Legislature(2017 - 2018)BARNES 124
01/29/2018 03:15 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB278 | |
| HB279 | |
| HB280 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 278 | TELECONFERENCED | |
| *+ | HB 279 | TELECONFERENCED | |
| *+ | HB 280 | TELECONFERENCED | |
HB 278-EXTEND:CERT. REAL ESTATE APPRAISERS BOARD
3:24:20 PM
CHAIR KITO announced the first order of business would be HOUSE
BILL NO. 278, "An Act extending the termination date of the
Board of Certified Real Estate Appraisers; and providing for an
effective date."
3:24:41 PM
MEGAN HOLLAND, Staff, Representative Andy Josephson, Alaska
State Legislature, presented HB 278 on behalf of Rep. Josephson,
prime sponsor. She stated that the proposed bill would extend
the termination date for the Certified Real Estate Appraisers
Board by eight years. She stated the extension was recommended
by the Legislative Budget and Audit Division (LB&A). After the
housing market crash in the 2000s, there was a federal mandate
to regulate real estate appraisers. The state board serves to
fulfill that federal requirement. She stated the board is
responsible for licensing, license enforcement, training, and
regulating real estate appraisers. The board currently manages
261 licensees.
3:26:30 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, reported on HB 278. She
reminded that the purpose of the sunset audit was to determine
whether the board was serving the public interest and should be
extended.
MS. CURTIS gave background information, explaining that a
regulatory oversight structure for the appraisal industry had
been established by the federal government. The framework
includes private entities that set appraisal standards and
qualification criteria for licensing; the state licensing boards
that certify; and federal entities that regulate the industry.
The federal appraisal subcommittee is responsible for monitoring
the state licensing boards and ensuring they keep in line with
standards. She highlighted that the board is subject to
external oversight outside of the sunset process, which factored
into the division's recommended term of extension. The federal
oversight includes on site compliance reviews of the board as
well as the Division of Corporations, Business and Professional
Licensing (DCBPL). She stated the conclusion that the board was
serving the public interest by efficiently licensing and
regulating certificate holders and licensees.
MS. CURTIS read from a document entitled, "A Sunset Review of
the Department of Commerce, Community, and Economic Development,
Board of Certified Real Estate Appraisers (board)" [included in
the committee packet], as follows:
Overall, the audit concludes the board is serving the
public's interest by certifying and licensing real
estate appraisers.
The board monitored certificate holders and licensees
and worked to ensure only qualified individuals were
issued certificates and licenses in Alaska.
Furthermore, the board developed and adopted
regulations to comply with federal requirements,
improve the real estate appraisal industry, and better
protect the public.
3:28:09 PM
MS. CURTIS gave the audit's two recommendations. The first
recommendation was that the DCBPL director continue to improve
administrative support to the board. She pointed to page 16 of
the audit document as follows:
The audit found inadequate board support by DCBPL
staff in the following areas:
1. Due to general oversight, three certificate holders
were incorrectly reported in the Appraisal
Subcommittee (ASC) national registry, which is
required by federal and state laws. Upon
identification by auditors, the errors were promptly
corrected by DCBPL staff. Incorrect status in the
registry may result in financial institutions
rejecting qualified appraisers or selecting
unqualified appraisers. Additionally, noncompliance
with federal requirements puts the board at risk of
more frequent ASC reviews that may increase board
administrative costs.
2. Auditors reviewed five investigative cases over 180
days old, and identified three cases with periods of
inactivity without justification ranging from 130 to
203 days. Management reported that investigators have
varying caseloads, priorities, and case management and
investigative skills that affected timeline goals.
Alaska Statute 08.01.050(a)(19) requires the
department to provide inspection, enforcement, and
investigative services to the boards. Cases that are
not actively investigated increase the risk of
incompetent or unlawful licensees providing services
to consumers.
