Joint Corporations Minutes for Meeting May 22 & 23, 2007

Committee Meeting Information

May 22 & 23, 2007

The Inn at Lander

Lander, Wyoming

Committee Members Present

Senator Cale Case, Co-Chairman

Representative Pete Illoway, Co-Chairman

Senator Ken Decaria

Senator Stan Cooper

Senator Grant Larson

Senator Charlie Scott

Representative Kermit Brown

Representative Liz Gentile

Representative Mary Gilmore

Representative Marty Martin

Representative David Miller

Representative Lorraine Quarberg

Representative Tom Walsh

Representative Dan Zwonitzer

committee Members Absent

Representative David Miller (May 22)

Representative Tom Walsh (May 23)

Legislative Service Office Staff

Lynda Cook, Staff Attorney

Others Present at Meeting

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

Joint Corporations Interim Committee Meeting Summary (May 22 & 23, 2007)

The Joint Corporations, Elections and Political Subdivisions Interim Committee met in Lander to consider the issues of election reform, campaign finance limitations, special district election laws, and business friendly versus fraud friendly statutes. The committee also heard an update on the implementation of the telecommuncations act passed last session. Finally, the committee considered possible changes to the subdivision statutes.

Call To Order

Co-Chairman Cale Case called the meeting to order at 8:00 am. The following sections summarize the Committee proceedings by topic. Please see the Agenda for details. (Appendix 2).

approval of minutes

The committee approved the minutes of the December, 2006 meeting.

Campaign Finance Laws

Secretary of State Max Maxfield introduced the topic of Campaign Finance Disclosure and Electronic Records. He introduced his staff who was present: Peggy Nighswonger, Karen Wheeler, Tom Cowan, Jeannie Sawyer and Pat Arp.

Campaign Finance Disclosure.

Peggy Nighswonger provided a power point presentation regarding the need for changes in campaign finance disclosure reports. (Appendix 3). The office would like to see mandatory electronic filing of these reports.

In 2006 there was a national report on campaign finance disclosure. Wyoming was found to be last in the nation. Only Wyoming and Montana do not have campaign finance data online, and Montana is getting that technology this year. Allowing this filing and holding of information would reduce paper and would reduce trips to Cheyenne to access the reports. It is also nice to be able to have the information in searchable form.

Members discussed the problems with candidates having internet access throughout the state. The office would need to provide guidance and training to help those people who are not computer literate.

Ms. Nighswonger discussed the differences in statutes throughout the states. Some states have a threshold amount of spending before electronic filing is required. She noted that the costs of setting up a system cannot be determined until the office has direction as to the parameters of a filing requirement.

Complaints they have received involve the dependability of mailing in reports and access to those reports in a timely fashion. Also, with handwritten reports, sometimes they are illegible and they are not searchable. It was noted that a system would require password protection to ensure no one changes a candidate's report. There was also discussion regarding linking lobbyist disclosure with candidate disclosure and how to cross reference the two. It was noted that the office already has the technology and expertise to accept electronic filing of business entity reports. It is not such a change to build this system into the current technology. The real question is whether the filing online should be mandatory. Without it the information is incomplete and paper filings are not searchable. Dr. Arp discussed the systems she has seen that are point and click systems allowing uploads of excel spreadsheets. Even if the candidate is computer illiterate they have election committees and volunteers who will be capable of doing this. Right now much of the paper filing is done by election committees anyway. Senator Scott asked what percentage of Wyoming is online. Dr. Arp stated that Wyoming is actually higher than most other states and she will provide that number.

Chairman Case asked for specific recommendations from the secretary of state. He asked for legislation for this session to require mandatory filing online. Dan Neal, Equality State Policy Center, supported this direction. The committee directed LSO to draft a bill requiring mandatory filing. Senator Scott noted that he cannot support what is essentially a new requirement on the holding of public office that a person have internet access. Chairman Illoway asked the SOS office to bring a presentation to the next meeting on how a system like this works in another state. It was also asked that the office bring an estimate of cost. The program should also provide the ability for candidates who don’t have internet access to phone their information in.

