The Alaska Association of REALTORS® was instrumental in getting two bills passed in 2011. HB 130 addressing fire sprinklers systems HB 188 addressing the interest rate on loans $25,000 or less have both passed this legislative session and were signed into law by the Governor on July 22, 2011. Thank you to all the committee members and others that put their time and effort into getting these two bills passed this session.   

House Bill 130 – “An Act Relating to municipal building code requirements for fire sprinkler systems in certain residential buildings.”    

This bill is in response to a national movement to require fire sprinkler systems in one and two-family dwellings. This legislation would require a most robust public process be followed before sprinkler can be mandated in new construction homes.   

HB 130 seeks to avoid broad mandates that will drive up costs for consumers in areas where sprinklers may not necessarily be needed without adequate public involvement.   

HB 130 requires that before a municipality can mandate sprinkler systems in all new construction of residential buildings with one or two dwelling units they must first:
At least 30 days prior to the first public hearing, publish a summary of the ordinance and notice the time and place of each scheduled public hearing;
Hold three public hearings within not less than a 60-day period and not more than 180 day period.

This bill realizes there may be cases in Alaska where requiring sprinklers in one and two-family dwellings is necessary. Often, the geography at the location of new builds is such that firefighters cannot make it swiftly to a burning home. In those cases, HB 130 would not prohibit sprinkler mandates; it assures public awareness and participation in those decisions.    

HB 188 - “An Act relating to the Interest that may be charged by express agreement.”   

HB 188 will allow land owners who wish to finance the sale of their property that is valued at $25,000 or less, be allowed to charge an interest rate that would be the greater of 10% or 5% above the Federal Reserve rate at the time of the loan. 

  Currently, Alaska Statute 45.45.010(b) sets the maximum interest rate for loans below $25,000 at 5 percentage points above the rate charged to banks by the 12th Federal Reserve District. In 1981, the last time this section was addressed, the Federal Reserve Rate was 14%. Thus the maximum allowed was 19%. Today the 12th Federal Reserve Rate is approximately 0.75%. Thus the current maximum interest allowed is 5.75%. 

  It is doubtful anyone contemplated such a low rate when Alaska’s usury laws were adopted. Currently, landowners who wish to finance the sale of their property are limited to an interest rate of 5.75%. Such a low rate is a strong disincentive to individuals offering financing on such transactions and buyers who are willing to pay a more reasonable rate of interest are losing out on the ability to participate in real estate ownership due to the current restrictions.