3. Due to staff turnover, DCBPL management could not
provide evidence that three of 11 board meetings held
between July 1, 2014, and March 31, 2017, were public
noticed. Alaska Statute 44.62.310(e) requires board
meetings be publicly noticed and AS 08.01.050(a)(6)
requires the department to provide administrative and
budgetary services to the board, which includes
noticing board meetings. Failure to publish meeting
dates may limit public participation in board
proceedings.
MS. CURTIS stated the second recommendation was that the
director work with the board to reduce fees to address the
surplus of over $165,000 at the end of March [2017]. The
board had requested a fee analysis, but it was not carried
out. The licensees paid a higher than justified fee as a
result.
MS. CURTIS listed the audit findings in the analysis. The
report noted that the board planned to move forward with the
regulation of appraisal management companies (AMC), expanding
the board's duties for the future. The division was
recommending an eight-year extension in recognition that the
board is subject to external oversight by the federal appraisal
subcommittee. These reviews are done on site at least every
other year.
3:30:25 PM
MS. CURTIS turned to the responses to the audit. She stated
that the department did concur with the findings and
recommendations. The board chair noted in his response that
they had received an attorney general's opinion that concluded
that a statutory change would be needed in order to regulate
AMCs. She underlined that the division did not agree with that
interpretation and offered additional comments outlining
specific federal and state laws that allow the regulation of
AMCs.
3:31:10 PM
REPRESENTATIVE JOSEPHSON cited a letter from LB&A that describes
the state's authority to regulate AMCs. He asked whether, if
there were clearer express authority, there would be any harm in
it.
MS. CURTIS stated that there is no harm in clarifying the
statutes.
3:31:32 PM
REPRESENTATIVE SULLIVAN-LEONARD asked whether, since the
Certified Real Estate Appraisers Board had excess funding, it
would consider refunding some of the appraisers' money that they
[paid in fees] the past years.
MS. CURTIS deferred to the department.
REPRESENTATIVE SULLIVAN-LEONARD queried whether the Certified
Real Estate Appraisers Board "is charging so much and all of a
sudden there was such a surplus, maybe there could be
consideration, especially if there's a particular complaint from
appraisers that they are paying a significant amount of money."
MS. CURTIS answered that most of the 11 boards they had audited
in the current year have maintained a surplus. The DCCED
response to LB&A is that maintaining a surplus of a year's
expenses will help prevent the spiking of fees. She added that
technically the statutes do not provide for that and instead say
that fees should be set to cover the cost of the occupation.
3:32:52 PM
CHAIR KITO stated that "if the department is doing that, it
doesn't seem like they have the statutory authority to be able
to do that. Whether or not it's a good idea, it seems like it
would require some legislative action."
3:33:08 PM
REPRESENTATIVE KNOPP asked Ms. Curtis to confirm the fund
balance of $165,000.
MS. CURTIS confirmed that at the end of March 2017 the board had
a balance of $165,609.
REPRESENTATIVE KNOPP referred to a letter he received in the
prior year from board member David Derry indicating that the
board had a balance of around $415,000. He asked about the
discrepancy between the board numbers and the audit numbers.
MS. CURTIS answered that the numbers were as of March. She said
she guessed the renewal period was at the end of summer, as FY
15 revenues were $279,000 through March 31, and in [FY] 17 it
was $35,000. She stated at the end of fiscal year 2017 (FY 17)
it could be a much higher amount. She suggested the department
may have current surplus amounts.
3:34:37 PM
REPRESENTATIVE KNOPP asked if the board had reduced its fees.
MS. CURTIS stated she did not have an answer. She reiterated
the report was dated Summer 2017.
REPRESENTATIVE WOOL pointed out that the FY 14 revenues were
$57,050, then went up to $279,000 and back down to $49,000. He
asked whether that was because the board had raised its rates
and lowered them back down again.
MS. CURTIS answered that every board had biennial licensing
meaning that every other year the members pay a renewal fee.
She added that in the off years there would also be revenue from
new applicants, so the boards did have revenue in the off year
but most revenue would be seen every other year.
REPRESENTATIVE WOOL surmised that in 2017 the revenue would jump
up again. He cited the audit and suggested the board had extra
cash and an adjustment of rate "could be tapered out over a
while."
