02/24/2010 03:15 PM House LABOR & COMMERCE

         HB 342-EXTEND BOARD OF REAL ESTATE APPRAISERS                                                                      
                                                                                                                                
3:32:33 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced that the first order of business would be                                                                 
HOUSE BILL  NO. 342,  "An Act extending  the termination  date of                                                               
the Board of Certified Real  Estate Appraisers; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
3:32:36 PM                                                                                                                    
                                                                                                                                
MICHELLE  SIKMA, Staff,  Representative T.  Wilson, Alaska  State                                                               
Legislature, presented  HB 342  on behalf  of the  prime sponsor,                                                               
Representative   T.  Wilson,   paraphrased  from   the  sponsor's                                                               
statement, inserted, as follows [original punctuation provided]:                                                                
                                                                                                                                
     HB  342 extend  the termination  date of  the Board  of                                                                    
     Certified   Real  Estate   Appraisers  (BCREA).Per   AS                                                                    
     08.03.010(c)(20),  the board  will sunset  on June  30,                                                                    
     2010. HB 342  extends this date by four  years, to June                                                                    
     30, 2014.                                                                                                                  
                                                                                                                                
     The  BCREA  is comprised  of  a  five member  board  to                                                                    
     establish:    (1)   examination    specifications   for                                                                    
     certification as a real estate  appraiser; (2) rules of                                                                    
     professional conduct  to establish and maintain  a high                                                                    
     standard  of integrity  in  the  real estate  appraisal                                                                    
     profession; and (3) regulations  necessary to carry out                                                                    
     the purposes of the statutes.                                                                                              
                                                                                                                                
     The   conclusion  of   the  Legislative   Audit  is   a                                                                    
     recommendation to  extend the BCREA's  termination date                                                                    
     by four years. (Report Digest #08-20064-10).                                                                               
                                                                                                                                
3:34:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH inquired about the fiscal note.                                                                             
                                                                                                                                
3:35:01 PM                                                                                                                    
                                                                                                                                
CHRIS CURTIS, Division of  Legislative Audit, Legislative Affairs                                                               
Agency,  explained   that  the  Division  of   Legislative  Audit                                                               
conducted a  sunset audit review  and issued a report  in January                                                               
2010.   The objective of the  audit was to determine  whether the                                                               
termination  date   should  be   extended.    She   reviewed  the                                                               
background  information,  including  that the  BCREA's  authority                                                               
originated  from an  Act that  passed the  Congress in  1989, the                                                               
Financial  Institutions  Reform,  Recover,  and  Enforcement  Act                                                               
(FIRREA).    This  federal  law   was  intended  to  ensure  that                                                               
federally  regulated  real  estate transactions  appraisals  were                                                               
performed  by   real  estate  appraisers  who   met  the  minimum                                                               
qualifications  and were  conducted  in  compliance with  uniform                                                               
standards.  Under the federal  law each state could establish its                                                               
own agencies to  license and certify real estate  appraisers.  In                                                               
1990, the legislature created the  Board of Certified Real Estate                                                               
Appraisers (BCREA).                                                                                                             
                                                                                                                                
MS. CURTIS  stated that the  audit recommended that the  BCREA be                                                               
granted an  extension until June 30,  2014, which is half  of the                                                               
eight years authorized  in statute.  The  Division of Legislative                                                               
Audit  recommended  only  a four-year  extension  of  the  BCREA,                                                               
instead  of  an eight-year  extension.    This recommendation  is                                                               
based  on  the  Department  of Commerce,  Community,  &  Economic                                                               
Development   (DCCED)  and   the  BCREA's   failure  to   address                                                               
recommendations  by  the  federal Appraisal  Subcommittee  (ASC).                                                               
Additionally, the Division of  Legislative Audit recommended that                                                               
the  DCCED  should  improve the  administrative  support  to  the                                                               
BCREA.  She  remarked that the lack of  administrative support is                                                               
a  systematic problem,  and is  one  that the  committee may  see                                                               
surface  in  other audits.    Further,  the legislative  auditors                                                               
recommended  that   the  Office  of  the   Governor  improve  its                                                               
appointments to the BCREA in a more timely fashion.                                                                             
                                                                                                                                
3:37:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN asked  for  clarification of  the items  the                                                               
DCCED and the BCREA failed to address.                                                                                          
                                                                                                                                
MS. CURTIS responded  that the federal ASC review  found that the                                                               
DCCED  and  the  BCREA  failed  to ensure  that  two  of  the  42                                                               
certified  applicants met  the  Appraiser Qualifications  Board's                                                               
minimum time period requirements  during which experience must be                                                               
earned.    Thus,  two  of the  certified  real  estate  appraiser                                                               
licensees  were  not appropriately  licensed.    The federal  ASC                                                               
recommended that the DCCED  request additional documentation, but                                                               
only  one applicant  responded.   Additionally,  the federal  ASC                                                               
asked the  department to  downgrade the  licenses, but  no action                                                               
was  taken  to  do  so.   She  understood  the  ASC  conducted  a                                                               
subsequent review, issued additional  findings, and the DCCED and                                                               
the BCREA are currently working to address any remaining issues.                                                                
                                                                                                                                
