Legislature(1997 - 1998)

03/14/1997 03:20 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                          
                         March 14, 1997                                        
                           3:20 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative John Cowdery                                                   
 Representative Bill Hudson                                                    
 Representative Jerry Sanders                                                  
 Representative Joe Ryan                                                       
 Representative Tom Brice                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Gene Kubina                                                    
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 *HOUSE BILL NO. 178                                                           
 "An Act relating to letters of credit under the Uniform Commercial            
 Code; and providing for an effective date."                                   
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 *HOUSE BILL NO. 33                                                            
 "An Act relating to real estate licensing and the real estate                 
 surety fund; and providing for an effective date."                            
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 178                                                               
 SHORT TITLE: UNIFORM COMMERCIAL CODE:LETTERS OF CREDIT                        
 SPONSOR(S): LABOR & COMMERCE BY REQUEST                                       
                                                                               
 JRN-DATE      JRN-PG         ACTION                                           
 03/06/97       561    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/06/97       561    (H)   LABOR & COMMERCE                                  
 03/14/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
                                                                               
 BILL:  HB  33                                                               
 SHORT TITLE: REAL ESTATE LICENSING                                            
 SPONSOR(S): REPRESENTATIVE(S) ROKEBERG BY REQUEST                             
                                                                               
 JRN-DATE      JRN-PG         ACTION                                           
 01/13/97        36    (H)   PREFILE RELEASED 1/3/97                           
 01/13/97        36    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        36    (H)   LABOR & COMMERCE, FINANCE                         
 03/14/97              (H)   L&C AT  3:15 PM CAPITOL 17                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 ART PETERSON, Attorney                                                        
 Uniform Law Commissioner                                                      
 State of Alaska                                                               
 350 N. Franklin Street                                                        
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 789-9830                                                    
 POSITION STATEMENT:  Testified on HB 178                                      
                                                                               
 L. S. KURTZ, JR., Attorney                                                    
 Uniform Law Commissioner                                                      
 Uniform Commercial Code                                                       
 1050 Beech Lane                                                               
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 258-6051                                                    
 POSITION STATEMENT:  Testified on HB 178                                      
                                                                               
 DOUGLAS LOTTRIDGE, Assistant Attorney General                                 
 Commercial Section                                                            
 Department of Law                                                             
 State of Alaska                                                               
 1031 W 4th Avenue, Suite 200                                                  
 Anchorage, Alaska  99801                                                      
 Telephone:  (907) 269-5100                                                    
 POSITION STATEMENT:  Testified on HB 178                                      
                                                                               
 ELEANOR "GRAYCE" OAKLEY, Executive Administrator                              
 Real Estate Commission                                                        
 P.O. Box 4072                                                                 
 Palmer, Alaska  99645                                                         
 Telephone:  Unavailable                                                       
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 KENNETH TRUITT, Assistant Attorney General                                    
 Department of Law, Commercial Section                                         
 State of Alaska                                                               
 P.O. Box 110300                                                               
 Juneau, Alaska  99811-0300                                                    
 Telephone:  (907) 465-3600                                                    
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 CATHERINE REARDON, Director                                                   
 Department of Commerce and                                                    
   Economic Development                                                        
 Division of Occupational Licensing                                            
 P.O. Box 110806                                                               
 Juneau, Alaska  99811-0806                                                    
 Telephone:  (907) 465-2534                                                    
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 KRISTAN TANNER, Real Estate Practitioner                                      
 1830 E Parks Street, Number 386                                               
 Wasilla, Alaska  99654                                                        
 Telephone:  (907) 373-3575                                                    
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 TERRY MCGILLIVARY, Staff Member                                               
 Real Estate Commission                                                        
 3601 C Street, Number 722                                                     
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 269-8768                                                    
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 CHRIS STEPHENS, Commercial Real Estate Broker                                 
   President                                                                   
 Bond, Stephens and Johnson                                                    
 3000 A Street, Number 200                                                     
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 786-7305                                                    
 POSITION STATEMENT:  Testified on HB 33                                       
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 97-21, SIDE A                                                            
 Number 001                                                                    
                                                                               
 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                  
 Standing Committee to order at 3:20 p.m.  Members present at the              
 call to order were Representatives Cowdery, Hudson, Ryan and Brice.           
 Representative Sanders arrived at 3:21 p.m.                                   
                                                                               
 Number 056                                                                    
                                                                               
   HB 178 - UNIFORM COMMERCIAL CODE:LETTERS OF CREDIT                        
                                                                               
 CHAIRMAN ROKEBERG indicated that the committee would address HB
 178, "An Act relating to letters of credit under the Uniform                  
 Commercial Code; and providing for an effective date."                        
                                                                               
 Number 103                                                                    
                                                                               
 ART PETERSON, Attorney, Uniform Law Commissioner, State of Alaska,            
 came forward to testify on HB 178.  He noted that another Law                 
 Commissioner was in attendance via teleconference in Anchorage.  He           
 wished to cover some general points of this legislation.  Mr.                 
 Peterson continued that the National Conference of Commissioners in           
 Uniform State Laws, the body that promulgated the original Uniform            
 Commercial Code (UCC), including this Article 5 on Letters of                 
 Credit, is a 105 year organization.  Alaska has adopted about 70 to           
 75 of the Uniform Acts promulgated by this group.  The bill before            
 the committee is the UCC's latest amendment of a substantial part             
 of this Commercial Code.                                                      
                                                                               
 MR. PETERSON added that the organization takes many years to                  
 develop any revision, such as what's before the committee                     
 currently.  One of the main points of this legislation, dealing               
 with letters of credit, is that it brings the law current with                
 practices and customs in international trade.  Alaska is becoming             
 more involved with international trade and they don't want to be              
 lagging behind the rest of the country in this area.  Fifteen                 
 states have already enacted this revision before the committee.               
 Twelve states have introduced it in the 1997 session and it was               
 only promulgated by the national conference in 1995.                          
                                                                               
 MR. PETERSON noted as a general matter, this legislation revises              
 the law that was enacted and developed about 40 years ago.  There             
 has been no significant amendment of the law since then.  In this             
 revision the law is simplified and it resolves questions which have           
 arisen, especially with regard to the developing use of computers             
 and modern technology.  It clarifies that the parties to a                    
 transaction can rely on the international standards of practice.              
 It conforms to international law and practice.  The letter of                 
 credit industry which is the main means of financing international            
 credit is a two hundred billion dollar industry in the United                 
 States.  This legislation helps to avoid litigation in a number of            
 areas.                                                                        
                                                                               
