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

             HB 279-EXTEND: REAL ESTATE COMMISSION                                                                          
                                                                                                                                
2:22:10 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of HB 279.                                                                           
                                                                                                                                
2:22:16 PM                                                                                                                    
MEGAN  HOLLAND,  Staff,  Representative  Andy  Josephson,  Alaska                                                               
State  Legislature,   Juneau,  Alaska,   said  the   Real  Estate                                                               
Commission received  an eight-year extension  recommendation from                                                               
Legislative  Audit. The  commission  oversees brokers,  associate                                                               
brokers, and  sales licensees. The commission  is responsible for                                                               
regulating   supervisors  of   licensees   and  enforcing   their                                                               
requirements  through their  investigations unit.  The commission                                                               
oversees [2,510]  licensees. There  was one letter  of opposition                                                               
to the  extension. It was  determined that the complaint  was not                                                               
within the purview of the  commission because the expectations of                                                               
the   author of the  letter did not  align with the  functions of                                                               
the commission.                                                                                                                 
                                                                                                                                
2:23:59 PM                                                                                                                    
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Alaska State Legislature, Juneau,  Alaska, reviewed the June 2017                                                               
audit findings  related to HB  279. She said the  audit concludes                                                               
the commission  is serving the  public's interest  by effectively                                                               
licensing and  regulating real estate licensees  and offices. The                                                               
commission  monitored   licensees  and  worked  to   ensure  only                                                               
qualified  individuals  practice   in  Alaska.  Furthermore,  the                                                               
commission developed and adopted  regulations to improve the real                                                               
estate industry and better protect  the public. Legislative Audit                                                               
recommends the full eight-year extension.                                                                                       
                                                                                                                                
MS. CURTIS said  the committee might have noticed  that the audit                                                               
covers less than two years. That  is because the prior sunset was                                                               
dated  July of  2015. That  audit noted  that the  commission had                                                               
failed to obtain  a master insurance policy. A  2008 law required                                                               
that  the  commission  obtain  an  errors  and  omissions  master                                                               
insurance policy  and make it  available to  licensees. Licensees                                                               
were  required   either  to  obtain  the   insurance  through  an                                                               
independent policy  or through the master  policy made available.                                                               
Statute  stated that  if  there  was no  master  policy, then  no                                                               
licensee  needed  to  obtain  the  insurance.  Subsequently,  the                                                               
legislature gave the commission  a two-year extension and changed                                                               
the  statute to  require all  licensees to  obtain the  insurance                                                               
regardless  of  whether  a  master   policy  was  available.  The                                                               
commission worked  with the  Division of  Corporations, Business,                                                               
and  Professional Licensing  (DCBPL)  to  change regulation  that                                                               
facilitated  a  successful procurement  and  a  contract for  the                                                               
insurance  policy   was  signed   in  June   2017.  Consequently,                                                               
Legislative Audit is recommending an eight-year extension.                                                                      
                                                                                                                                
MS. CURTIS said there is one  repeat recommendation on page 17 of                                                               
the audit:                                                                                                                      
                                                                                                                                
      Recommendation 1: DCBPL's chief investigator should                                                                       
       continue to improve oversight to ensure cases are                                                                        
     actively investigated and completed timely.                                                                                
                                                                                                                                
MS. CURTIS said management had  introduced a dashboard to monitor                                                               
case  resolution and  internal  benchmarks  to create  timeliness                                                               
goals for  investigators, but they  tested seven cases  and three                                                               
had  periods of  inactivity.  The periods  were  shorter and  the                                                               
percentage of errors was smaller,  but improvements still need to                                                               
be made. The  department, board, and governor  concurred with the                                                               
recommendations.                                                                                                                
                                                                                                                                
2:26:51 PM                                                                                                                    
SENATOR GARDNER recalled receiving  comments that the E&O [errors                                                               
and  omissions]  insurance  was onerously  expensive.  Since  she                                                               
hasn't heard any complaints for  a while, she assumes that having                                                               
the master policy solves that.                                                                                                  
                                                                                                                                
MS. CURTIS  said they found no  complaints about the cost  of the                                                               
insurance. The  intent was to  find a cost-effective way  for all                                                               
licensees to obtain the insurance.                                                                                              
                                                                                                                                
SENATOR  MICCICHE referenced  the  letter of  complaint that  Ms.                                                               
Holland described  in her  introduction. He said  he is  aware of                                                               
the struggles of  the property owner and asked  why the situation                                                               
wasn't a responsibility of the Real Estate Commission.                                                                          
                                                                                                                                
MS. CURTIS deferred to the chair of the commission.                                                                             
                                                                                                                                
2:28:21 PM                                                                                                                    
TRACI BARICKMAN,  Chair, Alaska  Real Estate  Commission, Palmer,                                                               
Alaska, said  complaints go through the  division's investigative                                                               
process  where jurisdiction  is  first determined.  This was  not                                                               
jurisdictional to the Real Estate  Commission, and the individual                                                               
was notified. Public commission  meetings are not the appropriate                                                               
forum for hearing complaints.                                                                                                   
                                                                                                                                
SENATOR MICCICHE asked  if there is a clear  path to jurisdiction                                                               
for this case if it is not the Real Estate Commission.                                                                          
                                                                                                                                
MS. BARICKMAN said it's in the statute.                                                                                         
                                                                                                                                
CHAIR COSTELLO asked  if the individual was pointed  in the right                                                               
direction.                                                                                                                      
                                                                                                                                
MS. BARICKMAN said that would be a division question.                                                                           
                                                                                                                                
MS. BARICKMAN  testified in support  of HB  279 on behalf  of the                                                               
commission.  She said  the Real  Estate Commission  operates well                                                               
within its budget provided by  licensing fees. As a commissioner,                                                               
she works with  the state investigator to  review complaints that                                                               
are  a  result  of  a   real  estate  transaction  or  licensee's                                                               
interaction with  the public. Most  complaints have  a legitimate                                                               
foundation, and in many cases,  licensees are disciplined through                                                               
education,  fines, and  sometimes  revocation  of their  license.                                                               
Without this  process the only  recourse for the public  would be                                                               
litigation.   By   modifying   and  adopting   regulations,   the                                                               
commission constantly  improves industry practices in  a changing                                                               
industry.  The  commission is  an  important  guard for  consumer                                                               
protection.                                                                                                                     
                                                                                                                                
[Note: At  2:33:42 PM Joanne  Blackburn gave testimony on  HB 278                                                               
and  Chair Costello  directed that  it be  placed in  the minutes                                                               
with the proceedings for HB 278.]                                                                                               
                                                                                                                                
2:37:03 PM                                                                                                                    
CHAIR COSTELLO closed public testimony on HB 279.                                                                               
                                                                                                                                
2:37:15 PM                                                                                                                    
SENATOR  MICCICHE moved  to report  HB 279,  version 30-LS1161\D,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
2:37:29 PM                                                                                                                    
CHAIR  COSTELLO announced  that without  objection, HB  279 moved                                                               
from the Senate Labor and Commerce Standing Committee.