Legislature(2009 - 2010)BELTZ 105 (TSBldg)
03/02/2010 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB117 | |
| SB279 | |
| SB258 | |
| SB129 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 279 | TELECONFERENCED | |
| + | SB 258 | TELECONFERENCED | |
| + | SB 129 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 117 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 2, 2010
1:36 p.m.
MEMBERS PRESENT
Senator Joe Paskvan, Chair
Senator Bettye Davis
Senator Kevin Meyer
MEMBERS ABSENT
Senator Joe Thomas, Vice Chair
Senator Con Bunde
COMMITTEE CALENDAR
SENATE BILL NO. 117
"An Act requiring the Department of Revenue to set the minimum
price for cigarettes for sale by wholesalers and retailers; and
prohibiting a wholesaler or retailer from selling at wholesale
or retail cigarettes at a lower price than the price set by the
Department of Revenue."
- MOVED CSSB 117(L&C) OUT OF COMMITTEE
SENATE BILL NO. 279
"An Act relating to regulation of residential mortgage lending,
including the licensing of mortgage lenders, mortgage brokers,
and mortgage loan originators, and compliance with certain
federal laws relating to residential mortgage lending; and
providing for an effective date."
- MOVED SB 279 OUT OF COMMITTEE
SENATE BILL NO. 258
"An Act prohibiting health care insurers that provide dental
care coverage from setting a minimum age for receiving dental
care coverage, allowing those insurers to set a maximum age for
receiving dental care coverage as a dependent, and prohibiting
those insurers from setting fees that a dentist may charge for
dental services not covered under the insurer's policy."
- HEARD AND HELD
SENATE BILL NO. 129
"An Act relating to state and municipal building code
requirements for fire sprinkler systems in certain residential
buildings."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 117
SHORT TITLE: PRICE OF CIGARETTES
SPONSOR(s): SENATOR(s) MCGUIRE
02/20/09 (S) READ THE FIRST TIME - REFERRALS
02/20/09 (S) L&C, FIN
02/09/10 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
02/09/10 (S) Heard & Held
02/09/10 (S) MINUTE(L&C)
BILL: SB 279
SHORT TITLE: MORTGAGE LENDING
SPONSOR(s): SENATOR(s) PASKVAN
02/15/10 (S) READ THE FIRST TIME - REFERRALS
02/15/10 (S) L&C, FIN
02/25/10 (S) L&C AT 2:00 PM BELTZ 105 (TSBldg)
02/25/10 (S) <Bill Hearing Canceled>
03/02/10 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 258
SHORT TITLE: DENTAL CARE INSURANCE
SPONSOR(s): SENATOR(s) HUGGINS
02/05/10 (S) READ THE FIRST TIME - REFERRALS
02/05/10 (S) HSS, L&C
02/15/10 (S) HSS AT 1:30 PM BUTROVICH 205
02/15/10 (S) Moved SB 258 Out of Committee
02/15/10 (S) MINUTE(HSS)
02/17/10 (S) HSS RPT 3DP 1NR
02/17/10 (S) DP: DAVIS, ELLIS, THOMAS
02/17/10 (S) NR: PASKVAN
03/02/10 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 129
SHORT TITLE: RESIDENTIAL SPRINKLER SYSTEMS
SPONSOR(s): SENATOR(s) MENARD
02/27/09 (S) READ THE FIRST TIME - REFERRALS
02/27/09 (S) CRA, STA, L&C
03/17/09 (S) CRA AT 3:30 PM BELTZ 211
03/17/09 (S) Heard & Held
03/17/09 (S) MINUTE(CRA)
03/19/09 (S) CRA AT 3:30 PM BELTZ 211
03/19/09 (S) Moved SB 129 Out of Committee
03/19/09 (S) MINUTE(CRA)
03/20/09 (S) CRA RPT 1DP 2NR
03/20/09 (S) DP: MENARD
03/20/09 (S) NR: OLSON, THOMAS
03/24/09 (S) STA AT 9:00 AM BELTZ 211
03/24/09 (S) Moved SB 129 Out of Committee
03/24/09 (S) MINUTE(STA)
03/25/09 (S) STA RPT 1DP 2NR 2AM
03/25/09 (S) DP: MENARD
03/25/09 (S) NR: MEYER, KOOKESH
03/25/09 (S) AM: FRENCH, PASKVAN
03/02/10 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
ESTHER CHA
Staff to Senator McGuire
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 117 for the sponsor.
MIKE ELERDING, representing himself
Ketchikan, AK
POSITION STATEMENT: Supported SB 117.
LORIE HOVANEC, Director
Division of Banking and Securities
Department of Commerce, Community & Economic Development (DCCED)
POSITION STATEMENT: Answered questions on SB 279.
SHARON LONG
Staff to Senator Huggins
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Presented SB 258 for the sponsor.
JACK MCRAE, Sr. Vice President
Premera-Blue Cross-Blue Shield of Alaska
POSITION STATEMENT: Opposed SB 258.
DAVID LOGAN, DDS
Alaska Dental Society
Juneau, AK
POSITION STATEMENT: Supported SB 258.
CHRIS HENRY
Alaska Dental Society
Fairbanks, AK
POSITION STATEMENT: Supported SB 258.