 Number 432                                                                    
                                                                               
 JERRY KURTZ, JR., Attorney, Uniform Law Commissioner, Alaska,                 
 testified via teleconference from Anchorage.  Throughout the years            
 he's represented financial institutions on a fairly steady basis.             
 A typical attorney in Alaska has never seen a letter of credit.               
 There are no reported Supreme Court, Alaska cases involving letters           
 of credit.  Letters of credit are rare in the litigation world.               
 This is due in part to the Uniform Act.  The big problem that's               
 come up in the last twenty years with letters of credit has been              
 the advent of computers.  There have been some problems applying              
 the forty year old statute to present commerce as it is being                 
 conducted.   A lot of letters of credit are still hard paper                  
 documents between individuals and banks, businesses, etc.  More and           
 more of these types of transactions are being done by some type of            
 electronic communication.                                                     
                                                                               
 MR. KURTZ stated that from the standpoint of Alaska he couldn't               
 stress enough the importance of letters of credit in foreign                  
 commerce.  They are best thought of as a bridge, a device whereby             
 both a person in Japan and Korea, for example, can deal with an               
 Alaskan company and do so without worrying whether they will be               
 paid for the goods delivered and visa versa.  The letters of credit           
 are primarily used in international commerce to assure that a party           
 in one country that is owed money for goods provided in another               
 country will be paid for these goods.                                         
                                                                               
 MR. KURTZ added that countries have language differences and                  
 different banking systems with lots of distance in-between,                   
 including a time lag based on what type of transport is involved              
 and the risk of not being paid.  A letter of credit is a device to            
 help solve these problems.  The practice of letters of credit in              
 international trade has been used for many decades.  He emphasized            
 that Alaska is heavily involved in international trade and is                 
 becoming more and more so.                                                    
                                                                               
 Number 805                                                                    
                                                                               
 DOUGLAS LOTTRIDGE, Assistant Attorney General, Commercial Section,            
 testified via teleconference from Anchorage on HB 178.  He is the             
 attorney assigned to review this legislation.  In so doing, he has            
 talked extensively with both the previous gentlemen who testified.            
 He added that his review of the bill comports with what they have             
 testified to.  He stated that on behalf of the Department of Law,             
 they have no legal problems with this bill and they support it.  He           
 reiterated the fact that because Alaska is so involved in                     
 international trade, it only makes sense for them to have a uniform           
 law that other international attorneys and businesses can rely on             
 as being consistent with the law they are familiar with.                      
                                                                               
 Number 917                                                                    
                                                                               
 REPRESENTATIVE JOHN COWDERY asked if this legislation would affect            
 the state's AIDEA loan programs.                                              
                                                                               
 MR. LOTTRIDGE stated that he had not specifically discussed this              
 possibility with the Alaska Industrial Development & Export                   
 Authority (AIDEA), but certainly any international transaction                
 using letters of credit would be affected by legislation, whether             
 it's AIDEA or any other organization.  Anyone using a letter of               
 credit would be doing so with this law in place, which this law               
 would certainly facilitate their dealings with other private                  
 enterprise or other countries.                                                
                                                                               
 Number 1044                                                                   
                                                                               
 REPRESENTATIVE JOE RYAN referred to the fact that a letter of                 
 credit requires seven days for the bank to honor it once all the              
 contract conditions are met.  When the person who's paying receives           
 this letter of credit, the funds that are required are deposited in           
 the bank where the letter is issued.  The corresponding bank on the           
 other side receives a wire transfer.  At the maximum there's about            
 three days that they need to fulfill federal requirements to handle           
 this.  Otherwise, they take the other four days and they put the              
 money in a money market at three percent and they make money off of           
 the other party's float.  If a party wants to get this money sooner           
 a discount note is signed which is commonly known as a banker's               
 acceptance.  The bank charges a fee for giving the money up front.            
 Representative Ryan didn't see why a person has to pay a tribute to           
 a bank to do the normal course of business if they chose that in              
 three days period of time they wanted their money and met all the             
 requirements.  They should be able to be paid out if everything is            
 as stated in a letter of credit.  He said he didn't see anything in           
 this legislation calling for a dispute resolution.  Alaska has a              
 great set of statutes on arbitration.  He thought these should be             
 referenced in this legislation.  He noted the different types of              
 letters of credit and it's become a practice lately in the market             
 for people to try and get some unsuspecting person to send them a             
 revolving letter of credit for purchases that are made on a                   
 continuing basis.  Some people sell these revolving letters of                
 credit on the market and leave the purchaser stuck having received            
 nothing.  A lot of due diligence is involved by the person issuing            
 the letter of credit and with the institutions with which they're             
 dealing.  He stated that he's consulted with individuals regarding            
 this legislation and was waiting for some responses.  He wanted to            
 make sure there were no loopholes to this legislation.                        
                                                                               
 REPRESENTATIVE ROKEBERG stated that he would also like answers to             
 some of the questions Representative Ryan raised.  He thought this            
 was an important piece of legislation and something that should be            
 considered properly.  He then asked Mr. Kurtz to give an                      
 explanation of some of the concerns which Representative Ryan                 
 raised.                                                                       
                                                                               
 Number 1295                                                                   
                                                                               
 MR. KURTZ noted Sec. 45.05.108, on page eight of the legislation              
 dealing with the seven day float issue.  He stated that this was a            
 delicate issue.  This gets into the area of forgeries which is an             
 enormous problem in the banking world.  He asked how long do they             
 give a bank or somebody else that has issued a letter of credit to            
 determine whether the documentation is adequate to require someone            
 to pay.  He said he was well aware of the problem of bankers making           
 money on float.  Not very many people like this practice, but on              
 the other hand the problem of proper documentation and times cannot           
 (indisc.) by looking at what's on the table in front of them.  This           
 section is a compromise in that seven business days is an outer               
 limit.  There was considerable discussion regarding the wording of            
 this section.  There should be a reasonable time after presentation           
 of the documents to produce the money, but whether it's reasonable            
 or not, someone doesn't have more than seven days to either do this           
 or say they aren't going to pay, period.  There is no answer to the           
 problem which Representative Ryan has presented.  Verifying                   
 documents before the letter of credit is honored, is a difficult              
 thing to do, yet one of the advantages of a letter of credit is               
 that they do in a rather expeditious manner, make money move.                 
 Three days or five days could be used but this could create a                 
 uniformity problem.  If this language is out of phase with what the           
 rest of the world is doing this makes it more difficult for a                 
 business man to operate under these parameters.                               
                                                                               
 Number 1479                                                                   
                                                                               
 MR. PETERSON added that he could make available to Representative             
 Ryan the official Uniform Laws Conference commentary under this               
 section.                                                                      
                                                                               
