Legislature(1997 - 1998)

02/10/1998 01:50 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE FINANCE COMMITTEE                                             
              February 10, 1998                                                
                 1:50 P.M.                                                     
                                                                               
TAPE HFC 98 - 25, Side 1                                                       
TAPE HFC 98 - 25, Side 2                                                       
TAPE HFC 98 - 26, Side 1                                                       
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Gene Therriault called the House Finance Committee                    
meeting to order at 1:50 p.m.                                                  
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley    Representative Kelly                                        
Co-Chair Therriault   Representative Kohring                                   
Representative Davies  Representative Martin                                   
Representative Davis   Representative Moses                                    
Representative Foster  Representative Mulder                                   
Representative Grussendorf                                                     
                                                                               
ALSO PRESENT                                                                   
                                                                               
Representative Gene Kubina; Representative Norman Rokeberg;                    
Margaret Pugh, Commissioner, Department of Corrections;                        
Catherine Reardon, Director, Division of Occupational                          
Licensing, Department of Commerce and Economic Development;                    
Larry Spencer, Alaska Real Estate Commission;                                  
                                                                               
The following testified via the teleconference network:                        
Art Clark, Real Estate Unlimited, Anchorage; Debra Britt,                      
Anchorage; Shane Osowski, Community Associations Institute,                    
Anchorage; David Garrison, Anchorage; William Brady, Remax,                    
Anchorage; John Carman, Anchorage; Clair Ramsey, Real Estate                   
Commission; Ron Polloch, Jack White Real Estate, Anchorage;                    
Eric Dyrud, Anchorage Board of Realtors, Anchorage; Bob                        
Baer, Totem, Anchorage; Ron Johnson, President, Kenai                          
Peninsula Boar of Realtors.                                                    
                                                                               
SUMMARY                                                                        
                                                                               
HB 33 "An Act relating to real estate licensing and the                        
real estate surety fund; and providing for an                                  
effective date."                                                               
                                                                               
HB 33 was HELD in Committee for further                                        
consideration.                                                                 
                                                                               
HB 53 "An Act relating to the authority of the                                 
Department of Corrections to contract for                                      
facilities for the confinement and care of                                     
prisoners, and annulling a regulation of the                                   
Department of Corrections that limits the purposes                             
for which an agreement with a private agency may                               
be entered into; authorizing an agreement by which                             
the Department of Corrections may, for the benefit                             
of the state, enter into one lease of, or similar                              
agreement to use, space within a correctional                                  
facility that is operated by a private contractor,                             
and setting conditions on the operation of the                                 
correctional facility affected by the lease or use                             
agreement; and giving notice of and approving a                                
lease-purchase agreement or similar use-purchase                               
agreement for the design, construction, and                                    
operation of a correctional facility, and setting                              
conditions and limitations on the facility's                                   
design, construction, and operation."                                          
                                                                               
 HB 53 was HELD in Committee for further                                       
consideration.                                                                 
HOUSE BILL NO. 53                                                              
                                                                               
"An Act relating to the authority of the Department of                         
Corrections to contract for facilities for the                                 
confinement and care of prisoners, and annulling a                             
regulation of the Department of Corrections that limits                        
the purposes for which an agreement with a private                             
agency may be entered into; authorizing an agreement by                        
which the Department of Corrections may, for the                               
benefit of the state, enter into one lease of, or                              
similar agreement to use, space within a correctional                          
facility that is operated by a private contractor, and                         
setting conditions on the operation of the correctional                        
facility affected by the lease or use agreement; and                           
giving notice of and approving a lease-purchase                                
agreement or similar use-purchase agreement for the                            
design, construction, and operation of a correctional                          
facility, and setting conditions and limitations on the                        
facility's design, construction, and operation."                               
                                                                               
MARGARET PUGH, COMMISSIONER, DEPARTMENT OF CORRECTIONS                         
provided members with a handout titled, What is the Problem?                   
(Copy on file).  She observed that there are 3,239 inmates                     
in Alaskan correctional facilities.  The emergency capacity                    
of the Department of Corrections is 2,691 inmates.  The                        
Department is over capacity by 548 inmates.  The state of                      
Alaska has been ordered by the Court to find a way to reduce                   
its prison population to 2,691 by May 1, 1998.                                 
                                                                               
