SB 5-RESTITUTION: PROPERTY AND INCOME LOSS  1:07:07 PM SENATOR PETER MICCICHE, Alaska State Legislature, said SB 5 strengthens Alaska restitution laws, assists in restoring crime victims to a pre-offense condition, and protects the property interests of all Alaskans. According to the 2013 Department of Public Safety Annual Report, Alaskans suffered over $23 million in loss due to property crimes, which is up more than 12 percent since 2011. A fundamental component of Alaska court ordered restorative justice is making crime victims whole. He explained that SB 5 addresses a language inconsistency in statutes speaking to restitution as a provision of sentencing, and the statutes have a provision of probation resulting in persons and businesses affected by crime receiving compensation [only] for loss and victim restitution orders. He noted that SB 5 reconciles this inconsistency under a provision of sentencing adding a public policy consideration calling for offenders to compensate victims for damages and injury, including loss of income. The bill defines loss of income as a total loss of income a business or person may lose due to not having stolen property available for the period of time it takes to replace that property, he stated. The new language directs courts, while making determinations of loss for restitution, to value property as the market value of the property at the time and place of the crime, or a reasonable time after the crime. The bill amends, as a condition of probation, establishing the same standard as in AS 12.55.045, and restitution as a condition of sentencing. 1:09:12 PM SENATOR MICCICHE pointed out that current inconsistency in Alaska's restitution laws contributed to a recent Alaska Appellate Court decision that is problematic to Alaskan and their property interests. The 9th Circuit Court of Appeals found in Lori S. Welsh v. State of Alaska, No. A-11197 (2013), that restitution orders, as a condition of sentencing or probation, would be restricted to actual damages or loss suffered by the victim. In that regard, there is no consideration of the market value of the property or loss of income to the crime victim. He offered that within his district there have been a rash of drug related crimes where folks are looking for money for additional drugs. Within his district, he described, there is a small water well drilling company and some folks broke in one night and literally trashed that vehicle for all of the copper on board, the welding leads, and all the wiring harnesses. He commented that the company was out of business for weeks and it was within the portion of the season with the highest amount of activity. The way the law stands, he explained, the court is [not] instructed to consider loss of income in restitution. The bill reconciles that inconsistency in the restitution orders so that the law clearly considers loss of income as a real loss to persons and businesses, and the court should make that consideration when determining restitution orders. He observes the rights of perpetrators but, he expressed, prefers to protect the rights of victims higher with just and fair restitution orders from the courts. He described SB 5 as a substantial step in that direction. 1:11:17 PM CHUCK KOPP, Staff, Senator Peter Micciche, Alaska State Legislature, advised that Section 1 of the bill clearly states public policy preference that the court consider loss of income in issuing restitution orders. He reiterated Senator Micciche in that Sec. 2 adds a new definition for loss of income specifying the inclusion of the total loss of income that a business or person suffers as a result of not having this property available for the period of time it takes to replace the property. He pointed to Sec. 3 and remarked that it directs the court when making determinations of loss for restitution to [include the] value of property as the market value at the time and place of the crime, or if that cannot be easily ascertained the cost of replacement. He extends this is taken directly from AS 11, criminal statutes where the courts determine value under the criminal law for property so it is the same language commonality in statute there. He explained that Sec. 4 speaks to conditions of restitution as a provision of probation and it makes amended language so that it is consistent with conditions of restitution for sentencing stating, "the court will determine the amount of actual damages or loss under the paragraph by valuing property as the market value of the property at the time and place of the crime, or if it cannot reasonably be ascertained the cost of replacement of the property within a reasonable time after the crime." The language brings in line the provisions of restitution under sentencing and the provisions of restitution under probation so that the standard is the same and the court, in both circumstances, he explained, can consider the loss of income to businesses and persons in determining restitution orders. He related that it is not mandatory as the law declares that the court will consider this. He reiterated Senator Micciche's comments in that the retail value in many cases is properly recognized as the replacement cost, and additionally, it is not just the items stolen but the cost of project delays and project cancelation. Off road system [theft or damage] can cost the season and liquidated damages begin depending upon what is stolen or damaged from the job site and, he related, how long it takes to replace that property. There is broad based support for SB 5 from businesses and persons across Alaska, he opined. 