ARIZONA STATE SENATE 46TH LEGISLATURE FIRST REGULAR SESSION

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1 ARIZONA STATE SENATE 46TH LEGISLATURE FIRST REGULAR SESSION MINUTES OF COMMITTEE ON COMMERCE DATE: March 5, 2003 TIME: 9:00 a.m. ROOM: SHR 3 CHAIRMAN: Senator Leff VICE CHAIRMAN: Senator Blendu ANALYST: Todd Madeksza COMMITTEE SECRETARY: ASSISTANT Brandy Martin ANALYST: Nancy L. DeMichele INTERN: Sophie Rigollet ATTENDANCE BILLS Committee Members Pr Ab Ex Bill Number Disposition Senator Allen X HB 2026 HELD Senator Arzberger X HB 2074 DPA Senator Cheuvront X HB 2135 DP Senator Giffords X HB 2148 DP Senator Martin X HB 2149 HELD Senator Tibshraeny X HB 2158 DP Senator Soltero X HB 2159 DP Senator Blendu, Vice Chair X Senator Leff, Chair X GOVERNOR S APPOINTMENTS Name Position Recommendation Mary Rose Wilcox Member, Arizona State Boxing Commission CONFIRMATION James Kelly Collins Member, Arizona Sate Veterinary Medical CONFIRMATION Examining Board

2 Chairman Leff called the meeting to order at 9:08 a.m., and roll call was taken. APPROVAL OF MINUTES Senator Leff announced, without objection, the minutes of the meetings of February 12 and 19, 2003, are approved as distributed. EXECUTIVE NOMINATIONS Mary Rose Wilcox, Member, Arizona State Boxing Commission RECOMMEND CONFIRMATION Mary Rose Wilcox stated she currently serves on the Maricopa County Board of Supervisors and previously served as a member of the Phoenix City Council for nine years. She stated she and her husband have been involved in youth sports activities for many years and she believes the sport of boxing teaches discipline in youth. She said that her husband and she are dedicating a boxing gym to the community in the Grant Park area, and she would like to assist in efforts to ensure boxing remains on a very professional level in Arizona. Senator Tibshraeny commented that the Boxing Commission is totally funded from the State general fund. He suggested that perhaps consideration should be given to turn the Boxing Commission funding as well as the Racing Commission into a 90/10 allocation, which could save the State some money. Ms. Wilcox replied that she is aware that the Director is researching various options, and they will be discussing Senator Tibshraeny s suggestion. Senator Soltero welcomed Ms. Wilcox and stated he is sure she will make an excellent member of the Boxing Commission. In response to Senator Allen, Ms. Wilcox stated she will be the only female on the Boxing Commission, if nominated. Senator Blendu moved that the recommend to the full Senate the CONFIRMATION of Mary Rose Wilcox as a Member of the Arizona State Boxing Commission. The motion CARRIED by a roll call vote of (Attachment 1). James Kelly Collins, Member, Arizona State Veterinary Medical Examining Board RECOMMEND CONFIRMATION Dr. James Kelly Collins stated he has had a long-standing association with veterinarians having taught in veterinary schools in Colorado for many years. He has also conducted laboratory diagnostic tests and served on several advisory committees regarding the education of veterinarians. He commented that he moved to Arizona three years ago and is the Department Head of Veterinary Science and Microbiology at the University of Arizona in Tucson. He said he looks forward to serving on the Arizona State Veterinary Medical Examining Board. Senator Blendu moved that the recommend to the full Senate the CONFIRMATION of Dr. James Kelly Collins as a Member of the Arizona 2 March 5, 2003