Commissioner Pugh reviewed the handout:                                        
                                                                               
What Is the Problem?                                                           
                                                                               
* Alaska's prison's and jails are severely overcrowded;                        
                                                                               
* There is no space for new criminals;                                         
                                                                               
* Projections show system will grow by 200 prisoners each                      
year;                                                                          
                                                                               
* The State is under Court Order to decrease                                   
overcrowding;                                                                  
                                                                               
* The State is being assessed fines for overcrowding; and                      
                                                                               
* No legislative action has been taken.                                        
                                                                               
What Has Been Done?                                                            
                                                                               
* In 1995, the Department sent over 200 prisoners out of                       
State;                                                                         
                                                                               
* In 1996, "Protecting the People" was introduced by the                       
Criminal Justice Cabinet;                                                      
The Governor introduced the G.O. Bond bill to implement                        
"Protecting the People";                                                       
Legislation to build a private prison in Anchorage was                         
discussed ; and                                                                
An initiative was placed on the ballot to block the                            
building of a private prison in Anchorage.                                     
                                                                               
* In 1997, the Criminal Justice Cabinet offered to work                        
with the Legislature;                                                          
The Legislature discussed issues and introduced a                              
variety of bills, but no legislation passed; and                               
A ballot measure passed effectively blocking                                   
construction of a prison in South Anchorage.                                   
                                                                               
* In 1998, the Governor introduced a bill for Phase I of                       
a statewide expansion.                                                         
                                                                               
What must we do right away?                                                    
                                                                               
Givens:                                                                        
                                                                               
* To do "nothing" is unacceptable;                                             
                                                                               
* The Governor will not commute sentences; and                                 
                                                                               
* The State needs to move over 500 prisoners by May 1.                         
                                                                               
Options:                                                                       
                                                                               
* We can use more CRC beds for low risk offenders;                             
                                                                               
* We can send more dangerous prisoners out-of-state; and                       
                                                                               
* We can place non-dangerous misdemeanants in tents or                         
other temporary structures on prison grounds surrounded                        
by a secure fence.                                                             
                                                                               
What are our long-term choices?                                                
                                                                               
* The legislature can review, amend, and adopt the                             
Governor's statewide expansion plan (HB 368, SB 267).                          
                                                                               
* The legislature can expand Spring Creek, replace Sixth                       
Avenue Jail, expand the state prison at Palmer, and                            
build a private prison at Palmer (SB 179).                                     
As proposed, this does not meet DOC principles.                                
                                                                               
* The legislature can authorize the conversion of Ft.                          
Greely at Delta Junction into a medium-security prison                         
for 800 prisoners (HB 53).  As proposed, this does not                         
meet DOC principles.                                                           
                                                                               
In response to a question by Co-Chair Hanley, Commissioner                     
Pugh reviewed the Department of Corrections principles.  To                    
warrant serious consideration, any prison or jail expansion                    
proposal must be:                                                              
                                                                               
- Safe;                                                                        
- Statewide (comprehensive and meets regional needs);                          
- Consistent with best correctional practices;                                 
- Involve community participation (government to                               
government); and                                                               
- Cost effective.                                                              
                                                                               
Co-Chair Hanley observed that HB 53 does not meet the                          
Administration's statewide comprehensive concern.                              
Commissioner Pugh agreed and added that Bethel is the most                     
chronically overcrowded correctional facility.                                 
                                                                               
Co-Chair Hanley asked the total per diem cost to implement                     
the Governor's plan, including capital and operating                           
expenses.  He observed that the Palmer facility expansion                      
would cost $16.5 million dollars for 221 beds.  He clarified                   
that the total per diem amount should include construction                     
costs amortized over 20 years.                                                 
                                                                               