The committee took straw polls to flesh out the issues that should be in the bill. The filing should apply to all campaign disclosure requirements including lobbyist reporting and political action committee reporting. The bill should not change the timing of the filing because that would be more like campaign filing reform. The bill should provide for secure data entry but free and open searchability. The requirements should apply only to state level elected officials and county officials.

Revamping Campaign Finance Laws

Ms. Nighswonger provided a list of changes the county clerks would like to see in the campaign finance laws. (Appendix 4).

They would like to see it clarified whether a campaign committee must file a separate report from the candidate. The county clerks would like to see receipts part of the report apply only to state candidates or if they apply to county candidates that it only apply to receipts above $500. They don’t think reports need to be filed with both the county and state. County clerks would like to repeal 22-25-108(b). They want to reconsider the timelines for filing and how that affects eligibility and timing for printing of ballots. Finally, they want the sponsor notification requirements to apply to individuals in 22-25-110(a).

There was discussion about the consequences of not timely filing reports.

Senator Scott noted a US Supreme court decision regarding the ability of individuals doing anonymous pamphleting. Staff agreed to look into the legalities of doing this.

Ms. Nighswonger also provided a list of technical changes that they would like to see to amend the general election laws. (Appendix 5). The changes would comport with the way elections are now conducted. The committee asked LSO to draft a bill making all the changes requested. The clerks will be asked to attend the next meeting July 30 & 31 in Cheyenne where the committee can debate and decide on each of the separate issues. The bill should take in all the recommendations in one bill. If necessary the bill could be separated later.

Circumvention of Campaign Finance Limitations.

Dan Neal, Equality State Policy Center, provided the committee with a copy of campaign filing reports for a political action committee created by three people, purportedly to give amounts above and beyond the $1000 individual donation limitations. (Appendix 6). He stated that this use of a political action committee does not violate the law but is clearly in contrast to the spirit of the law. Their suggestion is to limit the amount a PAC can contribute to a candidate. (Appendix 7). The federal limit is $5000 per candidate per election. They suggest requiring PACs and candidates to report the occupations and employers of the contributors. They would like to require itemized spending and disclosure within 24 hours of contributions of $1000 or more received after the pre-election reporting period. They would like to require county clerks to forward reports to the secretary of state electronically and direct the SOS to make reports available via a searchable online database and provide summaries on its website.

The committee discussed whether this would solve the issue because people could just form multiple PACs. Mr. Neal suggested that tying this to electronic reporting at least makes it clear when that is happening. There was also discussion about how to recognize contributions that are rejected. There was discussion regarding how cumbersome it would be to require candidates to find out who is the employer of a person who contributed. It was noted that the occupation requirement is currently in federal law. It was asked if the public would be better served by removing all the limits and letting people judge by seeing who is giving the big amounts. There is a Supreme Court opinion that a candidate can’t be limited in what he spends of his own money so the current limitations on individual donations really favor the independently wealthy. It was also suggested that the names of PACs should be transparent as to their purpose and membership. Rep. Brown noted that a limitation on PAC contributions could be inequitable because it treats a group with many members no different than a PAC with one individual. Senator Larson suggested that Mr. Neal’s suggestion that the candidate voted in a particular way because of the contribution was improper.

Mr. Neal suggested that the committee should also consider requiring reporting of 527 groups. Chairman Illoway noted that West Virginia has taken this step.

The SOS office testified that they agree about electronic filing being useful. They pointed out that requiring them to create a summary puts them in a bad position.

Chairman Case suggested that specifying what indirectly means in the individual campaign limitations might solve the problem. Mr. Neal offered to find out if other states have better language.

The committee asked LSO to draft a bill that limits the amount a PAC can contribute to those numbers suggested by Mr. Neal. They voted not to ask for a bill that would remove the limitations on natural individuals contributions. The committee also voted to have a bill drafted that clarified the directly and indirectly language currently in statute.

Chairman Illoway asked for a presentation from the SOS regarding what other states are doing with respect to 527s.

Special District Election Issues.