 REPRESENTATIVE RYAN stated that one of the biggest things someone             
 does when engaged in international trade is to exercise due                   
 diligence.  If someone looses money on a deal because of fraud or             
 some other problem and they've engaged in proper due diligence,               
 well then, "shame on you."  The nature of business being what it              
 is, it behooves the person who's handling these things to do so.              
 It's a common practice in the banking community that what they make           
 on their overnight deposits is enough to pay the interest they pay            
 out to the depositors.  What they make on their loans, is in                  
 effect, a net profit other than taxes.  They do quite well and some           
 people would like to have this money invested.                                
                                                                               
 Number 1576                                                                   
                                                                               
 CHAIRMAN ROKEBERG clarified that this depends on whether banking              
 institutions are buying or selling federal funds overnight in order           
 to make money.  He asked about the issue regarding the lack of any            
 dispute resolution.                                                           
                                                                               
 MR. KURTZ said he would be glad to respond, but wanted to finish              
 with his comments on the previous issue and pointed out that this             
 legislation is a default act.  "This is what goes unless it's                 
 varied by agreement."  He stated that there's nothing wrong with              
 someone negotiating with their banker along with the other parties            
 involved to require that they pay interest for the period they                
 loaned this money while they investigate.  He suspects that this              
 has been done at times.  On the issue of arbitration.  Agreements             
 to arbitrate in the event of dispute on letters of credit are                 
 allowed, but generally this is not normally done.  Arbitration is             
 a concept unheard of in many places.  Alaska has the Uniform                  
 Arbitration Act and it's worked very well, but not all states have            
 this Act and other countries probably have something similar.  In             
 terms of something that will be readily understood, most other                
 countries have some idea how the United States court system works             
 and visa-versa.                                                               
                                                                               
 MR. KURTZ continued that international commerce looks very strongly           
 for certainty of what laws will govern.  In arbitration, it's never           
 known how the arbitrators got where they got.  He stated that he              
 was a strong fan of arbitration, but inserting anything like this             
 into the present arbitration would do a disservice to Alaskan                 
 business people because if someone from another state or country              
 who doesn't have an effective arbitration system encountered this,            
 they would be very reluctant to go ahead without getting attorneys            
 involved and then spending more money and delay.  He thought this             
 was a good concept but didn't feel Alaska was in the position to              
 lead this movement.                                                           
                                                                               
 Number 1717                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked how someone would find themselves in a                
 dispute that would require resolution.  He asked if a letter of               
 credit denominated in a monetary amount might be disputed regarding           
 currency rates or asked for an example of any other dispute that              
 might be raised.                                                              
                                                                               
 MR. KURTZ responded that a typical dispute arises when the issuer             
 of the letter of credit refuses to pay out the money they agreed to           
 pay under this document because they feel they have not been given            
 the documentation in genuine form, say for example, if it's                   
 fraudulent.  It is required to be given before the money is                   
 released.  This relates to the forged document concept which is a             
 cause of a certain number of these disputes.  If it turns out that            
 the documentation is alright and the bank held the money for twenty           
 days, which it's not suppose to do under this bill version unless             
 a party says specifically they will not pay after the seventh day,            
 there have been problems with banks saying, "well, this looks                 
 awfully fishy to us.  We really don't want to pay you, but we don't           
 want to reject it yet...so we'll just take a few more days."                  
                                                                               
 Number 1816                                                                   
                                                                               
 CHAIRMAN ROKEBERG stated that, "so the forgery or somebody                    
 presenting themselves or misrepresenting themselves as an                     
 authorized party when in fact they weren't and then the institution           
 issuing the draft, if you will, of money to that person as a form             
 of forgery or embezzlement or something."                                     
                                                                               
 MR. KURTZ responded yes and pointed out a good example of what                
 happens is that suppose a party buys oil from Saudi Arabia, that              
 party relies on a letter of credit from a Saudi bank that is                  
 getting help in dealing with the transaction from a New York bank             
 and a question arises as to whether some of the documentation from            
 Saudi Arabia has been properly notarized.  This sounds like a                 
 simple thing, but there are a lot of false acknowledgments in the             
 world.                                                                        
                                                                               
 Number 1880                                                                   
                                                                               
 CHAIRMAN ROKEBERG clarified that the form available for any                   
 conflict would be the typical judicial system.                                
                                                                               
 MR. KURTZ responded that this was correct.                                    
                                                                               
 Number 1905                                                                   
 REPRESENTATIVE RYAN stated that he had participated in some of                
 these trades and offered to give an example.  He pointed out cargo            
 ships on the ocean with valuable cargo such as wheat, oats, etc.              
 In the process of delivery a party cancels on the deal.  He then              
 proceeded to outline in detail the makeup of a transaction such as            
 this with contracts outlining how and when the goods will be                  
 delivered.  Along with any contracts for sale, a clause might be              
 added that if a dispute arises, it would spell out what laws would            
 govern.  He made a point of stating that terms of dispute                     
 resolution are written specifically into related contracts.  He               
 pointed out that he didn't see anything in the bill before the                
 committee which specifies how disputes would be resolved.                     
                                                                               
 MR. PETERSON noted that one of the points that's significant with             
 revisions to Article 5 is the reliance on the body of material                
 regarding the "customs and practices, this international body of              
 material that's developed by the International Chamber of Commerce            
 used in all countries."  He added that it's now referred to in this           
 Article as a fall back position, but he would imagine within this             
 body of materials there are such provisions dealing with such                 
 things as the forum, the procedures for dispute resolution, etc.              
 He thought this bill adequately takes care of this point.                     
                                                                               
 MR. PETERSON stated that this legislation related to proposed                 
 Section 45.05.108 and this is the National Conference of                      
 Commissioners on Uniform State Laws (NCCUSL) official comment                 
 pertaining to this section.  As mentioned previously, this is a               
 comment in single space that runs more pages than the section                 
 itself.  He noted that this was an indication of how much thought             
 went into this legislation.                                                   
                                                                               
 Number 2183                                                                   
                                                                               
 CHAIRMAN ROKEBERG stated that he wished to appoint a subcommittee             
 to review this legislation to be led by Representative Ryan and to            
 include Representatives Cowdery and Kubina.  He suggested that a              
 subcommittee could be convened if there was a compelling reason to            
 do so, but if Representative Ryan wished to do some further                   
 research and report back to the Chair, they could determine if a              
 subcommittee meeting is necessary.                                            
                                                                               
 REPRESENTATIVE COWDERY asked the subcommittee Chair to address the            
 problem of a bank being recognized by other banks.                            
                                                                               
