Legislature(2015 - 2016)BARNES 124

04/14/2016 09:00 AM LABOR & COMMERCE

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Audio Topic
09:13:15 AM Start
09:13:56 AM SB158
09:46:43 AM SB165
09:52:21 AM Confirmation Hearing(s)|| Confirmation Hearing(s)|| Marijuana Control Board
10:11:06 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/15/16 at 10:00 a.m. --
+= SB 165 ALCOHOL: BOARD;MINORS;MARIJUANA CHECKS TELECONFERENCED
Moved HCS CSSB 165(L&C) Out of Committee
-- Public Testimony <Time Limit May Be Set> --
+= SB 158 REAL ESTATE COMMISSION;BROKER LICENSING TELECONFERENCED
Moved HCS SB 158(L&C) Out of Committee
-- Public Testimony <Time Limit May Be Set> --
+= SB 126 SMALL SECURITY OFFERINGS TELECONFERENCED
Scheduled but Not Heard
-- Public Testimony <Time Limit May Be Set> --
+ SB 206 REINSURANCE PROGRAM; HEALTH INS. WAIVERS TELECONFERENCED
<Pending Referral>
-- Public Testimony <Time Limit May Be Set> --
+ Confirmation hearing: Marijuana Control Board TELECONFERENCED
         SB 158-REAL ESTATE COMMISSION;BROKER LICENSING                                                                     
                                                                                                                                
9:13:56 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
SENATE  BILL NO.  158, "An  Act  relating to  real estate  broker                                                               
licensure; relating to the real  estate commission; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
9:14:40 AM                                                                                                                    
                                                                                                                                
WESTON EILER,  Staff, Senator  Mia Costello,  stated that  SB 158                                                               
was  brought  forward and  introduced  by  the Senate  Labor  and                                                               
Commerce Standing  Committee at  the request  of the  Alaska Real                                                               
Estate Commission and the real estate industry.                                                                                 
                                                                                                                                
9:14:57 AM                                                                                                                    
                                                                                                                                
KONRAD JACKSON, Staff, Representative  Kurt Olson, stated that on                                                               
4/13/16, the  committee moved,  but did  not adopt,  the proposed                                                               
House  committee  substitute  for SB  158,  Version  29-LS1303\H,                                                               
Bruce, 4/5/16,  which repeals AS 08.88.172(e),  and thereby would                                                               
require real estate brokers and  salespersons to carry errors and                                                               
omissions  insurance.    In  addition,   Version  H  changes  the                                                               
effective date of  Section 4 of the bill to  1/1/18, which allows                                                               
a  broker  applicant  currently   processing  an  application  to                                                               
complete that process.                                                                                                          
                                                                                                                                
9:16:20 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON removed his objection  stated on 4/13/16, and Version                                                               
H was before the committee.                                                                                                     
                                                                                                                                
9:16:34 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON opened public testimony.                                                                                            
                                                                                                                                
9:16:47 AM                                                                                                                    
                                                                                                                                
ERROL  CHAMPION,  Chair,  Legislative  Issues  Committee,  Alaska                                                               
Association  of Realtors,  expressed  his organization's  support                                                               
for the proposed House committee substitute for SB 158.                                                                         
                                                                                                                                
REPRESENTATIVE HUGHES  asked how  long the Alaska  Association of                                                               
Realtors has  been working to  support the  proposed legislation,                                                               
and whether support was found throughout its membership.                                                                        
                                                                                                                                
MR. CHAMPION responded  that the legislation has been  a topic of                                                               
discussion  for the  last  3-4  years.   In  further response  to                                                               
Representative  Hughes,   he  said   the  association   does  not                                                               
represent every real estate licensee,  however, it does represent                                                               
about  1,600 of  2,400  real  estate licensees,  and  all of  the                                                               
members  of  the association  have  been  well informed  in  this                                                               
regard.                                                                                                                         
                                                                                                                                