Co-Chair Therriault stressed that the Legislature needs the                    
Department of Corrections to provide it with numbers.                          
Commissioner Pugh stated that she would complete the math to                   
the best ability of the Department.  She noted that she has                    
questions about the cost of implementing HB 53.  She                           
questioned what the $70 dollar a day rate includes.  The                       
Department of Corrections' $100 dollar per diem cost                           
includes; total operations at an institutional site,                           
institutional programs, correctional industries,                               
transportation, inmate health care, building and equipment                     
depreciation, capital replacements and all administrative                      
and support costs.  The Arizona contract does not include                      
inmate health care, major medical, transportation or inmate                    
gratuities.  She asked how many years the $70 dollar a day                     
rate would hold.  She questioned what would happen if the                      
contractor defaults.  She asked what is the total price of                     
converting and operating Fort Greely as a medium security                      
prison.                                                                        
                                                                               
In response to a question by Representative Martin,                            
Commissioner Pugh stated that the prison and jail                              
populations have out stripped the growth in state                              
population.  Crime is down, but arrests are up.  She stated                    
that "people are not getting out."  She quoted a previous                      
commissioner of the department as saying that the "stopper                     
is in the bathtub, and the water is on."  She added that                       
either a bigger bathtub has to be built or the facet has to                    
be turned off.  She maintained that the bathtub is over                        
flowing.                                                                       
                                                                               
Representative Martin asked if a Fort Greely facility would                    
ease the problem.  Commissioner Pugh stressed that she cares                   
about what happens to the people of Delta Junction.  She                       
maintained that she would like to work with the Legislature,                   
but added that she has concerns and questions regarding the                    
proposal.                                                                      
                                                                               
Co-Chair Therriault noted that the Cleary moderator stated                     
that the Governor's plan is not acceptable.  He observed                       
that the Governor's plan has not been established to be the                    
most cost effective.                                                           
                                                                               
Representative Kelly asked if the $70 dollar a day rate                        
compares with the Department's $100 dollar a day cost.  He                     
questioned if the Delta project would take the pressure off.                   
Commissioner Pugh acknowledged that the Fort Greely facility                   
would take pressure off.                                                       
                                                                               
Representative Kelly observed that the proposal would                          
alleviate part of the prison problem without putting an                        
additional burden on the state's capital appropriations.  He                   
asked Commissioner Pugh's to outline her objections to HB
53.                                                                            
                                                                               
Commissioner Pugh stated that she does not have a good feel                    
for the financing package and the total cost of the                            
legislation.  She did not know if the total cost of the                        
facility and operations could be covered at $70 dollars a                      
day.                                                                           
                                                                               
Representative Kelly asked if she would be supportive if the                   
cost of the facility and operations could be covered for $70                   
dollars a day.  Commissioner Pugh felt that $70 dollars a                      
day would be low if all the factors were taken into account.                   
She acknowledge that her level of comfort would be increased                   
if it can be demonstrated that $70 dollars a day would cover                   
all the costs.                                                                 
                                                                               
Commissioner Pugh provided members with a facility count in                    
response to questions from Co-Chair Hanley during a previous                   
meeting (copy on file).                                                        
                                                                               
Co-Chair Hanley clarified that his request was in response                     
to the insinuation that there would not be enough medium                       
security prisoners to fill 800 beds.  He noted that the                        
handout does not show security levels.  Commissioner Pugh                      
clarified that most prisoners do fall in the medium custody                    
level.  Co-Chair Hanley noted that projections show that the                   
state correctional facilities would be over capacity by                        
1,300 prisoners.  Commissioner Pugh noted that the State                       
paid for the full cost of halfway houses even when they were                   
not full. Contracts with halfway houses are now on a per                       
diem basis.  Prisoners at Palmer, Wildwood and in Arizona                      
are medium security inmates.                                                   
                                                                               
Representative Davies asked what kind of health care                           
facilities are in Delta Junction, who would be called in                       
case of a riot and are there additional costs for fire                         
safety.                                                                        
                                                                               