LINDA HALL, Director
Division of Insurance
Department of Commerce, Community and Economic Development
(DCCED)
POSITION STATEMENT: Available to answer questions on SB 258.
SENATOR LINDA MENARD
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 129.
JEFF TUCKER, President
Alaska Fire Chiefs Association
Fairbanks, AK
POSITION STATEMENT: Opposed SB 129.
WALLY SMITH, President
Alaska State Homebuilders Association
POSITION STATEMENT: Supported SB 129.
DAVE MILLER, President
Interior Alaska Homebuilders Association
Fairbanks, AK
POSITION STATEMENT: Supported SB 129.
ERIC MOHRMANN, Fire Chief
Capital City Fire/Rescue
Juneau, AK
POSITION STATEMENT: Opposed SB 129.
JAMES HILL, Fire Chief
Ketchikan, AK
POSITION STATEMENT: Opposed SB 129.
DAVID SQUIRES, Fire Chief
City of Seward
Seward, AK
POSITION STATEMENT: Opposed SB 129.
JEFF FEID, Loss Mitigation Administrator
State Farm Insurance
POSITION STATEMENT: Opposed SB 129 and its CS.
MICHAEL REVITO
Staff to Senator Menard
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 129 and its CS.
ACTION NARRATIVE
1:36:24 PM
CHAIR JOE PASKVAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:36 p.m. Present at the call to
order were Senators Davis, Meyer, and Paskvan. Senators Thomas
and Bunde were excused.
SB 117-PRICE OF CIGARETTES
1:37:42 PM
CHAIR PASKVAN announced SB 117 to be up for consideration. He
noted that Senator Bunde had submitted a letter in support of SB
117. He moved to bring CSSB 117(), version E, before the
committee. There were no objections and it was so ordered.
ESTHER CHA, staff to Senator McGuire, sponsor of SB 117, related
that the department said the committee substitute (CS) lowers
the percentage that was in the original bill and a few off-brand
cigarettes may experience a decrease in their current pricing;
however, the majority of brands will experience an increase.
SENATOR MEYER said the last time this bill was heard they were
led to believe it would raise the price of cigarettes and he was
curious why the American Lung Society and the American Cancer
Society weren't supporting it. He thought it might be because
even though some of the major brands would probably go up in
price the off brands for the most part will go down. The fact
that this bill prevents businesses from selling tobacco as loss
leaders is good.
1:42:05 PM
MIKE ELERDING, representing himself, Ketchikan, said he would
answer questions. He said he has supported the concept of
regulating the price of tobacco products since 2004 and he
offered to provide historical context for how they had gotten to
where they are now if anyone wanted it.
CHAIR PASKVAN, finding no further questions, closed public
testimony.
SENATOR MEYER moved to report CSSB 117(), version E, from
committee with individual recommendations and attached zero
fiscal note. There were no objections and it was so ordered.
1:44:08 PM
CHAIR PASKVAN announced an at ease at 1:44.
1:45:28 PM
CHAIR PASKVAN called the meeting back to order at 1:45.
SB 279-MORTGAGE LENDING
1:45:51 PM
CHAIR PASKVAN announced SB 279 to be up for consideration. He
related that this committee had been working with the
administration for over one year and this bill is now good for
Alaska.
LORIE HOVANEC, Director, Division of Banking and Securities,
Department of Commerce, Community & Economic Development
(DCCED), said her division administers the Alaska Mortgage
Lending Regulation Act. She said the abuses in mortgage lending
and securities led to much of the financial crises the US is now
experiencing. To address some of these problems, both state and
federal regulators came up with regulatory reform and a new
system to license both mortgage loan originators and mortgage
lenders and brokers. In 2003, the state regulators, through the
Conference of State Banks Supervisors and the American
Association of Residential Mortgage Regulators (ARMOR), began
developing a uniform licensing registry similar to what had been
done by state agencies in the securities and investment advisor
industries.
She said this regulatory system for mortgage loan originator
licensing is known as the Nationwide Mortgage Licensing System
and Registry; it was launched in 2008 and since then nearly
every state is a participant. This system increases consumer
protection, enhances state regulators' ability to supervise, and
streamlines the licensing process.
MS. HOVANEC continued that in 2008 the federal SAFE Act was
passed which requires states to license mortgage loan
originators through this nationwide registry. It also requires
states to amend their mortgage lending laws to meet certain
minimum standards, which they can exceed if they want to. Alaska
began licensing mortgage loan originators through this registry
on August 1, 2009 and is, therefore, in compliance with the
first part of the federal law. SB 279 will bring Alaska into
compliance with the second part of the SAFE Act by amending its
statutes to meet the federal minimum standards.
She said the objectives of these amendments are to increase
accountability in education and tracking of mortgage lending
professions to reduce fraud in the residential mortgage loan
origination process and to provide consumers with free and
easily accessible information through the national database.
She explained that if Alaska does not comply with these minimum
federal licensing requirements through passage of SB 279, the
SAFE Act requires that the US Department of Housing and Urban
Development begin enforcing the standards. The effective date of
this bill is July 1, 2010 - also to meet the state's extension
deadline.