1:14:08 PM REPRESENTATIVE GRUENBERG asked whether the bill deals with loss of income and valuation of property. MR. KOPP answered in the affirmative. REPRESENTATIVE GRUENBERG offered his concern regarding valuation of property in that the bill requires the court to value the property "at that amount, using that standard," which is different from just requiring the court to take into account the loss of income. He questioned whether the intent is to require the court to use that measure of value, and pointed out there different methods of valuing property, such as, the cost of replacement or, in the area of income producing property to value it as stolen income producing property that was stolen, which would be similar to dealing with loss of income. Another method in reviewing the value of similar properties could be that someone shoots an unreplaceable prized animal, but would be [evaluated] as similar animals. He suggested that the sponsor may consider giving the court discretion in making determinations. Representative Gruenberg referred to [page 2], lines 16, 28-19, and suggested the following language: "value property at the market value," thereby substituting "as" for "at." Connected with that, the term normally used at the law is the "fair market value" and he recommended using the term as it is in the law. One of the really harsh rules is when a person is insured and their car is totaled, it is valued on a basis that is not the replacement cost but much less, he remarked. CHAIR LEDOUX asked that Representative Gruenberg stay with issues related to SB 5. 1:18:39 PM SENATOR MICCICHE responded that this bill language is permissive and does not dictate the method of valuation as each case will differ depending upon the circumstances. He advised that the intent of the bill is that not every Alaskan can go to Costco and purchase a new generator [that day] as it may have to be shipped on a $2,000 flight across the Inlet. He offered a scenario of someone in a boat, stealing a generator, is then caught, and the thief does not owe the victim for a $1,000 generator - they owe the victim for a $3,000 generator. The intent of the bill is that the court consider the actual cost of that object at the site at the time [of theft] and, pointed out that the bill is permissive enough to not steer the court on how it will value each item, rather that the actual value of the item is considered. REPRESENTATIVE GRUENBERG suggested that rather than requiring [the court] to value it, add the language crafted at the beginning of the bill. 1:19:59 PM MR. KOPP replied that this issue came up in the other body and the language on page 1, lines 14-15, is clearly permissive as it reads, "In determining the amount and method of payment of restitution or compensation, the court shall take into account ..." He offered the language does not tell the court ... REPRESENTATIVE GRUENBERG argued that it deals with loss of income, the suggestion he previously made deals with damage or loss of restitution. MR. KOPP explained that the entire section deals with restitution orders and sentencing, a predecessor to Sec. 2, which is permissive. It reads that a public policy favors requiring criminals to compensate for damages and injury, including loss of income. He offered that loss of income is internally consistent in that section as it is stated later in the same section with respect to someone who might steal commercial fishing gear, set net gear, drift gill net gear, or trolling gear that the court will consider loss of income in that consideration, "again, consider loss of income." He pointed out that the reference to "considering" is consistent "taking into account" is consistent throughout the statute and is something that is not a new concept, and highlighted it as a public policy priority. 1:21:49 PM CHAIR LEDOUX related that the time for amendments has passed and she will not slow down the bill at the end of the session for an amendment which could have been made and been introduced to the House Judiciary Standing Committee in compliance with the 24- hour rule. REPRESENTATIVE GRUENBERG pointed out that he does not believe that subsection (o) is limited to loss of income. MR. KOPP submitted that market value is a well-defined term in criminal law under AS 11.46.980, which is the same standard used by the courts to determine property valuation with respect to thefts and burglary in property crimes. 1:23:06 PM REPRESENTATIVE CLAMAN opined that as a statistical matter the public defender would say that 80-85 percent of criminal defendants are public defender eligible and usually do not have a lot of money. He questioned whether this changes the court's fundamental obligation to make a determination about the ability to pay or set restitution schedules consistent with how much money the defendant can actually earn. He advised he supports restitution and also does not like the idea of creating debtor's prisons or sending people back to prison because they can't pay. He asked how the bill impacts the obligation of the ability to pay. SENATOR MICCICHE explained that current Alaska law does not allow a person in prison solely due to the inability to pay under AS 12.55.051(a) and (c). He offered that perpetrators of a crime usually have no idea of the ultimate value of the damage and his goal is to get the perpetrator out of prison as quickly as possible, turn their lives around, and be put on a reasonable restitution payment plan. He further offered that AS 12.55.051[(c)] reads: ... If, at a hearing under this subsection, the defendant proves by a preponderance of the evidence that the defendant will be unable through good faith efforts to satisfy the order requiring payment of the fine or restitution, the court shall modify the order so that the defendant can pay the fine or restitution through good faith efforts ... SENATOR MICCICHE pointed out there is no potential for a debtor's prison in Alaska law, and no value to the victim even when retrieving cents on the dollar. He opined that it largely represents the expectation of the perpetrator to do their best to provide restitution to the victim. 