Chairman Black explained that it is his intent to have the agencies with
pending, temporary, and fee rules present a brief overview of those rules to
the entire committee, and then the rules will be submitted to subcommittees
for further study and recommendation.

Chairman Black also announced that he had arranged times for visits to
most of the state agencies that appear before the Business Committee.
These visits are scheduled on regular meeting days; all members are
welcome to participate; new members are particularly encouraged to do so.
Chairman Black explained that such visits are helpful because they
familiarize the legislators with agencies and enable them to better meet
constituents’ needs in the future.

24-0401-0201

Rep. Tilman questioned Ms. Jacobsen about the equivalency exam portion
of the rules, asking whether the “Department of Education” meant the U.S.
Department of Education or the State of Idaho Department of Education.
Ms. Jacobsen responded that her licensing board, in an effort to establish a
more uniform measure of achievement, would use the State Board of
Education’s equivalency tests. Ms. Jacobsen agreed to provide Rep. Tilman
with a list of the tests offered by the State Board of Education. It was
suggested that this matter could be pursued in greater detail in the
subcommittee assigned to study the Board of Cosmetology Rules.

Rep. Gagner asked whether it was realistic to expect that an out-of-business
shop would notify the Cosmetology Board, and suggested that the Board
would know a firm was out of business if it didn’t renew its license. Ms.
Jacobsen responded that this was not always the case, and that this rules
change will give the Board a better gauge of who is in business and where
they are located.

24-1801-0201

EXCUSED:

Chairman Black explained that today’s meeting will include an overview of
Rules changes from the Department of Insurance and the Real Estate
Commission, as well as appointment of subcommittees to study the Rules
in greater detail and recommend action to the full committee.

33-0101-0201

33-0102-0201

33-0101-0202

33-0101-0301

18-0119-0201

18-0117-0201

18-0118-0201

18-0132-0201

18-0142-0201

18-0143-0201

18-0148-0201

18-0149-0201

18-0150-0201

18-0152-0201

18-0153-0201

18-0154-0201

created by Benefits Improvement and Protection Act. There has been no
opposition to this rules change.

18-0155-0201

18-0162-201

18-0165-0201

18-0178-0201

Chairman Black then asked Vice Chairman Gagner to preside over the
meeting in order to explain the committee’s approach to dealing with Rules
reviews. Rep. Gagner passed out a copy of guidelines handed out at the
Administrative Rules Review Workshop, and suggested that members
familiarize themselves with the process as contained in the handout. He
also proposed a January 31 deadline for completing the work on Rules.
Rep. Gagner then assigned the following subcommittees:

Henbest Subcommittee: Rep. Henbest, Chairman; Reps. Eberle, Douglas.
This subcommittee will study Rules from Occupational Licensing, Board of
Accountancy, Engineers & Land Surveyors, and Real Estate Commission.

Collins Subcommittee: Rep. Collins, Chairman; Reps. Block, Rydalch,
Deal. This subcommittee will study Rules from the Department of Insurance.

Smith Subcommittee: Rep. Smith (30), Chairman; Reps. Cannon,
Snodgrass, Gagner. This subcommittee will study Rules from the Division
of Building Safety.

Chairman Black recognized Karen Gustafson, Office of Administrative
Rules, to respond to questions and to explain the options open to
committees with regard to acceptance or rejection of Rules. Ms. Gustafson
stated that a committee may reject an entire docket or any part of a docket,
but may not revise the portions to which they object. Pending Rules will
automatically go into effect if they are not rejected; Pending Fee Rules and
Temporary Rules will not go into effect without affirmative action by the
Legislature.

Chairman Black advised the subcommittees that they can take public
comment in their meetings on Rules. He also recommended that they work
through the Business Committee secretary to coordinate subcommittee
meeting dates, times, and rooms, in order to assure that someone will be
available to take minutes and provide an official record of the meetings.
Chairman Black also noted that, if a particular Rule does not seem to be
controversial, it may not be necessary to have those agency personnel
appear at the subcommittee’s meeting.

Chairman Black reminded the committee that any interested members were
invited to visit the offices of the Board of Accountancy and the Bureau of
Occupational Licenses immediately following adjournment, to meet their staff
and take a brief tour of their operations.

EXCUSED:

01-0101-0201

Docket No.

01-0101-0202

Rep. Henbest asked why the fee for a licensee in an inactive/retired status
is $100. Ms. Porter responded that this is a lower amount than the $120
charged for an active accountant, and it allows persons in industry or
academia who are not providing accounting services to maintain a license
without having to meet continuing education requirements. The license fee
is lower because the cost to the Board to administer these licenses is lower.

Rep. Gagner asked why the license fee increases by $50 each succeeding
month, and wondered why a person with an expired license would not simply
apply for reinstatement, which may cost less. Ms. Porter replied that if one
applies for reinstatement, he or she would have to complete 80 hours of
continuing education, which is double the usual amount for renewing a
license.

Ms. Porter continued to explain the changes involved in the new rules. She
stated that the fees associated with this docket are all the same as
previously assessed, with three exceptions: First, examination fees have
increased by approximately $14 to cover the higher charges from the
American Institute of CPAs. The other two fee changes are tied to new
license categories: Inactive or Retired, and Practice Privileges for licensees
residing in other states.

01-0101-0203

Rep. Rydalch asked Ms. Porter whether these fee changes had been
advertised to the public. Ms. Porter stated that they had been included in
mailings to individuals, and that there had been no negative comments
received by the Board of Accountancy.

10-0101-0201

There are other minor changes effected by this rule docket, including
lowering the retirement age from 65 to 60. This extends retired status to
younger engineers or land surveyors who may want to continue receiving
mailings and continue their affiliation with the Board. The registration fee is
$5 for retired status, and those within this group are not allowed to practice.
Finally, this docket specifies that the Board may post disciplinary orders on
the Internet, for a period of up to ten (10) years. Responding to questions
from committee members, Mr. Curtis said that the 10-year time frame seems
fair, and that the Internet publication is in addition to notifications printed in
other publications.

01-0102-0201

Rep. Henbest noted that the language on page 5, line 42, sounds arbitrary.
Mr. Curtis responded that the Board will request a copy of the actual
examination used by Canada, for instance, in order to judge the level of
competency required. If the examination is not shared, the Board will not
grant a license. Rep. Tilman asked whether this language is similar to that
used in other states, and Mr. Curtis responded that it is similar to the model
law.

David Couch, Legislative Chairman of the Idaho Society of Professional
Land Surveyors, appeared before the committee to testify in favor of H 53.

EXCUSED:

18-0119-0201

Rep. Collins asked Mr. Priest about the method used for compliance to this
rule, and whether the Department would have to wait for a complaint against
a company before any action could be taken. Mr. Priest explained that there
were two options available: 1) The Department could require that every
company file a copy of its methods of credit scoring for Department review,
or 2) The Department could put the burden on the companies to make sure
that their use of credit ratings is within the parameters outlined by the new
rule, subject to penalties. Mr. Priest said that the first option is not a
workable solution because the Department does not have the staff to review
policies from every insurance company.

18-0117-0201

18-0118-0201

Rep. Deal asked if this replaced the “white list;” Mr. Priest answered that it
does not, explaining that the “white list” is a list of insurers authorized to offer
surplus lines in the state. Rep. Rydalch asked Mr. Priest to give an example
of a situation in which this rule would come into play. Mr. Priest cited the
example of race car insurance, noting that if no Idaho companies were
offering such insurance coverage, this could be an eligible line for export,
meaning that the race car owner could go directly to a surplus lines broker
without checking with three Idaho companies first.

18-0132-0201

18-0142-0201

18-0143-0201

18-0148-0201

Rep. Deal asked Mr. Priest whether it might be necessary or advisable to
make it easier for an insured to find out why his rate has increased so
substantially. Mr. Priest answered that the NAIC Rule did not deal with this
question, and that it would have to be done legislatively.

18-0149-0201

18-0150-0201

18-0152-0201

Rep. Collins asked Mr. Priest to point out where it was required that the
disclosure take place up front, before the transaction. Mr. Priest pointed out
that on page 165, the disclosure is to take place “before charging a fee to a
consumer.” Rep. Deal asked whether this disclosure requirement applied
to transactions between brokers; in response, Mr. Priest noted that this
requirement applies only to retail producers, not to wholesale transactions.

18-0153-0201

18-0154-0201

created by Benefits Improvement and Protection Act. There has been no
opposition to this rule change. In response to a question from Rep. Collins,
Mr. Priest said that he was not sure what would happen if this new rule was
not adopted.

Rep. Rydalch asked Mr. Priest is there was any way to prevent a consumer
from paying premiums on two separate policies for Medicare supplement
insurance. Mr. Priest suggested that a consumer in this state could contact
the Department’s Senior Health Insurance Benefits Advisors (SHIBA)
program. He also said that it is not uncommon for a consumer to end up
with overlapping charges. Rep. Collins noted that, although an agent is
prohibited from duplicating coverage, there is nothing to prevent a consumer
from keeping both policies in place even though an agent has signed a
replacement form during the second transaction. In response to a question
from Rep. Deal, Mr. Priest stated that all the changes in this rule benefit
policyholders.

18-0155-0201

18-0162-201

18-0165-0201

18-0178-0201

EXCUSED:

Ms. Jacobsen stated that the purpose of this bill is to revise the renewal
dates for occupational licenses, switching from two times a year, in January
and June, to correspond to each license holder’s birth date or to the date of
initial operation in the case of a business. This new renewal dating system
will spread the work load throughout the year and will save staff time and
money.

Rep. Gagner asked whether the Bureau would be able to reduce their staff;
Ms. Jacobsen replied that they would not, but that the time savings would
result in better service from their office. Rep. Meyer noted that currently,
athletes’ agents are required to register but are not required to obtain a
license; Ms. Jacobsen replied that her bureau will be bringing forth a bill to
require such licensing in the near future. Rep. Tilman asked whether the
Bureau anticipated any negative effects from the switch, and Ms. Jacobsen
replied that they expected the first year following the change to produce
more questions and dialogue with licensees until they understand the new
system. She also noted that the fees for the first year will be prorated,
depending on the person’s date of birth during the calendar year.

In response to further questions from the committee, Ms. Jacobsen stated
that the effective date for this change is July 1, 2003. There is no test
involved in license renewal; rather, the applicant simply pays a licensing fee
each year. The Board has considered multi-year licensing, but has not
agreed to implement it because there is some opposition to doing this.
Renewals can be registered online, and in the past year, over 700 licensees
took advantage of this method.

07-0103-0201

07-0104-0201

07-0106-0201

07-0204-0201

07-0206-0201

07-0301-0201

07-0302-0201

07-0303-0201

07-0305-0201

07-0306-0201

07-0307-0201

07-0310-0201

07-0310-0202

07-0312-0201

07-0308-0201

There being no further business to come before the committee, the meeting
was adjourned at 2:35 p.m.

EXCUSED:

Rep. Kellogg asked whether the wording on the Statement of Purpose,
which reads,”There is expected to be no fiscal impact to the state’s General
Fund,” meant that there could, in fact, be a fiscal impact. Mr. Priest testified
that the wording probably should have been “There is no fiscal impact to the
state’s General Fund.” Rep. Kellogg suggested that the Statement of
Purpose should be corrected to reflect the new wording.

