01/29/2018 03:15 PM House LABOR & COMMERCE

             HB 279-EXTEND: REAL ESTATE COMMISSION                                                                          
                                                                                                                              
3:43:49 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that  the next order  of business  would be                                                               
HOUSE BILL  NO. 279,  "An Act extending  the termination  date of                                                               
the  Real  Estate  Commission; and  providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
3:44:02 PM                                                                                                                    
                                                                                                                                
MEGAN  HOLLAND,  Staff,  Representative  Andy  Josephson,  Alaska                                                               
State Legislature,  on behalf  of the  sponsor presented  HB 279,                                                               
extending  the termination  date of  the Real  Estate Commission.                                                               
She  explained that  the Alaska  Real Estate  Commission oversees                                                               
brokers,   associate  brokers,   and  sales   licensees  and   is                                                               
responsible   for  regulating   supervisors  and   licensees  and                                                               
enforcing  their requirements  for  the  investigation of  units.                                                               
The commission currently has 567  licensees across the state.  It                                                               
had received a full 8-year recommendation from LB&A.                                                                            
                                                                                                                                
3:45:30 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative Agencies and Offices, reported  on HB 279.  The audit                                                               
was  dated  June   2017  and  concluded  that   the  Real  Estate                                                               
Commission  did   serve  the   public  interest   by  effectively                                                               
licensing and  regulating real estate  licensees and  real estate                                                               
offices.  The commission ensured  that only qualified individuals                                                               
practiced and  developed and adopted  regulations to  improve the                                                               
industry  and  better  protect the  public.    Legislative  Audit                                                               
recommended an 8-year extension.   The audit period was less than                                                               
two years because the prior sunset  audit was dated July 2015 and                                                               
had concluded  that the commission  was not serving  the public's                                                               
interest  by failing  to procure  a master  Errors and  Omissions                                                               
(E&O)  insurance policy.   Ms.  Curtis said  a 2008  law required                                                               
that the commission move to maintain  a master policy and make it                                                               
available  to licensees.   The  licensees were  then required  by                                                               
statute to either obtain their  own independent policy or use the                                                               
master policy provided  by the division.  The  prior sunset audit                                                               
found there were  no clear explanations why the  division and the                                                               
commission  had not  been able  to obtain  a policy.   After  the                                                               
audit,  the  commission  was  extended only  two  years  and  the                                                               
statutes  were changed.    The previous  statute  stated that  if                                                               
there were  no master  policy, then  all licensees  were exempted                                                               
from  having to  obtain E&O  insurance.   There  was a  bit of  a                                                               
loophole in the statute, so if  a master policy was not obtained,                                                               
then no one would have to  have insurance.  Now all licensees had                                                               
to  have  insurance regardless  of  whether  there was  a  master                                                               
policy available.  In the present  audit, LB&A had found that the                                                               
commission  had  actively  worked  with the  division  to  change                                                               
regulations  to help  facilitate  a successful  procurement of  a                                                               
master  E&O  insurance  policy.   They  were  successful,  and  a                                                               
contract was signed in 2017.                                                                                                    
                                                                                                                                
3:47:52 PM                                                                                                                    
                                                                                                                                
MS. CURTIS  stated the legislative audit  had one recommendation.                                                               
In the  prior sunset audit,  LB&A had looked at  36 investigative                                                               
cases  and  found  that  29  of  them  had  extended  periods  of                                                               
inactivity from 124  days to four and a half  years.  The present                                                               
audit had  looked at the current  year and tested 7  cases.  They                                                               
had found  3 of  them had unjustified  periods of  inactivity and                                                               
those periods ranged from 72 to  194 days.  The audit recommended                                                               
DCBPL's  chief investigator  improve  oversight  to ensure  cases                                                               
were investigated  timely.  The  department, the  commission, and                                                               
the governor's office  all concurred with the  audit findings and                                                               
recommendations.                                                                                                                
                                                                                                                                
3:49:08 PM                                                                                                                    
                                                                                                                                
TRACI BARICKMAN, Chair, Real Estate  Commission, spoke in support                                                               
of HB  279.  She  said she had  been a licensed  professional for                                                               
about 25 years and over half of  those years as a broker and as a                                                               
trainer.  She testified as follows:                                                                                             
                                                                                                                                
     The real  estate commission operates well  within its means,                                                               
     maintaining a cumulative surplus  for four years.  Licensing                                                               
     fees  adequately  cover the  operational  cost  of the  real                                                               
     estate  commission  and therefore  place  no  burden on  the                                                               
     state's budget.  As a  commissioner, I work with the state's                                                               
     investigator  to  review  complaints   that  come  into  the                                                               
     commission as  a result  of a real  estate transaction  or a                                                               
     licensee's interaction  with a member  of the public.   Most                                                               
     complaints that are filed have  a legitimate foundation and,                                                               
     in many cases, licensees  are disciplines through education,                                                               
     fines,  and sometimes  through suspension  or revocation  of                                                               
     their  license.     But  without  this   process,  the  only                                                               
     resources for the public would be litigation.                                                                              
                                                                                                                                
     In some cases  where a licensee violated the  law a consumer                                                               
     may  not have  the resources  or  the desire  to take  their                                                               
     complaints  to  court  and therefore  would  allow  improper                                                               
     illegal actions of  a licensee to continue.   This would not                                                               
     be  in  the  public's   best  interest.    Additionally,  by                                                               
     modifying and  adopting regulations, real  estate commission                                                               
     constantly  improves our  industry practices  and standards.                                                               
     It takes  consistent work by  the real estate  commission to                                                               
     keep regulations on track with  the constantly changing real                                                               
     estate industry.   This is  necessary to keep  Alaskans safe                                                               
     from  financial losses  associated  with  their real  estate                                                               
     transactions.                                                                                                              
                                                                                                                                
     As  stated,  the recent  sunset  review  concluded that  the                                                               
     commission is  serving in the  public's best interest.   The                                                               
     review  unconditionally   recommends  that   the  commission                                                               
     extend  its  expiration date  to  June  30, 2026,  with  the                                                               
     recommendation  that  the  chief  investigator  continue  to                                                               
     improve  oversight to  ensure  investigations are  completed                                                               
     timely.   This  has been  an  ongoing process  and they  are                                                               
     working on  it.   Real estate  professionals have  access to                                                               
     our consumers' homes.  To  terminate the commission would be                                                               
     taking away  an important guardian for  consumer protection.                                                               
     That protection is Alaskan consumer protection.                                                                            
                                                                                                                                
3:52:07 PM                                                                                                                    
                                                                                                                                
CHAIR KITO remarked the continuing  surplus was "fairly high" and                                                               
asked  whether there  was  a  plan to  address  reducing fees  or                                                               
reducing surplus for the board for future years.                                                                                
                                                                                                                                
MS.  BARICKMAN answered  that  the commission  had  been able  to                                                               
reduce licensing fees as a result of that surplus.                                                                              
                                                                                                                                
3:52:52 PM                                                                                                                    
                                                                                                                                
MARK  MASLEY, President-Elect,  Alaska  Association of  Realtors,                                                               
testified  in  support of  HB  279.   He  stated  he  had been  a                                                               
licensed realtor professional in the state since 2001.                                                                          
                                                                                                                                
3:53:48 PM                                                                                                                    
                                                                                                                                
CHAIR KITO opened public testimony  on HB 279.  Upon ascertaining                                                               
that no  one wished to testify,  he stated he would  leave public                                                               
testimony open.                                                                                                                 
                                                                                                                                
3:54:00 PM                                                                                                                    
                                                                                                                                
CHAIR KITO held over HB 279.