The 3rd meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, November 9, 2001, at 10:00 AM, in Room 129 of the Capitol Annex. Senator Brett Guthrie, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senators Brett Guthrie, Charlie Borders, David Boswell, Tom Buford, Bob Jackson, Marshall Long, R.J. Palmer, II, and Jack Westwood; Representatives Carolyn Belcher, Larry Clark, Ron Crimm, Jon Draud, Dennis Horlander, Joni Jenkins, Paul Marcotte, Reginald Meeks, Charles Miller, Ruth Ann Palumbo, Jon David Reinhardt, and Jim Stewart.
Guests: David Cox, Executive Director, Bud Salyers, General Counsel, Kentucky State Board of Licensure for Professional Engineers; Rick Johnstone, Commissioner, Alcoholic Beverage Control; Ken Meredith, Deputy Commissioner, Department of Housing, Building and Construction; Robert Weiss, Glenn Acree, Kentucky Home Builders; Doug Doolin, Lexington Fayette Urban County Government; John Cooper, Anheuser Busch; Bert May, Kentucky League of Cities; Gay Dwyer, Kentucky Retail Federation; Tom Gatewood, Dept. of Charitable Gaming; Chris Nolan, MML&K; Bob Benson, Kentucky Horseman’s Benevolent & Protective Association; and George Binder, Kentucky Consulting Engineers Council and Kentucky Society of Professional Engineers
LRC Staff: Vida Murray, Jack Jones, Ann Seppenfield, Cyndi Galvin, and Susan Cunningham.
Chairman Guthrie called the meeting to order and asked for a moment of silence for Representative Butler and his family. The motion was made to approve the minutes of the last meeting with a second and they were adopted by voice vote.
David Cox, Executive Director of the Kentucky State Board of Licensure for Professional Engineers and Land Surveyors requested approval of six administrative regulations. He said the regulations submitted did not increase fees and were more housekeeping in order to verify language and consolidate multiple regulations into one. He said now there was clarification regarding the difference in a fee for an application and one for an examination. There was also clarification that the $150 renewal fee was applied to an individual and not for a firm. Also, changed was the term “firm” to “business entity.” There is an explanation regarding an engineer who adds new disciplines to his qualifications. Regarding fees for dual licensees for firms that practice both engineering and surveying, the annual renewal fee will be discounted.
Senator Buford asked what the difference was between an individual engineer renewing his license and a firm with engineers in it renewing their license and if the firm could pay an increased fee and the engineers would not have to pay the renewal. He also asked if the engineers who work for the Transportation Cabinet renew their license personally and then charge that fee on a voucher back to the state.
Mr. Cox said that each individual engineer had to renew his license every other year and the business entity for whom he works must renew its permit during the same time frame. This insures that qualified persons are working in the business. He also said surveying firms must have a permit. Regarding increasing the fee for business entities he said that professional societies had not requested this consideration. Mr. Cox said that typically business entities paid the engineers’ license renewal fees. He also indicated that the Transportation Cabinet was not charged a firm permit fee nor were agencies such as Lexington Urban County Government.
Senator Guthrie called for a motion to accept the Regulations and with a second they were adopted by voice vote.
Rick Johnstone, Commissioner for Alcoholic Beverage Control spoke to the committee about issues and changes the Department wants to make in the 2002 legislative session. One item will be mandatory server training. Another particularly important issue, he said, pertains to restaurant licenses that used to require a business to have 50% of its sales in food to qualify as a restaurant. However, last session a local option bill raised the requirement to 70% for food sales. He indicated the Department would like to be able to do an audit of businesses that are questionable regarding 70% food sales without having to cite the business or do a whole audit.
Mr. Johnstone said the board’s authority also needed to be expanded. Currently, the law says that the board has to either suspend or revoke a license. He said there is a provision where the days suspended can be bought out by the licensee at $50 a day. Mr. Johnstone said he would like to be able to mandate training in lieu of suspension. He feels this option would help licensees determine individuals over and under age, and could require 100% ID checks when selling malt beverage or distilled spirits.