Rep. Black asked what authority the department has to evaluate the types
of investments made by insurance companies. Mr. Priest responded that
other sections of the Code allow the department to evaluate investments and
to disallow certain types of investments that they think are inappropriate.
Rep. Gagner noted that appraisers have to be certified in Idaho, and asked
whether the department should specify that a “certified” inspector should be
used. Mr. Priest said that the department’s interest is in getting an
independent appraiser, and that the word “competent” in the proposed
legislation will cover the need for certification. Rep. Cannon asked whether
the bill would force companies to sell assets. Mr. Priest explained that the
intent was to avoid this. An insurance company can invest only a certain
percentage of its assets in any one fund family, and if that investment
appreciates, that appreciated value could cause the company’s percentage
in that fund company to exceed the allowable percentage. Thus, if the
department uses the initial cost of the investment rather than the appreciated
value, this will avoid the necessity of selling some investments to re-establish
the acceptable percentages.

Mr. Priest also presented an amendment to H 61, which adds clarifying
language to the bill to make it clear that criminal action will arise only for a
violation of the Code, not for Rules violations.

In response to questions from the committee, Mr. Priest stated that this area
has not been a huge problem for the department, but that, without any
effective penalties, there is currently no good way to enforce the rules. The
$1,000 and $5,000 amounts are maximums that may be charged, and are
not automatically imposed. The director of the department has authority to
decide whether or not a penalty would apply.

EXCUSED:

10-0101-0201

Docket No.

10-0102-0201

Mr. Curtis then explained that Docket No. 10-0102-0201, which changes
terminology from “infraction” to “violation.”

01-0101-0201

01-0101-0202

01-0101-0203

Rep. Block stated that she had heard some concern from constituents that
increasing the examination fee may discourage college graduates from
taking the exam. Ms. Porter stated that the Board had not addressed this
possibility, but that the individual applying for an exam should be responsible
for those fees. In some cases, a candidate for the CPA exam is already
working in a CPA firm, and many firms absorb the cost for that candidate’s
exam. Ms. Porter also pointed out that the proposed fee increase goes
directly to reimburse the actual cost of the exam, and that this is the first
increase in ten years. In response to Rep. Block’s concern about fewer
candidates taking the exam, Ms. Porter said that the number of examination
candidates had temporarily dropped, but that she thought the drop could be
attributed to the requirement for a fifth year of education before taking the
exam. The numbers of candidates sitting for the exam are now moving back
up.

Rep. Eberle asked Ms. Porter to explain what effect H 485 had. Ms. Porter
testified that H 485 was a comprehensive bill that was the result of several
years of negotiation throughout the state. It adopted model language used
at the national level, in an effort to establish more standardized procedures.

MOTION

In explanation of her motion to reject, Rep. Block again said she had
received communication from some constituents who were concerned that
the higher fees will discourage college graduates from taking the CPA exam.
Rep. Henbest stated that the proposed fee increases represent a pass-through expense, and that if the rule is rejected, the higher examination
costs will have to be absorbed by the Board of Accountancy, which will have
to recover those additional costs from the entire group of licensees in the
form of higher fees. Ms. Porter agreed, stating that the higher examination
fees were not developed by the Board, but rather were reflective of higher
charges by the American Institute of CPAs, who develop and provide the
examinations. Rep. Eberle pointed out that new college graduates who are
applying to take the CPA exam have gone to college specifically to become
accountants, and he doubted whether the slightly higher fees would have a
negative effect on the numbers of those graduates taking the exam.

24-0401-0201

24-1801-0201

33-0101-0201

33-0101-0202

Rep. Eberle asked how long real estate agents had been required to have
errors and omissions insurance. Ms. Koster replied that this requirement has
been in place since 1994. Ms. Koster also provided an explanation of the
kinds of things that E&O insurance might cover; Ms. Jones added that, in
some cases, a homeowner may also consider civil action or an action
through the Commission’s Enforcement Division.

33-0101-0301

EXCUSED:

Rep. Snodgrass asked whether this applied only to new construction. Mr.
Eaton stated that it would apply to new construction and also “substantial
remodel” of an existing home. Substantial remodel is defined as being a
remodeling project that costs in excess of 50% of the home’s assessed
value. Rep. Eberle asked whether a kitchen remodel, which may cost
$20,000, would not be covered under this legislation; Mr. Eaton replied that
it would not.

Rep. Douglas asked Ms. Jacobsen whether there had been any objections
to this bill filed with the Bureau. Ms. Jacobsen said that the Bureau had
notified all high schools and coaches in the state and had posted this
proposed change on its website for many months, and no objections had
been filed. She also noted that Sen. Denton Darrington supports the bill.
Rep. Henbest commented that it appeared as if the licensing requirements
did not include any work experience or specific education in order to be
licensed as an athlete agent. She also asked whether other states are
licensing such agents. Ms. Jacobsen responded that most other states
register agents, but that Idaho does not have provision for “registration” of
agents, only for licensing.

Rep. Snodgrass asked whether this legislation will prevent parents of a
young athlete from acting as an agent unless they are licensed by the state.
Ms. Jacobsen stated that it would not. Rep. Gagner noted the importance
of making sure an athlete understands that he or she may lose eligibility for
scholarships if a contract is signed with an agent, and he wondered whether
the legislation should specifically state that. Ms. Jacobsen testified that the
language used in the bill is in compliance with national legislation. Rep.
Smith asked whether other states are also moving toward licensing athlete
agents. Ms. Jacobsen said she did not have information about the number
of states that may be doing so, but she does know that other states are
concerned about this possible problem for student athletes.

Rep. Tilman noted that the difference between “registration” and “licensing”
is largely a semantic difference, and that the intent of the legislation is what
should be primarily considered. The intent is to allow the State of Idaho to
get out in front of a potentially large problem and, as far as possible, prevent
it from occurring. Rep. Henbest asked whether Ms. Jacobsen thought that
requiring licensing was going to bring about a higher level of compliance
than requiring registration. Ms. Jacobsen said she did not know whether it
would or not. Rep. Snodgrass noted that an unscrupulous agent can still
prey on athletes, whether he is licensed or not. Ms. Jacobsen stated that the
Bureau has made great effort to contact high schools and coaches
throughout the state to educate them about potential problems for athletes,
and that, if this bill passes, coaches can at least ask for proof of licensure
from agents, which may help to ameliorate the problem of unscrupulous
agents preying on athletes. The Bureau’s intent in this legislation is to be in
compliance with the Code in terms of licensing rather than registering
agents, and Ms. Jacobsen stated that the Bureau will continue to educate,
inform, and try to weed out any disreputable agents.

Ms. Schaefer explained that most of the changes contained in this bill are
changes in definitions and removal of outdated language. She stated that,
on page 9, the makeup of the board is detailed; the board will consist of a
member of the House of Representatives, a member of the Senate, an
expert in finance and insurance, an expert in groundwater mediation, and
three participants from the industry, to include a large petroleum distributor,
a small petroleum distributor, and a petroleum retailer.

Rep. Black asked about the compensation given to members of the Board.
Ms. Schaefer testified that the compensation of a $50 per diem, plus
expenses, is equivalent to the amount paid to members of other state boards
and agencies, as stipulated in Section 509. Rep. Douglas asked whether
this deals primarily or exclusively with gas station tanks, or whether farm
tanks were included. Ms. Schaefer stated that the Code allows different
types of petroleum tanks to be insured, although the vast majority are gas
station tanks. However, farm tanks could be included, as could above-ground tanks.

EXCUSED:

Rep. Gagner asked whether this change will be included in the rules
submitted to the committee next year. Mr. Corbell answered in the
affirmative.

Ms. Schaefer explained that about 95% of the changes contained in this bill
are changes in definitions and removal of outdated language. She stated
that the makeup of the board is detailed on page 9; the board will consist of
a member of the House of Representatives, a member of the Senate, an
expert in finance and insurance, an expert in groundwater mediation, and
three participants from the industry, to include a large petroleum distributor,
a small petroleum distributor, and a petroleum retailer. Ms. Schaefer also
testified that other states are currently considering Idaho’s successful
legislation in this matter.

Ms. Schaefer acknowledged the presence of Jim Alcorn from the State
Insurance Fund, Dennis Baird from Baird Petroleum, and Michael Backe
from Olympus Technical Services.

Mr. Alcorn responded to several questions from committee members,
explaining that the State Insurance Fund acts as a third party administrator
for the Petroleum Storage Tank Fund. Mr. Alcorn noted that the Petroleum
Board will provide knowledgeable people in the field of petroleum who will
be able to help the State Insurance Fund in the administration of the storage
tank fund. The amount of the trust fund is currently $40 million; no new fuel
tax revenues are being generated at the present time. The current ceiling
for the fund is $20 million, and the floor is currently $15 million. Mr. Alcorn
explained that the $40 million total includes $28 million in unencumbered
surplus, plus “eligible but not insured” funds, plus reserves for claims. Mr.
Alcorn also testified that the Petroleum Clean Water Trust Fund has a
certificate of authority from the Department of Insurance, and the
Department oversees the Fund in the same way that it oversees insurance
companies.

Rep. Tilman asked Mr. Cameron to explain how a cardholder could file an
action, as detailed on page 2, line 4 of the bill. Mr. Cameron stated that this
would be undertaken like any other civil lawsuit; any penalty paid would be
paid into the general fund, not to the individual. This provision should
discourage frivolous lawsuits. Rep. Meyer asked about the potential cost to
businesses who have to convert their credit card equipment. Mr. Cameron
explained that most businesses make changes by changing software and
thus the cost is minimal. Furthermore, businesses tend to update the
software periodically, and thus most of them recognize that they will need to
do this soon anyway. Mr. Cameron stated that the legislation did try to take
into account the expense to small retailers, and that was the reason for
exempting sliding (mechanical) credit card machines.

Rep. Henbest asked whether this legislation would affect online retailers or
catalog purchases; Mr. Cameron answered that those transactions are not
under the control of state legislation. Rep. Henbest also asked whether
governmental agencies would be covered by this new requirement; Mr.
Cameron stated that they would be, but that the cost to the agencies is not
anticipated to be a problem, since it will be minimal. Rep. Gagner asked
whether this requirement will eventually be extended to imprinted receipts as
well. Mr. Cameron stated that there is nothing planned in that regard; he
also stated that there are still many people who use mechanical card
machines.

Rep. Eberle asked why the restrictions had not, in fact, been extended to
imprinted receipts. Mr. Cameron explained again that this exemption was
included in order to lessen the possible financial burden on small
businesses, who are the majority users of that type of receipt. Rep. Eberle
asked whether it would be possible to block out the information on the extra
copies of such a receipt. Rep. Tilman noted that he had, in fact, seen
receipts with account numbers partially or totally blacked out on some of the
copies, and he thought this could be done eventually.

EXCUSED:

Rep. Deal asked Mr. Roden to briefly summarize the key points of the
legislation, including the differences from last year’s bill brought by the Beer
& Wine Distributors Association. Mr. Roden stated that, first, the bill adds
the stipulation “within the state of Idaho” when discussing restrictions
imposed on distributors. Also, this bill specifies that termination will not be
allowed “without good cause;” the time frame allowed to correct deficiencies
remains at 90 days. Mr. Roden stated that last year’s bill had retroactive
provisions, but that these had been removed, since the courts said the
conditions could not apply retroactively. Also, Mr. Roden pointed out that the
definition of “good cause” is taken directly from the beer code.

Mr. Roden further explained that, in the current climate, large conglomerates
are often buying up smaller vintners, and the large companies may have
existing distributors which take over from the distributors of the smaller
vintners. The small vintners’ distributors have already built up a retailer base
and are negatively impacted when such a transaction takes place. The bill’s
intention, according to Mr. Roden, is to level the playing field.