3 State Veterinary Medical Examining Board. The motion CARRIED by a roll call vote of (Attachment 2). CONSIDERATION OF BILLS HB 2026 structural pest control commission HELD HB 2149 credit unions HELD Senator Leff announced HB 2026 and HB 2149 will be held until next week at the request of the sponsors in order to work on amendments. HB 2074 PSPRS; military credit (now: registrar of contractors; powers; funds) DO PASS AMENDED Todd Madeksza, Senate Commerce Research Analyst, explained HB 2074 makes substantive and clarifying changes to current statute outlining administration by the Registrar of Contractors (ROC) and management of the residential contractors recovery fund. He said current statute outlines the power and duties of the ROC including maintaining a complete indexed record of licensed contractors in the State along with a list of all applications, and licenses issued, renewed, terminated, cancelled, revoked or suspended. He noted that the current statute also administers the residential contractors recovery fund to provide financial protection to residential consumers against a licensed residential contractor s poor workmanship or nonperformance. Mr. Madeksza stated that the fund is required to be maintained at a level of $200,000, and the fund s balance is currently $6 million. He commented that from time to time the ROC is also called upon to conduct a courtesy inspection for either the contractor or homebuyer. In these instances, the ROC acts as a disinterested or neutral party to resolve a conflict between two disagreeing parties. Mr. Madeksza stated HB 2074 codifies the current practice of the ROC and makes it clear that it has the authority to conduct the courtesy inspections. He said there is no anticipated fiscal impact to the State general fund associated with this measure. Mr. Madeksza explained the 6-line Leff amendment dated 2/28/03 at 1:35 p.m. adds an emergency enactment clause to the bill. Senator Allen wanted to know why the administrative law judges were being eliminated as part of the administrative enforcement team. Michael Goldwater, Director, ROC, testified in support of HB He stated he will soon retire as Director of ROC, and he introduced the new appointee Israel Torres. In response to Senator Allen, Mr. Goldwater stated that historically the ROC has had five administrative law judges. He said with the creation of the Office of Administrative Hearings, the administrative law judges were transferred and hiring ceased. He said this basically conforms to legislation. Senator Leff thanked Mr. Goldwater for his outstanding service as Director of ROC. Spencer Kamps, Deputy Director, Homebuilders Association of Central Arizona, testified in support of HB He stated the interest in the bill relates to the courtesy inspection program. He said it was discovered through the Auditor General s Office that the ROC did not have statutory authority; therefore, the amendment will ensure that the program continues. He commented that the program used by homeowners and homebuilders to resolve disputes without a formal complaint being filed has been an excellent program for 15 years. He said the program is suspended and the passage of the bill and amendment will enable the program to continue. 3 March 5, 2003

4 Senator Leff announced the individuals who registered their position on the bill (Attachment A). Senator Blendu moved HB 2074 be returned with a DO PASS recommendation. Senator Blendu moved the 6-line Leff amendment dated 2/28/03 at 1:35 p.m. be ADOPTED (Attachment B). The motion CARRIED by a voice vote. Senator Blendu moved HB 2074 be returned with an AS AMENDED, DO PASS recommendation. The motion CARRIED by a roll call vote of (Attachment 3). HB 2135 wage assignments; employer duties DO PASS Brandy Martin, Commerce Assistant Research Analyst, explained HB 2135 repeals one version of dual-enacted legislation dealing with employee disclosure of a wage assignment order to provide child support. In response to Senator Allen as to the bill s purpose, Ms. Martin explained that two versions of the statute existed that could not be blended. She said the child support committee recommended that one version be repealed, which this bill represents. Senator Blendu moved HB 2135 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of (Attachment 4). HB 2148 mortgage guaranty insurance DO PASS Mr. Madeksza explained HB 2148 establishes mortgage guaranty insurance as part of the established uniform rate form and approval process and extends mortgage guaranty insurance rate and form filings waiting periods. He said mortgage guaranty insurance is the insurance that a lender may require homebuyers to purchase to ensure recoupment of losses from a defaulted home mortgage. He indicated that this type of insurance is usually required if a homebuyer purchases a home with less than 20% as a down payment, which enables the homebuyer to purchase a more expensive home with a lower down payment. Mr. Madeksza stated the bill establishes the insurance as part of the uniform rate form and approval process that is already in statute pursuant to A.R.S He said the measure eliminates waiting periods for the current mortgage guaranty insurance statute outlining rate filings and applies the established time frames to mortgage guaranty insurance. He noted there is no anticipated fiscal impact associated with this legislation. Michael Low, Attorney, Low and Childers, representing PMI Mortgage Insurance Company, testified in support of HB He stated that the purpose of the bill is to conform to legislation that passed last year. He said the measure puts PMI s mortgage guaranty insurance on the same rate and form regulation as every other kind of insurance with the exception of workers compensation and title insurance. Senator Leff asked why title insurance is separate. Mr. Low responded title insurance is basically uniform across the country, and he will research that issue to see why it is not included. Senator Blendu moved HB 2148 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of (Attachment 5). HB 2158 Arizona corporation commission; investment management DO PASS 4 March 5, 2003

