HOUSE BILL NO. 218 "An Act relating to property loaned to or held by museums." Co-Chair Therriault provided members with a proposed committee substitute, work draft 1-LS0786\D, 2/28/00 (copy on file). Mr. Hand testified in support of the legislation on behalf of the sponsor. He acknowledged the good job that Alaska's many museums do in preserving the state's rich cultural heritage. Unfortunately, there are numerous artifacts in Alaska's museums that are currently in a quandary because the owners or lender of the property have lost contact with the museum. Lenders pass away or move without maintaining notice with the museum. Sometimes, there is little or no documentation as to the origins of items. This leaves museums in a difficult position since without contact with the lender or defined ownership by the museum, it is very difficult to properly care for these artifacts. Artifacts require care and maintenance over time. Some artifacts require maintenance/upkeep that could be potentially damaging to the property. It is even possible that an item has degenerated to a point where the best thing to do, is to dispose of the property. Without contact with the lender, museums are put in the unenviable position of having to care for these items without authority to do so. He maintained that museums cannot reasonably be expected to properly care for an item while simultaneously incurring liability for doing so. House Bill 218 establishes a process through which museums may clarify title on unclaimed objects. Mr. Hand outlined the process through which museums may clarify title on unclaimed objects. At least 7 years must have passed after the expiration date of the loan without any contact between the lender and museum. The museum must first send a notice by certified mail, return receipt requested, to the lender's last known address. If, after 30 days, no notice of delivery has been received, the museum then publishes notices for a period of 4 weeks in a general circulation newspaper in the area of the museum and in the area of the lender's last known address: - The notice states that the museum intends to take title to the property. - The bill specifically stipulates the information that must be included in the notices. Mr. Hand explained that if no response is received within a period of 65 days, the museum then sends another certified mailing to the last known address of the lender. If again there is no response, the museum then undertakes another round of newspaper notices for a period of two weeks. A lender still has legal recourse through a reclamation period of 2 years after the museum has taken title to the property. The bill also stipulates that a museum must take responsible steps in order to keep proper written records regarding loaned property, including notifying any lenders about a change of location of the museum. Also, under this act, museums must notify all new lenders of this statute. Mr. Hand concluded that the legislation provides for a course of action museums can follow in order to alleviate very serious problems that seemingly every museum in the state is encountering. There is strong support from those in the museum community who are working very hard to preserve Alaska's cultural heritage. Vice Chair Bunde questioned if notification costs could be absorbed with a zero fiscal note. He questioned how many certified letters would be sent to artifact owners. Mr. Hand observed that the department felt that the cost of newspaper notification would be minimal and could be included in the cost of doing business. He did not know how many letters would have to be sent. Vice Chair Bunde asked if loan contract agreements have provisions for forfeiture. Mr. Hand did not know. He added that the legislation would address undocumented items. MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT provided information regarding the proposed committee substitute. He noted that the first change occurred in section 2 of the bill. Section 2(a)(1) and (2) differentiate between loans with and without expiration dates. Redundant language was taken out of section 2(a)(2); the museum can take possession if there is no expiration date and seven years have passed. The telephone number of the museum representative was added in subsection (b) on line 11, page 2. Mr. Tibble continued to explain changed made in the proposed committee substitute. The third change occurred on line 21, page 2: "or" was added to clarify that notice would be provided by newspaper in the judicial district the museum is located and in the judicial district in which the lender's last known address or the county, borough or geographical organization of their last known address. The final change was on page 3, line 9: "at least" before "once a week" was added to provide consistency. Mr. Hand observed that the requirement for a telephone number was also added on page 4, line 5; and "at least" was also added page 4 and line 10. The sponsor agreed with the changes made in the proposed committee substitute. Vice Chair Bunde MOVED to ADOPT work draft 1-LS0786\D, 2/28/00. There being NO OBJECTION, it was so ordered. Representative Austerman questioned how estates would be handled. Mr. Hand clarified in the case of an estate that the heirs would be the titleholder of the property. Representative Phillips questioned why seven years was chosen and asked if it would be retroactive. Mr. Hand explained that the provision would be in affect for items that have been in the museum's custody for the previous seven years without contact from the lender. They would not have to begin another 7-year period. The seven-year period was chosen arbitrarily based on provisions in other states. KAREN CRANE, DIRECTOR, DIVISION OF LIBRARIES, ARCHIVES AND MUSEUMS spoke in support of HB 218. She observed that out of 25,000 objects that there are 85 objects that would be affected; 24 are unclaimed; the rest are undocumented. (TAPE CHANGE, HFC 00 - 42, SIDE 2) Ms. Crane