Commissioner Pugh noted that standards established by the                      
American Corrections Association state that a prison should                    
be located no farther than 50 miles from a major city of                       
10,000.  This standard was established to assure proximity                     
to emergency services.  She stressed that the problems                         
regarding HB 53 are not insurmountable.  She noted that                        
issues such as response to fires or riots would need to be                     
addressed.  Transportation in case of an emergency is also                     
an issue.  She noted that prisoners could be screened for                      
medical concerns.  She observed that there is a good runway                    
at Fort Greely, but added that it is more expensive to                         
airlift a person.  Representative Davies asked Commissioner                    
Pugh to attach a cost to these issues.  She stressed that it                   
will be difficult to get a true "apples to apples cost."                       
                                                                               
In response to a question by Representative Mulder,                            
Commissioner Pugh noted that the department is working on a                    
Request for Proposal (RFP) for out-of-state medium security                    
beds. The Arizona contract expires on June 30, 1998.  The                      
RFP would be for up to 600 beds.  Representative Mulder                        
pointed out that 600 beds are needed today.  The Fort Greely                   
facility would not come on line for a couple of years.                         
Commissioner Pugh acknowledged that it is a reasonable                         
expectation that 800 beds will be necessary.                                   
                                                                               
In response to a question by Representative Davis,                             
Commissioner Pugh clarified that security levels relate to                     
buildings and custody levels relate to the degree of                           
supervision.  Each inmate has a custody and security level.                    
There are five custody levels: maximum, closed, medium,                        
minimum and community.  The majority of inmates are in                         
medium custody.                                                                
                                                                               
Representative Davies pointed out that if prisoners for out-                   
of-state or rural facilities are screened for pre-existing                     
medical conditions and other needs than prisoners in                           
facilities near town would require more expensive care.                        
                                                                               
Co-Chair Therriault pointed out that the Legislature trusts                    
the Department to write a contract for out-of-state inmates.                   
He added that the Legislature would trust the Department to                    
write a contract to implement HB 53 if it is enacted.                          
Commissioner Pugh clarified that the out-of-state contract                     
will go out to bid as an RFP. She reiterated that she would                    
appreciate guidance.                                                           
                                                                               
(Tape Change, HFC 98 - 25, Side 2)                                             
                                                                               
MARGOT KNUTH, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW                    
pointed out that many of the prisoners in overcrowded                          
institutions cannot be moved since they are pretrial                           
prisoners or serving short sentences. She pointed out that                     
regional facilities would need to be expanded.                                 
                                                                               
HB 53 was HELD in Committee for further consideration.                         
HOUSE BILL NO. 33                                                              
                                                                               
"An Act relating to real estate licensing and the real                         
estate surety fund; and providing for an effective                             
date."                                                                         
                                                                               
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, testified in                          
support of HB 33.  He observed that the legislation                            
represents four years of hard work by members of the real                      
estate community, the Alaska Real Estate Commission, the                       
House Labor and Commerce Committee and the sponsor.  The                       
legislation is the result of a task force formed in 1994 by                    
the Alaska Real Estate Commission to take up the issues of                     
property management and community association management.                      
There are no regulations for community association                             
management in the state of Alaska.  He maintained that the                     
legislation enhances consumer protections.  There are 2,200                    
real estate licenses in the state of Alaska.  He referred to                   
an unlicensed individual that embezzled $57 thousand dollars                   
from 18 separate community associations in Anchorage.  He                      
observed that the Commission rewrote a significant portion                     
of the real estate chapter.  The Commission is given more                      
authority to regulate licensees.  The legislation also                         
expands educational opportunities.                                             
                                                                               
Representative Rokeberg noted that he is a commercial real                     
estate broker, licensed in the state of Alaska.  He                            
emphasized that he has not sold a house in 25 years.  Under                    
current statute, Representative Rokeberg is required to take                   
at least 8 of the 20 required hours every two years on                         
selling houses.  The legislation creates specialties for                       
education.                                                                     
                                                                               