Dossie Overfield, Northwest Rural Water District and Doug Brandt, Park County Assessor, testified regarding issues that have come up with respect to enlarging special districts. (Appendix 8). The current law requires an election even if the enlargement applies only to people who are asking to join the district if there are voters in the area. The simple solution is the change an “and” to an “or” in 22-29-301(a). Chairman Case asked whether the people who are already in the district should be concerned about an expansion and should have the right to vote it down. Another solution would be to repeal (ii). The committee voted to have a bill drafted that would repeal (ii).

The other issue they are concerned about is that renters are allowed to vote in the special district elections. Rep. Brown discussed the Supreme Court case that held that special district elections can be on a basis other than one man one vote. It was argued that renters are paying property tax through their rent and they are entitled to vote. The committee asked LSO to look into the legalities of limiting these elections to landowners rather than qualified electors. They also want to know whether they can distinguish between resident and non resident landowners. This question needs to be answered before they can decide what can be done.

The final issue they brought to the committee involves the requirement of yearly mapping of every district. This is costly to districts which do not tax. They would like to exempt non taxing districts from the mapping requirements until such time as they need to levy taxes. Senator Scott would like a district to opt to be a non-taxing district. If they take that option they can use a system for election of board members that are users rather than property owners (if they can be, based on the research). The district could later reorganize as a taxing district if they need to use current laws. He also would like to find out what other districts might be affected by this because they are user based. This would also affect the ability to obtain loans and would require a look at loan requirements from the water development commission. The committee voted to have LSO draft a bill which exempts districts who do not currently tax from the mapping requirements but requires them to declare that option.

Business Friendly/Fraud Friendly Business Entity Statutes

Secretary of State Max Maxfield introduced Tom Cowan and Karen Wheeler in the Securities division of his office. Congress is serious about cracking down on fraudulent business entities and if the state does not do something then Congress is going to step in. (Appendix 9).

Wyoming promotes its business friendly climate. Wyoming was the first state to adopt LLC laws. Wyoming has minimal filing requirements and formation fees are inexpensive. Finally we have no state income tax, personal or corporate. Wyoming allows one person to hold all the offices in a company and allows for anonymity.

Wyoming is fraud friendly for many of the same reasons. In addition, there are a lack of enforcement provisions. Ms. Wheeler described the history of corporate entities in Wyoming. After Wyoming received a favorable IRS ruling on LLCs the filings boomed. The legislature then adopted progressive laws providing for additional business entities. Soon the FBI, Interpol and other law enforcement agencies began calling to get information about entities that were forming in Wyoming and the secretary of state's office wasn’t able to provide much information.

In 2005 a Department of Justice report, “U.S. Money Laundering Threat Assessment”, and in 2006 a report entitled “The misuse of corporate vehicles – financial action task force” placed Wyoming, Nevada and Delaware as the places with the worst laws with respect to fraud potential. This is true despite the fact that Wyoming has one of the lowest number of filings for business entities. Part of the problem is that Wyoming allows entities to be formed by non US residents. The reports slammed the state for allowing registration with minimal information, allowing them to cloak their activities.

There are three types of filers: 20% are mom and pop type, 40% are incidental to professional practice (lawyers) and 40% are formation agents. The problem seems to be in the area where the formation agents are entities that do not live or exist in Wyoming. According to the law a registered agent must maintain a physical presence in Wyoming. There is a cottage industry developing providing formation agents. These agents provide an office and call forwarding. In the first four months of 2007 four entities filed almost 1200 of the new filings. They also file shell corporations that can be sold when someone is looking for a shell to move things to.

Mr. Cowan discussed shell companies and anonymity. These are the two biggest issues to Congress. Shell companies are used by scam artists to avoid detection. They are a corporate name with only the expense of incorporation. The only requirement is a physical location in Wyoming and all too often that is just a drop box. They provide a veneer of legitimacy to scam artists. Because a corporation does not require an annual statement for a year after formation, the SOS will know very little about the entity for a year. In Nevada, they made a change to require the filing of an annual business license, whether or not you do business in Nevada. The business license mandates the name, addresses, SSN and ownership percentages for each identified stockholder.

One promoter of shell corporations states on his website that “the SOS can’t share information that they don’t have”.

Aged shells sell for up to $9000. They give the appearance of prior operating experience.