1:50:55 PM
MS. HOVANEC said she would next address some of the major
changes to Alaska's law. Technical changes included changing
"originator" to "mortgage loan originator" wherever it was used.
MS. HOVANEC said the first substantive change was to section 9
on page 6, line 8, where license renewal was changed from
biennial to annual on the calendar year, December 31.
1:53:34 PM
She said section 85 on page 41, line 20, repealed AS 06.60.017
that exempts small mortgage lenders from licensing, because the
SAFE Act does not allow exemptions of this sort. She said
references to the "small mortgage lender" exemption were deleted
throughout.
1:55:08 PM
MS. HOVANEC said the SAFE Act requires that fingerprint cards
for criminal background checks be sent to the registry as well
as the Department of Public Safety (DPS). Under current statutes
fingerprint cards must be submitted just to the Department of
Public Safety (DPS).
Section 11 on page 6, line 23, says permit fees are to be set in
regulation for flexibility. Currently they are set in statute.
They anticipate potentially decreasing the fee for mortgage loan
originators so that originators and companies are paying similar
renewal fees rather than originators paying a larger fee.
Section 12 on page 6, line 28, requires 20 hours of pre-
licensing education as per the SAFE Act; three hours in federal
statutes and regulations to mortgage origination, fraud
prevention, consumer protection, three hours in ethics and two
hours related to lending standards for non-traditional mortgage
products and the additional hours to be of the licensee's
choosing. Current law has no education requirements.
Section 18 on page 10, line 21, authorizes the division to issue
a provisional license if the fingerprint card processing is
excessively delayed but all other requirements for licensing
have been met. This is to prevent holding up commerce when it
appears a person is qualified.
In section 22 on page 12, line 21, the references to paper were
eliminated. Because the national database is accessible to
consumers on the Internet, they will be going paperless.
Section 29 on page 14, line 9, is a new section permitting
branch office registration, something the national database
requires, and the department wants the ability to track all the
branches that mortgage lenders and originators are opening.
Section 35 on page 15, line 25, modifies Alaska's continuing
education requirements from 24 hours every 2 years to 8 hours
annually.
SENATOR MEYER asked if the US Department of Housing and Urban
Development would take over without action on this bill.
MR. HOVANEC replied yes, but they don't really take over. They
would set up their own licensing system in addition to the
state's system. So industry would be required to comply with two
regulatory schemes.
SENATOR DAVIS asked if the state would be a penalized if it
didn't meet the deadline.
MS. HOVANEC replied not to her knowledge.
2:02:06 PM
CHAIR PASKVAN said they had been working on this for a whole
year and he is comfortable with language in the bill, but he has
been close to it for a while.
MS. HOVANEC explained that the fiscal note adds $65,000/year for
a new occupational licensing position and $3,000 for materials
required for the position. The amount of work being generated by
participation in the national registry is more than their one
occupational licensing person is able to handle, because they
also handle their money service business regulations. Travel
would increase by $20,000/yr. They have approximately 72 out-of-
state lenders and are able to do some examinations of them
through a joint exam with the states in which the primary
location of the lender is located, but they are expected to
participate in a certain number of exams - as part of this joint
protocol they have joined. This budget would allow them to
participate in approximately three to four exams per year
depending on where they are located. It also adds a membership
fee to the National Mortgage Regulatory Association and funding
for the division to "upfront" the state background fee which is
about $50-150/yr.
They expect that revenue will increase substantially due to
expansion of the definition of "licensee" to include the loan
modification and servicing companies as well as changing from a
biennial renewal to an annual renewal.
CHAIR PASKVAN explained that the expenditures for fiscal year
(FY) 2011 are about $131,000, but the income would be about
$384,000. So it has a positive impact on the state's treasury.
MS. HOVANEC agreed.
SENATOR DAVIS said that she appreciated Ms. Hovanec's review and
that she saved her a lot of work by visiting the office.
2:06:07 PM
CHAIR PASKVAN closed public testimony.
SENATOR MEYER moved to report SB 279 from committee with
individual recommendations and attached fiscal note(s). There
were no objections and it was so ordered.
2:08:29 PM
At ease
2:11:16 PM
CHAIR PASKVAN called the meeting back to order at 2:11.
SB 258-DENTAL CARE INSURANCE
2:11:45 PM
CHAIR PASKVAN announced SB 258 to be up for consideration.
SHARON LONG, staff to Senator Huggins, sponsor of SB 258, said
it was at the request of the Alaska Dental Society. It prohibits
insurance companies from establishing age limitations on young
children receiving dental care. Currently a fear is emerging, as
evidenced by 20 other states introducing this legislation, that
insurers are moving towards restricting children four years and
older from dental care coverage.
She said that establishing a minimum age requirement leaves a
significant segment of our population already identified as at
risk without dental insurance. It does allow a company to set a
maximum age for a person to receive coverage for dental care as
a dependent child.
MS. LONG said that even though this restriction not covering
those under four is currently in effect in only one state,
Maine, the fear is not unfounded. A non-covered services clause
was inserted in provider contracts first in the northeast, and
within one short year it had spread south and west to finally
include all states - bringing her to the next provision of SB
258: It will prohibit insurance companies from fee capping non-
covered services in Alaska. That is the current practice of
insurance companies - dictating what a dentist can charge for
services the insured does not even cover in a plan.
