03/29/2018 01:30 PM Senate LABOR & COMMERCE

        HB 278-EXTEND:CERT. REAL ESTATE APPRAISERS BOARD                                                                    
                                                                                                                                
2:10:34 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of HB 278.                                                                                                        
                                                                                                                                
2:10:55 PM                                                                                                                    
MEGAN  HOLLAND,  Staff,  Representative  Andy  Josephson,  Alaska                                                               
State Legislature,  Juneau, Alaska,  said the Board  of Certified                                                               
Real Estate  Appraisers came to be  in the early 2000s  after the                                                               
housing market  crash, which resulted  in a federal  mandate that                                                               
states control and regulate real  estate appraisers. The board is                                                               
responsible  for licensing,  training, regulating,  and licensing                                                               
enforcement  of real  estate  appraisers  in Alaska.  Legislative                                                               
Audit  recommends an  extension  for the  full  eight years.  The                                                               
board received  good federal audits  in 2005 and 2007.  The chair                                                               
of  the board  and the  president of  the Alaska  chapter of  the                                                               
Appraisal Institute are available to answer questions.                                                                          
                                                                                                                                
2:12:25 PM                                                                                                                    
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Alaska State Legislature, Juneau,  Alaska, reviewed the June 2017                                                               
audit findings  related to HB  278. She directed  the committee's                                                               
attention to  the background information  beginning on page  3 of                                                               
the audit  that explains the  regulatory oversight  structure for                                                               
the  appraisal  industry,  which  has  been  established  by  the                                                               
federal government. She  said it is important  to understand that                                                               
this  board  is subject  to  external  oversight outside  of  the                                                               
sunset process.  That oversight  does factor  into their  term of                                                               
extension.                                                                                                                      
                                                                                                                                
MS. CURTIS  said the  audit concluded that  the board  is serving                                                               
the  public  interest  by   monitoring  certificate  holders  and                                                               
licensees and  working to ensure only  qualified individuals were                                                               
issued certificates  and licenses in Alaska.  The board developed                                                               
and  adopted regulations  to  comply  with federal  requirements,                                                               
improve the  real estate appraisal  industry, and  better protect                                                               
the public.                                                                                                                     
                                                                                                                                
MS. CURTIS reviewed  the first of two recommendations  on page 16                                                               
of the audit:                                                                                                                   
                                                                                                                                
     Recommendation 1: DCBPL's director should continue to                                                                      
     improve administrative support to the board.                                                                               
                                                                                                                                
MS.  CURTIS  said  three problems  indicate  improvement  needed.                                                               
First,  three certificate  holders were  incorrectly reported  in                                                               
the  Appraisal Subcommittee  national registry.  Second, auditors                                                               
reviewed  five investigative  cases  and  identified three  cases                                                               
with  periods of  inactivity without  justification ranging  from                                                               
130 to 203  days. Third, 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 publicly noticed.                                                                
                                                                                                                                
MS. CURTIS reviewed the second recommendation:                                                                                  
                                                                                                                                
       Recommendation 2 DCBPL's director, in consultation                                                                       
       with the board, should reduce fees to address the                                                                        
     surplus.                                                                                                                   
                                                                                                                                
MS. CURTIS said that as of March  2017 the board had a surplus of                                                               
$165,000. Board members had requested  a fee analysis on multiple                                                               
occasions, so  they could  look at reducing  fees. DCBPL  did not                                                               
conduct  a fee  analysis, so  licensees were  paying higher  than                                                               
justified fees.                                                                                                                 
                                                                                                                                
MS.  CURTIS  noted the  schedule  of  licenses  on page  11,  the                                                               
schedule  of  revenues  and  expenditures on  page  12,  and  the                                                               
summary of license fees on page 13.                                                                                             
                                                                                                                                