explained that the cost of contacting owners would occur over a number of years. She did not anticipate that all 85 objects would be addressed in the first year. She observed that old airplane parts are among the unclaimed objects. These could be transferred or sold. It is expensive to maintain objects that the state does not hold title to. The legislation would cleanup problems encountered by the department. Representative J. Davies asked if there is a problem with the affective date of the bill. Ms. Crane indicated that effective date is not a problem. Vice Chair Bunde asked about forfeiture provisions. Ms. Crane responded that there is a forfeiture provision containing the same seven-year period. The timeline chosen for the legislation was modeled after the American Association of Museums. DONNA MATHEWS, EXECUTIVE DIRECTOR, MUSEUMS ALASKA, ANCHORAGE testified via teleconference in support of the legislation. She noted that the legislation would affect private museums around the state. All museums have some items that cannot be cared for, disposed of or transferred to other interested parties. The legislation provides strong guidelines for future practices and is clear and specific. DIANE BRENNER, ARCHIVIST, ANCHORAGE MUSEUM OF HISTORY AND ART, ANCHORAGE testified via teleconference in support of the legislation. She noted that in 1969 an old organ was brought to the museum for a temporary display. The owners disappeared. The museum wishes to dispose of the organ. The legislation would allow for disposal. BEA SHEPPARD, BOARD MEMBER, MUSEUMS ALASKA, JUNEAU testified in support of the legislation. She noted that Museums Alaska has supported the change for many years. She observed that abandoned property must be handled by an auction. In many cases museums wish to retain the property or turn them over to other museums. Representative Austerman questioned if there is a policy of trying to contact heirs. Ms. Sheppard responded that in many cases the museum does not know whom to contact. Co-Chair Therriault asked if the current practice is to enter into a written agreement. Ms. Crane explained that the current practice is to accept loans for a period of a year; if the museum desires to keep the object longer the loan is renegotiated. It is easier to find the heirs to the estate or the legal owners after only a year. Co-Chair Therriault provided members with a timeline showing the proposed schedule for acquisition (copy on file). He questioned if the process could be streamlined. Ms. Crane stressed the relationship of trust with owners and donors. Ms. Sheppard observed that the legislation is based on similar legislation in other states. She felt that the legislation is a good compromise and emphasized the need for private institutions. Vice Chair Bunde asked if the contract requires owners to be contacted at the end of a year. Ms. Crane noted that the obligation is on the museum to contact donors. Notification occurs before the year has ended. Vice Chair Bunde observed that museums would obtain title to objects that are in need of care and that there would be additional costs associated with the assumption of these objects. Co-Chair Therriault asked if the museum could take possession prior to seven years. Ms. Crane interpreted the legislation to require the museum to wait for seven years before taking possession. Ms. Crane felt that seven years is a reasonable period and reiterated the need to maintain trust with owners. She did not feel that the problem would occur in the future. Ms. Sheppard noted that the one-year period only pertained to the state museum and that there are up to 70 other museums in the state. Representative J. Davies asked if the legislation would preclude museums from entering into different contract arrangements. Ms. Crane responded that the museum would follow state guidelines. Co-Chair Therriault did not know if passage of the legislation would preclude other contractual provisions. Co-Chair Therriault observed that the museum would take possession before the requirement for the second notice expired. Ms. Crane thought that the legislation would provide for possession after the 65th day. Co-Chair Therriault questioned if the Committee would prefer a timeline that would be shorter and less expensive. Vice Chair Bunde spoke in support of a compromise between 60 days and seven years. Co-Chair Therriault clarified that it was not his intent for the museum to take possession as soon as the expiration of the contract occurred. Vice Chair Bunde noted that the Department of Public Safety has a one-year time period for dealing with property that comes into their possession. Vice Chair Bunde asked how many items the state museum has acquired in the last seven years without a contract. Ms. Crane stated that there have not been any acquisitions without a contract in the last seven years. Representative G. Davis pointed out that the statute would be unnecessary after the backlogs of past acquisitions have been addressed. Representative J. Davies expressed concern that museums not be precluded from entering into shorter contracts. Page 5, line 11 states that the provisions in the legislation would govern over conflicts in other state law. Co-Chair Therriault did not expect that the museum would hear from anyone that has not contacted them over the past seven years. He questioned if the expense of two newspaper notifications was warranted. He stressed that the intent is to take care of the backlog of items and felt that the legislation could be streamlined to shorten the time period and reduce the costs of notification. Ms. Crane acknowledged that the intent of the legislation is to address old objects. Ms. Sheppard agreed that the concern is to take care of the backlog. Co-Chair Therriault acknowledged that the intent is to address backlog but pointed out that the legislation would pertain to future purchases as well. HB 218 was heard and HELD in Committee for further consideration.