The legislation updates the provisions for when a license is                   
required, for office locations, branch offices, record                         
keeping, contracts and signs.  Fees are only due when there                    
is a written existing contract.  The Conflict of Interest                      
declarations are expanded as the result of a 1995                              
Legislative Budget and Audit Committee audit.  It proscribes                   
prohibited conduct of unlicensed activity by adopting                          
language promulgated by the Mississippi Real Estate                            
Commission.  This language has been tested in federal                          
courts.  Exceptions are expanded to 20 under AS 161.                           
Representative Rokeberg observed that Amendment C would add                    
an additional exception (copy on file).  Amendment C would                     
allow management by a natural person of property for another                   
person without a fee, other than the reimbursement of                          
expenses (copy on file). Condominium and townhouse                             
associations can continue to manage their own activities.  A                   
unit owner resident in an association project has the right                    
to manage that project for a profit.  Only individuals that                    
manage more than one association would be covered under the                    
statute.                                                                       
                                                                               
Representative Rokeberg emphasized that the interests of                       
real estate practitioners and the public have been balanced                    
by the legislation.  He observed that the legislation has                      
wide support among real estate groups and the                                  
Administration.                                                                
                                                                               
Representative Rokeberg provided members with Amendments A,                    
B and C (copy on file).  He stated that Amendment A contains                   
language clarifications.  He reviewed Amendment A.  He noted                   
that there are three references to deletion of "a mobile                       
home or."  He explained that mobile home dealers were                          
inadvertently swept into real estate activities.  The                          
amendment clarifies that real estate licensees do not wish                     
to have exclusive right to manage mobile home parks.                           
                                                                               
Representative Rokeberg observed that Amendment B                              
incorporates recommendations by the Alaska Chapter of                          
Community Associations.  Definitions of conduct of                             
investigation and community association accounts are                           
clarified.  Association fund's may not be commingled with                      
funds of other associations or the licensee's.                                 
                                                                               
Representative Rokeberg noted that Amendment C was added at                    
the request of Representative Cowdery.  This amendment would                   
allow a person to have another person manage their property                    
without a fee.                                                                 
                                                                               
In response to a question by Co-Chair Hanley, Representative                   
Rokeberg clarified that the proposed amendments were not                       
drafted by Alaska Legal Services.  Alaska Legal Services did                   
review the amendments.                                                         
                                                                               
Co-Chair Hanley noted that Representative Rokeberg could                       
legally sell a house.  He observed that Representative                         
Rokeberg would not be required to take refresher classes on                    
selling a house.  He questioned if there is a prohibition on                   
selling houses if that portion of the education update is                      
not taken.  Representative Rokeberg emphasized that there is                   
a 20-hour mandate for continuing education.  Specialty                         
classes represent 8 of the 20 hours.  He would not have to                     
take the residential sale portion.  Co-Chair Hanley stressed                   
that education requirements are set to assure that the                         
statues are understood "across the board".  He reiterated                      
that the legislation allows sell of homes by licensees that                    
are not required to take that portion of the educational                       
requirements.                                                                  
                                                                               
Representative Rokeberg noted that the original legislation                    
would have created different types of licenses.  He observed                   
that the proposal was controversial among the real estate                      
community.  The legislation represents a consensus position.                   
                                                                               
Representative Rokeberg noted that the legislation would                       
grant current community association managers that can                          
demonstrate that they have performed the function for 24                       
months a limited community association license.  A limited                     
community association license would restrict their activity                    
to management of associations only.  They would be forbidden                   
to participate in other types of real estate activities.                       
                                                                               
Representative Rokeberg noted that the legislation provides                    
for the expansion of the education requirements for pre-                       
licensing to include community association management                          
topics.                                                                        
                                                                               
Representative Rokeberg asserted that the legislation would                    
improve real estate education.                                                 
                                                                               
Co-Chair Hanley noted that the legislation prevents the                        
Alaska Real Estate Commission from saying that the 20-hour                     
requirement cannot be taken in two days.                                       
                                                                               
In response to a question by Representative Martin,                            
Representative Rokeberg explained that the legislation                         
allows associations to manage themselves or retain the                         
services of a resident owner to manage the association for a                   
profit.                                                                        
                                                                               
Representative Mulder disclosed that he has a real estate                      
license.                                                                       
                                                                               