9:19:40 AM                                                                                                                    
                                                                                                                                
TRACI  BARICKMAN, Commissioner,  Alaska  Real Estate  Commission,                                                               
informed  the committee  she has  been a  real estate  broker for                                                               
over  23 years,  and  has reviewed  and  supervised thousands  of                                                               
transactions and hundreds  of licensees.  She  clarified that not                                                               
all  real  estate licensees  are  Realtors,  and the  upgrade  to                                                               
education as referred to in the  bill should not be confused with                                                               
continuing education;  the bill addresses 15  hours of additional                                                               
broker  education.   Ms. Barickman  described the  differences in                                                               
the industry  between transactions of  25 years ago and  those in                                                               
recent years, and  also the differences between what  is taught a                                                               
new  licensee and  what understanding  is required  of a  broker,                                                               
such  as business  recovery funds,  opening a  new office,  trust                                                               
accounts, operating accounts, supervision,  and local, state, and                                                               
federal law.   She advised that the duties of  a broker cannot be                                                               
taught in 15 hours, or in 24 months of real estate sales.                                                                       
                                                                                                                                
9:22:14 AM                                                                                                                    
                                                                                                                                
MATTHEW STEELE,  real estate licensee,  expressed his  support of                                                               
the  effective date  change [within  Version H].     He clarified                                                               
that  there are  two  licenses issued  by the  state,  that of  a                                                               
salesperson  and  that  of  a   broker;  however,  to  become  an                                                               
associate broker, one  must obtain a broker's license.   His goal                                                               
is not to  start his own firm, but to  become an associate broker                                                               
working under the supervision of a broker.                                                                                      
                                                                                                                                
9:23:58 AM                                                                                                                    
                                                                                                                                
ELIJAH  WAUGH  stated  that  as   a  lifelong  Alaskan  he  finds                                                               
legislation related to occupational licensing,  such as SB 158, a                                                               
direct infringement on individual liberty.   The bill doubles the                                                               
amount of  time required  to become a  broker, and  he questioned                                                               
why  that  would  provide  safety  to the  general  public.    In                                                               
reality, this policy  helps very few and is an  example of "crony                                                               
capitalism"  because it  creates  barriers to  entry, and  limits                                                               
competition to existing brokers.   Mr. Waugh referred to a recent                                                               
White   House  report   that   showed  unnecessary   occupational                                                               
licensing  negatively  affects low-income  families,  immigrants,                                                               
and military  spouses, and leads  to higher  unemployment [report                                                               
not  provided].   At this  time, Alaska  needs leadership  and he                                                               
expressed his strong opposition to the bill.                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  inquired as to whether  Mr. Waugh would                                                               
attribute to  the real estate  industry any honest  motivation or                                                               
merit in its support for further education for brokers.                                                                         
                                                                                                                                
MR. WAUGH opined  the industry seeks to gain  from requiring more                                                               
education, and there is no problem with the current system.                                                                     
                                                                                                                                
9:27:14 AM                                                                                                                    
                                                                                                                                
MARGARET  NELSON,  real  estate   licensee,  Alaska  Real  Estate                                                               
Alliance,  said she  works for  a  very small  brokerage and  has                                                               
worked in  the industry for 12  years.  She acknowledged  that SB                                                               
158 has support of the  "Alaska boards of Realtors"; however, she                                                               
is not a Realtor,  and was unaware of the bill.   She said she is                                                               
opposed  to  SB  158  because  the  real  estate  industry  is  a                                                               
professional  service   industry,  and   individuals  distinguish                                                               
themselves  by  providing  customer  service  to  their  clients.                                                               
Large  brokerage  houses  support  this  bill  as  it  eliminates                                                               
competition from  new brokerages.   Ms.  Nelson pointed  out that                                                               
all licensees are independent contractors  who are small business                                                               
owners and thus  are subject to taxes as a  small business.  More                                                               
time spent on unnecessary training  restricts time to earn money,                                                               
and every  two years repetitive continuing  education courses are                                                               
required.  She noted that  some real estate licensees who provide                                                               
property    management   services,    and   manage    homeowner's                                                               
associations, will pass the cost  of additional training along to                                                               
homeowners, and  brokers who work for  engineering companies will                                                               
also pass costs  along to consumers.  Another point  is that some                                                               
brokers already  have undergraduate  degrees.  Most  important is                                                               
the impact  of the  bill on rural  Alaska, where  applicants will                                                               
have  to  travel  for  training   and  not  all  are  suited  for                                                               
correspondence classes.  Ms. Nelson  opined that present-day real                                                               
estate  is not  more complex  if one  seriously wishes  to assist                                                               
one's  client.    She  urged  for more  review  of  the  proposed                                                               
legislation.                                                                                                                    
                                                                                                                                