She said that Senator Huggins became aware of trends surrounding
coverage restrictions and age limitations elsewhere and
introduced this bill in order to start the discussion and get
ahead of the issues before they became a problem here.
Understanding that insurance can raise complex issues among
stakeholders, not the least of which includes federal restraint
of trade restrictions and waivers, Senator Huggins asked for
some experts to be available for the committee this afternoon.
MS. LONG said that Senator Paskvan had raised a question about
mutuality of obligations under contract and Dennis Bailey from
Legal Services was on line and that Linda Hall, Director,
Division of Insurance, was available, as was Pat Shier,
Director, Division of Retirement and Benefits.
2:16:20 PM
CHAIR PASKVAN announced public testimony.
2:16:32 PM
JACK MCRAE, Sr. Vice President, Premera-Blue Cross-Blue Shield
of Alaska, said SB 258 raises several major constitutional and
public policy issues. It would require health insurers who
provide coverage to change their contracts with dentists by
modifying basic terms. The key language regarding the proposed
change is found on page 2, lines 3 and 4 where it raises
constitutional issues as Article 1, Section 15, of the Alaska
Constitution states:
No law impairing the obligation of contracts and no
law making any irrevocable grants of special privilege
or immunities shall be passed.
Although Alaska courts have interpreted this language to permit
passing laws which have changed future contracts, Mr. McRae
said, it would appear that these provisions in legislation run
contrary to the public policy intent.
In addition, Mr. McRae said, language in SB 258 raises a related
and serious public policy question of whether it is in the
state's interest to pass legislation that basically changes
health insurance contracts which benefit one select group of
health care providers. As an alternative, he suggested an
amendment that would avoid the constitutional problem that SB
258 raises and still respond to the concerns that the dentists
have raised.
He added that Premera-Blue Cross-Blue Shield of Alaska doesn't
have age restrictions in any of their dental contracts in Alaska
and haven't for a long period of time.
CHAIR PASKVAN asked if they do not have age restrictions within
their contracts now, how he could raise an impairment of
contract issue.
MR. MCRAE answered the issue that is of most concern for them is
when they have a contract with, for example, a benefit that pays
a maximum of $2500 year for crowns. As their contracts are
presently written, once the cap is reached the dentist would
still have to give the discounted rate which had been agreed to
in the contract to the member. This would move them in the
direction of giving the dentist the ability, once a contract
limit is reached, to charge whatever he wanted to. Other items
outside of the contract, such as teeth whitening, have no
restrictions on what can be charged. They would want the
provider to still allow the discounted rate to their enrollee
once the cap is reached.
2:20:35 PM
CHAIR PASKVAN said he didn't understand the argument he was
advancing within the impairment of contract context.
MR. MCRAE stated that the amendment would say "offers but cannot
require a provision in the contract that would allow discounted
fees for non-covered services." That would allow for dentists to
still give the discounted rate to the Alaskan dental plan
enrollee once the cap had been reached. Without that, dentists
could charge whatever they want.
CHAIR PASKVAN asked if that would be for both covered and non-
covered services.
MR. MCRAE answered yes, but generally speaking, it would be more
in the direction of covered services. Their main concern is that
the enrollee could still get the discounted rate once the cap is
reached, because that is where most of the expensive dental
charges are.
CHAIR PASKVAN asked if he recognized the ability of the
legislature to adopt public policy that prohibits private
parties from going beyond the boundaries established in that
public policy.
MR. MCRAE answered that he did recognize that.
CHAIR PASKVAN asked if the state would or wouldn't be sued for
impairment of contract.
MR. MCRAE responded, "No, I don't believe we would sue the
legislature for impairment of contract, Mr. Chairman."
CHAIR PASKVAN commented, "I was just wondering why it was raised
then."
2:22:55 PM
DAVID LOGAN, DDS, Alaska Dental Society, said he is a Juneau
dentist. He said that SB 258 seeks to correct a couple of things
that are negatively impacting consumers. It sets fee limits on
services that dental insurance plans do not pay a benefit for
and it prohibits setting minimum age requirements for dependents
to receive dental benefits. The protection for consumers by
prohibiting an age restriction is obvious he said, and Alaska
still leads the nation in baby bottle tooth decay.
They are also interested in preserving the progress that has
been made in conjunction with the dental board over the last few
years insuring that medical providers can receive reimbursement
for dental benefits for delivering dental services during well
baby checks for applying fluoride. Frequently children are seen
at that age by medical providers but have yet to see dental
providers. Unfortunately for young children who have severe
cavities at those ages, rehabilitation can cost a lot as well as
be difficult. Sometimes the ability of the parents to receive
coverage under dental managed care plans can be a deciding
factor in the decision to seek care or not.
MR. LOGAN explained that the act of setting the fees on non-
covered services is a fairly recent change and started a couple
of years ago, sweeping quickly across the nation. One state,
Rhode Island, prohibits it, and that is one of the initial
states that started the practice. The net effect on the
remaining states has been for dentists to reexamine their
participation in these plans both for a service that they're not
providing the benefit for and the economic impact on their
practices. The effect is that dentists drop out of these plans
and then consumers have fewer providers to choose from. Many are
being forced to leave their dental home if they want to receive
full, costly or even partial use of their dental benefits. He
said the overall affect is reduced access, and this impact would
sadly be borne disproportionately in rural communities with
fewer providers to choose from.