Rep. Deal asked whether local governmental agencies could license
mortgage agents; Mr. Gee responded that this would limit licensing to the
state. Rep. Gagner asked about the activities of an “agent” versus those of
a “licensee” as delineated on lines 32-34 of page 1. Mr. Gee said that an
agent would generally be an employee of a mortgage company.

Teri Ottens, Executive Director of the Idaho Association of Mortgage
Brokers, testified in favor of H 28. She noted that this legislation is the
result of three years of work with the Department of Finance, and that it will
protect and enhance the powers of the Department of Finance to enforce
federal laws with regard to predatory lending practices. Ms. Ottens stated
that she believes this legislation is good for consumers and for the lending
industry as well.

Rep. Black asked how this legislation would apply to mortgage bankers.
Ms. Ottens testified that she has been in touch with bankers and that they
have no problem with the legislation.

Kathy Smith, Millennium Mortgage, testified in favor of H 28. She stated
that the mortgage brokers are all in agreement with the proposed legislation.

Rep. Kellogg asked whether Mr. Eaton had any contact with northern Idaho
building contractors; he replied that they are members of the Idaho Building
Contractors Association, and they have had input on the bill. Rep. Henbest
asked what is behind the buildup in liability costs, and asked whether this is
a national problem or a local Idaho problem. Mr. Eaton stated that there are
always a few “bad actors” in any field, and the construction trades are no
different. He also said that some trial attorneys have taken a particular
interest in building defects, and that they are encouraging homeowners to
file lawsuits. He noted that, so far, Washington, California, and Arizona have
passed similar legislation, and that 15 or 20 other states are considering it.

Rep. Cannon asked whether this was unnecessary legislation, since
building contracts should contain provisions for settlement of disputes. Mr.
Eaton said that, although the Association has drawn up sample contracts for
its members to use, there is no way to force them to actually use contracts
that include provisions for dispute settlement. Rep. Cannon noted that it
seems strange to be asked to pass legislation to control the homebuilders
in this regard, since Idaho has no licensing requirements for builders. Rep.
Eberle asked what would happen if a builder incorporated, then dissolved
the corporation in order to avoid settlements, and subsequently formed a
new corporation to continue in the construction business. Mr. Eaton noted
that unscrupulous people could do this, but that there may also be a way to
pierce the corporate veil and go after the offending builders.

Ron Whitney, Board Member of the Building Contractors Association,
testified in favor of H 133, stating that this bill would provide for a way to
cure building defects which surface after the final walk-through of a new
home with the homeowner.

Woody Richards, representing BMC West, a multi-state supplier of building
materials, and an occasional installer of materials, testified in favor of H
133. Mr. Richards reiterated the fact that complaints against builders have
increased recently, and that this has had an effect on the liability insurance
industry, which has seen premium increases of 400% to 600% per year in
some years. These costs are eventually passed along to consumers and
result in higher building costs. Mr. Richards also spoke to the availability of
insurers willing to write policies, pointing out that in California, the previous
35 companies writing such policies is now down to just six.

Rep. Deal stated that he is in favor of H 133, saying that it has become
necessary to draw a line in the sand, since construction defect claims have
escalated precipitously in recent years. He stated that attorneys do find this
area to be a source of potential income; furthermore, he noted that the bill
will help with the afford ability and availability of insurance in Idaho.

Rep. Snodgrass stated that, as a real estate professional, he is also in favor
of this bill. Since a home is the largest investment that many people make
in their lifetime, they may immediately hire an attorney when they have
construction problems with that investment. It would be preferable to deal
with such problems at the lowest level, directly with the builder, rather than
at the highest level, which is the court system.

Rep. Henbest noted that she is ambivalent about the bill, and wonders
whether it is necessary to place something in the Code that should be a
matter of common sense. In any case, she does not want this bill to stall the
efforts being made to license contractors in the state of Idaho.

Steve Gordon, State Board of Morticians, testified in favor of H 9, explaining
that the industry has worked to come up with an alternative licensing
category. Currently, a “funeral director” and a “mortician” perform different
functions. In response to questions from the committee, Mr. Gordon stated
that the crematory license is incorporated into the same chapter, and that a
funeral director works under the supervision and direction of a mortician.
Also, a mortician can act as a funeral director, since the mortician’s license
includes the authority to act as a funeral director and an embalmer. A
separate embalmer’s license does not exist.

Bart Kline, a mortician, testified in favor of H 9, including the amendment,
noting that he was initially opposed to this bill but that he now favors it
because he believes that the educational standards need to be set.

Tim Gibson, owner of Cloverdale Funeral Home and Cemetery, testified in
favor of H 9, noting that he was also initially opposed to the bill but now
believes that it should be passed in order to give the industry some time to
gauge what its effect will be. He does have some concerns about the
amount of education and the expenses associated with it. In Idaho’s rural
areas, the licensing requirement may work a hardship on small mom-and-pop operations. Mr. Gibson stated that if the curriculum becomes too
cumbersome, he thinks the industry should return to clear up such problems
with the Board and the Legislature. He is concerned about the lack of
availability of help for the funeral industry, noting that it took him one and a
half years to find a licensed mortician to replace one who left his business.

In response to questions from members of the committee, Mr. Gibson
testified that if the category of “funeral director” is defined as in this bill, the
people who greet the families and work with them to make funeral
arrangements would be able to be licensed as funeral directors without
having a mortician’s license. Mr. Steve Gordon was asked to respond to a
question about the locations of mortuary colleges. He stated that there are
none in Idaho, but that some schools do have online education, including
schools in Indiana and other Midwest states, and in Louisiana. Costs vary
greatly, from about $50 per credit to as much as $700 per credit.

Rep. Rydalch asked for further details on the impact of the current licensing
situation on rural funeral homes. Mr. Gibson explained that some of these
small-town funeral establishments are “mom and pop” operations, and that
it is difficult for such businesses to find someone to cover for them if they
wish to leave town for vacation or other reasons. The role of a licensed
“funeral director” could be filled by a minister, a spouse, or another qualified
person who could be licensed in that category. Rep. Kellogg asked Ms.
Jacobsen if she had worked with funeral directors in framing this bill; Ms.
Jacobsen replied that the legislation was drafted at the request of the State
Board of Morticians.

Rep. Black commented that this is the third year that this type of legislation
has been proposed, and that last year there was considerable opposition to
the legislation. However, after cooperating on possible language, all
interested parties are satisfied that this is a good piece of legislation. Rep.
Black suggested that perhaps the legislation should be put in place and be
allowed to work for a year; then, if it doesn’t produce the additional numbers
of licensees that the industry needs, the educational requirements can be
revisited and perhaps revised next year.

CONSENT

REQUEST

MOTION

Rep. Douglas asked whether this bill would restrict a volunteer from using
the term “counseling.” Roger Hales, attorney for the Bureau of Occupational
Licensing, replied that such a volunteer could not represent himself as a
“licensed” counselor or a “licensed” marriage counselor; however, if he is
providing counseling services for free, he could call himself a “counselor.”
In response to further questions, Mr. Hales also explained that there are
three licensure classifications: 1) a licensed professional counselor; 2) a
licensed marriage and family life counselor; and 3) a licensed pastoral
counselor. Rep. Henbest asked whether a priest would be barred from
accepting compensation unless he were licensed; Mr. Hales responded that
if a priest wanted to call himself a licensed counselor, then he would have
to be licensed. However, he is not barred from accepting compensation for
counseling services.

Roberta Crockett, a member of the Board of Professional Counselors and
Marriage & Family Therapists, testified in favor of H 10. She explained that
her organization had been involved in the drafting of this bill and that it
provides good clarification and refinement of the licensing language in the
current Code.

EXCUSED:

Chairman Black announced that there had been a lot of discussion between
the engineers and the landscape architects concerning H 8. Since there still
seem to be unresolved issues in the proposed legislation, Chairman Black
announced that he will place the bill before a subcommittee for further study.
The members of the subcommittee will be Rep. Cannon, Rep. Deal, Rep.
Block, and Rep. Douglas. Rep. Cannon will serve as subcommittee
chairman. Since the Business Committee is not meeting on Thursday,
February 13, the subcommittee will have an opportunity to meet at the
regular committee meeting time, 1:30 p.m., in Room 408.

Mr. Priest explained that this legislation arises in response to the Gramm
Leach Blyley Act of 1999, which allowed a single financial entity or institution
to offer a variety of financial products. Financial institutions are regulated by
the federal government, while insurance companies are regulated by each
state’s insurance department. Mr. Priest explained that sometimes the state
Department of Insurance needs to exchange information with federal
financial services regulators, such as the Federal Reserve or the Federal
Deposit Insurance Corporation, and enter into exchange agreements with
them. H 58 will allow federal and state regulatory bodies to exchange
information with the assurance that the confidentiality of the information will
be protected.

Rep. Tilman asked Mr. Priest to explain in more detail what kind of
information this bill addresses. Mr. Priest gave an example of a federal
regulatory agency examining a bank which also sells insurance products.
If the regulatory agency uncovers evidence that the bank is engaging in
problematic or unfair practices in its insurance sales, the federal agency
might want to share that information with the state insurance department.
He also noted that when the Department of Insurance communicates with
federal agencies, the federal agencies ask what authorization the
department has and how the shared information will remain confidential.
Rep. Tilman then asked for an example of a “law enforcement agency” as
listed on line 15 of the bill; Mr. Priest said that the Federal Bureau of
Investigation would be an example of such an agency. He also explained
that this bill will provide protection to companies under investigation; such
companies should be assured that information will remain confidential if itis
shared with state regulatory agencies.

Rep. Cannon asked whether this bill would apply to individuals, in the sense
that it would allow personal information, which may be already floating
around, to be shared by agencies. Mr. Priest stated that if the information
“floats” to the Department of Insurance, this bill allows the department to
protect the confidentiality of such confidential information from other
agencies. It also extends the same protection to an insurance producer or
other licensee, if the information is used in the course of a regulatory action.

Rep. Black further clarified that an individual would not be able to go to the
Department of Insurance seeking confidential information; rather, this bill
addresses information sharing only between government agencies.

Mr. Priest then briefly reviewed the bill, explaining that it addresses specific
details of the bail bond field. For example, Section 5 addresses the types of
records that are required to be maintained, and specifies a five-year period
for retention of records on collateral, which is the same as that required of
other agents under Idaho Code. Section 6 contains the types of fees an
agent may charge and imposes limits on those fees. Section 7 details the
manner in which collateral must be handled. Mr. Priest noted that, although
the department receives only a small number of complaints about bail bond
agents, the highest number of those concern the handling of collateral. This
section also places limits on the amount of collateral that can be held,
stipulates that collateral funds must be maintained in a separate fund from
other funds, and requires that collateral must be returned within a
reasonable time after settlement. Section 8 deals with conditions for early
surrender of a defendant to custody, noting that the bail agent must have
good cause to surrender a defendant; without good cause, the bail agent has
to refund the premium. Section 9 states that bail bond agents are
responsible for their own employees in relation to bail transactions, and
clarifies that this section does not change any employer-contractor liability
laws.

Mr. Priest also presented a number of amendments to H 62, stating that
these represented clarifying language which was thought to be advisable
and necessary after consultation with bail bond agents.

In response to questions from committee members, Mr. Priest stated that the
number of complaints registered with the department about bail bond agents
is very small, and that this legislation will simply give the department a tool
to rein in that small number of abuses. He explained that the $15,000
amount for a surety bond was the figure agreed upon by all parties, this
amount was thought to be high enough without placing an undue burden on
smaller “mom and pop” operations.