 HB 33 - REAL ESTATE LICENSING                                               
                                                                               
 CHAIRMAN ROKEBERG indicated to the committee that the next                    
 legislation to consider would be HB 33, "An Act relating to real              
 estate licensing and the real estate surety fund; and providing for           
 an effective date."  Chairman Rokeberg noted a possible conflict of           
 interest that might exist with this legislation since he is                   
 currently a real estate broker in the state of Alaska.  This                  
 legislation will have a direct affect on his conduct of business.             
 He continued that he is the sole proprietor and broker for the                
 Rokeberg Company located in Anchorage, Alaska.                                
                                                                               
 CHAIRMAN ROKEBERG noticed the committee substitute related to this            
 legislation labeled LS-0197\B, Lauterbach, 3/11/97 and entertained            
 a motion to adopt this version.                                               
                                                                               
 Number 2407                                                                   
                                                                               
 REPRESENTATIVE COWDERY made a motion to adopt the committee                   
 substitute for HB 33 as noted.  Hearing no objection it was so                
 adopted and before the committee for review.                                  
                                                                               
 CHAIRMAN ROKEBERG mentioned that this bill was introduced at the              
 request of the Real Estate Commission.  The primary reason for this           
 bill was in the interest of consumer protection.  He added that               
 there had been some conversion embezzlement of funds from a number            
 of businesses in the Anchorage area over a number of years.  Over             
 the course of an investigation under a task force appointed by the            
 commission there was discovered a very large case that affected as            
 many as nineteen different condominium associations.  Large amounts           
 of embezzled money was involved.                                              
                                                                               
 TAPE 97-21, SIDE B                                                            
 Number 000                                                                    
                                                                               
 CHAIRMAN ROKEBERG continued that this particular bill provides for            
 the establishment of endorsements related to both Real Estate                 
 Property Managers and Community Association Managers.  He pointed             
 out that the real estate statute is probably the most perused part            
 of the Alaska statutes because it is required reading by all people           
 who wish to come before the department and take the examination to            
 become a real estate practitioner, broker or associate broker.  As            
 part of this examination there is a difficult and long portion of             
 it that is taken out of the statute and the regulations that                  
 pertain to operating a real estate business in Alaska.                        
                                                                               
 Number 060                                                                    
                                                                               
 ELEANOR "GRAYCE" OAKLEY, Executive Administrator, Real Estate                 
 Commission, came forward to testify on HB 33.  She referred to a              
 letter in the committee packet which she prepared at the request of           
 Chairman Rokeberg as an introduction to this legislation which sets           
 out the recommendations from the Task Force.  It took the Task                
 Force about a year to study the issues affected by this legislation           
 and the Task Force was made up of all realms of the property                  
 management population, big and small firms alike.  They studied the           
 issues to decide what would work and what wouldn't.  They solicited           
 comments from their colleagues and they were operating on a                   
 directive from the Real Estate Commission to draft recommendations            
 to deal with Property Management and Community Association                    
 Management and how they should handle separate licensing for each.            
                                                                               
                                                                               
 MS. OAKLEY continued that there had been a number of pleas from the           
 property managers themselves and the association managers.  They              
 didn't mind taking an exam and being licensed, but they did resent            
 the fact that virtually everything in the exam and in the pre-                
 licensing education, along with the continuing education, seem to             
 be oriented towards sales.  This is not what they were practicing.            
 They wanted the education to be part of what they would eventually            
 be practicing.                                                                
                                                                               
 Number 161                                                                    
                                                                               
 MS. OAKLEY said she had looked at the number of surety claims that            
 had been filed in the last ten years against sales persons and                
 against property managers.  She then broke these numbers down into            
 five year increments, the first, from 1986 to 1990 there were 58              
 claims filed against sales persons and only sixteen against                   
 property managers.  In the second five year period, from 1991 to              
 1996, there were 42 claims against sales people and 25 against                
 property managers.  The percentage for property managers has                  
 increased significantly and the dollar amount paid out was about a            
 two to three ratio, about $127,800 for property managers in the               
 first five year period, $177,000 against sales.  In the second five           
 year period it was $86,600 to $81,600.  The amount of money paid              
 out against property managers surpassed during the second five year           
 period.                                                                       
                                                                               
 Number 250                                                                    
                                                                               
 REPRESENTATIVE RYAN stated that he would like to claim a potential            
 conflict since he holds an active real estate salesman license from           
 the state of Alaska.                                                          
                                                                               
 Number 266                                                                    
                                                                               
 MS. OAKLEY mentioned that the bill is lengthy because the entire              
 Chapter 88 is being opened up.  Implementation of an endorsement              
 program, as proposed, involves changes of terminology that are                
 found throughout the legislation.  She directed the committee's               
 attention to Section .168, which starts on page 9, line 11.  This             
 is the very essence of what this legislation proposed to do.  It              
 spells out endorsements for three specialties, for Sales, Property            
 Management and for Community Association Management.  A person                
 getting a new license after this bill becomes effective would have            
 to declare at least one endorsement in order to get a license.                
 They could get more than one, but there would have to be at least             
 one attached to any active license.                                           
                                                                               
 Number 343                                                                    
 MS. OAKLEY stated that a core body of knowledge would be required,            
 such as property law and how title is held, fiduciary duties of               
 agency, conflict of interest, etc., those types of things that                
 would be common to all three endorsements would be covered in all             
 three exams and then there would be topics applicable to each of              
 the specialized practices for sales, such as financing, contracts             
 used in sales transactions, for example.  Property management would           
 have such things as the contracts used in property management,                
 landlord tenant law, Americans with Disabilities Act, etc.  For the           
 Community Associations there would be the Uniform Common Interest             
 Ownership Act and the types of documents used in condominium                  
 projects, such as declarations, etc.  This legislation proposes to            
 establish these areas of expertise by regulation.                             
                                                                               
 MS. OAKLEY continued that there would be an entry level examination           
 specific to each area.  She has been in contact with the testing              
 service contracted with the state of Alaska as far as the                     
 restructuring of the exam necessary to implement this.  She stated            
 that it is doable.  The three tiers as are now defined in real                
 estate licensing, an entry level, an associate broker and a broker            
 would still remain intact in each of the three specialties.  The              
 chief person in a real estate office would be a broker with an                
 endorsement for the specialty area in this office.   If there is              
 more than one specialty area in an office all the proper                      
 endorsements would be required.                                               
                                                                               
