04/16/2016 03:00 PM Senate FINANCE

HOUSE BILL NO. 290                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Real                                                                         
     Estate Commission; and providing for an effective                                                                          
     date."                                                                                                                     
                                                                                                                                
3:44:19 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH, STAFF,  REPRESENTATIVE KURT OLSON, explained                                                                    
that the  legislation would extend  the termination  date of                                                                    
the  Real Estate  Commission to  June 28,  2018. She  stated                                                                    
that each  year the  Division of Legislative  Audit reviewed                                                                    
boards and  commissions in order  to determine  whether they                                                                    
should   be  reestablished   per  A.S.24.44.   The  division                                                                    
reviewed  the  activities  of the  commission  in  order  to                                                                    
determine  whether there  was a  demonstrated  need for  the                                                                    
commissions  continued existence,  and whether  it had  been                                                                    
operating  in  an  effective manner.  She  stated  that  the                                                                    
review of the  audit offered the opinion that  the board was                                                                    
serving  the public  interest  by  effectively by  licensing                                                                    
real  estate broker,  associate brokers,  and sales  people.                                                                    
She   noted    that   the    division   had    offered   two                                                                    
recommendations:                                                                                                                
                                                                                                                                
     1.  The  commission's  chair   and  the  Department  of                                                                    
     Commerce,   Community,    and   Economic   Development,                                                                    
     Division  of  Administrative Services  director  should                                                                    
     work together to procure a  master errors and omissions                                                                    
     insurance policy for real estate licensees.                                                                                
                                                                                                                                
     2.   The  Division   of   Corporations,  Business   and                                                                    
     Professional  Licensing's   chief  investigator  should                                                                    
     take action  to ensure cases are  actively investigated                                                                    
     and completed timely.                                                                                                      
                                                                                                                                
Ms.  Stidolph  concluded  that   the  commission  served  an                                                                    
important   role  by   improving  operations   and  industry                                                                    
practices by  modifying and adopting regulations.  She added                                                                    
that because  the commission's ability to  obtain Errors and                                                                    
Omissions (E&O) insurance was key  to the decision to extend                                                                    
the board, the sponsor felt  that the commission should only                                                                    
be extended for  two years. She said that  the E&O insurance                                                                    
was a significant statutory duty  to protect the public that                                                                    
was  not being  met, and  was a  problem that  had not  been                                                                    
solved  in 9  years  and required  further  scrutiny by  the                                                                    
legislature.                                                                                                                    
                                                                                                                                
3:46:08 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, related that the  division had issued a 6                                                                    
year recommendation  for extension under the  condition that                                                                    
the  commission obtain  the E&O  insurance by  January 2016.                                                                    
She said  that if the commission  were unable to do  so, the                                                                    
division recommended  a 4 year extension.  She elaborated on                                                                    
the two previously mentioned audit recommendations.                                                                             
                                                                                                                                
3:48:32 PM                                                                                                                    
                                                                                                                                
Senator  Dunleavy  wondered  whether  there  the  commission                                                                    
should  be   monitored  by   the  Department   of  Commerce,                                                                    
Community and Economic Development.                                                                                             
                                                                                                                                
Ms. Curtis  explained that investigations would  still occur                                                                    
regardless of which entity monitored the commission.                                                                            
                                                                                                                                
3:49:16 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
3:49:43 PM                                                                                                                    
                                                                                                                                
BUTCH MOORE,  SELF, BIG LAKE (via  teleconference), spoke to                                                                    
a complaint that  he had filed with the  commission in 2014.                                                                    
He said  that the real  estate violations had cost  him over                                                                    
$250,000.  He  relayed  his  personal  story  and  expressed                                                                    
frustration with the commission.                                                                                                
                                                                                                                                
3:52:50 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  queried whether  Mr. Moore was  in favor                                                                    
of the bill or in opposition.                                                                                                   
                                                                                                                                
Mr. Moore  did not think  the real estate  commission needed                                                                    
to  be  funded. He  believed  that  there  was no  point  in                                                                    
funding  the  commission if  it  could  not  do the  job  of                                                                    
protecting the public.                                                                                                          
                                                                                                                                
3:54:10 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
3:54:40 PM                                                                                                                    
                                                                                                                                
JANEY   HOVENDEN,   DIRECTOR,  DIVISION   OF   CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  expressed                                                                    
appreciation for  Ms. Curtis' comments  and the work  of the                                                                    
division.  She  spoke to  the  recommendations  made by  the                                                                    
division  of  budget  and  audit.   She  asserted  that  the                                                                    
department had endeavored to retain  and E&O policy, but had                                                                    
faced challenges at every stage  of the process. She relayed                                                                    
that  in   November  2015,  the   department  had   put  out                                                                    
information soliciting  for bids for the  master policy, but                                                                    
there had been no bidders.  She said that the department had                                                                    
received feedback  that the premiums set  in regulation were                                                                    
too  low, and  that there  had not  been enough  information                                                                    
provided about the  risk pool; there were  not enough people                                                                    
with  E&O insurance  to be  able to  evaluate the  risk. She                                                                    
said   that  the   commission  was   researching  additional                                                                    
information  that  could  assist in  regulation  to  address                                                                    
concerns and  would soon be  putting out  another invitation                                                                    
to bid  (ITB). She spoke  to the problem of  files lingering                                                                    
for extended periods  of time, and said  that solutions were                                                                    
being  instituted to  deal with  the  gaps in  investigative                                                                    
cases. She noted  that the board was operating  in the black                                                                    
and had  recently experienced a  reduction in fees due  to a                                                                    
large  surplus.  She  concluded   that  the  commission  was                                                                    
necessary for  guiding the profession, and  the division, in                                                                    
the regulation of  the profession. She said  that whether or                                                                    
not the  board was in existence,  the licensing requirements                                                                    
were  in  statute  and  people were  still  required  to  be                                                                    
licensed and were best served by the board.                                                                                     
                                                                                                                                
HB  290  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.