The other issue that Congress is concerned about is anonymity. The problem is that there is very little information required to be filed. The name of the company, the number of shares, name and address of each incorporator, street address and name of registered agent are all that is required. Very often the incorporator and the registered agent are the same. Law enforcement wants information about who the officers and directors are. Under Wyoming law that information is required to be kept with the registered agent within 6 months of formation. LLC’s don’t ever require this information be kept anywhere. And, when the information is finally available, it could be a nominee cloaking an owner. Also, an officer may not be the owner. Nominee names may be used on the annual reports and the annual reports don’t have to be filed for a year. Member names are never required for LLCs. Some of the ways to dissolve corporations for failure to obey the law take too long, as much as 17 months.

Virtual offices help provide anonymity. Registered agents will use virtual offices but the virtual office won’t allow for service of process.

Possible legislative solutions: Require more information to be maintained on site, decrease delinquency time, increase enforcement authority, adopt a registered agency act and increase penalties.

Information should include shareholders, LLC members, manager records, nominee certificates and addresses of beneficial owners’ names which should be checked against a national watch list. A filing should be required when a change of control occurs. The SOS does not want to house the information. It should still be kept by the registered agents and should be kept somewhere in Wyoming physically.

They would like to see a reduction in the 60 day grace period. They want them to provide a contact name at the time of filing. The laws should clarify where venue should be where no registered agent exists. The SOS would like the legislature to shorten the period before revocation can occur and provide for increased penalties.

They want to see increased enforcement authority, including penalties for a registered agent not keeping records or not having a physical presence as required. They should also require periodic auditing.

The state should adopt a registered agency act. That would require a written agency agreement authorizing only a natural person to act as a registered agent, apply it to all business entities and require the agent to be here and accept service of process at the address of record.

We should be able to prosecute violations as a felony if there is serious wrongdoing. Nevada recently did this.

The committee discussed possible solutions. Increasing filing fees would really only hurt legitimate businesses. This would only raise the price for shell corporations but really not deter them. It was noted that the changes made to make Wyoming more business friendly hasn’t made Wyoming a big corporate state. It has made life easier for Wyoming companies but has only attracted riffraff. There was discussion about whether allowing one person to hold all the offices was an evil. It isn’t except that fraud is easier when there is only one person. There was discussion about making a requirement that the SOS keep track of shareholders. The problem is that information is considered proprietary and it is dynamic. Those names can change on a daily basis. Mr. Cowen suggested the committee hear from registered agents. Most are a legitimate entity.

Senator Scott suggested that we need to be able to enforce the requirement for a physical presence of registered agent and acceptance of service of process. LLCs should be treated the same as corporations in terms of what they should maintain. Delaware recently adopted a registered agent act that Mr. Cowan thinks is very helpful.

The office hasn’t taken a systematic approach to enforcement because they have never been staffed that way. The world is changing and they are now taking a look at these people who file hundreds of filings. If there are no people there or they can’t accept service, the SOS sends certified letters to all the companies using that registered agent telling them they have 60 days to replace the registered agent, then they can revoke the company.

There was discussion regarding whether there is any legitimate use of shell corporations. Mr. Cowan saw none from his perspective.

There was discussion about how a change of control act would work. Transfer of control prior to initiation of activity would trigger a annual report filing requirement. Massachusetts requires them to maintain a list of owners who reside in that state. It is being looked at as an infringement on privacy.

Tom Jones, National Federation of Independent Businesses, testified that while he has heard about the potential fraud, he hasn’t heard evidence about actual fraud being committed against citizens of the state of Wyoming. He warned the committee to be careful of the burden they are putting on the good guys.

The committee asked LSO to draft a bill using the Delaware registered agent law and expand it to LLCs and other entities where appropriate. The bill should look at the information the registered agent has to have on file but at a minimum should include the name and address of a real person who can be served a subpoena. The bill should also create a small audit capacity within the SOS and include penalties for non-compliance.

The committee asked LSO to draft a change of control act. If 50% or more of the ownership of a company changes hands they would have to file an annual report. LSO would work closely with the SOS office for the details needed.

The committee asked the LSO to draft a bill decreasing the delinquency time and dealing with the other timing issues requested by the SOS.