In response to a question by Representative Mulder,                            
Representative Rokeberg noted that the Commission cannot                       
assess civil penalties.  The legislation would allow a civil                   
penalty of up to $5 thousand dollars beyond the amount that                    
the person benefited.  He noted that the activity would have                   
to be egregious before the Department of Law would                             
prosecute.  The Alaska Real Estate Commission requested the                    
authority to assess fines.  The Commission did not have any                    
authority over non-licensed activity.  Representative Mulder                   
asked if other boards are allowed to assess fines.                             
                                                                               
RON JOHNSON, PRESIDENT, KENAI PENINSULA BOARD OF REALTORS                      
testified on HB 33.  He referred to Amendment A.  He noted                     
that "financial institution" would be substituted for                          
"banks" on page 18, line 4.  He questioned if the Federal                      
Deposit Insurance Corporation (FDIC) covers financial                          
institutions.  If they are not covered by FDIC they would                      
not be insured funds. He suggested that "sales person" could                   
be replaced with "real estate services licensee".  He                          
asserted that mobile homes are not a real estate item.  He                     
observed that a restriction on the number of hours that can                    
be taken in a day would hurt rural areas.  He maintained                       
that the ability of person to retain information is not                        
affected by the amount hours that they sit in a chair.                         
                                                                               
Representative Rokeberg noted that "financial institution"                     
was inserted on the request of the State Bank and Securities                   
Commission.  He stressed that to the best of his knowledge                     
"real estate services licensee" is used where it can be                        
used.  He observed that there are three types of licenses.                     
He stressed that the term licensee cannot be used to                           
distinguish between other types of licenses.                                   
                                                                               
ART CLARK, REAL ESTATE UNLIMITED, ANCHORAGE testified in                       
support of HB 33. He observed that he also represents the                      
Alaska Association of Realtors and is on the Board of                          
Directors for the Community Association Institute.  He spoke                   
in support of the amendments.  He spoke against limiting the                   
number of educational hours that can be taken in a day.                        
                                                                               
LARRY SPENCER, ALASKA REAL ESTATE COMMISSION explained that                    
there are seven members on the Commission.  There are two                      
public members, one from each judicial district and two                        
members at large.  Judicial district members are licensees.                    
                                                                               
Co-Chair Therriault expressed concern that the legislation                     
would overrule policy set by the Commission. He questioned                     
why the Commission felt the number of educational hours                        
should be restricted to 7 per day.                                             
                                                                               
DEBRA BRITT, PIONEER MANAGMENT ANCHORAGE testified in                          
support of HB 33.  She noted that she manages community                        
associations.  She spoke in support of the amendments.                         
                                                                               
SHANE OSOWSKI, PRESIDENT, COMMUNITY ASSOCIATIONS INSTITUTE,                    
ANCHORAGE testified in support of HB 33.  He observed that                     
he is an attorney practicing real estate construction law.                     
He noted that Representative Rokeberg has incorporated his                     
comments into the bill.  He spoke in support of the                            
amendments.                                                                    
                                                                               
DAVID GARRISON, ASSOCIATE BROKER, ANCHORAGE testified in                       
support of HB 33.  He questioned the affect of section 30,                     
page 19.                                                                       
                                                                               
WILLIAM BRADY, REMAX, ANCHORAGE testified in support of HB
33.  He noted that he is also the Chairman of Industry                         
Issues for the State Association of Realtors.  He spoke in                     
support of the amendments.  He clarified that the intent is                    
to break down educational requirements of licensees who are                    
practicing in different areas of real estate.  He maintained                   
that it is not fair to a commercial agent or a property                        
manager to take classes dealing with residential property                      
sales.  The legislation would allow licensees to take the                      
core hours specific to their area of expertise.  He noted                      
that the Commission is not recommending a limit on hours                       
that can be taken in a day.                                                    
                                                                               
(Tape Change, HFC 98 - 26, Side 1)                                             
                                                                               
JOHN CARMAN, HOME STATE MORTGAGE, ANCHORAGE testified in                       
support of HB 33.  He spoke in support of the provision to                     
exclude unlicensed parties from receiving fees from real                       
estate transactions.                                                           
                                                                               