 Number 465                                                                    
                                                                               
 MS. OAKLEY stated that Section 171 covers what the individual                 
 criteria would be for the specialty areas.  She said she'd like to            
 cover some of the areas outlined at the beginning of the bill which           
 deal with some additional changes incorporated.  One of the things            
 that happened in 1994 was the issuance of two different Attorney              
 General opinions that basically said that whereever the statute               
 says the commission shall or the board shall do something, they               
 cannot delegate this to a staff person.  Language in Section .061             
 on page 2, makes it possible for the commission to use some                   
 discretion to delegate some of the authority and carry out some               
 things that are necessary to implement the real estate statute.               
 Section .071 also on page 2, not only incorporates endorsement                
 changes, but two other things that are very important to the                  
 success of this, one of which is that unlicensed activity is a                
 major problem.  The number of complaints coming into the commission           
 office of people conducting property management business without              
 having a license is significant and on the rise.                              
                                                                               
 MS. OAKLEY offered that their frustration with the unlicensed                 
 individuals is that they can write a letter stating that they're              
 required to be licensed, but in order to enforce them to get a                
 license they are required to go to court.  This takes the                     
 cooperation of the District Attorney's office.  This office is so             
 overwhelmed with criminal matters.  This legislation allows the               
 ability to levy civil fines and to administer this through                    
 administrative hearings in the Department of Commerce rather than             
 relying on the Department of Law and the District Attorney.  This             
 would also be an effective vehicle for violations regarding                   
 advertizing, where someone is not following the provisions of the             
 statute about the way they advertize with their company name.  She            
 then went into specific examples of these violations and the                  
 specifics of levying fines.                                                   
                                                                               
 Number 688                                                                    
                                                                               
 REPRESENTATIVE COWDERY asked how they would define how many units             
 managed as applying to this section.                                          
                                                                               
 MS. OAKLEY noted that this is outlined in the exceptions.                     
                                                                               
 Number 707                                                                    
                                                                               
 REPRESENTATIVE COWDERY used the example of managing property for              
 his elderly mother, a 10 to 20 unit condominium facility.  He asked           
 if a situation such as this is addressed in this legislation.                 
                                                                               
 MS. OAKLEY responded that this is specifically addressed as to the            
 number of units managed, but a person can certainly manage their              
 own property.  As for relatives in the exceptions under Section               
 .900, it does spell out that anyone managing a total of four units            
 or less are not required to have a license.  The task force was               
 aware that an arbitrary limit was needed in order to enforce                  
 consistently.                                                                 
                                                                               
 CHAIRMAN ROKEBERG suggested that Representative Cowdery research              
 this issue and propose a possible amendment concerning the same.              
 Number 793                                                                    
                                                                               
 REPRESENTATIVE RYAN asked about the procedure for fining an                   
 individual that is out of compliance with advertizing.  If the                
 board finds someone in violation and they levy a fine, is that                
 person is required to come before the board for a hearing?                    
                                                                               
 MS. OAKLEY responded that if the individual does not think they are           
 guilty and shouldn't have to pay the fine, then they would have an            
 administrative hearing as opposed to going to court.  A hearing               
 officer from the Department of Commerce would make a recommendation           
 to the board.                                                                 
                                                                               
 REPRESENTATIVE RYAN said he was not comfortable with this hearing             
 officer concept.                                                              
                                                                               
 Number 909                                                                    
                                                                               
 KEN TRUITT, Assistant Attorney General, Commercial Section,                   
 Department of Law, came forward to testify on HB 33.  He was                  
 assigned to review and track this legislation.  He referred to                
 Section 13 of the bill, page 9, lines 5 through 9 regarding the               
 civil fine provision.  As the language currently exists, he                   
 interprets this to mean that this would go through the                        
 Administrative Procedures Act which would be before a hearing                 
 officer.  The commission is given the authority to hear issues                
 before it; it delegates this authority to a hearing officer                   
 for expediency sake.  The hearing officer takes evidence, makes               
 findings of fact, conclusions of law and renders a proposed                   
 decision.                                                                     
                                                                               
 CHAIRMAN ROKEBERG asked if Mr. Truitt thought it troublesome that             
 the Department of Commerce would do this rather than the Department           
 of Law.                                                                       
                                                                               
 Number 1025                                                                   
                                                                               
 MR. TRUITT responded that they were referring to constitutional               
 provisions for the rights of due process.  He noted that they've              
 been working with this specific Administrative Procedures Act for             
 a number of years which is based on the California Act initiated in           
 1945.  Alaska's Administrative Procedures Act affords more                    
 protections for due process than the constitution requires.                   
                                                                               
 REPRESENTATIVE RYAN noted as an example that most Administrative              
 Law Judges for the Federal Aviation Association (FAA) were formally           
 prosecutors.  He found it very difficult to believe that these                
 people were being objective.  He felt as though someone in these              
 situations is seen as guilty before they're charged and they have             
 to spend a lot of time and expense.                                           
                                                                               
 Number 1138                                                                   
                                                                               
 CHAIRMAN ROKEBERG noted that the request for the Department of                
 Commerce to hear these cases rather than the Department of Law was            
 due to timeliness.  The main purpose of this legislation is to                
 shift the portion of responsibility to the Department of Commerce.            
                                                                               
 MR. TRUITT responded that this was not really a question of law.              
 He stated that he was not necessarily allowed to make comments                
 regarding policy.  The Department of Law handles all the                      
 Administrative Procedures Act cases for the Department of Commerce            
 as it stands now.                                                             
                                                                               
 Number 1226                                                                   
                                                                               
 CATHERINE REARDON, Director, Department of Commerce and Economic              
 Development, Division of Occupational Licensing came forward to               
 testify on HB 33.  She said that there seemed to be some confusion.           
 The Department of Law serves in the role of prosecutorial                     
 assistants.  It's not because they don't have time to be judges,              
 this is not a role that the Department of Law has ever served.  The           
 hearing officers are employed by the Department of Commerce.  The             
 Division of Occupational Licensing provides the funding, but the              
 Department hires and supervises the hearing officers.                         
                                                                               
 MS. OAKLEY stated that it was their intent, but the thought was               
 that "there are a number of things that are violations of the                 
 statute but they're not the kind of violations that are robbing               
 people of their life savings, yet they are still violations."                 
 These usually aren't important enough to warrant taking Attorney              
 General time that is available to go ahead and prosecute.  She                
 suggested that maybe they should allow levying a fine with a cap              
 for lesser offenses.  The language suggested and recommended by the           
 task force is already in the statute.  This might be looked at.               
                                                                               
 Number 1412                                                                   
                                                                               
 REPRESENTATIVE RYAN suggested that they allow an individual to take           
 a case against them directly to court rather than require a hearing           
 before an officer.                                                            
                                                                               