Mr. Johnstone said one recurring question is, “Why can someone sell when they can’t consume?” By law, you can sell alcohol in an open container if you are twenty. The Department wants to change sales in open containers, so that if alcohol is sold in a bar type setting or by the drink the server has to be 21. Mr. Johnstone said closing hours are different for distilled spirits vendors than for malt beverages vendors. The Department of Alcoholic Beverage Control would like to make the statutes consistent by requiring the closing hours for distilled spirits to be the same as for malt beverages.
Mr. Johnstone said it has been difficult to determine when a minor on premises is appropriate. He said the restaurant drink license was created when people began to eat out. However, a by-the-drink license does not allow minors on the premises. He said this is a problem because some businesses will try to create the atmosphere of a restaurant when in fact the sites are bars. He said the Department will propose changing the licensing statute and issuing supplemental licenses that would designate in what area of the building minors were permitted. He said the responsibility should be on the patron and not on the licensee. Mr. Johnstone said statutes defining groceries needed to be rewritten to create a consistent definition of “groceries.”
Mr. Johnstone said when the statute regarding Sunday sales was changed in the 1998 legislative session the phrase “by-the-drink” was unintentionally deleted. There will be a bill drafted to correct this error; however, since there is a Declaratory Judgement action presently pending in Franklin Circuit Court to rule that ABC’s opinion that package liquor stores cannot sell on Sunday, this item will be held until the ruling is handed down.
Mr. Johnstone said there will be a proposal to change the statute to allow payment of licensing fees or fines electronically. The current statute does not provide for this method of payment but will be needed because the Department of Alcoholic Beverage Control will go online for license renewal in the near future.
In closing Mr. Johnstone said current law required hotels with in-room licenses to advertise; however, ABC had treated these as supplemental licenses and not required advertisement. He would propose adding hotels to the license that is exempted from this requirement. Mr. Johnstone said regarding tobacco he would recommend amending KRS 438.330, by deleting the reference to Trust and Agency Funds and the reference to the Department of Alcoholic Beverage Control filing the report with the federal government which is in reality done by Health Services. He said there may be other items included in the Alcoholic Beverage Control package and that hopefully this can be done in one bill; however, if there is disagreement within the industry there will be two separate bills.
Senator Borders commented that mandating training in lieu of suspension was weakening the statute and that training should be in addition to suspension. Also, continuing education and training would water down the violator’s fines and penalties.
Mr. Johnstone said that he wanted to see people who sell alcohol go through training similar to that required of food servers by the Board of Health and has hopes that eventually the Department will license people who serve.
Senator Buford said to keep in mind when designing the change in the law that there are establishments still in existence that have combination licenses. These licenses may permit a minor on the premises of an establishment that sells alcoholic beverages and may allow bars to sell package liquor.
Mr. Johnstone said there are 70 distilled spirits licenses but only one for malt beverages. Therefore, if there is a facility that had a bar, it could sell malt beverages by the drink or by the package.
Senator Westwood agreed with Senator Borders regarding in-service training and asked if Mr. Johnstone had been in contact with businesses or the industry to see if they were willing to help with training. He also asked if there was a way to insure that minors not have access to mini bars in hotel rooms and if in fact a minor could rent a hotel room with a mini bar in it.
Mr. Johnstone said he had started an education branch and that if there was mandatory training for people who serve, the Department of Alcoholic Beverage Control could do the training without outside help. Also, some stores have their own training programs. He said it might be possible for the Department to look at a facilities internal training and approve it if it was compliant with the Kentucky statutes. Regarding the in-room licenses, Mr. Johnstone indicated that there has never been a call or any activity for violations.
Senator Boswell said that it was general hotel policy not to rent a room to anyone under the age of 21.
Representative Draud asked Mr. Johnstone if Kentucky law permitted parents to buy alcoholic drinks for their minor children. Mr. Johnstone said there was no law in Kentucky to permit adults to buy alcohol to give to underage children in a licensed facility.
Senator Long said the concern should be focused on places that continue to have violations, and to increase the ability of the Department of Alcoholic Beverage Control to close that business down.
Senator Boswell said regarding the board authority he felt that conducting a training seminar was a move in the right direction. He said that habitual offenders should be dealt with accordingly; however, there also should be some latitude in the enforcement and degrees of penalties for legitimate businesses.