5 Ms. Martin explained HB 2158 makes clarifying and conforming changes to the Investment Management Act of the Arizona Corporation Commission (ACC). She stated that the bill clarifies that the ACC may prevent a financial institution from disclosing the existence or content of a subpoena related to an investigation to anyone except the financial institution s legal counsel. She indicated that the bill also makes conforming changes to the Act regarding the authority of ACC s attorneys to represent the ACC in administrative or civil matters. Kenneth Rosen, Legislative Liaison, ACC, testified in support of HB Senator Leff asked why a financial institution would want to disclose information regarding a subpoena. Mr. Rosen explained most institutions that are in receipt of a subpoena from the ACC have complied willingly with ACC s request not to disclose; however, several larger institutions have questioned the authority under which the ACC is making the request not to disclose. Mr. Rosen explained that the financial institution might possibly disclose that information to a lending institution s customer, who may be the focus of the ACC s investigation of possible violations of the Arizona Securities and Investment Management Acts. Mark Sendrow, Director of the Securities Division, ACC, testified in support of HB He provided background information leading to the introduction of this measure. He said two major banks raised some questions as to the legal authority of the ACC to request nondisclosure, and those institutions requested that either a court decision or legislation be enacted. Mr. Sendrow commented that because of the time element, it was believed that legislation would be the best way to clarify this issue. Senator Blendu moved HB 2158 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of (Attachment 6). HB 2159 securities sales; Arizona corporation commission DO PASS Ms. Martin explained HB 2159 makes clarifying and conforming changes to the Securities Act of the ACC. She stated that the bill clarifies that the ACC may prevent a financial institution from disclosing the existence or content of a subpoena relating to an investigation to anyone except the financial institution s legal counsel. She said the measure conforms the Securities Act to the federal Sarbanes-Oxley Act of 2002 by lengthening the statute of limitations for certain types of securities fraud and makes conforming changes to the Act regarding the authority of the ACC attorneys to represent the ACC in administrative or civil matters. Senator Leff asked a representative of ACC to comment on the similarities of HB 2158 and HB Kenneth Rosen, Legislative Liaison, ACC, explained that as originally drafted, the provisions of both bills were contained in a single draft. However, after review in early January, an ACC Commissioner raised a question as to the germaneness. Mr. Rosen said the ACC directed him to have that question reviewed by the Rules Attorneys in the Arizona House of Representatives. Mr. Rosen said the advice given was to exercise caution and suggested that the bill should be split. He said based on that advice, the measure was redrafted into two bills HB 2158 and HB Mr. Rosen explained that HB 2158 relates to proposed amendments to the Investment Management Act and HB 2159 relates to proposed amendments of the Securities Act. Senator Blendu moved HB 2159 be returned with a DO PASS recommendation. The motion CARRIED by a roll call vote of (Attachment 7). 5 March 5, 2003

6 There being no further business, the meeting adjourned at 9:33 a.m. Respectfully submitted, Nancy L. DeMichele Committee Secretary (Tapes and attachments on file in the Secretary of the Senate s Office/Resource Center, Room 115.) 6 March 5, 2003

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