 Number 1538                                                                   
                                                                               
 MS. OAKLEY continued that the she would briefly review particular             
 sections to this legislation.  Section .081 simply makes more                 
 specific the scope of the commission's authority to adopt                     
 regulations.  Section .091 would expand the areas where the                   
 education appropriation from the surety fund could be used for.               
 It's presently very broad and general.  This would also authorize             
 the commission to deposit any monies that might be collected at a             
 course that was offered to be deposited back into the surety fund.            
 She noted an AG opinion that says money can be taken out of the               
 surety fund to pay for these courses, but if any monies are                   
 collected or publication products are sold, this money has to be              
 deposited back into the general fund.                                         
                                                                               
 MS. OAKLEY continued that Section .161 outlines those things that             
 would require a license and it's broken out from the existing                 
 statute to make it specific for each of the three specialized                 
 endorsement areas.  Section .171 lists what the minimum                       
 qualifications are to get a license in each of these endorsement              
 areas.  Also, currently the language says that a person has to have           
 24 consecutive months, but it doesn't say when and the commission             
 had a regulation that was "shot down" which attempted to make this            
 more definitive.  Now they are asking that in this statute this be            
 defined and tightened up to 24 consecutive months within the last             
 36.                                                                           
                                                                               
 Number 1721                                                                   
                                                                               
 MS. OAKLEY stated that Section .173 would provide for mandatory               
 Errors and Ommissions (E&O) insurance if it could be made available           
 at a reasonable premium.  The rational behind this is that the                
 surety fund is a protection for consumers to be reimbursed for                
 losses.  The E&O insurance is a means for licensees to give                   
 themselves some guarantee of being able to pay what might be held             
 against them.  This would be contingent strictly on whether a                 
 policy could be made available at a premium that would not exceed             
 $200 a year which could be billable along with the license figures.           
                                                                               
 MS. OAKLEY continued that Sections .181 through .201 deal with the            
 examination process and being able to contract with a testing                 
 service.  Section .221 is the authorization to the Department of              
 Commerce to set fees which is no different than what is done right            
 now except they would be setting them for the individual                      
 endorsements.  These fees have not been determined at this point.             
                                                                               
 Number 1868                                                                   
                                                                               
 REPRESENTATIVE RYAN asked that if someone has to take a course and            
 pass a test, he asked to what purpose did the Department of                   
 Commerce put an endorsement on a license and charge a fee.                    
                                                                               
 MS. OAKLEY stated that this person would be getting a license just            
 like Representative Ryan received his license for real estate,                
 except under new circumstances this license would be for a                    
 particular endorsement.  There would undoubtedly be some graduated            
 fees if a person had more than one endorsement.                               
                                                                               
 Number 1950                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked if they intended to set these fees by                 
 regulation.                                                                   
                                                                               
 MS. OAKLEY responded yes.                                                     
                                                                               
 Number 2006                                                                   
                                                                               
 MS. OAKLEY noted that the section regarding inactive licenses was             
 housekeeping language to make it clear.  A person can have a                  
 license in a "holding pattern" for up to two years.  Section .262             
 is an enabling section for reciprocity.  There are a number of                
 states that have reciprocal agreements with other states that allow           
 for license holders of one state to practice in the other.  The key           
 phrase in this section is that a negotiated agreement between the             
 two states is involved.  Alaska does not have any reciprocal                  
 agreements at this time.  Section .263 allows for an endorsement              
 which provides for recognizing that someone has a license in                  
 another state with whom they have no reciprocal agreement, but the            
 state recognizes that they have qualified for a license in another            
 state.  By providing proof of this license and passing the Alaska             
 law portion of the exam, they can get an Alaska license.                      
                                                                               
 MS. OAKLEY continued that Section .281 outlines that any                      
 outstanding obligations of a licensee to the surety fund must be              
 cleared before a license can be reinstated.  Sections .291 through            
 .321 deal with the location and registration of branch offices and            
 the timing of registration or notice of changes.  Section .331                
 spells out that any transaction must be through the employing                 
 broker.  This will have some ramifications with going to the                  
 endorsement system because the broker needs to have these same                
 endorsements as the licensee in his office and if they're working             
 outside of a particular endorsement some clarifying needs to be               
 done.  A broker is the one who is responsible for making sure their           
 licensees "tow the mark" and therefore the transactions have to be            
 run through the brokers office.  This is not a change of what's in            
 place presently.                                                              
                                                                               
 Number 2266                                                                   
                                                                               
 CHAIRMAN ROKEBERG noted that this is the section where he parts               
 company from the commission's recommendations.                                
                                                                               
 MS. OAKLEY noted that in Section .341 "the personal services                  
 contract that terminology has been used in another context recently           
 and I may give some, some rise to concern, the Task Force thinking            
 on this particular instance, the section was formally headed,                 
 'listings.'  The listing is the typical personal service contract             
 in a sales transaction.  In using, substituting the label 'personal           
 service contract' was simply to broaden the scope so that it would            
 cover the contracts for Property Management and for Community                 
 Association Management as well.  Listings would not be ruled out,             
 but they would be one of three different kinds of contracts that              
 might be under the general heading of a personal services                     
 contract."                                                                    
                                                                               
 MS. OAKLEY continued that Section .351 delineates the types of                
 records that need to be maintained.  Section .361 addresses when a            
 commission or other fee is earned and it's contingent on this,                
 there needs to be a written contract in order for commissions to be           
 collected if it's challenged.  Section .381 has to do with signs              
 and their standardized measurements in order to regulate.                     
                                                                               
 TAPE 97-22, SIDE A                                                            
 Number 000                                                                    
                                                                               
 MS. OAKLEY generally commented on audits of the agency.  A                    
 recommendation was made that the commission should define what                
 constitutes a conflict of interest.  This is the reason for the               
 thorough definition that's incorporated into Section .391.  Section           
 .394 is a new section that ties in with the agency disclosure.                
 "One of the things that the industry has asked for and that the               
 commission has attempted and not been able to achieve is to have a            
 standardized form for the initial disclosure of agency, of who a              
 person is working for and this one would simply make that a                   
 requirement.  It would be, the form itself would be a regulation as           
 the property disclosure form is a regulation of AS 34.70 that is              
 not part of the real estate commission, but part of the property              
 law section.  But, that's what is being, would be accomplished by             
 enactment of Section .394."                                                   
                                                                               