John Duvall, charter president of the Professional Bail Agents of Idaho,
testified in favor of H 62. Mr. Duvall stated that his organization worked with
the proposed legislation drafted by the Department of Insurance, and the
resulting H 62 was submitted to all members of the organization for their
comments, revisions, or questions. Mr. Duvall said that members were
expressing concerns as late as yesterday about this bill, and that the
amendments noted by Mr. Priest resulted from this consultation and revision
process. Mr. Duvall testified that everyone now is in favor of this bill, and
that it is good for the Department of Insurance, because many of the current
codes don’t pertain to bail agents. It is also good for consumers, and good
for the state association of bail agents.

Rep. Black asked Mr. Duvall to explain how he has “control” over a
defendant, in order to allow the bail agent would be able to “surrender” such
a person. Mr. Duvall responded that the judge sets the amount of a bond on
a defendant, and that individual signs a civil contract with the bond agent.
The defendant then is under the control of the bail bond agent until he is
sentenced, at which time control is taken over by the judge. Rep. Black
asked how a bail bond agent maintains “control” over a defendant if that
person is not in physical custody. Mr. Duvall stated that the defendant is
usually reasonable and complies with the conditions of the bail bond agent’s
control over him.

Rep. Gagner asked whether bail bond agents lose money if a defendant
skips bail; Mr. Duvall responded that this is the case, since bail bond agents
have no insurance coverage to pay their losses. The bail bond agents carry
insurance coverage only against insolvency of their own business. Rep.
Gagner asked whether law enforcement personnel are available to assist a
bail bond agent when he goes out to retrieve a defendant who may be in
danger of skipping bail; Mr. Duvall said that generally speaking, the law
enforcement personnel will be on “civil standby” and will be ready to assist
if needed.

Rep. Douglas presented an example of parents pledging title to their home
as collateral for a bond to bail out their child from jail, and asked whether the
parents would lose their home if the child skips bail. Mr. Duvall said that this
would be the case. Rep. Douglas also asked whether the bail bond agent
is required to determine ownership for an item, such as a diamond ring, that
is presented as collateral; Mr. Duvall said that this kind of verification is
difficult to carry out at 2:00 a.m. when a lot of bail bond activity takes place,
but verification can take place later, which will ascertain whether the person
has equity in the property presented.

Rep. Rydalch asked Mr. Mackey what the background of this bill is. Mr.
Mackey said that, although he thought all insurance companies did, in fact,
pay interest in situations where payments were delayed, a situation was
brought to his attention recently in which such interest was not paid. Only
after becoming aware of the details of this case, which was in the Sun Valley
area, did he realize that Idaho Code did not require such interest payments.

Jim Genetti, Department of Insurance, was recognized in order to respond
to questions from Rep. Tilman, who asked how the department currently
handles cases of slow payment of proceeds from a life insurance policy. Mr.
Genetti responded that, if the department receives a complaint, it would
instigate an investigation into the circumstances of the case. Since the Code
currently states that proceeds need to be paid in a “reasonable time,” the
department can issue fines or take other appropriate administrative actions.
Before fining a company, a determination would be made as to whether
there is a justification for not paying the proceeds, such as whether or not a
proper claim of death has been filed.

Mr. Genetti also stated that it is uncommon for a claim to remain unpaid after
30 days, although occasionally there are circumstances such as disputes
over ownership that cause such a delay. In any case, Mr. Genetti testified,
the department has never seen a problem that has extended many months,
although some cases do extend for 60 or 90 days. These usually are
protracted over that period of time for a reason, such as ownership disputes,
improper documents. However, the beneficiary still should be receiving
interest on the proceeds if the payment is delayed.

Rep. Black commented that anyone who may have a dispute with an
insurance company should know that the Department of Insurance is very
responsive to such complaints, and it is often surprising how quickly the
offending insurance company will respond to settle the matter, once it is
contacted by the department. Insurers know that the department has the
authority to suspend an insurance license, which provides considerable
leverage, since reinstatement of a license is an expensive and time-consuming process.

MOTION

EXCUSED:

Chairman Cannon noted that it would be necessary to plan how to handle the
succeeding testimony on H 8. He asked those who were present to indicate whether
or not they would be able to return on Monday afternoon for a second subcommittee
meeting, and assured them that they would be given an opportunity to offer their
testimony at today’s meeting. He also suggested that, in the interest of time, each
group wishing to testify might want to choose a single spokesman to present its
position, thus avoiding repetitious testimony. Rep. Cannon then announced that the
subcommittee would convene again on Monday afternoon, February 17, immediately
following adjournment of the Business Committee meeting.

Ms. Jacobsen then introduced Jon Mueller, representing the American Society of
Landscape Architects, which has about 80 members in the state of Idaho. Mr.
Mueller stated that he would first summarize the business and practice of landscape
architecture in the state of Idaho, since there is some misunderstanding of exactly
what a landscape architect is. Mr. Mueller explained that the profession of
landscape architect was granted professional status about 30 years ago, and at that
time, landscape architects worked primarily in one of two areas: the public sector
(government projects) and the nursery industry. During the 1970s, landscape
architects began opening private offices, and an accredited landscape architecture
program was instituted at the University of Idaho. In the 1980s and 1990s, the
profession grew, and engineers began hiring landscape architects as part of their
overall design team.

Mr. Mueller then presented a series of charts detailing various aspects of the
landscape architect profession, including the definition of “landscape architecture”
and some examples of projects completed by landscape architects. Mr. Mueller
stated that some landscape architectural firms act as general contractors on some
jobs, and that the average size of their projects is around $50,000, with some
exceeding $125,000. There are firms in Boise who have participated in the
development of over 40 subdivisions. Firms also engage in public practice, including
work for federal, state and local agencies such as the Bureau of Land Management,
the National Park Service, the Department of Water Resources, the Idaho
Transportation Department, and parks and cities.

Steve Drown, professor of landscape architecture at the University of Idaho,
appeared before the committee to continue the presentation on H 8. Mr. Drown first
made a slight correction to Ms. Jacobsen’s testimony, noting that a landscape
architect can have up to five years of formal education. He also provided an
explanation of the curriculum, which has changed over the years as the field of
landscape architecture has grown and developed. He testified that, at the University
of Idaho, the emphasis is on scale of projects, with beginning students working on
smaller scale projects and then moving on to specific construction technologies as
well as functional and aesthetic elements of landscape design. Mr. Drown also
stated that there is a substantial service component to the U of I’s program, in which
the students are required to go out and work on actual projects.

Dell Hatch, Idaho Board of Landscape Architects, appeared before the committee
to explain the preparation and testing of landscape architects. The examination
given to candidates for licensing is developed and distributed by the Council of
Landscape Architects Registration Boards (CLARB), whose mission is to foster
public health, safety and welfare. In producing the test, their purpose is to identify
the minimum competency expected of a candidate to be considered for licensure.
The test is the Landscape Architecture Registration Exam (LARE), a uniform
national exam developed through task analysis from industry professionals. The
exam is two days long, and consists of five sections: legal and administrative
aspects, analytical aspects, planning and site design, structural considerations,
including materials and methods of construction, and grading, drainage and
stormwater management.

Mr. Hatch also talked about the Landscape Architects state board, stating that the
board consisted of three members, appointed by the governor for four-year terms.
The board meets quarterly, or more often if necessary, and screens candidates for
the licensing exam as well as screening applicants from other states. They also
handle complaints and regulate licensees. Under the proposed legislation in H 8,
the board would deal with continuing education requirements and would also monitor
licensing compliance. All functions of the board are funded by license fees.

Mr. Hatch then presented a graphic which illustrates the three separate disciplines
of landscape architecture, engineering, and architecture, and shows how the three
fields overlap one another in instances such as storm water, drainage, and grading.

Alan Giltzow, a member of the State Board of Architectural Examiners, appeared
before the committee to testify in favor of H 8. Mr. Giltzow said that, in evaluating
this bill, his board asked the question, would it threaten the health, safety, and
welfare of the public. Their conclusion was that it would not, and the Board voted
6-0 in favor of supporting the proposed legislation.

Jeremy Pisca, representing the Idaho Building Contractors Association, testified in
opposition to H 8. Mr. Pisca stated that the building contractors do appreciate and
applaud the work done by landscape architects. He also said that the verbiage of
H 8 is probably based on model legislation drafted at the national level, but that once
it is passed, it becomes Idaho law. The building contractors are concerned that
implementation of this legislation will have the effect of increasing the cost of
housing, since it would require more employees to be licensed as landscape
architects.

Mr. Pisca provided a one-page handout to members of the subcommittee which
illustrates current and proposed functions of landscape architects. Mr. Pisca stated
that the scope of practice is being expanded, and any time that scope of practice is
expanded, the number of people required to be licensed also expands. Noting that
H 8 is a prefiled bill, Mr. Pisca said that members of the contractors association did
not become aware of problems in the bill until mid-January, and that they have not
had an adequate opportunity to work out the potential problems. The building
contractors would be comfortable with leaving in the current exemptions.

Chairman Cannon announced that the subcommittee will continue hearing testimony
on H 8 on Monday afternoon, February 17, following adjournment of the Business
Committee meeting. At that time, it is his intention to begin hearing testimony from
the engineers and then continue with the rest of those wishing to testify.

EXCUSED:

Rep. Gagner asked what would be required of an apprentice electrician who may
have been working without additional training for many years; in other words,
would he have to complete the required number of hours of additional training
corresponding to the number of years he had been practicing? Mr. Corbell
responded that if H 143 passes, such apprentices would not be required to “make
up” additional training, but would have to enter continuing education courses and
take the minimum number of hours required.

In response to further committee questions, Mr. Corbell stated that the
continuation training can be either from a university or technical college, or from
training offered by an employer; however, in order for on-the-job training to satisfy
the requirements, it would have to be approved by the state electrical bureau,
which is in charge of such continuation training. The specific requirements will
be set by the Rules of the electrical board, and a certificate will be issued to an
apprentice which will document the training. Mr. Corbell said that the specific
number of hours has not been set, but that the continuation training required of
journeyman electricians is eight hours, and it could be the same for apprentices.
Mr. Corbell also stated that H 143 will not “force” anyone to become

a journeyman electrician; rather, an electrical worker can choose to remain an
apprentice as long as he completes the continuation training.

Rep. Deal asked whether there would be a review process when a mobile home
park is turned into a subdivision. Mr. Lyman replied that the existing park has
already gone through a review when it was established, and that it would have
to be in compliance with current regulations for parks before it would qualify for
subdivision, under this bill. The park would also have to be in compliance with
all health and environmental laws.

Rep. Black asked what would happen if tenants are given the opportunity to buy
their lot, but some tenants choose not to buy the lot. Would those tenants who
do not purchase the lot be forced to move out of the park? Mr. Lyman responded
that there may be a handful of tenants, or even a majority, who want to continue
renting their spaces. The owner of the park can continue renting their lots to
them, and in that case they would not be displaced. Although the ultimate goal
of subdividing a park is to move it to an owner-occupied park, the owner may
even find it desirable to sell the lots over an extended period of time rather than
all at once; for instance, he may be able to spread out the tax consequences of
a long-term capital gain on the property if he sells the lots gradually.

Rep. Gagner asked about the requirement stated on page 2, lines 25-27, that a
park be in existence for at least three years prior to the date of an application for
subdivision. Mr. Lyman said that this language responds to the counties’
concerns about the possibility of an owner getting a manufactured home park
approved with the intention of converting it to a subdivision. The three-year
requirement is an attempt to protect the counties from those who would quickly
convert from a park to a subdivision, once the park is approved.

Rep. Eberle expressed concern about the requirement that a homeowner’s
association be established, and stated that counties already have the ability to
regulate this kind of subdividing if they wish to do so. He also pointed out that the
counties may hesitate to approve new mobile or manufactured home parks if they
think the parks will be converted to subdivisions.