CLAIR RAMSEY, REAL ESTATE COMMISSION, ANCHORAGE testified in                   
support of HB 33 and urged the Committee to pass HB 33                         
during this legislative session.                                               
                                                                               
RON POLLOCH, JACK WHITE REAL ESTATE, ANCHORAGE testified in                    
support of HB 33.  He observed that the legislation balances                   
many interests.  The legislation clarifies that an                             
unlicensed person cannot receive a fee.  He referred to the                    
civil penalty provisions.  He noted that the Alaska Real                       
Estate Commission has no jurisdiction against an unlicensed                    
person performing a licensed activity.                                         
                                                                               
ERIC DYRUD, ANCHORAGE BOARD OF REALTORS, ANCHORAGE testified                   
in support of HB 33.  He urged prompt passage of the                           
legislation.                                                                   
                                                                               
BOB BAER, TOTEM, ANCHORAGE testified in support of HB 33.                      
He is also chairman of Concern Advocates for Real Estate                       
Services.                                                                      
                                                                               
Mr. Spencer testified in support of HB 33.  He stated that                     
he is a member at large of the Alaska Real Estate                              
Commission.  He emphasized that the legislation represents                     
over four years of work.  The Alaska Real Estate Commission                    
has passed a resolution in support of civil penalties for                      
unlicensed activities.  Currently, unlicensed activities are                   
referred to the Department of Law.  He observed that the                       
Division of Occupational Licensing has limited attorney                        
time.  Only egregious offenses are pursued.  The Alaska Real                   
Estate Commission recognizes the need to restate and                           
reinterpret current laws restricting fees or commissions to                    
licensed persons.  He emphasized that the legislation                          
enhances consumer protection by regulating the practice of                     
professional management of condominium associations.                           
                                                                               
Co-Chair Therriault asked the position of the Alaska Real                      
Estate Commission regarding to the number of training hours                    
that can be taken per day.  Mr. Spencer noted that the                         
Commission has taken actions in the education areas to make                    
the 20-hour component more effective. The Commission                           
originally recommended limiting training to seven hours per                    
day.  Marketing courses were eliminated.  Computer courses                     
were eliminated.  Credit for people that arrive late was                       
eliminated.  The real estate industry resisted the seven-                      
hour restriction.  The Alaska Real Estate Commission                           
concluded that they did not have documentation to support                      
the premise that educational quality would be more effective                   
with a seven hour per day limit.  The Commission also                          
recognized the difficulty of individuals in rural areas that                   
have to fly in to take educational classes.  The Alaska Real                   
Estate Commission does not regulate the number of hours per                    
day.                                                                           
                                                                               
Representative Rokeberg spoke in support of section 7.  He                     
noted that expansion the 20-hour biannual educational                          
requirement was discussed.                                                     
                                                                               
Co-Chair Therriault noted that section 7 on pages 5 and 6                      
delineates the specific types of courses that the Commission                   
must accept.                                                                   
                                                                               
Representative Rokeberg stated that section 7 balances                         
competing interests within the industry.  He noted that the                    
Commission has not always recognized courses offered at                        
national conventions.  He noted that the conventions offer                     
six-day courses with tuition of $1 thousand dollars or more.                   
He pointed out that these nationally recognized courses lead                   
to professional designations.                                                  
                                                                               
Mr. Spencer reviewed educational requirements.  He noted                       
that the bill conforms to recommendations of the Alaska Real                   
Estate Commission Task Force.                                                  
                                                                               
Representative Rokeberg stated that there is a need to write                   
regulations into law.  He observed the importance of real                      
estate law.                                                                    
                                                                               
In response to a question by Representative Grussendorf, Mr.                   
Spencer noted that property managers do not generally sell                     
houses.  He added that a small number of individuals are                       
involved in strictly commercial real estate.                                   
                                                                               
Co-Chair Therriault expressed concerns that individuals who                    
are not required to take continuing education relating to                      
residential sales may sell a house.                                            
                                                                               
Representative Rokeberg maintained that there are only 5 - 6                   
uniquely specialized individuals.                                              
                                                                               