He said the basic question of fairness needs to be asked. If the
insurance companies are interested in helping dental consumers
receive dental care and lowering overall dental costs, the
dentists' preference would be that the insurance companies
provide the benefit; then at least they are in it together.
MR. LOGAN said his concern has been that as the insurance
companies are taking this approach, they are requiring dentists
to make a sacrifice that is at no cost to themselves, but they
enjoy the benefit of marketing the savings. He said dentists are
sensitive to the cost of health care, but they are also
unfortunately unable to deal with insurance companies on a level
playing field as they are exempt from anti-trust laws while
dentists are not. The best a small trade group of dentists can
do is approach these matters legislatively, because they don't
have the ability to negotiate with the insurers.
CHAIR PASKVAN said he was trying to figure out if a policy
provided a covered service for teeth cleaning once a year and
someone wanted it a second time because they were very health
conscious, what the dentists' ability would be to charge a
different rate for the second teeth cleaning as compared to the
charge that might have been allowed under the first cleaning.
MR. LOGAN replied that some fee differential would likely be
involved. Under managed care plans, the dentist submits a fee
schedule to the dental insurance company and he agrees to charge
a lesser amount for services that are covered by the insurance
company, but on services that aren't covered he agrees to abide
by their normal fee schedule.
2:29:13 PM
CHAIR PASKVAN asked what a person would be charged for his
second teeth cleaning if the first one was insured and set at
$80 ($50 paid by insurance and $30 paid by the insured), but the
second one wasn't covered.
MR. LOGAN answered the dentist would probably charge his normal
fee of $100.
CHAIR PASKVAN asked if he perceived the national movement was
trying to restrict him in charging his office rate for non
covered services.
MR. LOGAN answered that was his understanding.
2:31:59 PM
CHRIS HENRY, Alaska Dental Society, said he is an orthodontist
in Fairbanks, Alaska. He explained that one of the concerns is
about the fairness of the plan and likened a dental practice to
a hotel business that signed up for a program to reduce their
hotel rates so that tourists would come in, but they also
provide meals. They are hoping to bring more patrons into their
hotel. Then they find out that plan they signed up for limited
them on what they could charge for the meal that was not part of
the plan. He said dental practices need to be profitable enough
to support staff and provide for their benefits such as medical
insurance and retirement plans. He said it goes back to what it
takes to run a small business whether it is dentistry or any
other kind of medicine.
2:35:34 PM
LINDA HALL, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), said she
was available to answer questions on SB 258.
CHAIR PASKVAN "suspended" public testimony.
MS. LONG remarked that the bill's sponsor did not view the
amendment favorably and urged finding common ground with regard
to the contracts.
2:36:58 PM
SB 258 was heard and held.
2:37:27 PM
CHAIR PASKVAN announced an at ease.
2:41:29 PM
CHAIR PASKVAN called the meeting back to order at 2:41.
SB 129-RESIDENTIAL SPRINKLER SYSTEMS
2:41:45 PM
CHAIR PASKVAN announced SB 129 to be up for consideration. He
said a lot of work was done on this bill in the past year. He
moved to bring CSSB 129(), version M, before the committee.
There were no objections and it was so ordered.
2:42:58 PM
SENATOR LINDA MENARD, sponsor of SB 129, said the committee
substitute (CS) was a result of listening to the pros and cons
of this issue while adhering to what she believed needs to
happen. She said the CS is a compromise. She said that she is
not opposed to sprinkler systems being required in homes, but
she does believe that requiring residents to install sprinkler
systems in the building code needs a more robust hearing.
SENATOR MENARD said the CS removes all references to the state,
state agencies, and state corporations, because Alaska has no
statewide building code. The CS retains local control while
setting in statute an elongated public process. Along with
preparing a cost benefit analysis, this bill calls for local
governments to post notice at least 30 days before their first
public hearing, schedule at least three public hearings on a
proposed ordinance or amendment to be held within a 60-day
period and not consider the proposed ordinance or amendment for
adoption sooner than 60 days after conclusion of the first
public meeting.
It is no surprise that the firefighters would be against this
bill. Respectfully, she said, it is their job to do all they can
to protect the life and property of Alaskans, but she argued
that the CS retains local control and gives local decision
makers the option of mandating sprinklers.
SENATOR MENARD argued that those opposed to the bill would say
this bill puts an unfunded mandate on cities and municipalities,
but the unfunded mandate is really being put on homeowners. Plus
a local government can choose to spend as little or as much as
it wants to on the required cost benefit analysis.
SENATOR MENARD said the cost benefit analysis language in this
bill is very broad simply requiring local governments to prepare
a cost benefit analysis as to how expensive or inexpensive a
proposal may be.
2:46:11 PM
She said the reason for the expanded public process is that
adopting a code requiring fire sprinkler systems for one to two
family dwellings is not a "run-of-the-mill" code item. It is an
expensive system that has proven impacts on the cost of a home.