MOTION

Rep. Meyer pointed out that a lot in an existing park, even if it were converted to
a subdivision, will still be used for a mobile or manufactured home and not for a
stick-built home. Mr. Lyman agreed, and also noted that the park owner cannot
sell an undivided interest in the lot until he has met all the requirements and
gotten a legal description of the lot. Mr. Lyman also stated that, without the ability
to own the lot, a mobile home owner has to finance the purchase of a home as
personal property, rather than as real estate. This requires that he pay a much
higher interest rate, perhaps 12% to 14%, rather than the interest rate for real
estate loans, which are around 6%.

Rep. Rydalch asked what happens to such a subdivision if the homeowner’s
association fails; in other words, who would maintain the subdivision? Mr. Lyman
stated that the provision for a homeowner’s association was included at the
request of the counties, since some entity needs to maintain roads within such
a subdivision. Rep. Rydalch said that some subdivisions do not allow private
roads; Mr. Lyman noted that the bill addresses existing parks which already have
their own road system.

Rep. Deal stated that some mobile home parks have small lots that would not
meet current requirements for parks. If such a park were to subdivide and not be
in compliance with current requirements, Rep. Deal wondered whether the city
would have the authority to rule on the viability of such a subdivision. Mr. Lyman
said that if an existing park is not in compliance with current requirements for a
park, then it would not be eligible for subdivision. The city’s or county’s role is to
verify that the statutory requirements have been met.

Patricia Nilsson, Planning Agent for Ada County, testified in opposition to

H 177, stating that it is difficult to testify against manufactured homes since they
offer affordable housing to many people, and in fact constitute 6% of the housing
in Ada County. Nevertheless, Ms. Nilsson enumerated several negative effects
of this legislation on Ada County. First several parks in the county are
nonconforming, although they did meet the requirements when they were
established. Ms. Nilsson said that she is not certain whether this bill would allow
subdivision of such parks. Second, the bill seems to allow a bypass of the review
that all plats undergo from the Planning and Zoning Commission, and would take
away the review process, which is a matter of fairness. Finally, this bill would set
up different standards for mobile and manufactured home subdivisions.

Rep. Gagner asked whether an owner of a mobile home park who requests
subdivision is automatically turned down. Ms. Nilsson said that the park needs
to be in compliance or can apply for a variance, and that such application would
be heard by the county commissioners. She also stated that she felt the current
standards protect the health, safety, and welfare of the public.

Rep. Gagner spoke in favor of the motion to send H 177 to the floor with a do
pass recommendation, noting that if parks are not allowed to subdivide, the
owner has no choice but to sell the property for an alternate use, in which case
all tenants are displaced. With regard to the existence of a homeowner’s
association, Rep. Gagner said that this is an important provision because
otherwise no right to lien exists in the event that the park becomes a mess. The
association needs to set budgets and demonstrate its viability. Rep. Gagner also
pointed out the serious problem of financing a mobile home purchase, noting that
if the home does not sit on real property and a permanent foundation, it cannot
be financed as real property and thus has to be financed at the higher rate for
personal property.

Rep. Cannon stated his opposition to H 177. He stated that a park may have
met the requirements in existence 20 years ago when it was developed, and
perhaps those requirements are acceptable for a rental situation. But H 177 is
now asking to make that arrangement permanent by allowing subdivision and
separate ownership of the lots. Rep. Gagner pointed out that subdividing the
park would not bring about any change in use; the only effect is that the tenant
would become a homeowner. Rep. Cannon replied that the use is not, in fact, the
same, because a rental is a temporary situation, while ownership is more
permanent. Rep. Rydalch asked whether this matter could be solved by local
ordinance.

Responding to Rep. Cannon’s concern, Mr. Lyman said that Rep. Cannon’s
question presumes that the original park approval was temporary; however,
“rental” does not mean temporary, and nothing in the original approval makes it
temporary. Also, ownership does not constitute a different use.

Mr. Lyman further testified that there should be no expectation that local
jurisdictions will waive setback requirements in order to approve subdivision of
existing parks. Rep. Eberle stated that the counties do have the power to do so
now, and that this local control should not be taken away from them. Rep.
Tilman stated that the counties were the entities who previously requested this
type of legislation, so it would not be accurate to characterize this legislation as
“taking away” anything from the counties.

Rep. Tilman explained that the Business Committee had received long and
extensive testimony in previous years from the tenants in mobile home parks,
who were frustrated by rent increases and new rules being imposed on them, and
that this legislation would solve some of those problems. Rep. Tilman stated that
H 177 is one tool to help those who need affordable housing, and that it will
provide a process for them to become homeowners and obtain favorable
financing. Rep. Tilman said that there may need to be future modifications of this
legislation, but that the committee should pass it and see how it works in
alleviating some of these problems. He also noted that Mr. Lyman had worked
with interested parties to work out the details of this bill.

Rep. Rydalch stated that she has not perceived a need for this legislation and
that no one has approached her with complaints about the current situation. Rep.
Black noted that this could be because they have simply given up on seeing any
improvements in their situation.

Rep. Henbest asked whether this entails the same work as that performed by a
landscape architect. Mr. Hales said that the practices of the two professions do
entail some overlap. Rep. Henbest asked that the statement of purpose for the
amendment reflect the expansion of the scope of practice.

Rep. Gagner asked whether the additional language was controversial. Mr.
Hales stated that the need for the language came to light after the architects
reviewed the landscape architect act. The scope of practice for architects
currently allows them to design buildings and groups of buildings, and their intent
with this amendment is to allow them to include design of the site surrounding
those buildings. Rep. Block asked for some examples of what would be
designed by an architect in these spaces; Mr. Hales mentioned sidewalks and
entrances.

James Murray, past president of the American Institute of Architects-Idaho and
an officer of that group for the past seven years, testified in favor of H 32. He
stated that 28 states require continuing education for an architect’s license
renewal. Also, the American Institute of Architects, with 50,000 members,
currently requires continuing education as part of its membership requirements.
Mr. Murray also stated that the AIA board is in support of this legislation.

Rep. Black asked Mr. Murray to address the proposed amendment to H 32. Mr.
Murray introduced Stan Cole of the Idaho Board of Architectural Licensing. Mr.
Cole testified that architects often collaborate with landscape architects and civil
engineers on issues such as building accessibility and parking layouts. This
amendment will make it clear that architects are involved in this part of a project.

Rep. Snodgrass asked whether a specific number of hours had been set for
continuing education requirements. Mr. Cole said that the requirement would be
eight hours per year, and would focus on health and safety areas.

Rep. Block asked whether the architects had collaborated with consulting
engineers and whether they are in agreement with the amendment. Mr. Cole
testified that they had discussed it with landscape architects and that they had no
opposition. Rep. Block noted that the design of drainage systems, for example,
takes great technical knowledge, and she asked whether architects have that
necessary training. Mr. Cole stated that architect education includes an
understanding of site drainage, although it does not include a course in civil
engineering. However, when an architect needs to utilize that expertise, he will
hire an appropriate engineering consultant.

Rep. Cannon stated that he thought the amendment added a section which will
give architects the authority to actually perform this work, and that this goes
beyond the scope of practice of an architect. He also asked whether the architect
will be able to stamp the site plan, which is currently done by a civil engineer. Mr.
Cole stated that the amendment is not trying to expand, but rather to clarify, the
architect’s scope of practice.

Rep. Tilman said that it appears this amendment will add the ability to oversee
what architects have actually already been doing as a matter of practice. Mr.
Cole said that was exactly right. Rep. Black noted that the committee may be
trying to avoid causing another problem similar to the current discussion dealing
with landscape architect licensing.

David Koga, president of the Idaho/Montana division of the American Society of
Landscape Architects, testified in favor of H 32, explaining that architects,
landscape architects, and engineers work well together on site development. He
also noted that architects do have rules of professional responsibility, and that
they know when they need to consult with other experts in areas not included in
their scope of practice.

Bill Dial, currently a member of the Board of Idaho Landscape Architects,
testified in favor of H 32. He also supports the proposed amendment, stating
that it will recognize the site planning functions of architects.

EXCUSED:

Rep. Cannon reminded subcommittee members and those in attendance that at the
previous meeting, testimony was taken from the landscape architects and the
building contractors, and that at today’s meeting the engineers would be given the
first opportunity to offer testimony. He also requested that if others wished to testify,
they limit their remarks to new material and try to refrain from giving testimony that
would duplicate the testimony already submitted by others.

H 8. He presented information about the comparative educational components of the
civil engineering and landscape architect programs at the University of Idaho. He
pointed out the significant differences in education, examination, and experience
required of the two fields.

Molly Creswell, representing the Consulting Engineers of Idaho, testified in
opposition to H 8. Ms. Creswell stated that her organization became aware of the
bill at its pre-filing, and that they contacted and met with Rayola Jacobsen and the
landscape architects in an effort to negotiate acceptable language regarding scope
of practice. However, no compromise or middle ground could be reached.

David Bennion, Consulting Engineers of Idaho, an engineer with CH2MHill, testified
in opposition to H 8. Specifically , he spoke to the language on page 2, item 5(b).
Mr. Bennion questioned whether landscape architects actually possess the
necessary technical knowledge to perform all the functions listed therein. This
creates a concern for the health and safety of the public, although this may not be
the intent of the bill.

Rep. Deal asked whether some of the designations in section 5a of page 2 are able
to fit into the definition of a landscape architect, such as erosion control or site forms.
Mr. Bennion said that, although some would be included under a landscape
architect’s practice, it is difficult to narrow the scope to a specific site, or a specific
campus or 10-acre project. Rep. Gagner asked what the response of the landscape
architects was to the request to strike items (a) through (e). Mr. Bennion said that
when the revised bill was drafted, those sections were kept intact.

Karen Doherty, president-elect of the Idaho Society of Professional Engineers,
testified in opposition to H 8. She stated that the ISPE promotes licensure and
thinks that licensing landscape architects is a good step. However, she is
concerned with the breadth of language found in the bill. Ms. Doherty said that her
organization is hopeful that acceptable language can be found, if not during this
legislative session, then sometime beyond the end of the session.

Rep. Douglas asked whether Ms. Doherty was willing to let the bill go forward, or
whether she would like to see the bill held in committee. Ms. Doherty stated that she
would not approve of the bill in its current form, but that she is willing to continue
working on it to make it acceptable to all interested parties.

Jerry Peterson, Consulting Engineers of Idaho, and past member of the Idaho
Engineering Licensing Board, testified in opposition to H 8. Mr. Peterson said that
the wording included in the definition of a landscape architect is too broad; for
instance, “land form” could be construed to mean a berm, an earth-filled dam, a
highway embankment, or even a landslide. A “pedestrian and vehicle circulation
system” might mean an interstate highway system. Mr. Peterson said that the intent
of the bill is good, but that it is too broad and leaves too much that could be
misinterpreted in the future.

James Murray, past president of the American Institute of Architects-Idaho, testified
in favor of H 8 in its amended form, stating that the newest amendments to the bill
meet all the concerns of his organization.

Jim Thomas, a landscape architect in practice for 20 years in Idaho, testified in
favor of H 8. Mr. Thomas testified that landscape architects are often challenged
on their technical abilities, but that the landscape architect curriculum does cover
technical areas such as grading, storm drainage, and watershed. Also, with regard
to the definition of “land forms,” Mr. Thomas stated that the current practice
language involves the design and arrangement of land forms, as well as the
development of industrial and recreational sites, and H 8 actually narrows this. Mr.
Thomas also distributed copies of a document entitled “Landscape Architect Design
& Alignment Concepts,” which details the role of landscape architects in the work
done on Highway 93 in Montana. Finally, Mr. Thomas stated that landscape
architects abide by an ethics clause that directs them to refrain from performing work
for which they are not competent. It has been proposed that they adopt rules of
professional responsibility, which will need to be adopted by the landscape
architecture board. Mr. Thomas stated that this bill is simply asking that landscape
architects be granted some professional recognition for their work.