The committee asked the LSO to draft a bill providing that a corporation that fails to answer a subpoena would be put into delinquent status and increasing penalties as requested.

LSO is to send Senator Scott and the members a copy of the Delaware registered agent act.

Public Service Commission Update on Telecom Implementation

Commissioner Cindy Lewis introduced Chris Petrie, chief counsel. She described how the PSC has worked aggressively to develop rules to implement the new telecom act. They need to ensure there is no widespread outage of service due to lack of rules to implement the new act. The PSC had a technical conference with industry to develop the rules on May 4, 2007. They had twenty three participants in that conference. The PSC provided the latest draft of the potential rules but they will be having another technical conference before emergency rules will be proposed. (Appendix 10). The PSC is also having hearings in Lander tomorrow regarding quality of service complaints on the reservation and the surrounding areas.

Chris Petrie gave a general overview of what the emergency rules will look like. Changes to the implementation of quality of service rules have been a hot topic. Reporting requirements were discussed regarding outages. The making of information about competitive services available to the public is also a hot topic. This is also true regarding the form and content of filed price schedules. TSLRIC has not been completely removed from the rules because it may be required if a switched access provider maintains a price above 3 cents per minute after 2010.

Mike Korber discussed how the new law might change the universal service fund assessments. Chairman Illoway asked the PSC to come again to the July meeting to update the committee on the effects of the changes on the universal service fund. He also requested that the commission send out copies of the different rule drafts directly to the committee and take them off the e-mail list.

Jody Levin testified that Qwest has been actively participating with the technical conferences. She stated that the biggest area of debate is regarding the definition of essential services when dealing with filing of price schedules. The question is whether certain services could be construed to fit within the definition. There was also discussion about how anti-competitive behavior should be defined.

The committee asked LSO to ensure that a change to the reference to Bureau of economic statistics make it into the revisor’s bill this session.

The meeting recessed for the night.

* * * * * *

Co-Chairman Illoway called the meeting to order at 8:00 a.m.

Subdivisions

Dave Johnson, Wyoming Bankers Association, testified regarding a problem bankers have when lending on Wyoming ranchettes. When a bank loans money on an acreage of 20 acres or less, the foreclosure redemption period is 3 months plus 30 days. If the acreage is over 20 acres, the foreclosure redemption period is 12 months plus 30 days. The problem is that the secondary market will not purchase loans that have this long redemption period. That means that local banks have to hold on to those loans for their duration and that ties up valuable capital that could be loaned out for other purposes. They would like to see the acreage number expanded. (Appendix 11). This also hampers the buyers from getting better rates on the property. Laurie Urbigkit and Jim Magagna supported an increase in the acreage but did not commit to a number.

The committee asked LSO to draft a bill increasing the acreage to 80 acres.

Joe Evans, Wyoming County Commissioners Association, testified regarding the county perspective. Land use planning is a necessity to control the uses of land. The statutes are very specific that land use planning cannot affect mining and mineral rights. He stated that there is nothing inherently wrong with large acre lots. The problem is that there are no regulations on what you can do with a lot over 35 acres. They do have to provide ingress and egress to the property. The problems occur when there are large subdivisions created with 40 acre lots where there is no consideration of the added needs for water, sewer and fire and police protection. He spoke in support of the last year's committee bill allowing counties to decide if regulation is necessary for acreages up to 100 acres. The bill did not address the costs associated with reviews. The maximum amount a county can charge is $1000 and that number should be addressed to reflect modern times. This is in W.S. 18-5-309. When an acreage is converted from agricultural land to residential use the costs to the county go up.

Comprehensive plans may only be implemented through zoning. He provided the committee with a land use survey among the counties. (Appendix 12). He argued that any changes should not be statewide, but rather should provide tools to local governments. Jim Hudelson, Goshen County Commissioner testified regarding his concerns about planned developments that are not regulated through the subdivision laws because the lots are over 35 acres. (Appendix 13). Without having the ability to regulate these lots there is no way to protect the buyers. They need to address access to roads, law enforcement, water and sewer. They support what was included in 2007 House Bill 10. Senator Larson stated that if the legislature addresses this they need to be done through an open process that is not arbitrary at the local level.

