to
the general public who may be doing business with a registered
limited liability partnership. The association also believes that
the law could be interpreted quite broadly and could result in the
partnership being able to deplete the access of the partnership and
leave creditors high and dry.
Number 248
ROD LIND, Alaska Society of CPA's, testifying from Anchorage, said
a limited liability partnership is, in fact, a general partnership
with one change, and that change is that a partner in a limited
liability partnership is not personally liable for the misconduct
of another partner. The partnership itself continues to be subject
to all claims. He pointed out that no one from the public has
objected to this change, and he questioned if the banking community
should decide what form of business individuals can operate.
Number 280
SENATOR KELLY stated that because committee members had other
committee meetings to attend, SB 348 would be back before the
committee at its next meeting.
There being no further business to come before the committee, the
meeting was adjourned at 3:35 p.m.
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