 MS. OAKLEY noted that Section .396 is essentially the same                    
 as it now is with the housekeeping of the terminology to match the            
 endorsements.  In subsection (c) the word "joint" agency was used             
 originally and this has caused a lot of confusion about what is               
 actually used interchangeably with "dual" agency.  The phrase                 
 "dual" is used in this section to avoid this confusion.  Section              
 .401 expands and clarifies the types of behavior that are not                 
 condoned and also reiterates that compensation for licensed                   
 activity must be paid by the broker to the appropriate licensee and           
 on the part of the licensee can be accepted only from the broker.             
                                                                               
 Number 211                                                                    
                                                                               
 MS. OAKLEY continued that Section .450 deals with the surety fund             
 and adds language that corresponds to the language in Section .091            
 regarding fees received from educational offerings.  Section .460             
 includes a filing deadline for a surety claim which is something              
 that was done at one time with regulations.  This was overturned by           
 a Supreme Court decision and this would put it into statute that if           
 a claim was going to be filed it had to be done so in two years               
 after the infraction occurred.                                                
                                                                               
 MS. OAKLEY added that Section .472 outlines a change that would               
 allow the costs of surety fund hearings to be charged to the fund             
 as they occur.  Now when a claim is awarded the costs can be                  
 charged to the fund.  But as indicated, very rarely are the checks            
 from the surety fund cut in the same fiscal year as the claim is              
 filed.  A lot of the hearing activity is not necessarily in the               
 same year that the check is cut and yet the appropriation and the             
 money funding source is on a fiscal year basis.  It is not                    
 realistic to try to calculate what the hearing costs are when it's            
 finally determined whether a claim is going to be awarded and have            
 it be paid based on the activity in the fiscal year when the check            
 is cut because it doesn't track with the amount of time and expense           
 incurred.                                                                     
                                                                               
 Number 391                                                                    
                                                                               
 MS. OAKLEY added that Sections .474 through .495 were editorial               
 changes.                                                                      
                                                                               
 Number 395                                                                    
                                                                               
 REPRESENTATIVE RYAN noted that the last class he took dealt with              
 the dissatisfaction of the people in the real estate industry and             
 the uses that the surety fund was set up for.  They felt as though            
 they were being taxed over and above the purposes for which the               
 fund was set.  His understanding was that the fund was set up to              
 pay claims.                                                                   
                                                                               
 CHAIRMAN ROKEBERG stated that Representative Ryan's concerns were             
 noted.                                                                        
                                                                               
 Number 511                                                                    
                                                                               
 MS. OAKLEY responded that as for the surety fee escalating there is           
 a cap in the statute and there is no proposal to change this.                 
                                                                               
 MS. REARDON noted that in regards to conducting hearings and the              
 associated costs to determine whether someone wins or loses their             
 claim are very legitimate things to be paid out of the surety fund.           
 Without the hearings the whole surety fund structure cannot                   
 operate.                                                                      
                                                                               
 Number 639                                                                    
                                                                               
 MS. OAKLEY continued regarding the transitional sections and the              
 effective date of the bill.  In this committee substitute the                 
 effective date is different than what it was in the original House            
 bill.  If this statute were put in place, the regulation project to           
 set the educational curriculum, this would mean revamping the exam.           
 The effective date would be January 1, 1999.  Anyone currently                
 licensed  would renew in January 1998, and anyone new coming into             
 the business after January 1, 1999, would have to meet the new                
 initial criteria.  The first time that the currently licensed                 
 people would have to meet the new education criteria would be for             
 the renewal in January 2000.  This gives a long lead time to get              
 ready for this bill.                                                          
                                                                               
 Number 808                                                                    
                                                                               
 KRISTAN TANNER, Real Estate Practitioner, testified via                       
 teleconference from Wasilla on HB 33.  She stated that real estate            
 practitioners pay two fees when they renew their licenses.  They              
 pay one to the surety fund and one to renew their licenses.                   
 Whether or not the money is paid out of the surety fund for the               
 hearings or out of their budget the net result is the same.  If               
 these costs are paid out of the budget this means that the cost for           
 renewing licenses will go up.  This has to come from one of these             
 two places and regardless of which it comes from the organization             
 will have to pay the cost.                                                    
                                                                               
 MS. TANNER continued that under the exceptions in the legislation,            
 when the task force compiled their recommendations, they noted that           
 there were many things over a period of years which were exceptions           
 and are currently in violation of the law.  She gave an example               
 that took place during the downturn of the real estate industry in            
 the late 80's.  They found that many people were in the process of            
 trying to keep their homes by renting after they moved out of                 
 state.  Unfortunately, they could not afford a property manager.              
 With the law that is in place today, this is a violation of the               
 law.  One of the exceptions in this new proposed plan is for an               
 exception of a total of four units.  Generally anything over a four           
 plex is considered commercial property.                                       
                                                                               
 Number 968                                                                    
                                                                               
 MS. TANNER generally listed the other exceptions such as bookkeeper           
 performing bookkeeping functions, tradesman or vendors performing             
 maintenance, etc.  They wanted to make sure these exceptions were             
 in this legislation so there wasn't any misunderstanding of who               
 needed a license or who didn't.  In response to a question raised             
 by Chairman Rokeberg regarding management of larger real estate               
 units and people looking for exceptions so that family members or             
 friends could manage them, Ms. Tanner responded that for the                  
 protection of the public a property of this size, for example, a              
 building with ten units needs to be managed by a licensed                     
 practitioner who has the education and the understanding of the               
 laws in order to apply them when needed.                                      
                                                                               
 REPRESENTATIVE RYAN asked about the surety fund and stated that               
 this bill was a major expansion of power for the commission.  He              
 wasn't sure that if they took a vote of the licensed practitioners            
 that they would find this legislation to be very popular.  He had             
 some concerns that with the more authority they take on and                   
 exercise, the higher the cost might be.                                       
                                                                               
 Number 1138                                                                   
                                                                               
 MS. TANNER stated that the majority of the information that is in             
 this work draft came out of "and let me just say that the two and             
 a half years that I was on the commission we saw a number of                  
 different violations by practitioners which clearly harmed the                
 public and, yes, the surety fund did pay for that, but what we try            
 to do is look at what were the causes.  Forget that the money is              
 being paid, but let's look at what are the really the root causes             
 of these claims that are being filed."  They set out to develop               
 some different education and endorsements so that clearly the                 
 people operating in Property Management, Community Association                
 Management or in Sales get the education that they need for each of           
 these.  She stated that she as a general nature did not support               
 more regulation or to expand the statute, but unfortunately she has           
 seen a lot of abuses.                                                         
                                                                               
 REPRESENTATIVE RYAN stated that this was reasonable and understood            
 her concern.                                                                  
                                                                               