Doug Brandt, Albany County Planner, Mark Kant, Sweetwater County planner and Ray Price, Fremont County planner testified regarding the planners perspective. It has been 32 years since the subdivision act was passed. In Albany county they have over 54 square miles of these over 35 acre lots. These have been developed arbitrarily. Albany county has tried to do minimal regulation of these developments but they repealed those requirements after the Aspen Pedro case. They are in the process of creating a comprehensive plan, but it won’t make much difference because they have no control over where the development is going to occur. Mr. Brandt suggested that the legislature not link the threshold to anything else, and perhaps take out the threshold altogether. He also discussed Carbon County’s approach to address the issue by using density zoning to get around the problem. Mr. Kant discussed the problems they have had with development around Rock Springs. He also discussed the fraud that was occurring in the advertisement of some parcels. Mr. Price testified that they need more tools than zoning. He agreed that it should be left to counties to decide how large of lots they want to regulate. There was discussion whether the regulation should override the exemptions currently available in statute. Some planners do think some regulation should occur despite the exemption when the development enters into the commercial and industrial realm.

There was discussion on the difference between zoning and subdivision. Zoning deals with use of land (where development occurs and density) and subdivision is a permitting process whereby counties can require the provision of infrastructure on the property. There was also discussion about what the appropriate lot size should be. Setting it at 75 acres may just cause us to see developments of 80 acre lots.

Frank Falen, Cheyenne land use attorney, testified regarding the perspective of the landowners. He argued that the existing subdivision laws were designed for small lots. The information required does not make sense when you get over 35 acres. Putting this type of development into that structure will ruin the ability to sell those lots because they would be too expensive. He noted that selling large size lots does not mean an immediate development of houses. He discussed the necessity of allowing ranchers to sell off a portion of a ranch to pay inheritance taxes when the ranch is handed down from generation to generation. He noted that the current statutes are implemented in an arbitrary manner. He offered several examples where the land planners required unreasonable burdens in order to grant a permit. He argued that the increase in land prices near Cheyenne is largely due to the cost of subdivision. He discussed how when an acreage is broken into 40 acre parcels, the assessor changes the tax classification from ag to residential. They begin to receive increased income long before anyone actually lives there and without having to provide any services. With respect to roads, he suggested that rather than putting the requirement to build roads at the outset through subdivision laws, perhaps they should change the size of the currently required easement. That would allow for expansion of the road when it is needed. He argued that counties can establish road standards through the zoning process. Statutes providing for master transportation plans allow counties to establish where roads can occur. The problem is that zoning applies all the time instead of to one particular development. He finished suggesting that if people want to live outside of town they shouldn’t expect to receive the amenities of town. When asked how he would deal with this he suggested that there should be a separate statute for those large acreages that deals with the real concerns for those subdivisions, which isn’t as arbitrary in permitting as the current statute. He also suggested that the committee look along the line of how many lots a place is broken into rather than the size.

Jim Magagna, Wyoming Stockgrowers Association, testified regarding the ranchers perspective. His perspective is that the association supports the rights of landowner to develop their land. He provided a handout that described the cost of community services for rural residential development in Wyoming. (Appendix 14). He also provided a Wall Street Journal article discussing rural subdivisions. (Appendix 15). He argued that there are real costs related to rural development. He argued that the committee needs to look at the use of land and how the lands are being taxed. There are abuses going on out there. He is concerned about the problems that occur to neighboring ranchers when a neighbor subdivides his land. They are opposed to increasing the 35 acre exemption because they think it will increase the number of lands that will be broken into nonviable agricultural land. He suggested they should focus on fostering quality development. They should also focus on the number of lots rather than the size of the lots. Finally, there should be lesser requirements for a developer who has built in reasonable standards in the development. Perhaps if someone doesn’t do this then there are maximum things the county can require. He also addressed the issue of requiring notice of the chain of mineral ownership is an excessive burden. He also discussed the new requirements on the family exemption. He would like the committee to take another look at the five year requirement and change it to a requirement to hold the land for five years after the division rather than before. Some of the things they could support are requirements for disclosure.