3:36:22 PM
DAVID DERRY, Chair, Board of Certified Real Estate Appraisers,
testified in support of HB 278. He pointed to his letter on
page 29 of the audit that addressed the recommendations by the
legislative audit committee. He spoke to recommendation number
2 about reducing fees. He explained the board was on a 2-year
cycle for registering appraisers and recertification fees and
was not able to get the fees reduced in 2017. He added that
based on the accounting dated on November 3, 2017, the fund
balance for the board in the first quarter of FY 18 was
$378,297. The surplus was due to not adjusting fees.
3:38:10 PM
MR. DERRY clarified that the fees, as high as they were, carried
over from a court action that had occurred several years
previously due to legal action brought against one of the
certified appraisers, which ended up going to the Alaska Supreme
Court. That had resulted in increased fees for all certified
appraisers for the state to pay for that cost. The costs were
paid but unfortunately the fees were not analyzed and adjusted.
The board had a meeting in September 2017 at which the board,
with the director of the division, was able to adjust fees. The
fees effective for the 2019 recertifications would be reduced to
$350. That had been conveyed to the board.
MR. DERRY added that regarding the refunds, the board had been
told by the division that under state statutes it could not
extend the refund to anyone, so the balance surplus would carry
forward until it was used up.
MR. DERRY addressed the issue of AMC regulations. Although the
audit staff and some members of the board thought it did have
the authority "to do AMC legislation," the board had been told
by the Attorney General's office that it did not. The board was
currently working with Representative Josephson and Senator
Meyer on AMC legislation and hoped to get it through during the
current legislative session.
3:40:18 PM
REPRESENTATIVE STUTES asked if [the board] had a full
complement.
MR. DERRY answered in the affirmative.
3:40:34 PM
REPRESENTATIVE WOOL drew attention to the form before the
committee and stated it did not list total revenue in 2017
because the date of the audit was March 31. He added in 2015
that figure was $279,000. He asked if Mr. Derry had a number
for the 2017 revenue.
MR. DERRY answered that the accounting dated November 3, 2017,
showed total revenue for FY 17 as $278,417.
3:41:34 PM
WILLIAM "BILL" BARNES, President, Appraisal Institute, Alaska
Chapter, testified in support of HB 278. He gave a brief
history of the Appraisal Institute (AI), founded in 1932 during
the depths of the Depression to enact appraisal standards and
ethics. He noted it was the largest and oldest appraisal
institute in the United States and was also located in 60
countries, with 90 chapters. Alaska had 111 members of the 261
certified appraisers, for 43 percent capture rate of membership.
He continued that the AI writes almost all the [appraiser]
textbooks. He stated the AI believes that the board of
appraisal in the state of Alaska is serving the public interest
as intended and had been since 1991. The institute recommends
that HB 278 pass as intended and extend the board of appraisers
for another eight years.
3:43:33 PM
CHAIR KITO opened public testimony HB 278. After ascertaining
that no one wished to testify, advised that public testimony
would remain open.
CHAIR KITO held HB 278 over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB278 Sponsor Statement 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 278 |
| HB278 Fiscal Note DCCED CBPL 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 278 |
| HB0278 Version D.PDF |
HL&C 1/29/2018 3:15:00 PM |
HB 278 |
| HB278 2017 Audit 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 278 |
| HB279 2017 Audit 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 279 |
| HB279 Fiscal Note DCCED CBPL 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 279 |
| HB0279A Version D.PDF |
HL&C 1/29/2018 3:15:00 PM |
HB 279 |
| HB279 Sponsor Statement 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 279 |
| HB280 2017 Audit 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 280 |
| HB280 Fiscal Note DCCED CBPL 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 280 |
| HB280 Sponsor Statement 1.25.18.pdf |
HL&C 1/29/2018 3:15:00 PM |
HB 280 |
| HB0280 Version D.PDF |
HL&C 1/29/2018 3:15:00 PM |
HB 280 |