Rep. Deal asked whether the landscape architects would be willing to continue
working on this legislation to arrive at common verbiage. Mr. Thomas stated that
they would do so, although the language is too broad if only section 5 is included.
Rep. Cannon asked Mr. Thomas to explain what he, as a landscape architect,
would be able to do after passage of this bill that he cannot do now. Mr. Thomas
said that he would do nothing different than what is already in his scope of practice,
including grading and drainage, campground roads, and so forth.

Rep. Gagner questioned the need for this bill, given Mr. Thomas’ previous answer.
He noted that normally bills are brought forth to address a problem, but it seems as
if no one is violating the landscape architect’s right to perform the duties they
perform. Mr. Thomas stated that over the years, the engineers have objected to
areas of crossover in the respective practices, and have also questioned
exemptions. Rep. Cannon observed that just because a landscape architect is
licensed, that does not mean that he is qualified to do certain work. Thus, by
passing this bill, the public may be exposed to landscape architects who are not
competent to do what their licensing would allow.

David Koga, president of the American Society of Landscape Architects for Idaho,
testified in favor of H 8, and stated that he had received a letter in support from the
Idaho Nursery and Landscape Association, which consists of a mix of retail
nurseries, garden centers, and sprinkler system installers.

Mary McGown, a member of the Landscape Architect Board, testified in favor of

H 8 because she said that the issues in this bill are everyday concerns that need to
be addressed, including adoption of the rules of professional responsibility, adoption
of the continuing education rules, and use of the electronic seal, which is not in
current law.

Kirby Vickers, JUB Engineers, testified in opposition to H 8, stating that, if he
were to hire a landscape architect to do drainage, for example, he would be in
violation of the standard of care demanded of him.

Debowden Bauer, Landscape Architect Board, testified in favor of H 8, stating that
recently, the City of Boise rewrote previous language specifying the use of
engineers, to read “any qualified professional licensed to do this work.” Ms. Bauer
also testified that if a client sees a benefit to using a landscape architect, he should
have the freedom to hire one.

Stan Cole, architect and past president of the American Institute of Architects,
testified in favor of H 8, saying that the Architecture License Board voted to support
this legislation and that they do not anticipate any conflicts.

John Eaton, representing the Building Contractors of Southwest Idaho, testified in
opposition to H 8, stating that some employees who perform this type of work
aren’t exempted from the licensing requirements and thus may be barred from doing
it in the future. An example of this would be irrigation system installers, who may
have to be licensed as a landscape architect to continue their work. In response to
a question from Rep. Cannon, Mr. Eaton stated that their concern is that requiring
licensing of such workers will have the effect of driving up the cost of home
construction.

Bill Dial, Idaho Board of Landscape Architects, testified in favor of H 8, saying that
this bill is a simple housecleaning bill. Since the landscape industry was established
30 years ago, there have been tremendous changes in the field, and it is necessary
to update the licensing requirements to reflect those changes. He also stated that
the landscape architects had made sure that the green industry would be exempt
from these requirements. Responding to a question from Rep. Cannon, Mr. Dial
stated that the work performed by landscape architects is currently covered under
today’s law, but that the new definitions in H 8 define this work more closely.

Roger Hales, Board of Landscape Architects and Occupational Licensing Board,
stated that landscape architects don’t claim to be engineers; rather, they retain
engineers to perform those functions that require engineers. Mr. Hales stated that
some of the concerns expressed by the contractors have been resolved; also, there
was specific language included to meet the concerns of the engineers. One problem
is that contractors are undefined and unregulated, and have no specific education,
testing, or training. Mr. Hales said that all parties have worked in good faith, but that
many don’t understand what landscape architects are all about.

Rep. Douglas asked whether the landscape architects had addressed the concern
expressed by John Eaton about irrigation system workers. Mr. Hales said that the
legislation won’t interfere with the basic activities they do today, as long as the
activities don’t impact health, safety, and welfare.

After hearing from all parties who wished to offer testimony, Chairman Cannon
asked for some committee discussion of H 8. Rep. Gagner said that normally when
a bill is sent to a subcommittee, it is in an attempt to see whether there is any new
testimony or whether a compromise can be effected. In this case, the parties do not
appear to have resolved their differences.

Rep. Douglas stated her support of the motion, suggesting that the committee could
deal with the housekeeping aspects of the bill while still leaving out the scope of
practice and exemptions. She also noted that she had done some research into the
function of landscape architects, and that she was particularly impressed with their
work on the Highway 93 project, specifically how they worked with the public in a
sensitive and responsive manner.

Rep. Block stated that she also supports the motion, noting that engineers have
been working with the infrastructure of the state for 100 years, and that the
responsibilities of engineers are huge. She said she does not think it would be in the
best interest of the State of Idaho to ignore their expertise.

MOTION

EXCUSED:

Mr. Wilgus noted that currently there are three sites under consideration for
the 2010 Winter Games: South Korea, Austria, and Vancouver. Washington
state has already passed a resolution of support similar to HJM 3; Oregon
and Montana are also considering similar statements of support, as are
British Columbia and Alberta. The International Olympic Committee is
visiting all three potential sites during the months of February and March,
and a final decision will be made on July 3, 2003. Mr. Wilgus also testified
that, if the 2010 Olympics does take place in Vancouver, an Idaho delegation
will be able to visit, in order to learn more about what needs to be done with
an eye towards hosting the games in Idaho in the future.

Mr. Wilgus also commented on the second document he distributed, which
addresses Idaho’s possible hosting of a winter Olympics in the future. The
35-year time frame was chosen because it is thought that the state will
probably have grown to a point where it will have the capacity to handle the
Olympics at that point. Mr. Wilgus said that his department conducted
interviews with about 40 business and political leaders to assess Idaho’s
future readiness to host such an event. Since Idaho is a fiscally
conservative state, it is thought that there would not be support for building
facilities specifically for the Olympics; rather, the state would depend upon
growth and facility development that will occur naturally as the state grows.
The Olympics requires a minimum of 22,000 hotel rooms; Idaho is currently
able to provide about 9,000, or 42% of the necessary number. Mr. Wilgus
envisions Olympic events spread over a wide area of southern Idaho, with
opening and closing ceremonies at Bronco Stadium, which will probably
have a 65,000 seat capacity in 35 years. He also stated that, for example,
downhill events could be in Sun Valley, free style at Bogus Basin, slalom
events in Valley County, and skating events in Canyon County. Thus, the
economic impact would be spread throughout a large portion of the state.

MOTION

Chairman Black also announced that the Business Committee will meet on
Friday afternoon, although he does not anticipate a lengthy meeting because
there are only two bills on the agenda, H 144 and H 206.

EXCUSED:

Chairman Black thanked the subcommittee for its work on this issue, and
commended Rep. Cannon for chairing the committee in a fair and efficient
manner.

Mr. Barber explained that in UM/UIM cases, the insurance company agrees
to pay the amount that would have been paid if insurance was in place.
Once sufficient information is provided about an accident, a fair amount can
be determined for payment. However, Mr. Barber said that the current
statute’s allowance of 30 days for payment does not allow sufficient time for
reception and evaluation of all the information needed to arrive at a payment
amount. H 180 states that, when the required information is presented, an
insurer will have 60 days to evaluate it and make an offer of payment. If the
insurance company fails to make an offer, or makes an offer substantially
less than that arrived at through arbitration, the insurance company will be
required to pay reasonable attorney’s fees and reasonable arbitration fees.
Mr. Barber testified that the aim of H 180 is to get the insurance companies
to pay claims in a timely manner.

In response to questions from committee members, Mr. Barber said that the
term “all information” on line 15 refers to all the information required by the
insurance policy, which is interpreted as “sufficient” information for the
company to evaluate and make an offer. Mr. Barber also stated that it is
hoped that H 180 will reduce attorney fees because it will encourage swift
settlement. The 20% figure is an attempt to quantify what “substantially”
means.

Ric Peterson, Farm Bureau Mutual Insurance Company, testified in favor
of H 180. In Mr. Peterson’s view, the most important part of H 180 is the
extension of time to 60 days, and the provision that the 60-day time period
does not begin until the company gets enough information to make an
informed decision as to a settlement amount. Mr. Peterson also stated that
unless legislation is passed, there will be a sharp increase in the number of
UM/UIM claims going to court.

Mr. Peterson responded to questions from committee members, explaining
that, in the case of a pregnant woman who may be injured in an accident, the
woman would not be limited to 60 days to report damages but could wait
long enough to determine whether there is harm done that is not initially
detected. In cases of medical costs, most policies have medical or health
coverage that will pay those kinds of expenses.

Jim Harris, an attorney, testified in opposition to H 180. Mr. Harris
disagreed with Mr. Barber’s statement that 41-1839 predates UM/UIM
coverage, and said that Idaho law was no different before the Martin case of
December 2002, which was cited as the reason for this proposed legislation.
Mr. Harris noted some major problems with H 180: First, this bill will mean
that every arbitration case will go to court because only a court can award
attorney fees. The result of this will be an increase in the District Court
workload. Second, the increase in time from 30 days to 60 days will allow
insurance companies to further delay settlement of claims. Mr. Harris also
pointed out that the legislation requires that “all” information must be
supplied before the clause regarding attorney fees is applicable, and this will
give insurance companies an additional defense to not pay claims. Finally,
this legislation contradicts the Unfair Claims Settlement Practices Act. The
bill will allow insurance companies to make an offer, no matter how ridiculous
the amount may be, in order to force the matter into court. Mr. Harris thinks
that H 180 does not avoid litigation; rather, it forces litigation.

Responding to committee questions, Mr. Harris said that H 180 will require
litigation in every arbitration case because of the fact that only courts can
award attorney fees; this language is found in line 20 of the bill, “the court
shall award …” Mr. Harris also stated that he does not think the Legislature
has the responsibility to determine what is reasonable; rather, the
Legislature sets policy. It is up to judges to decide cases, since they are
trained to determine what is reasonable.

Rick Dredge, an attorney in private practice and a member of the Idaho Trial
Lawyers Association, testified in opposition to H 180, stating that is
represents a substantial change in Idaho law. Mr. Dredge stated that Idaho
Code Section 41-1839 is working well; however, under the proposed new
legislation, an insurance company does not have to actually tender payment,
but is required only to make a settlement offer. Mr. Dredge gave some
examples of actual cases in which this would have worked a hardship on
insured parties. He also testified that H 180 will remove the incentive for
insurance companies to make swift settlement.

Mr. Dredge responded to questions from the committee, explaining how
arbitration fees and legal fees are currently paid. He stated that the district
court has the sole authority to award attorney fees, and that after the judge
enters a judgment in the case, he then makes a judgment on fees and
awards them.

Andrew Chasen, an attorney, testified in opposition to H 180. Mr. Chasen
first stated that he can accept the extension of time from 30 days to 60 days,
and that he also has no problem with the term “all information” on line 15.
He does have a concern, however, that the bill will require the insured to be
exposed to the risk of attorney fees for just trying to get a fair settlement
amount. Mr. Chasen stated that the bill provides a built-in intimidation factor
for the insured.

