Legislature(1999 - 2000)
02/02/1999 09:00 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 6
"An Act relating to the disposal of state land."
Mel Krogseng, staff to Senator Robin Taylor was invited to
join the committee. She explained the bill on behalf of
Senator Taylor, sponsor. The land in question has been
purchased and returned to the State because of default. The
Department of Natural Resources proposed the amendments
that were already incorporated into bill. It is supported
by them and carries a zero fiscal note.
Senator Adams asked about the two amendments proposed by
the chairman. Ms. Krogseng said there was no objection to
the amendments.
Carol Carroll, Director, Division of Support Services,
Department of Natural Resources was invited to join the
committee. She did not wish to testify but said Dick
Mylius from the department was available via teleconference
in Anchorage.
Dick Mylius, Resource Assessment and Development, Division
of Land, Department of Natural Resources testified before
the committee via teleconference in Anchorage. He said the
department supported the bill as currently drafted. It
would allow them to get land up for sale more quickly.
Under State statute the land must be appraised before sale.
Senator Adams referred to Amendment #1, section 5 having to
do with appraisals. His concern was that the director
might not reject an appraisal. What happens if there is a
low appraisal rating?
Mr. Mylius said they opposed Amendment #1. The department
may want to reject an appraisal for many reasons. Such as
error in computation, the wrong parcel of land, etc.
Senator Adams referred to Amendment #2.
Mr. Mylius said his concern for Amendment #2 was the
statute was changed previously to two years. Further, it
does not read quite clear what the addition modifies.
Senator Adams suggested that in Amendment #2, line 6, after
"lease" insert "or".
Mr. Mylius briefly described an inaccurate appraisal and
the problems caused by this for the committee.
Co-chair Torgerson commented about the situation of the
hiring of an appraiser to appraise a specific piece of
land, it was rejected and the case was now under
administrative appeal. He then explained purpose of the
amendment.
Mr. Mylius said this kind of situation rarely arises and
this one was an exception. There was significant error.
The private appraiser ignored all comments and suggestions
made by State appraiser.
Senator Torgerson said appraisers were hired because they
were supposed to be unbiased towards either party. Did
they try to negotiate a higher price?
Mr. Mylius said there was a lot of differences. The piece
of property was a difficult one to appraise.
Senator Torgerson asked if appraisers were licensed by the
State? Mr. Mylius said they were. Senator Torgerson asked
if they were covered by insurance? Mr. Mylius said he did
not know.
Senator Phillips asked if the process done for everyone was
normally the same?
Mr. Mylius said parcels of land were appraised beforehand.
They appraise the land up front and the buyer pays this fee
up front. They do sell exclusively to an individual in
certain situations.
Senator Phillips asked what happened if an individual did
not like the appraisal? Was another appraisal secured?
Mr. Mylius said that was correct.
Senator Adams asked what the third appraisal in this
particular situation came out to be? Mr. Mylius said the
issue was currently out to deal and he could not release
the amount of the appraisal.
Co-chair Torgerson asked what was the expectation of the
person paying for the appraisal? In this particular
situation, they got two more appraisals and still filed an
appeal.
Senator Donley MOVED Amendment #1. Senator Adams OBJECTED.
He MOVED to delete all of section 5 as an amendment to
Amendment #1. Co-chair Torgerson OBJECTED. He said there
was an expectation on behalf of the buyer when the
appraisal service was paid for. Therefore the department
did not have any veto right.
Mr. Mylius said this instance was a rare occasion. The
State certified appraiser had voiced her concerns. The
outside appraiser did not respond to her concerns.
Senator Torgerson said he felt Mr. Mylius wanted to leave
everything to the discretion of the department.
Mr. Mylius said they either do appraisal with their own
staff or hire another appraiser. Then it could be appealed
to the commissioner, the individual could purchase the
property or not, or they could take the matter to Court.
Senator Torgerson said this was not great policy and it did
not make sense.
Senator Phillips asked about the appraisals. Did the same
process apply to all properties? Mr. Mylius said they did
use the same appraisal process for all properties.
Senator Phillips questioned then why was this case so
different? Mr. Mylius said this was because of the
difference of the value of the property between the
purchaser and the department.
Senator Kelly asked if there was any contract that the
Department of Natural Resources would sell land to a person
based on an appraisal carried out by one of their approved
people? Mr. Mylius said there was no contract, but it
would still have to be approved by their appraiser. He
explained that the only ground for disapproval was fraud.
Senator Kelly explained his understanding of a contract
with an appraiser. Is one stuck with the obligation of
buying even if they do not like the appraiser? The larger
question to be determined is that is this something that
always goes on? Or is this just an isolated incident? He
said he would have to support Senator Torgerson's amendment
individuals.