9:32:38 AM                                                                                                                    
                                                                                                                                
KELSI PULCZINSKI said  she is strongly opposed to  SB 158 because                                                               
the bill  doubles the amount  of experience required to  become a                                                               
licensed real estate  broker, and doubles the  amount of training                                                               
required.    She  stated  that  the  increased  requirements  are                                                               
unnecessary  and create  barriers  to enter  into  the field;  in                                                               
fact,  unnecessary occupational  licensure requirements  infringe                                                               
on individual liberties, cripple  the free market, and perpetuate                                                               
crony  capitalism.     Ms.  Pulczinski  opined   the  legislation                                                               
addresses a  problem that does  not exist, and supporters  of the                                                               
bill   will   directly   benefit  by   eliminating   competition.                                                               
Additionally,  supporters  are  the  only  sources  offering  the                                                               
training.  The proposed legislation  hurts small business owners,                                                               
low-income individuals, and others.   She urged for the committee                                                               
to   better   the  lives   of   Alaskans   by  protecting   their                                                               
opportunities.                                                                                                                  
                                                                                                                                
9:34:57 AM                                                                                                                    
                                                                                                                                
JEREMY  PRICE,  State  Director, Alaska  Chapter,  Americans  for                                                               
Prosperity,  said he  was  speaking on  behalf  of "thousands  of                                                               
grass-roots activists  across the state"  to oppose SB 158.   The                                                               
legislation  reduces  competition  for big  brokerage  firms  and                                                               
creates  barriers and  unnecessary hurdles  for those  wishing to                                                               
become  a broker,  by  those  who will  benefit.    He noted  the                                                               
demographics of  those most  negatively affected  are low-income,                                                               
immigrants,  military spouses,  and rural  individuals.   He read                                                               
from a  report [report not  provided].   Mr. Price read  from the                                                               
public record of  the 9/2[/16] minutes of the  Alaska Real Estate                                                               
Commission [document  not provided].   He concluded  that members                                                               
of  the industry,  who  are trainers,  have  put the  legislation                                                               
forward, which is a conflict of  interest that has not been given                                                               
full attention.   Large brokerage firms support  the bill because                                                               
it  suppresses competition;  however,  the  public benefits  from                                                               
greater competition,  and there  is legal  recourse to  deal with                                                               
bad actors.                                                                                                                     
                                                                                                                                
9:37:56 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON opined that  fifteen hours of additional                                                               
education is not  very much to ask of brokers.   He asked whether                                                               
one more  year of experience  would be satisfactory,  rather than                                                               
two more years.                                                                                                                 
                                                                                                                                
MR. PRICE stated that legislation is  not the best way to prevent                                                               
bad  actors   from  becoming   licensed  brokers.   He  supported                                                               
Representative Josephson's foregoing proposal.                                                                                  
                                                                                                                                
REPRESENTATIVE JOSEPHSON  surmised the intent of  the legislation                                                               
is to strive for improvement in the industry.                                                                                   
                                                                                                                                
MR.  PRICE  inquired as  to  whether  the industry  provided  the                                                               
committee with  evidence of problems  which are addressed  by the                                                               
legislation.                                                                                                                    
                                                                                                                                
9:40:09 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON,  after ascertaining no  one else wished  to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
9:40:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  moved  to  report  CS for  SB  158  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
[There  followed discussion  as  to the  correct  version of  the                                                               
bill.]                                                                                                                          
                                                                                                                                
9:41:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KITO  restated  the   motion  to  report  [House]                                                               
committee  substitute for  SB  158,  Version 29-LS1303\H,  Bruce,                                                               
4/5/16, out of committee with  individual recommendations and the                                                               
accompanying fiscal notes.                                                                                                      
                                                                                                                                
9:41:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON advised  that  he would  not object  to                                                               
fifteen  hours of  additional  education,  however, he  suggested                                                               
that members  may further consider  the extension from  two years                                                               
to four years.                                                                                                                  
                                                                                                                                
9:42:08 AM                                                                                                                    
                                                                                                                                
There being  no objection,  HCS SB 158(L&C)  was reported  out of                                                               
the House Labor and Commerce Standing Committee.