In response to questions from the committee, Mr. Chasen outlined the major
changes that H 180 would effect. First, the time limit to settle claims is
extended from 30 days to 60 days. Second, it muddies the water in the
matter of what information is required to be submitted to an insurance
company, whereas currently the requirement is that “proof of loss” must be
submitted. Finally, it will make a person who has paid premiums on a policy,
sometimes for many years, pay attorney fees to his own company. Asked
whether an insured must pay both attorneys, Mr. Chasen responded that,
although this may not be the current practice, this legislation will, in fact,
require that.

Ron Dennis testified in opposition to H 180. Mr. Dennis introduced his
wife, Marietta Dennis, who was seriously injured in an automobile collision
in April of 1996, incurring over $78,000 in medical bills. Mr. Dennis stated
that, because the other driver, who was at fault, had only $25,000 in
insurance coverage, he had to retain an attorney on a contingent fee basis
in order to try and settle his claim. The insurance company kept asking for
more and more information, and finally the matter went to arbitration.
Although the arbitrator found all points in favor of Mrs. Dennis, the settlement
offer was just $8,000. Mr. Dennis stated that his insurance company finally
did offer the remaining $275,000 of coverage that he carried on his policy,
but that he had to sign off on any future claims. There is still dispute about
interest owed. Mr. Dennis said that H 180 seems to leave a lot of “wiggle
room” for insurance companies to avoid payment of claims. He also stated
that their medical bills were paid.

Breck Barton, an attorney and a neighbor of Mr. and Mrs. Dennis, testified
in opposition to H 180, stating that it will encourage parties to go to court
in order to settle claims, and that it provides a disincentive to insurance
companies to settle small claims. Mr. Barton pointed out several problematic
aspects, including the requirement to “offer” a settlement rather than to
“tender” payment. He also thinks that the term “all information” may lead to
great mischief by insurance companies, who can change policy language to
demand unreasonable information before they settle claims.

Mr. Barton responded to committee questions, noting that he has no problem
with the extension of time from 30 days to 60 days. However, he thinks that
H 180 adds language to statute without deleting the existing statute, and this
may provide conflicting language, which will have to be settled by the
Supreme Court. Although he was hired on a contingency basis, the Martins
are still waiting for a final settlement and there is still debate about attorney
fees and costs in this matter.

Woody Richards, representing the National Association of Independent
Insurers, testified in favor of H 180. Mr. Richards responded to arguments
made by those opposing H 180. He stated that this bill will not increase the
workload of the district courts, since the courts have always had the
responsibility of making awards. Mr. Richards said that this bill will reduce
the current game playing with regard to accident claims and their settlement.
He pointed out that there seems to be no objection to the extension of time
provisions; in addition, the bill defines what information has to be provided
to the insurance company. Mr. Richards testified that it is also in the best
interest of insurance companies to settle claims promptly so that they do not
alienate their customers and lose business. He also stated that the specified
20% amount was an attempt to make the definition of “substantial” more
certain. Mr. Richards also disputed the problem with the term “offer” in H
180, versus the term “tender” in the existing code, noting that if an offer is
accepted, the company has an obligation to pay the amount offered. Mr.
Richards said that if an insurance company were to make demands for
unreasonable information, the courts would throw out those demands.
Finally, he testified that the bill will not require the insured to pay attorney
fees, and there is no way it could be interpreted to mean that.

Allyn Dingel, an attorney, testified in favor of H 180. Mr. Dingel discussed
the Martin case of December 2002, noting that it was not the insurance
company’s fault that a two-year delay had taken place; rather, among other
delays, the plaintiff changed attorneys. Because the Martin case found that
the legislature hadn’t addressed the area of arbitration, Mr. Dingel pointed
out that the legislature needed to fix this, and H 180 is an attempt to do so.
He also noted that an “offer” of settlement is considered to be as good as a
payment.

Responding to questions from committee members, Ms. Ottens said that it
is not common to see real estate agents brokering mortgages, but there are
some who do so. This legislation is intended to protect consumers from
predatory lending practices as well as other practices sometimes engaged
in by unscrupulous individuals. However, the bill will not require a license for
a realtor who simply wants to suggest a bank or other lender to his clients,
since this does not constitute “brokering” a mortgage.

EXCUSED:

Jim Laski, an attorney representing Sun Valley Elkhorn Association and
other homeowners’ associations, testified in support of H 242. Mr. Laski
said that the intent of the legislation is to grant the associations the power to
levy monetary penalties or fines for noncompliance with association rules.
Currently, homeowners’ associations have no statutory authority relating
specifically to them, unlike condominium associations. When a
homeowners’ association attempts to impose fines, the matter usually ends
up in court because it is not clear whether the association actually has
statutory authority to do so. Mr. Laski said that H 242 is consistent with laws
in several other states, and pointed out that it requires a two-thirds majority
vote of the association members in order to approve association rules.

In response to questions from the committee, Mr. Laski stated that this bill
would ratchet up pressure on nonconforming homeowners, but
acknowledged that if an offending party still refuses to comply with rules, the
matter would have to be decided by a judge. He also testified that the
reason this legislation is proposed under the code section on nonprofit
corporations is that homeowners’ associations are typically set up as
nonprofits, and there is no section of code dealing specifically with
homeowners’ associations. Rather than bring a bill that would set up a
separate section on homeowners’ associations, Mr. Laski said that they
thought this was a simpler approach. Committee members also expressed
concern about passing legislation that would affect all nonprofit corporations,
instead of just homeowners’ associations.

Susan McBryant, who operates a small property management company in
the Sun Valley area, testified in favor of H 242. She explained that the rules
of homeowners’ associations are designed to uphold property values and to
maintain a certain lifestyle within subdivisions. Ms. McBryant stated that, in
dealing with nonconforming residents, associations have detailed provisions
for notification, hearings, fines and penalties. However, the associations are
not able to actually enforce the rules, which makes for tremendous
neighborhood disharmony and can allow property values to decline when
rules are ignored.

Responding to committee members’ questions, Ms. McBryant stated that
homeowners’ associations have no enforcement powers, so when cases of
nonconforming homeowners are taken to court, the courts find no enabling
language that allows the association to enforce their rules. She also stated
that H 242 would enable all homeowners’ associations to go to their
members to vote on rules and would give them enforcement powers. Again,
committee members noted that the legislation does not specifically address
homeowners’ associations, but instead adds to the code applying to
nonprofit corporations.

Dick Miller, representing Association Management, Inc., a small company
that manages homeowners’ associations, testified in favor of H 242. He
said that, under the current situation, associations have only two options
when enforcing rules: either friendly persuasion, or a lawsuit.

In support of the motion, Rep. Gagner stated that he thought the legislation
was unnecessarily broad, covering all nonprofit corporations, and he
suggested that it should be reworked and refined to include only
homeowners’ associations. Rep. Cannon said, in explanation of his motion,
that he thought the Legislature should stop passing laws to correct problems
that individual groups should be taking care of on their own. He said that if
a homeowners’ association imposes rules on its members, it ought to
enforce its own rules.

MOTION

S 1047, which includes a number of housekeeping matters made necessary
by the 1999 recodification of the real estate law. The first change adds back
into law a section that was inadvertently dropped during the recodification,
which requires that brokers who deal with mobile homes, motor homes or
floating homes must comply with the same licensing requirements as other
real estate agents. H 242 also will allow self-certification of compliance with
errors & omissions insurance, and will allow online renewals. It also clarifies
the deadline for license applications and renewals, clarifies that a licensee
is not entitled to a refund if he terminates his license, and clarifies that a
licensee will not receive CE credit for taking the same core course more than
once. Additional changes include a requirement that a licensee, when he is
buying or selling property, must run the business through his own broker,
and an allowance for a licensee to pay personal assistants or other sales
associates directly, rather than having his broker pay them.

In response to questions from committee members, Rep. Jones said that
some other states also require a waiting period for convicted felons, but she
is not aware of any states that have a complete ban on the licensing of
felons, although such a ban could be implemented in the future. She also
responded that there is no provision for making a notation on the licensee’s
license that he or she is a felon.

EXCUSED:

In response to a committee question, Erwin Teuber, director of Terry Reilly
Health Centers, stated that 39% of all revenues in such clinics comes from
patient fees.

Rep. Deal expressed disappointment that the Department of Health and
Welfare had not brought these concerns to the attention of those who
worked on this legislation; there was no discussion of these points before the
legislation reached this stage of being considered by the Business
Committee. Mr. Schultz responded that the department had chosen to take
no position on H 281 because it doesn’t fit within the Governor’s budget.
Rep. Deal said it was his understanding that the department agreed that the
program should be created and then wait for funding to become available.

Bill Foxcroft was recognized to respond to a question from the committee.
Mr. Foxcroft stated that, according to the best estimates that he can obtain,
between two-thirds and three-fourths of those who utilize health care clinics
for the indigent actually cannot afford to purchase health insurance.

Rep. Tilman asked why this bill was before the Business Committee, rather
than the Health & Welfare Committee. He noted that the bill does not deal
with health insurance issues per se, but rather deals with pure grant
programs. Furthermore, Rep. Tilman stated that he did not think the
Business Committee could decide policy issues without an overall
appreciation of the Department of Health & Welfare, and this is outside the
scope of the committee’s expertise.

MOTION:

Rep. Gagner expressed some serious concerns about H 281. There is no
probability of funding this program this year, and he does not want this idea
to compete with Health and Welfare funding. Rep. Gagner also noted that,
if the bill is sent out without any funding, it will not come back through the
committee again for further consideration. Although he is totally supportive
of the idea, he has some reservations about passing H 281.

EXCUSED:

In response to committee questions, Mr. Dugdale explained that UGMA
accounts are set up because a child cannot enter into a contract with an
investment company or bank. Generally the giver of a financial gift to the
child self-appoints as custodian and establishes the account under the
child’s social security number. The custodianship can be transferred to
another person if desired. H 144 does not require the custodian to hold the
funds to age 25; rather, the transfer can be made at any time between the
age of majority, 18, and the age of 25, subject to the discretion of the
custodian. No person may act as custodian of an UGMA account unless he
or she has reached the age of majority. Mr. Dugdale also explained that a
“custodian” of an UGMA account is different from a “conservator” because
a conservator is one who manages assets left to a minor following a death.

Rep. Clark explained the amendments to H 144, pointing out that the
amendment simply deletes the changes to code section 68-801 which were
originally proposed in H 144. Instead, it was decided that the changes
should be made to code section 68-820 only, which is what the amendments
to H 144 will do.

H 144 to General Orders with amendments attached.

EXCUSED:

EXCUSED:

Mr. Lodge also presented an amendment to S 1051, which was the result of
working with the insurance industry. There was some concern expressed
over the language of the original bill, which defined the denial of coverage
or benefits to be “unfair methods of competition and unfair or deceptive acts
or practices.” The amendment removes that language and instead specifies
activities which may not be used as the basis for denying coverage or
benefits. The amended bill will also have a new Statement of Purpose which
will reflect the new language.

S 1051. Ms. Taylor reported that Blue Cross had worked closely with Mr.
Lodge in drafting amendments to the bill, out of a concern over the severe
wording on trade practices. After reaching agreement on the amendments,
Ms. Taylor said that Blue Cross management decided they still could not
support the legislation because they perceive it as a mandate.

S 1066, which clarifies the procedures followed in cases of garnishment.
This bill provides for designation of a particular office to accept all
garnishments on the bank by notice to the Department of Finance, which will
publish a list of all such designated offices on its website. Mr. Collins stated
that he is not aware of any opposition to this bill.