Mr. Spencer noted that next year's core courses include                        
ethics, disclosure and agency contracts.                                       
                                                                               
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL                          
LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT                     
testified in support of HB 33.  She maintained that the                        
legislation provides enhanced consumer protection and fixes                    
some holes in the statutes.                                                    
                                                                               
In response to a question by Representative Mulder, Ms.                        
Reardon noted that the Board of Architects and Land                            
Surveyors has a similar statute that permits them to charge                    
people committing an unlicensed activity.  She noted that                      
the Division has requested similar civil penalty authority.                    
Money could be collected through garnishment of permanent                      
fund dividends.  She stressed that the civil penalties will                    
contribute to enforcement of licensing laws.                                   
                                                                               
Representative Mulder noted that the reciprocity section was                   
deleted.  Representative Rokeberg noted that there are no                      
reciprocity arrangements with other states.                                    
                                                                               
Co-Chair Therriault referred to section 7, subsection (4).                     
This subsection would mandate that the Commission approve                      
"courses offered and attended at a national convention for                     
real estate licenses if the courses were approved for                          
continuing education credit by the real estate licensing                       
board of the state in which the convention was held."  He                      
questioned why the state of Alaska should recognize                            
educational requirements of states that do not recognized                      
Alaskan real estate licenses.                                                  
                                                                               
Representative Rokeberg clarified that the Commission did                      
not request section 7, subsection (4).  Representative Kelly                   
pointed out that convention courses would focus on the                         
issues that cross state boundaries.                                            
                                                                               
Co-Chair Therriault questioned why the decision is not left                    
to the Alaska Real Estate Commission.  Representative Kelly                    
stressed that real estate courses are difficult to find.                       
                                                                               
Representative Rokeberg asserted that the legislation                          
expands opportunities for education to better courses.                         
                                                                               
Representative Davis stated that subsection (4) seems to                       
give the courses credibility.                                                  
                                                                               
In response to a question by Co-Chair Therriault, Ms.                          
Reardon noted that the Commission currently has subpoena                       
power.                                                                         
                                                                               
Ms. Reardon noted that other regulatory agencies issue                         
fines.                                                                         
                                                                               
In response to a question by Representative Mulder,                            
Representative Rokeberg observed that the Endorsement                          
Concept has been deleted from the legislation.                                 
                                                                               
Representative Davies expressed concern with page 3, line                      
25.  Representative Rokeberg noted that existing law                           
requires the Commission to publish disciplinary actions                        
three times.  The legislation would allow the Commission to                    
release the information in their newsletter.                                   
                                                                               
Representative Davies suggested that "must" be changed to                      
"shall" on page 5, line 31 and a caveat be added stating                       
that "unless the Commission finds in writing reasons for                       
disallowing" a course it will be approved.                                     
                                                                               
Representative Davies questioned the deletion of "natural"                     
on page 6, line 25. Representative Rokeberg spoke in support                   
of deleting "natural".                                                         
                                                                               
In response to a question by Representative Mulder,                            
Representative Rokeberg noted that section 1, on page 1                        
clarifies that real estate can mean an interest in a mobile                    
home.  The legislation exempts real estate licensees from                      
mobile home dealer licensing requirements.                                     
                                                                               
Ms. Reardon noted that there are other problems with                           
statutes relating to mobile home dealer licensing.                             
                                                                               
Co-Chair Therriault referred to section 48, page 28.  He                       
noted that section 48 states that the chapter does not apply                   
to a person who manages a total of four or fewer residential                   
units for other persons.  He interpreted the statute to                        
state that a person who manages a total of four or fewer                       
residential units for other persons is exempt from the                         
Title.  He suggested that they could sell a home.  He noted                    
that the person should not be exempted from the provisions                     
of the Title.  The activity should be exempted.                                
                                                                               
Mr. Reardon added that page 30, line 1 should exempt the                       
bookkeeper or accounting function not the person.                              
                                                                               
HB 33 was HELD in Committee for further consideration.                         
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 4:07 p.m.                                             
House Finance Committee 15 2/10/98                                             

Document Name Date/Time Subjects