MS. CURTIS said  the audit notes on page 14  than the board plans                                                               
to move forward to regulate  appraisal management companies. This                                                               
will   significantly   expand   the  duties.   They   are   still                                                               
recommending eight years extension  in recognition of the federal                                                               
oversight of the board.                                                                                                         
                                                                                                                                
MS.  CURTIS said  the department  concurs with  the findings  and                                                               
recommendations. The  board's response is  on page 29.  The board                                                               
also  agrees. The  board's response  also  discusses an  Attorney                                                               
General's  opinion that  they  received that  they  would need  a                                                               
statutory  change   in  order  to  move   ahead  with  regulating                                                               
appraisal management companies. Legislative  Audit does not agree                                                               
with  that conclusion.  The auditor's  comments that  explain the                                                               
basis  for the  disagreement are  on page  33. Legislative  Audit                                                               
believes  that  current  Alaska  statutes  and  federal  law  are                                                               
sufficient to allow for that activity.                                                                                          
                                                                                                                                
CHAIR COSTELLO asked if there was  a response to that letter from                                                               
the board.                                                                                                                      
                                                                                                                                
MS  CURTIS  said there  is  no  opportunity  for the  auditee  to                                                               
respond to Legislative Audit's additional comments.                                                                             
                                                                                                                                
CHAIR COSTELLO opened public testimony on HB 278.                                                                               
                                                                                                                                
2:18:03 PM                                                                                                                    
DAVID DERRY,  Chair, Board of  Certified Real  Estate Appraisers,                                                               
Homer, Alaska, said the board  met with the division director and                                                               
agreed  to  a reduction  of  fees  in  2019.  He noted  that  the                                                               
Attorney General  did not  think the board  had the  authority to                                                               
regulate  appraisal management  companies (AMC),  but the  Senate                                                               
passed an AMC bill  that would allow that and moved  it on to the                                                               
House. The  board is  willing to  take that  on. The  board works                                                               
hard,  specifically regarding  the federal  audits it  is subject                                                               
to.  Their goal  is to  make an  excellent rating  as opposed  to                                                               
good.                                                                                                                           
                                                                                                                                
2:20:06 PM                                                                                                                    
WILLIAM   BARNES,   President,   Alaska  Chapter   of   Appraisal                                                               
Institute, Palmer,  Alaska, testified  in support  of HB  278. He                                                               
said the  Appraisal Institute has  111 members of the  261 Alaska                                                               
certified  appraisers or  43 percent.  The organization  supports                                                               
the  extension  for eight  years.  The  board is  performing  its                                                               
mission of protecting the public and the banking system.                                                                        
                                                                                                                                
CHAIR COSTELLO asked if the  issue regarding public notice can be                                                               
easily rectified.                                                                                                               
                                                                                                                                
MR. BARNES asked if the question was directed to him.                                                                           
                                                                                                                                
[Note: Joanne  Blackburn gave the following  testimony at 2:33:42                                                               
PM, during the hearing on HB 279.]                                                                                              
                                                                                                                                
JOANNE   BLACKBURN,   representing   self,   Anchorage,   Alaska,                                                               
testified in support of HB 278.  She said it is important to have                                                               
a  strong appraisal  industry. She  has seen  varying quality  of                                                               
appraisals for federal projects. As  the state hopes to have more                                                               
federally-funded  projects, an  excellent  appraisal industry  is                                                               
needed  for  both  private  and   public  interests.  She  warned                                                               
legislators  against becoming  involved  in  situations based  on                                                               
hearsay  information about  private families'  property interest.                                                               
She concluded by saying let the boards be strong.                                                                               
                                                                                                                                
2:21:40 PM                                                                                                                    
CHAIR COSTELLO closed public testimony on HB 278.                                                                               
                                                                                                                                
2:21:46 PM                                                                                                                    
SENATOR  MICCICHE moved  to report  HB 278,  version 30-LS1160\D,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
CHAIR  COSTELLO announced  that without  objection, HB  278 moved                                                               
from the Senate Labor and Commerce Standing Committee.