Rep. Jaquet gave an overview of the reasons why she thinks this legislation
is necessary. She stated that prescription drugs are the fastest growing
segment of overall national health expenditures, and that drug utilization
increases as a result of pharmaceutical advertising. The majority of
promotional efforts continues to be focused on the physician; spending on
drug promotion directly to physicians increased by nearly $5 billion from
1996 to 2000. The pharmaceutical industry has instituted a voluntary code
of conduct to control marketing practices, effective July 1, 2002. Rep.
Jaquet stated that, while this is a start, it still does not require any reporting.
H 289 will require the pharmaceutical industry to report gifts, which will allow
closer monitoring of how those gifts may be influencing physicians to use
certain drugs.

Committee members expressed some concern with the disclosure and
reporting requirements, citing increased bookkeeping costs which will
ultimately be passed along to patients. They also had questions about
disclosure of trade secrets. Rep. Jaquet pointed out that the increased costs
will be borne by the drug companies, not by physicians; the trade secret
information is protected under Title 9 of existing code.

H 334 to the committee. Mr. Brassey said that this bill includes two
amendments to Section 41-309 of the Insurance Code. The first, on lines 25-31, creates the presumption that for purposes of this section, an insurer with
tax exempt status, or an affiliate of such an insurer, is a government agency.
The second amendment is in lines 16-17 and line 30, which will apply the
statute to an insurer’s affiliates.

Mr. Brassey stated that in most states, a State Insurance Fund is created
because worker’s compensation insurance is mandatory for employers, so
the state fund can offer work comp policies to those who cannot otherwise
get insurance. In Idaho, the State Insurance Fund offers a basic, standard
worker’s compensation policy, and the fund is barred from doing business
out of the state of Idaho. Recently, the Worker’s Compensation Fund (WCF)
of Utah acquired ownership of a for-profit subsidiary, Advantage, who
currently does business in Idaho. Because the Utah parent company acts
as the state insurance fund for that state, it enjoys a tax-exempt status. A
ruling by Judge McKee found that the Utah company is, in fact, a
government company operating in Idaho, which is a violation of Idaho’s
code. Because of their tax exemption, the Utah company enjoys the same
advantage as the Idaho state fund. Private companies who offer worker’s
compensation policies do not enjoy the same competitive advantage and
therefore fear that they will not be able to stay in this market. As the market
contracts, there will be fewer companies offering coverage and less
variability in policies.

In response to questions from committee members, Mr. Brassey said it is
generally agreed that Advantage is a shell corporation which enjoys a federal
tax exemption. The current situation illustrates the kind of problem that
exists when more than one state fund operates in this state; the result will be
that private companies will dry up. He stated that Advantage has a broader
range of products which may be more like private company policies; the
Idaho state fund, on the other hand, offers only one basic policy.

Mr. Riley stated that WCF of Utah is not a state agency, and that it issues
policies, maintains sufficient capital, is subject to the rules of the Idaho
Department of Insurance, and has its rates regulated by that department.
The preliminary decision of an administrative proceeding conducted by
Judge McKee stated that WCF is controlled by the State of Utah because the
governor of the state appoints the board of directors. Mr. Riley disagrees
with this finding.

Mr. Riley explained that the State Insurance Fund of Idaho has over half of
the market for work comp policies; the second largest company is Liberty
Northwest, and Everest National is third. Basically, there are two private
carriers in the Idaho marketplace: Liberty Northwest and Advantage. Mr.
Riley said that the question of the tax advantage is moot because pricing is
set by the Department of Insurance, so Advantage is not able to undercut the
competition. Mr. Riley also said that the state cannot set up barriers to
prevent businesses from coming into Idaho; if they do so, this is a violation
of the commerce clause of the Constitution. Mr. Riley suggested that there
are a number of ways to prevent unfair practices without barring companies
from coming into the state. He stated that H 334 and probably the entire
code section are an interference with interstate commerce. Rep. Deal noted
that it is not a bad thing that the state insurance fund is a major supplier of
work comp policies in the state; in fact, the same situation exists in Utah.

In response to committee questions, Mr. Riley supplied figures on market
share for Liberty Northwest (11.49% in 2001) and Advantage (5% in 2001).
The rest of the market is covered by about 200 smaller carriers whose total
share is about 25-30% of the market. The State Insurance Fund has over
50% of the market. He also said that, unlike the State Fund, Advantage
does not pay dividends back to its policyholders. Mr. Riley also said that
Advantage was owned by another company in Indiana, but in 1998 the WCF
of Utah bought the company’s stock. He noted that it may be easier for
Advantage to get reinsurance because of its affiliation with WCF.

Dennis Lloyd, General Counsel to WCF in Salt Lake City, was recognized
to answer a question. Mr. Lloyd said that Advantage has its own board of
directors and is regulated by the Indiana Insurance Department. He also
stated that Advantage cedes 80% of its premiums to WCF.

H 334. He testified that his company works with over 1,000 Idaho
businesses in the area of work comp. Workcare employs over 20 people,
and this bill will cause the termination of many of them; additionally, it will
affect the jobs of claims adjusters, loss prevention specialists, continuing
education instructors, and others. Mr. Galtney stated that he has chosen to
postpone construction of a new headquarters building in Meridian because
of H 334. If this legislation passes, Advantage will be forced to cease
underwriting in Idaho, which will negatively affect independent agents who
rely on Advantage for worker’s compensation products.

Responding to committee questions, Mr. Galtney said that Workcare does
not have a tax advantage; Workcare is not an insurance company, but rather
is a service company that provides services for Advantage on a contractual
basis. Workcare provides loss prevention and safety services which help to
mitigate losses before they occur.

Rep. Deal asked Mr. Moore if he could read the final conclusion of Judge
McKee’s ruling; Mr. Moore responded that he did not have that with him.
Upon further questions from the committee, Mr. Moore stated that there is
a Senate bill currently in the Idaho Senate, S 1148, which addresses the
issue of the definition of “voting control.” Committee members expressed the
point that Advantage is ceding 80% of premiums to the WCF of Utah, while
the State Insurance Fund of Idaho sends its profits back to Idaho consumers
in the form of dividends.

H 334. Mr. Lewis stated that staffing services such as his do not have many
options in purchasing work comp insurance; basically, they must choose
between the State Insurance Fund or the Reinsurance Fund. Worker’s
compensation insurance represents the single biggest variable in the cost
of doing business. Mr. Lewis’ company has been offered little or no risk
control services in the past, but when he went to Workcare, he was offered
participation in their aggressive loss control program, which resulted in a
$100,000 savings the first year. Passage of H 334 will force his business
back into the risk pool and limit his options for risk management.

MOTION

EXCUSED:

H 178. Rep. Mitchell briefly recounted his 30 years’ experience as a beer
and wine wholesaler. He stated that, in his view, it is the wholesaler who
establishes the necessary rapport with retailers and earns the shelf space
for the wines. In response to a committee question, Rep. Mitchell stated that
he did not have contracts with vineyards and that he was not sure that such
contracts were available or necessary at the time.

Mr. Roden stated again that H 178 is a clarification of existing law, and does
not change Idaho Code. He said that there has been some talk about similar
legislation in Washington and Illinois; both dealt with franchise laws in
general. The Illinois case dealt with out-of-state entities differently than in-state entities, which is viewed as a violation of interstate commerce. Mr.
Roden noted that the Washington law has been stricken on the same basis,
because it also dealt with out-of-state entities differently. Mr. Roden stated
that, if Idaho’s law is not clarified, there are a lot of small businesses in Idaho
which will be hurt because they have built up their businesses over a number
of years and have little or no protection under the current law.

Responding to the committee’s questions, Mr. Vickers stated that he does
have agreements with his distributor. He chooses not to distribute his own
products because the distributor does a better job of dealing with small
retailers and restaurants who may order small amounts of his product at any
one time.

H 178. Mr. Abrams pointed out that there are now fewer distributors but
more wineries in existence. He stated that a winery is lucky if it can get a
distributor to represent it. In any case, Mr. Abrams think that it is best to let
the open marketplace determine the relationships between vintners and
distributors.

In response to a committee question, Mr. Roden stated that the term “good
cause” was dealt with by a court decision, but that it was a District Court
decision, not a Supreme Court decision. Although judges may look to a
precedent set by a District Court decision, they may not even know about the
existence of such a decision because District Court decisions are not
published. In any case, those decisions made at the district level are not
binding in future cases; only Supreme Court decisions are binding on future
cases.

MOTION:

EXCUSED:

Responding to further questions, Mr. Pisca stated that real estate agents are
trained to market properties, and are not trained as home inspectors.
Therefore, they do not have greater knowledge of the property’s condition
than the people who actually live in the home, and they should not be held
responsible for knowledge they cannot have. He also said that payment for
a home inspection is an item that can be negotiated between buyer and
seller. Mr. Pisca said that, on the disclosure form, the seller is responsible
to list conditions actually known by him as owner of the home; if he is aware
of conditions that existed prior to his ownership, he would be required to
disclose them.

S 1097. Mr. Eidam presented a handout which compared the duties of an
agent dealing with a “customer” and the duties of an agent dealing with a
“client.” Mr. Eidam stated that S 1097 will remove the distinction between
the two, and the public will not know that they are not getting representation
as a “client” until something goes wrong and they find that the agent is not
responsible. He also said that under current law a realtor can fulfill his
obligation by referring the buyer to a professional inspector, and that he
would not have to do the inspection himself.

EXCUSED

In response to committee questions, Rep. Mitchell said that this legislation
applies only to casualty insurance, including malpractice; it will not apply to
homeowner’s, auto, or business insurance.

Mr. Evans provided members of the committee with a copy of a “Sample
School District” handout which details the utilization and cost figures for an
Idaho school district. This report provides information on each of the cost
drivers affecting insurance coverage; H 243 will not provide this kind of
detailed information. Mr. Evans explained that the retirees from all districts
are pooled and that their premiums are paid from their unused sick leave at
PERSI. Mr. Evans asked why districts would want to have their over-65
retirees reported as part of the district, when districts are not involved
financially and the premiums are not part of the district’s budget. Mr. Evans
said that the Council opposes H 243 because it is not needed, and also
because they think that the eventual result of the required reporting will lead
to those with better reports leaving behind a higher risk pool when they go
to another carrier. H 243 poses a significant danger to the program Mr.
Evans has been running successfully.

H 243. Ms. Taylor said her biggest concern is that the retiree pool will be
undermined and the sickest retirees will be left in the pool, thus jeopardizing
the viability of the system. She also pointed out troublesome areas of the
bill: There is no definition of cost report, no definition of “regular basis,” and
no determination of whether the reports are on an incurred or on a paid
basis. Finally, Ms. Taylor said that the language in H 243 does not say that
a report needs to be given to an individual school district.

Bill Lindsay was recognized to respond to earlier committee questions. Mr.
Lindsay said that page 1, lines 28-30 contain the requirement that
employees and retirees of a district have to be included in the same health
insurance plan. He also read from HIPAA regulations, Section 164.501, third
paragraph, in which disclosure of specific claim information is permitted for
purposes of comparison. Mr. Lindsay said that it is not the intention of this
bill to hurt retirees or to destroy the pool; rather, it is seeking information so
that districts can get a competitive bid on their insurance coverage.

Rep. Tilman argued in favor of his motion to HOLD H 243 in committee,
saying that it appears that claims information is available to districts, at least
on the basis of the entire pool’s history. He said that there did not seem to
be a problem in this area, since 94 districts are in the pool and none of them
appeared to testify in opposition to the bill.

Responding to committee questions, Ms. Eaton said that the franchise
business may be slowed because franchises hesitate to go into some states
which have inconsistent or unfavorable regulations. She said that her
association’s main concern is the government regulation and interference
that this bill represents.