1:26:01 PM REPRESENTATIVE CLAMAN submitted that a generator could be running for 10-years before being stolen and the old generator is worth less than $500, but the practical reality of locating a 10-year old replacement is hard to imagine. He surmised this bill allows the court make the determination of [replacement] value. SENATOR MICCICHE responded he has faith that common sense will prevail. CHAIR LEDOUX opened public testimony. 1:28:00 PM CHRIS NETTLES, President, GeoTek Alaska, Inc., said he is testifying on behalf of the National Federation of Independent Business, and as primary owner of GeoTek Alaska. He pointed out how important it is to a business to strengthen restitution laws, and offered that within his business a snow machine was stolen from an off-road site, and fortunately it was stolen after the project had been completed. However, he said, had the machine been stolen before the project, his business would not only have undergone the cost of replacing the snow machine, but the cost of getting another one to the site. On top of that issue, a company may be under contracts and standby costs, and suffer liability or loss due to not meeting the contract time. When reviewing the cost of an item or damage performed by a perpetrator, it is not just the cost for that item as there are many other costs possibly included for one item that is essential to a project. It is important that victims receive restitution from perpetrators, if possible, he expressed. CHAIR LEDOUX closed public testimony after ascertaining no one further wished to testify. 1:31:44 PM NANCY MEADE, General Counsel, Administrative Staff, Alaska Court System, [Advised she is available to answer questions.] REPRESENTATIVE GRUENBERG offered his concern regarding Sec. 3-4 of the bill and opined that subsection (o) which will be added in Sec. 3, would not be limited to a determination of loss of income language at page 1, "requiring the court to take that into account." He further opined the new subsection (o) would not be permissive but would require the court to value the property at the fair market value. MS. MEADE responded that the legal interpretation of the bill is something the court system does not normally provide as it would be a better question for Legislative Legal and Research Services. She offered that from the court system's point of view, this does clarify how to apply some currently inconsistent statutes, which the court can easily apply. At restitution hearings there are currently arguments and discussion brought forth regarding valuation of property, she explained. This bill offers more guidance for the court which, she noted, is something the judges appreciate and reiterated it clarifies some inconsistencies. She did not see a problem with courts applying it as written, she remarked. 1:34:16 PM STACI SHROEDER, Assistant Attorney General, Legal Services Section, Department of Law, asked Representative Gruenberg to briefly restate the question. REPRESENTATIVE GRUENBERG turned to Sec. 3, and asked whether that subsection would only apply to property involved in loss of income. He opined it is a standalone section under restitution and compensation, AS 12.55.045, not all of which involves income producing property or property involved in the loss of income. He surmised that subsection (o) applies to income producing situations and non-income producing situations. 1:35:42 PM MS. SCHRODER answered that she reads subsection (o) as applying to the entire statute and not being limited in clarifying how the court should value property. REPRESENTATIVE GRUENBERG agreed that it is just not a factor to be taken into consideration, but "in a non-income situation the court would have to value it at that method." He opined it is not all bad, but there may be other ways the court would want to have some leeway. REPRESENTATIVE KELLER pointed out that is not necessarily bad as it applies to all restitution compensation. 1:36:38 PM The committee took an at-ease from 1:36 to 1:38 p.m. 1:38:50 PM CHAIR LEDOUX referred to the discussion of whether or not there is a grammatical error on [page 2], lines 16, 28-29, which read: ... shall value property as the market value of the property ... CHAIR LEDOUX submitted that the sponsor does not believe it is a grammatical error. SENATOR MICCICHE pointed out that when reading the whole sentence "the court shall value property ..." which is taking the value and valuing it "as" the market value of the property. He said that "at" the market value of the property would be looking at one singular item. The bill says, "it is valued as the market value of the property," and he does not see it as a grammatical error as it fits, it went through the Department of Law, and Legislative Legal and Research Services, who all agreed that is the correct language, and for all intents and purposes it is fully functioning as written. 1:40:02 PM REPRESENTATIVE KELLER moved to report SB 5, labeled 29-LS0109\H, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 5 moved from the House Judiciary Standing Committee. 1:40:28 PM The committee took an at-ease from 1:40 to 1:44 p.m.