Representative Reindhardt questioned the need to change the statutes for “food and groceries” and “staple groceries” if the two groups understood the laws. He said what he was hearing was that the Department of Alcoholic Beverage Control wanted to bring malt beverage regulations into the distilled spirits regulations; however, that would weaken the distilled spirits regulations.
Mr. Johnstone said part of the definition of the statute is rolled into administrative regulation and the printed guidelines supplied to the licensees do not have the regulations in them; therefore, the businesses do not know where to go to find the regulations. It is a routine problem and the real intent is to take the definitions of “commercial transaction” and “staple groceries” from the regulations and place them in the statute eliminating the need to look for the definitions someplace else.
Bob Wiess, Executive Director of the Kentucky Home Builders Association introduced Glenn Acree, the Home Builders’ attorney, and Jerry Fritz the Home Builders legislative chairman. He said the association was open to suggestions regarding the draft. Under the proposed draft small contractors who perform projects over $2,500 are required to register with the Kentucky Department of Housing, Buildings and Construction and those who performed projects under $2,500 are exempt. The bill was written for residential contractors. Contractors who do light commercial building, projects that include no more than 10,000 square feet, are also required to be registered. The bill restructures the Single Family Advisory Board in the Department of Housing and adds a consumer, an engineer or architect, builders and code officials to the board. The Department of Housing will oversee the board. People who are already registered with the state such as plumbers, HVAC contractor, sprinkler contractor or builders of manufactured housing are exempt as are people who build their own homes. However, if a plumber decides to get into the building business he would have to register as a builder.
Senator Long suggested that an independent builder is often used in rural areas and should be included on the board instead of having three members of the Home Builders Association.
Mr. Weiss said the private program continues in effect under the bill because the registered builder program has been in effect in Louisville since 1960 and has been adopted across the state. The association will keep administrative cost down by verifying proof of insurance. Currently Louisville, Lexington and Bowling Green have registration programs that will be grandfathered in under the bill.
Mr. Weiss said under the enforcement section you will not be able to get a building permit unless you show that you are registered with the state or a local community. In a county that does not enforce a building code, if an electrician will not be able to install a temporary pole unless the builder is registered and has a permit number. The bill tries to make enforcement local rather that state. Also, under the bill you must have a contract that requires the name and address of both parties, a description of what work is to be performed, payment terms and a way to resolve a dispute before going to court. Arbitrators could be the Home Builders Association, the Better Business Bureau, or a mediator. Additionally there should be a one year written warranty, and a person who is not registered under the law will be precluded from enforcing a construction lien or contract.
Mr. Weiss said registration numbers should be prominently posted on job sights. The bill requires 6 hours of continuing education for every builder and remodeler. Specialty contractors such as people who do window replacement will be required to register. These registration fees and requirements would be less than a contractor. In concluding Mr. Weiss said he was open to suggestions making changes in the bill.
Senator Guthrie asked why building contractors needed to be registered state wide. Mr. Weiss said that the industry was too wide open and people were taking advantage of this by building without knowing the building code or having the knowledge to build. The result is problems for the consumer.
Representative Palumbo asked what the definition of a general retailer was and for an explanation of subsection 8 of Section 5 and what the twenty four month period means.
Mr. Weiss said a retailer like Sears or Home Depot will be exempt if they use their employees to install carpeting because they would be the liable party. Regarding subsection 8, remodeling multiple homes or businesses for the purpose of selling and not the persons own use would make them a builder.
Representative Palumbo said the way the bill currently read she was concerned that people who owned apartments would have to register their maintenance people. Mr. Weiss said this was not the intent of the bill and the language would be changed to clarify that rental property is not the same as a property built for purchase.
Mr. Fritz said some people build a house just long enough live in it and then will sell it and repeat this over and over. If there is a set time that the person must live in the house they do not circumvent the statute by living there while the house is being finished.
Senator Jackson said the bill could place a burden on home builders who live in Western Kentucky who had to come to Frankfort for continuing education. He also said he felt the board had too much authority and asked what prompted the bill draft.