It is especially costly for those on well systems, which almost
a third of Alaskans are on. Anchorage Mayor Sullivan said he
thinks the extra public process is appropriate for fire
sprinklers in one or two family dwellings because installing
them in Alaska's cold climate is complex.
SENATOR MENARD said she didn't dispute the potential life and
property savings quality of sprinkler system and realized there
are situations where mandating sprinklers in a new home would
seem to make sense, but her point with the CS was that the
public who will be the one to pay for the system will have ample
time for testimony, discussion and education if the issue
arises. She said SB 129 has a zero fiscal note.
2:49:04 PM
JEFF TUCKER, President, Alaska Fire Chiefs Association,
Fairbanks, said a public process is already in place that has
worked well for all public code procedures. There is no need for
a special process for just one issue.
2:51:18 PM
WALLY SMITH, President, Alaska State Homebuilders Association,
deferred his testimony to the Interior Alaska Building
Association.
2:52:00 PM
DAVE MILLER, President, Interior Alaska Homebuilders
Association, Fairbanks, said this bill is a reasonable and
intelligent compromise that provides time for local building
officials, legislators and voters to consider the consequences
of mandating sprinklers in single family homes in Alaska. He
encouraged the committee to pass SB 129.
SENATOR MEYER asked what it costs to install a sprinkler system
in an average size house.
MR. MILLER answered anywhere from $2-8 square foot.
SENATOR MEYER took the middle, $5, and said an average house is
1500-2000 square feet; so this would add substantial cost on to
a new home and the builder would just pass it on to the
consumer.
MR. MILLER responded that consumers right now are having a hard
time buying homes without having an additional $7500 added to
their cost. Appraisers aren't even "getting value" for that, so
consumers would have to pay for this cost out of pocket.
Also, he said, it's almost impossible to say how much a real
functioning system in homes with well systems would cost to
install. Their job as builders is to provide safe and affordable
housing for Alaskans and mandating sprinklers would put a large
number of people where they couldn't afford to build a home. The
Homebuilders encourage life safety things like smoke detectors
that are a better value for homebuyers.
SENATOR MEYER asked if sprinklers are susceptible to freezing up
in the winter.
MR. MILLER replied that it would depend on the type of system,
but water systems are susceptible to freezing in Alaska and
Minnesota. He had even read a report that said some insurance
companies were not providing a discount for having a sprinkler
system because of some water loss issues with systems going off.
Maintenance of these systems is another issue.
SENATOR MEYER asked how often sprinkler systems need to be
maintained.
MR. MILLER replied that most would recommend an annual
inspection.
2:59:43 PM
ERIC MOHRMANN, Fire Chief, Capital City Fire Rescue, Juneau,
said the City and Borough of Juneau (CBJ), like 17 other
jurisdictions across the state of Alaska, is a deferred
jurisdiction. This means that the State Fire Marshall's Office
has looked at their code adoption process and their capabilities
and has decided that they not only meet the minimum enforcement
requirements of the state fire and building codes, but that they
exceed them. He said the local jurisdictions had spent quite a
bit of money to provide citizens with good quality code plan
review, enforcement and adoption.
3:01:25 PM
He explained that the City and Borough of Juneau has a rigorous
process for adopting codes; the Assembly appoints a five-person
committee to review the codes in detail, line-by-line, over a
two-and-a-half year period. In Juneau's case, this committee
consists of an architect, an electrical engineer, a civil
engineer, a mechanical engineer and a contractor. They meet
regularly in public meetings which are publicized over a two-
and-a-half year period and look at the building, fire and
residential codes (the one in question here). They make
amendments and modifications to those codes to meet the local
jurisdictional needs. By law, they are not allowed to make a
code requirement or a code change that is less stringent than
the state's, but they are allowed to have ones that are more
stringent. After numerous public meetings, which are publicized
and open to the public, their recommendations are turned over to
the Assembly Public Works Committee. This committee reviews the
recommendations in detail in publicized open public meetings and
then forms a recommendation that is forwarded on to the full
Assembly. The full Assembly, in public open publicized meetings,
presents these recommendations through two public hearings which
span one month.
He said the state of Alaska does not enforce nor has it adopted
the 2009 International Residential Code, the code that has
specifications for residential sprinklers for one and two-family
dwellings. The state doesn't even address it. Only local
deferred jurisdictions and home rule communities can look at
this code and decide on their own whether they are going to
adopt the provisions or not. He said that the City and Borough
of Juneau had adopted the International Residential Code for
2003 and modified the 2006 version that requires sprinklers in
one and two-family dwellings, because that would not be
appropriate at this time.
MR. MOHRMANN explained that when the 2009 codes comes up for
review, the committee, the Assembly Committee, the Assembly, and
the public can all have their say and decide whether they want
that option or not.
3:04:28 PM
MR. MOHRMANN said this bill addresses one issue only -
residential sprinklers - and emphasized:
There is no more effective way to protect our citizens
from fire than one and two-family residential
sprinklers. Seventy-eight percent of fires occur in
one and two-family dwellings. Eighty percent of the
civilian fire deaths, 84 percent of the civilian fire
injuries occur in one and two-family dwellings. Where
should we be addressing our fire resources to solving
the problem? It seems to make sense to me.