 Number 1326                                                                   
                                                                               
 CHAIRMAN ROKEBERG pointed out that this bill did not expand the               
 scope of the real estate licensure except as to Community                     
 Associations, it merely defines what previously was under the                 
 statute regarding property management in such a way that clarifies            
 this responsibility to the public.                                            
                                                                               
 MS. OAKLEY also noted that this legislation does allow for current            
 license holders to be grandfathered in.                                       
                                                                               
 Number 1398                                                                   
                                                                               
 TERRY MCGILLIVARY, Staff Member, Real Estate Commission, testified            
 via teleconference from Anchorage on HB 33.  She stated that she              
 worked directly with the task force.  She was asked to discuss the            
 anticipated transition process from the current system to a system            
 of specialty endorsements.  Under the current law real estate                 
 licensees are permitted to practice real estate sales, property               
 management or both.  Therefore, the task force came up with a                 
 transitional plan under where existing licensees during the first             
 year after the proposed effective date of this measure would either           
 have an endorsement for sales or property management or both simply           
 by applying for it.  Community Association Managers on the other              
 hand are not currently licensed or regulated by the state.  The               
 transitional measure for existing Community Association Managers              
 would permit them to obtain a real estate license with an                     
 endorsement for Community Association Management by providing                 
 evidence that they are currently practicing as Community                      
 Association Managers.                                                         
                                                                               
 MS. MCGILLIVARY stated that those endorsed during the transitional            
 period would be required to accomplish the continuing education for           
 each specialty endorsement they hold before the first license                 
 renewal after the effective date.  If the required education was              
 not accomplished, no licensee would be eligible to renew.  The                
 proposed transitional schedule would require that new licensees               
 requesting licensure after January 1, 1999, would be required to              
 take pre-licensing courses for each endorsement and pass the                  
 examination weighted for each endorsement requested.  New licenses            
 would be issued only with endorsements beginning January 1, 1999.             
 Any licensee re-activating an inactive license or re-instating an             
 existing license after January 31, 1999, would do so under the                
 transitional provisions just described who apply for endorsements             
 according to those requirements.                                              
                                                                               
 MS. MCGILLIVARY continued that all licensees renewing at the bi-              
 annual renewal deadline date of January 31, 2000, would renew only            
 on completing required continuing education hours for each                    
 endorsement.  She reiterated that the purpose of this legislation             
 is to protect Alaska consumers by ensuring the competency of the              
 real estate professionals.  This legislation is the product of                
 cooperation of consumer representatives and industry                          
 representatives who participated extensively in the drafting of               
 this legislation.  This legislation is supported by the Alaska                
 Association of Realtors, the Alaska Chapter of the Institute of               
 Real Estate Management and the Alaska Chapter of the Community                
 Associations Institute.                                                       
                                                                               
 Number 1559                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked if Ms. McGillivary's salary was paid out of           
 the surety fund.                                                              
                                                                               
 MS. MCGILLIVARY stated that, yes, it was and she stated that she              
 worked mainly in real estate education.  She publishes the Alaska             
 Real Estate News which is a newsletter published six times a year.            
 It keeps licensees up to date on legal information and keeps                  
 consumers from inadvertently becoming victimized.  This newsletter            
 is the only direct communication between the department and the               
 industry.  She also works on the landlord/tenant brochure                     
 distributed statewide, as well as, a broker manual to help people             
 set up their real estate businesses.                                          
                                                                               
 Number 1719                                                                   
                                                                               
 CHAIRMAN ROKEBERG asked Ms. Tanner to respond to what the nature of           
 the task force's conclusions were about allowing for an additional            
 endorsement for commercial real estate practices.                             
                                                                               
 MS. TANNER noted that they did have this discussion and they                  
 concluded that, whether it be residential sales or commercial                 
 sales, the point of contention in the industry over licensing                 
 education to renew wasn't a dispute over sales, but there was a big           
 dispute with the property management licensees who did not feel               
 that the education provided was helpful to them in their business.            
 Rather than make a fourth category, it seemed from all the                    
 testimony given, that the sales category was an umbrella for both             
 residential and commercial brokers.                                           
                                                                               
 Number 1719                                                                   
                                                                               
 CHAIRMAN ROKEBERG noted that under the new endorsement regime for             
 property management, these individuals are exclusively allowed to             
 conduct the renting and leasing of space so to be a commercial                
 lease agent someone would have to have a property management                  
 endorsement.                                                                  
                                                                               
 MS. TANNER responded that this would be correct.                              
                                                                               
 MS. MCGILLIVARY concurred and added that the commission has also              
 discussed this matter.  Although this was not addressed by the task           
 force specifically, it does seem to be the opinion of many, that              
 this would be very logical for someone in this situation have a               
 commercial endorsement.                                                       
                                                                               
 Number 1935                                                                   
                                                                               
 CHRIS STEPHENS, Commercial Real Estate Broker; President, Bond,               
 Stephens and Johnson testified via teleconference from Anchorage on           
 HB 33.  He noted that he would testify more extensively at a later            
 time, but did comment on the issue of commercial endorsements.  He            
 felt as though commercial real estate practice is distinctly                  
 different from residential.  He shared his experience of selling              
 his home through a broker, even though he is a commercial agent               
 himself.  In commercial transactions agents deal in business                  
 transactions in leasing and acquiring commercial real estate.                 
 These skills are totally different.  He also noted that many times            
 the continuing education he is required to take has nothing to do             
 with commercial real estate transactions as well.                             
                                                                               
 MR. STEPHENS mentioned the issue of establishing agency disclosure            
 provided to a client which has been controversial.  He felt they              
 needed to be careful.  How this is done between commercial and                
 residential is greatly different.  He said he was not sure about              
 the ramification of this.                                                     
                                                                               
 Number 1975                                                                   
                                                                               
 CHAIRMAN ROKEBERG said he also shared this concern and noted that             
 they would take a look at this issue carefully.                               
                                                                               
 MS. OAKLEY pointed out that approving courses for continuing                  
 education over the years all of the various national organizations            
 providing education have consistently had courses approved which              
 are ones that commercial brokers thrive on.  She noted that these             
 types of courses are offered, but not necessarily allocated to                
 schedules that are always convenient for everyone.                            
                                                                               
 Number 2038                                                                   
                                                                               
 CHAIRMAN ROKEBERG stated that the committee has taken it upon                 
 themselves to inject a provision for the National Association of              
 Realtors approved courses leading to designations and making them             
 acceptable for elective hours in the statute.  He also mentioned              
 some technical amendments to the bill which will be addressed at a            
 later time.  House Bill 33 was held over for further discussion.              
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 2100                                                                   
                                                                               
 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing             
 Committee at 5:33 p.m.                                                        
                                                                               

Document Name Date/Time Subjects