Mr. Weiss said there would be approved training agencies that would go out to the Home Builders Association’s chapters. Regarding the board’s authority, Mr. Acree said the language had been taken from other statutes that were already in effect. Mr. Weiss said there was language in the bill allowing local communities to have an appeals board. He said there is now oversight to a home being built and that this bill would professionalize the industry.
Senator Boswell asked if a homeowner subcontracted work to remodel his home would he be required to register. Mr. Weiss said if the person doing the subcontracting was living in the home with no intent to sell the home he would not have to register.
Representative Draud asked for an explanation of Section 8 regarding the contractual agreements. Mr. Weiss said in the home building industry, lack of contracts is prevalent, and espoused that having a contract would protect the consumer if something went wrong after the house was built.
Representative Reinhardt asked if a person who had rental property would be in volition of the law if he or she sold the property shortly after it had been remodeled. He asked how the bill defined someone as a builder if the residential property already exists. He said most communities require a permit; however, this does not make the person a builder. Mr. Acree said the rental property owner could ask the board for an exemption and it would be granted. The bill was meant to penalize people who build houses to sell rather than live in or to sanction one who buys property under the guise of renting when they intend to fix it up to sell. He said an exemption clause should be drafted.
Mr. Weiss responded to Representative Reinhardt that the bill does not change the community permit process. He said the bill relates to constructing new homes or remodeling existing ones such as adding on a room or putting in a new kitchen.
Representative Clark said his concern was that definitions for residential contractor and the light commercial contractor could be conflicting. He also said that he felt that the exemption in the bill would help specialty contractors circumvent the law. He also felt that the language precluding an unregistered person who did not belong to the association the right to go to court if there was a problem with his or her home was inappropriate.
Mr. Weiss said the bill could be limited to residential contractors only. Regarding Section 9 he said the bill does not say if you do not belong to the association but says if you are not registered and you file a lien or have a contractual problem you do not have the right to go to court. The registration referred to is with the state; not with the association.
Representative Palumbo asked how volunteers for Habitat for Humanity were treated under the bill. She was also concerned about a person who applied for a contractor’s registration number being denied and having no board to which to appeal. She also wanted the warranty to be longer than a year. Mr. Weiss said volunteers would be exempt. He said the association did not want to mandate local boards. If a local community does not have a board the person can come to Frankfort. There also is a statute that allows for the establishment of a local appeals board for issues related to the building permit process. Regarding the warranty, Mr. Weiss said most structural problems happen in the first year.
Representative Crimm commented that people, particularly in the metropolitan areas, do need to be protected.
Next Ken Meredith, Deputy Commissioner of the Department of Buildings, Housing and Construction spoke to the committee. He said there were some concerns about the bill in the draft form, however, he felt that the committee had addressed most of those concerns. He said they will be working with the association and the Department of Housing’s board and incorporating their suggestions in the bill.
Robert Kirchdorfer, Chief Building Inspector for Louisville said he was concerned about the bill because Louisville already has a program that provides funds to make sure that contractors there follow certain guidelines. He said the local jurisdiction must set the criteria for a permit for single family dwellings. He recommended that consumers would be better protected if a Kentucky building code was applied to all single family dwellings. Under this recommendation, inspectors would verify code compliance.
Bob Weiss responded that the bill was to make sure that no matter where you are building that the criteria is the same and the Home Builders Association would work with the three programs already established to make sure that contractors do not have to get multiple licenses. He said the bill could grandfather existing programs.
Bill Schreck, Director of the Department of Inspection, Permits, and Licenses in Louisville said his Department had some concerns about the funding. He said licensing programs were good if they were attached to a permit program and currently, state law does not require a permit to build a home. He felt that state law needed to be changed to so comply. He said there was also a problem with a contractor’s insurance being changed or dropped and wanted to know who would be in charge of making sure the insurance was valid during the two year period.
Doug Doolin, Director of Inspection for the Lexington Fayette Urban County Government, said Lexington has a registration program that has been in effect approximately one year. They have 17,032 contractors listed. His main concern was the loss of revenue and the jobs of the people that they have hired to enforce registrations in their area.
Representative Meeks said the intent was good but if there would be a loss of revenue for less enforcement he could not support the bill.
Representative Crimm moved to adjourn the meeting, the motion was seconded and Senator Guthrie adjourned the meeting.