John Robitaille, Petroleum Association, testified regarding the mineral industry perspective. There is a problem with surface owners who do not realize that they do not own the mineral estate. They support the requirement of disclosure of who owns the mineral estate. The committee asked if it was more important to tell the buyer who owns the mineral estate versus just telling the buyer that he does not own the minerals. Mr. Robataille could not answer that without checking with his association. The committee asked him to let them know what their answer is.

Laurie Urbigkit, Wyoming Association of Realtors, testified regarding their perspective. She mentioned the disclosure statute that was passed. There is concern that a full mineral search is required. She doesn’t think so, but it may need to be clarified. With respect to fees, they oppose eliminating any maximum on the fees. They support the idea of encouraging quality development. They do not support the increase above 35 acres. The size of the lots is not the issue, the process is the problem. It is a very lengthy process. They should look at streamlining the existing process, or even creating a new system for lots that are larger. She also passed out two bills that they would like to see passed this session. She especially would like to see 2007 HB 290 built into any subdivision bill that comes out of this committee. Senator Scott asked the interested parties to get together to come up with what requirements could be imposed on larger lots that would be acceptable. He also asked them to come up with a concrete proposal regarding planned unit developments. With respect to HB 290, they would like to be able to offer lots for sale prior to approval of the permit. She was asked whether other states have this problem and how they handle it. She noted that they did not oppose 2007 HB 160, requiring a homeowners association, unless it has the amendment requiring full mineral disclosure.

Bob Bailey, First American Title Insurance, testified regarding subdivisions. When property is subdivided the landowner submits their land to a body of law. He noted that changing the regulation to number of lots will just make people file ten different subdivisions with smaller numbers of lots. People will always find a way to get around the law. He believes county commissioners do have authority to regulate these divisions of land if they feel they are in contravention of the subdivision laws. He expressed concern over the requirement in last years bill giving responsibility to landmen for disclosure when they use different language than title insurance companies and there is no reason to not allow title companies to do it too. He suggested that the correct terminology is fee estate and mineral estate. He also described how much it would cost to disclose all the names of the mineral holders. He complained about 2007 HEA 124. He wanted a definition of what vacant land is and clarity about whether the disclosure requires who holds the minerals versus whether the minerals are granted. It is fairly simple to find out if the minerals were severed at the patent. However, finding out if they have been severed after that could be expensive because that would require a complete search. Representative Zwonitzer agreed to ask for an attorney general's opinion.

Doug Cooper, rancher, testified that he is living next to a 60 mile subdivision of 40 acre lots. He suggested that the more important issue is the number of lots versus the size of lots. He expressed concern over the use of contract for deed which doesn’t get recorded. There should be a mechanism to inform assessors that a sale has occurred. The neighboring rancher needs to know who is responsible for half the maintenance of a fence for example. He also discussed the problem of absentee landowners who don’t maintain their land at all. There is also a problem of people using development roads to access areas where they don’t have a right to be. There is also concern on how these developments affect wildlife and natural resources.

Billie Little, rancher, testified. She provided written testimony. (Appendix 16) She expressed concern that farm land is being turned into subdivisions. She explained the agricultural economic impacts from this change. Towns should grow outward, not from outside in. People do not understand that 35 acres is not enough to raise horses and people are starving their animals on these small acreages. They are also using them for junkyards. Groundwater pollution is getting to be a problem. She testified that subdivisions should be restricted on irrigated lands. She would like to see 160 acre limitations. She is on the county planning commission so she understands the issues. She suggested that the $500 income to qualify for the ag exemption is much to low. This has caused the proliferation of these ranchettes.