But regardless of that, he said, the code review committees look
at a variety of things - how many toilets a building has to
have, how many egress windows, electrical ground fault
interrupter circuits, and smoke detectors - thousands of items.
They all have financial impacts, so why single out this one item
to go through a different process?
MR. MOHRMANN stated that right now a triplex or four-plex within
Juneau is required by the code to have a sprinkler system, but
the State of Alaska has not made that requirement until one has
more than 16 residential units.
MR. MOHRMANN said that it was mentioned that sprinklers will not
work off of a well, but he has installed three residential
sprinkler systems in his own homes, one by contractor and two by
himself. His cost was $1200-$1500 per system, and two of them
were off of wells and they do work. You need a water tank and an
electric pump. "It's not rocket science." They didn't freeze up
and these were all done in Fairbanks. These systems were given
breaks by insurance companies; he said state law says you get a
2 percent reduction in your local taxes if you have a
residential sprinkler system installed. It won't pay for the
whole thing, but it helps, and insurance companies recognize the
value. The history behind residential sprinkler systems is that
they have been phenomenally effective, he concluded, and they
cost about 3 percent of new construction using the excessive
estimate of $5 sq. ft. Bottom line, though, these systems are
very effective at saving lives
3:08:53 PM
SENATOR MEYER asked if the sprinkler heads are sensitive to kids
throwing balls, for instance.
CHIEF MOHRMANN replied that he had three kids in each one of his
houses with the same type of heads, but the ball never hit them.
Mechanically they are very reliable and don't have a record of
having many accidental activations from getting struck by
something. Statistics show that sprinkler head spontaneously
fail less than one in a million.
SENATOR MEYER asked what annual maintenance is required.
MR. MOHRMANN answered that an NFPA 13-R system, which is
designed for triplexes and larger and commercial applications,
requires an annual inspection in the form of a report that is
turned into the local fire department. The fire code does not
apply in the case of one and two-family dwellings, but the
International Residential Code does. He didn't believe it had a
requirement for annual inspections.
SENATOR MEYER remarked that he is not required to have his
furnace checked annually, but he wants to do it. He would
probably want to do that with a sprinkler system.
MR. MOHRMANN answered yes; most residential systems (wet
systems) are filled with water all the time. They are very
simple. It will come off the meter, have an indicating valve, a
little backflow preventer valve, and a pressure gauge. You check
to see if the valve is open and if it has pressure. That's about
it. The fire department is more than happy to answer questions
about them.
3:12:07 PM
SENATOR DAVIS asked if he was speaking to the CS or the original
bill.
MR. MOHRMANN responded that he was trying to demonstrate that
the established local process is already very vigorous and is
used for thousands and thousands of other items; injecting this
requirement for one and two-family dwellings is excessive and
not necessary. He opposed the CS for the same reason - because
what it requires is already being done.
SENATOR DAVIS asked why he opposed the bill since it didn't
mandate sprinkler systems.
MR. MOHRMANN answered that a triplex is regulated under the
International Building Code; a one and two-family dwelling is
regulated under the International Residential Code. Both of
those are scrutinized under the local code adoption process for
that deferred jurisdiction. It is already a very rigorous
process, and the reason for his opposition to the CS is that it
injects additional steps that are unnecessary.
SENATOR DAVIS asked if something could be changed in the bill
that would allow him to support it.
MR. MOHRMANN replied, "To be honest with you, at this point,
there is already under - I believe it's AS 29.25 - specific
directions in regards to how meetings are supposed to be
held...and code adoption falls within that." The local
jurisdictions have to follow those by law, so that makes the CS
superfluous. It's merely an effort to make adopting residential
sprinklers more onerous, he concluded.
CHAIR PASKVAN said he was particularly focused on whether the
percentage of structure fires and the percentage of civilian
fire deaths occurring in residential structures were in
triplexes or more as compared to duplexes or less.
MR. MOHRMANN responded that this information came directly from
the National Fire Protection Association and he would be happy
to provide copies of that document to the committee. It was in
reference to one and two-family dwellings.
3:16:56 PM
JAMES HILL, Fire Chief, Ketchikan, Alaska, said the Ketchikan
Fire Department and the City of Ketchikan both strongly opposed
SB 129 because everyone knows the benefits of having a
residential sprinkler system. He said back in the 60s and early
70s, 15,000 people a year were killed in fires; today it's less
than 4,000. The codes were changed because people died. The most
recently deferred jurisdictions in Alaska all have different
fire and building code issues to deal with. He asked that the
legislature leave fire and building code enforcement issues on a
local level and not have state mandates that impede their
ability to protect their communities.
MR. HILL said that Ketchikan already has the Ketchikan Municipal
Code that goes through the same process that Juneau does. Their
process provides them the ability to work with people on issues
that have been around since Ketchikan was formed. To take that
away to have some kind of leverage with contractors, homeowners
and professionals is wrong, he emphatically stated. For example,
a local single family dwelling in Ketchikan sits atop a 26-
percent grade that for all practical purposes he could not
protect - at least with a fire truck to the front door. He also
wasn't able to provide emergency medical services without having
to walk there. It's in a "dandy spot" with probably the best
view in town and was approved a couple of years ago. Now someone
wants to build a neighboring house in the same vicinity, and he
now has some leverage with those folks to have a standpipe put
in between the homes instead of requiring a sprinkler system to
go in the second house. It is a fixed fire system that would
allow him to provide effective fire protection for both of the
homes.