Senator Donley asked for an explanation of the standard
used. Was there clear and convincing evidence that the
appraisal was inaccurate? Mr. Mylius said there was no
clear and convincing standard. There was however a
standard checklist to make sure the appraisal was good.
Senator Donley said he had received comments that State
policy was not being executed. There were people in
positions that have decision-making authority ignoring the
intent of the statute. This was causing great concern for
many individuals. A systemic pattern was seen and needs to
be attended to. He has been hearing of this process in the
business community.
Mr. Mylius said he would provide statistics to the
committee showing that this was a rare incident.
Co-chair Torgerson said if he wanted to purchase land he
had the option not to purchase it, not the appraiser.
Senator Green voiced her concerns. The Commissioner was
approving each appraiser. Perhaps it was time to get back
into the reversionary relationship of buyer and appraiser.
The present system does not work very well. Was this
appraiser still on the payroll? Mr. Mylius said this
person was no longer a certified appraiser. The particular
appraiser did not fill out and submit the required re-
certification papers and therefore was not on the certified
list.
Senator Green asked if a minimum bid was ever set? Mr.
Mylius said the appraiser did set a minimum bid.
Senator Green asked if they were operating according to
policy? Mr. Mylius asked for clarification?
Senator Green asked if the department was operating under
statute so an individual could anticipate what they might
have to go through?
Senator Kelly asked if this was under regulation or policy?
Mr. Mylius said most operations were under regulation.
Senator Phillips asked about list of approved appraisers?
And how often was this reviewed? Mr. Mylius said he was
not sure how many were on the list. It was reviewed less
often than once a year. The appraiser in question was not
on the list any longer.
Co-chair Torgerson said the Department of Natural Resources
also had a list of appraisers that were not approved to
use. This has created a problem. He asked if the bank
changes the appraisal on a loan? Mr. Mylius said he was
unaware of what the bank did.
Co=chair Torgerson spoke briefly to the committee regarding
appraisals in favor of the State.
Senator Wilken asked Co-chair Torgerson to set aside the
amendment to Amendment #1 pending receipt of requested
information.
Senator Donley referred to amendment to Amendment #1 and
perhaps it could be incorporated into Amendment #2.
Tape: SFC - 99 #18, Side A
Co-chair Torgerson explained Amendment #2 and the change of
two years to five years for an appraisal. They were trying
to assist Alaskans in their purchase of land.
Senator Donley spoke to the "clear and convincing"
standard. Senator Adams concurred. He suggested they work
on this bill overnight to find a negotiated point and also
take care of the involved constituent to make sure this
does not happen in the future. He felt this truly was an
isolated case.
Co-chair Torgerson said he did not feel this was an
isolated issue. As he said, they might as well not license
appraisers.
Senator Kelly asked if appraisers were licensed in the
State? Co-chair Torgerson said he thought they were
certified.
Senator Donley asked if the amendment to amendment #1 was
presently before the committee. Senator Adams said this
could be held overnight and perhaps they could come up with
a compromise and get bill out tomorrow.
Co-chair Torgerson briefly commented.
Senator Donley said there was really two questions. The
first one was the approval of appraisers. The department
should not have the authority to approve appraisers.
Second, was the "clear and convincing" standard if there
was "discretion" to be approved by the department. These
were possible suggestions offered by Senator Donley.
Senator Green said his suggestions would not correct the
situation. Senator Donley disagreed saying this suggested
standard would have given the constituent something to go
by.
Co-chair Torgerson felt there should have been an unbiased
appraisal.
Senator Donley pointed out that the same thing could happen
if the Commissioner discriminated in approving appraisers
who were sympathetic to them. Co-chair Torgerson's concern
was that the State, in this matter, was asking Alaskans to
come, give money and then they would do the appraisal.
Senator Green asked if the burden of appraisal were back on
the State, either there could be a flat fee or the
applicant could pay and State would handle the appraisal?
Co-chair Torgerson said this could be an option.
Mel Krogseng rejoined the committee and also said this
could be an option. The price of an appraisal is pretty
standard unless it is a remote parcel. She suggested Mr.
Mylius check into this matter.
Ms. Krogseng continued. It was her understanding that a
bank had an appraisal list and no matter who ordered the
appraisal the official appraiser is taken from that list.
If there is a problem then perhaps we should check into the
standard of their certification.
Co-chair Torgerson HELD the bill in committee along with
the amendments. This should be worked out with Department
of Natural Resources. Ms. Krogseng said she would be glad
to work with the committee and the department.
Co-chair Torgerson reviewed the agenda for tomorrow. An
Overview of the Department of Administration was scheduled.
Senator Adams asked if the University of Alaska would also
be taken up?
Senator Parnell said he had asked for a review of all
bargaining units. He did not know if the University would
be present.
ADJOURNED
Co-chair Torgerson adjourned the meeting at approximately
10:50 A.M. (Tape number#18, Side A.)
SFC-99 (1) 02/02/99
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