Brenda Arnold, Laramie County Assessor testified regarding the agricultural land taxation statutes. There are four criteria that must be met. The primary use has to be farming or grazing. The land must be used to its full ability. If you are the owner, you have to have received at least $500 from the sale of agricultural products. If you lease the land the lessee has to have received $1000 from the sale of agricultural products. Finally, it can not be part of a platted subdivision. That means these 40 acre ranchettes can qualify. If the covenants on the land state that they can’t have a commercial agricultural business, then it is obvious. Otherwise it is all based on affidavits. The majority of the buying public do not know the difference between a platted subdivision and a record of survey (which is used for the 40 acre and more ranchettes). She suggested that protective covenants should be required to state whether agriculture business is allowed. The concern over vacation of subdivisions when the lots don’t sell was raised. Counties don’t want to give up the dedicated roads they received in the subdivision permit. Senator Scott suggested that with any legislation the committee would have to think about the possibility of turning the lots back to agricultural land if possible. There was discussion regarding contracts for deed. There is no requirement that it be recorded.

Diana Holm, Assistant Director of the Rucklehaus Institute at the University of Wyoming, testified regarding the issue of open space land use planning in Wyoming. She explained that her institute issues several reports tracking population change and land use in the state that will be helpful to the committee in understanding the issue and its implications. She offered to get any information the committee might need. For every $1 in tax revenue received from these rural residents, it costs the county $1.13 in operation and maintenance costs to serve them. They are currently trying to quantify how much land has been lost to large acre subdivisions. 98,000 acres have been put into traditional subdivisions since 1998.

Mr. Robitaille testified that the mineral owner should be told if a subdivision occurs. There was discussion regarding the taxation of the mineral estate as a way of keeping track of the owners. Frank Falon explained how mineral reservations work and the various definitions that apply.

Darci Jones, Wyoming Conservation Voters, supports providing more flexibility to local governments to determine how they want to grow.

Senator Scott pointed out that there is a need to do something. At the same time, the full subdivision regulations are designed for smaller acreage subdivision. He would like the interest groups to put their heads together to put together something they can agree to. They need to look at what size should be regulated. What level of regulation should occur. They need to think about the property tax consequences and what requirements for disclosure should be included. He asked Laurie Urbigkit to lead the effort to develop a proposal.

The committee focused on the following: 2007 HB 290, disclosure, vacating subdivisions, regulation on larger pieces that doesn’t go with full blown regulation, 2007 HB 160, 2002 HB 142 (providing for cluster developments), large lot subdivisions and stripping portions that would be irrelevant to large lots, large lots being up to 160, amend 18-5-309 because the limit is inadequate, and require buyers to acknowledge that there is no representation as to owner of the mineral estate, it is dominant and it is their responsibility to research it.

Joe Evans testified that the county officials will come back with a suggestion.

Staff was asked to draft one or two bills encompassing 2007 HB 160, 2007 HB 290, 2002 HB 142, W.S. 18-5-309 & disclosure and the regulation of large lots through a streamlined mechanism. Get a balanced approach so that the cost does not get out of reason.

Meeting Adjournment

There being no further business, Co-Chairman Pete Illoway adjourned the meeting at 2:45 pm.

Respectfully submitted,

Representative Pete Illoway, Co-Chairman Senator Cale Case, Co-Chairman

Appendix	Appendix Topic	Appendix Description	Appendix Provider
1	Committee Sign-In Sheet	Lists meeting attendees	Legislative Service Office
2	Committee Meeting Agenda	Provides an outline of the topics the Committee planned to address at meeting	Legislative Service Office
3	Elections	Campaign Finance Disclosure	Secretary of State
4	Elections	2007 Election Code Suggested Changes	Secretary of State
5	Elections	2007 Election Code – Changes & Suggestions	Secretary of State
6	Elections	Statement of Foundation of Political Action Committee	Equality State Policy Center
7	Elections	Equality State Policy Center Presentation	Equality State Policy Center
8	Special District Elections	Special District Elections & Mapping Issues	Northwest Rural Water District
9	Business Entities	Business Friendly vs. Fraud Friendly	Secretary of State
10	Telecommunications	Proposed Rules	Public Service Commission
11	Subdivisions	Redemption of Agricultural Real Estate	Wyoming Bankers' Association
12	Subdivisions	County Land Use Survey	County Commissioners' Association
13	Subdivisions	County Authority to Regulate	Jim Hudelson
14	Subdivisions	Cost of Community Services for Rural Residential Development in Wyoming	Jim Magagna
15	Subdivisions	Wall Street Journal article	Jim Magagna
16	Subdivisions	Written Testimony	Billie Little