CHAIR PASKVAN said he believed the CS is a local option bill,
and he asked him what portion of the procedure is not
appropriate.
MR. HILL replied that he didn't believe it was inappropriate;
it's just already being done on a local level and communities
have different fire and building code issues to deal with.
3:21:46 PM
CHAIR PASKVAN asked him to provide the statistics from 1970 that
he referenced to the committee.
MR. HILL responded that wouldn't be a problem.
3:21:59 PM
DAVID SQUIRES, Fire Chief, Seward, Alaska, read a letter signed
by the city manager opposing SB 129. It said as written SB 129
would infringe upon their rights as a home rule city and would
limit the rights of their citizens to consider ways to reduce
the cost of government.
MR. SQUIRES said SB 129 would limit the ability of the
municipality to consider options when planning forest fire
protection. It also increases their administrative workload by
increasing the number of public hearings for ordinance adoption.
This bill does not consider what process each deferred
jurisdiction already has in place for adopting building, fire or
mechanical codes. This bill would severely impact the community
of Seward because of existing ordinances concerning improvements
for construction where they have used a sprinkler requirement as
a way to reduce costs to developers.
If this bill is passed, Mr. Squires said, it would drive up the
cost for fire protection in Seward because of the need to
require vehicles or a vehicle that would have the ability to
truck in water, supplies and the cost of a building to house
those vehicles.
MR. SQUIRES pointed out that the state fire marshal indicated
this bill would have no fiscal impact on the department, and
that is true because the State of Alaska does not regulate this
issue, but having certain items in place prior to adoption of an
ordinance on sprinklers for residential structures would put an
enormous financial impact on their community.
He thanked Senator Menard for allowing time for the public
process, but as a deferred jurisdiction that passes building,
fire, mechanical, electrical codes and more, he said Seward
already has that process in order and he had not received one
complaint from any of the contractors or residents that have
built houses within the City of Seward that their timelines for
adopting new codes or making additions to codes is too short. He
would like to hear if the proponents of this bill think they are
not getting a fair hearing at any of the deferred jurisdictions,
so they could fix those items.
MR. SQUIRES commented on Mayor Sullivan's letter where he said
this could be done on a case-by-case basis - this bill does not
allow case-by-case; it would be a blanket ordinance. It would
not be good for two houses that have different requirements 2000
feet apart; it could lead to a fairly large lawsuit.
3:26:44 PM
JEFF FEID, Loss Mitigation Administrator, State Farm Insurance,
opposed SB 129 as well as the CS. He said the total lives in
cost of residential fires is enormous, and on behalf of their
policy holders, State Farm must take all reasonable steps to
reduce the 3000 national yearly deaths caused by them. It's
beyond dispute that when properly installed, sprinklers save
lives, protect property, and reduce the risk to firefighters.
He said that State Farm provides premium discount for homes
protected with fire sprinkler systems meeting nationally
recognized standards. They have considered many studies that
show the benefits of having fire sprinklers. One example is in
Scottsdale, Arizona, that has had an ordinance for over 20
years. In the first 15 years the ordinance was in place, they
had 598 home fires. Of those fires, 49 were in single family
homes with sprinkler systems and no deaths occurred. In the
homes that had fires without sprinkler systems, 13 people
perished. Likewise, another 13 people who would have likely died
without sprinklers were saved.
The average fire loss for sprinklered incidents in Scottsdale is
$2,166 in property damage compared to $45,000 for unsprinklered
incidents. Significantly reduced water damage was also found
because fires were suppressed with 341 gallons of water per fire
in those homes with sprinkler systems versus the unsprinklered
homes that used almost 3,000 gallons per home.
MR. FEID related that the average cost to install a system in
Scottsdale was 80 cents sq. ft. and the National Fire Protection
Research Foundation has shown on a national average installation
cost of $1.61 sq. ft. He noted that part of the Foundation
project included participation from the National Association of
Homebuilders as well as State Farm.
CHAIR PASKVAN asked him to submit the data he relied upon.
SENATOR MENARD reiterated that she is not against sprinkler
systems, but she is for a more public process and opportunity.
MICHAEL REVITO, aide to Senator Menard, additionally commented
that a lot of speakers didn't address the actual CS which was
about having a more robust public process. Some of the folks who
spoke said a public process was already in place, and while that
is true, statute says that local governments are required to
notice only five days before public hearings begin. Since all
the previous speakers seemed to support involving the public as
much as possible, giving the public even more time to educate
themselves and come forth with their opinions seemed reasonable.
SB 129 was held in committee.
3:33:24 PM
CHAIR PASKVAN thanked everyone for their testimony and adjourned
the meeting at 3:33 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS SB 129 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM SL&C 3/9/2010 1:30:00 PM |
SB 129 |
| SB 279 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM |
SB 279 |
| SB 258 Bill Packet.pdf |
SL&C 3/2/2010 1:30:00 PM |
SB 258 |