REPRESENTATIVE  LYNN  acknowledged  that the  audit  reduced  the                                                               
extension   period.     He  asked   whether  the   punishment  is                                                               
commensurate with the findings.                                                                                                 
                                                                                                                                
MS. CURTIS related  that rather than wait eight  years to conduct                                                               
an additional  review, an audit  could be  held in four  years to                                                               
determine   whether  the   DCCED  and   BCREA  are   meeting  the                                                               
requirements.   One result of  the BCREA not meeting  the federal                                                               
licensing  criteria is  that  it could  lead  to federal  lending                                                               
institutions   not   accepting   appraisals,  which   is   fairly                                                               
substantial, she stated.                                                                                                        
                                                                                                                                
REPRESENTATIVE LYNN asked whether  any inspections or spot checks                                                               
would occur.                                                                                                                    
                                                                                                                                
3:39:31 PM                                                                                                                    
                                                                                                                                
MS. CURTIS  related that  she does not  believe any  oversight is                                                               
currently in place except for the federal review.                                                                               
                                                                                                                                
REPRESENTATIVE  LYNN  recalled  his   own  military  service  and                                                               
offered his  belief that surprise inspections  are worthwhile, so                                                               
periodic inspections should happen.                                                                                             
                                                                                                                                
3:40:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON inquired as  to whether the BCREA should                                                               
be  extended  for  only  two  years  instead  of  four  years  as                                                               
recommended by the auditors.                                                                                                    
                                                                                                                                
MS.  CURTIS  answered  the  decision   is  subjective,  that  the                                                               
division  thought that  it  may  take some  time  to address  the                                                               
issues and  wanted to allow  the DCCED  and BCREA time  to remedy                                                               
the problems.  She said she thought four years seemed prudent.                                                                  
                                                                                                                                
REPRESENTATIVE  T.  WILSON wondered  whether  it  would take  two                                                               
years to comply with the audit recommendations.                                                                                 
                                                                                                                                
MR.  CURTIS responded  that it  could.   She also  noted she  was                                                               
unsure  it would  warrant the  resources necessary  to conduct  a                                                               
full audit.                                                                                                                     
                                                                                                                                
3:41:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH  referred to  the fiscal note  that indicates                                                               
the licensing  program is required  to cover its  operating costs                                                               
with licensing  fees.  The  revenue generated by  BCREA licensing                                                               
fees is anticipated to cover  the program's full operating costs.                                                               
Although this  fiscal note indicates  new funds are  not required                                                               
to implement this  bill, the fiscal note  impact is approximately                                                               
$100,000.                                                                                                                       
                                                                                                                                
MS. CURTIS  stated that she  cannot address the fiscal  note, but                                                               
agreed  that the  BCREA must  assess  fees to  cover the  BCREA's                                                               
administrative costs.                                                                                                           
                                                                                                                                
3:42:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH asked how often the BCREA meets.                                                                            
                                                                                                                                
MS. CURTIS related that the BCREA has  met 11 times in the past 4                                                               
years.                                                                                                                          
                                                                                                                                
3:43:00 PM                                                                                                                    
                                                                                                                                
JENNIFER  STRICKLER, Chief,  Professional Licensing,  Division of                                                               
Corporations,  Business,   and  Professional   Licensing,  Juneau                                                               
Office,   Department   of   Commerce,   Community,   &   Economic                                                               
Development (DCCED), explained that  the fiscal note reflects the                                                               
direct expenses,  but does not  include indirect  expenses, which                                                               
includes  the overhead  of the  agency.   She explained  that the                                                               
BCREA is not asking for a  new appropriation, but is just sharing                                                               
the cost of operating the board.                                                                                                
                                                                                                                                
3:44:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH  asked for  the reason  that the  fiscal note                                                               
reflects  $100,000 per  year.   He  offered his  belief that  the                                                               
language is confusing.                                                                                                          
                                                                                                                                
REPRESENTATIVE CHENAULT  explained the fiscal note.   He referred                                                               
to  the funding  source as  Receipt Support  Services (RSS).   He                                                               
explained that RSS represents funds  collected from licensees and                                                               
does not represent general fund expenditures.                                                                                   
                                                                                                                                
3:45:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  asked for  the number of  certified real                                                               
estate appraisers.                                                                                                              
                                                                                                                                
MS.  STRICKLER   answered  that   there  are   approximately  243                                                               
licensees.   In further response to  Representative Chenault, she                                                               
related that the number of licensees has stayed about the same.                                                                 
                                                                                                                                
3:46:22 PM                                                                                                                    
                                                                                                                                
BUTCH  OLMSTEAD,  Vice-Chair,  Board  of  Certified  Real  Estate                                                               
Appraisers  (BCREA),  stated  at   last  BCREA  meeting  held  on                                                               
February 19th,  2010, the  BCREA adopted  several changes  to its                                                               
regulations to  respond to the  audit.  The BCREA  gave direction                                                               
to its staff to send certified  letters to applicants who had not                                                               
complied    with   the    continuing   education    requirements.                                                               
Additionally, the  BCREA accepted a surrendered  license from one                                                               
of  three applicants.   He  related that  the BCREA  reviewed the                                                               
Division  of Legislative  Audit findings  and offered  his belief                                                               
that the board has accomplished the audit recommendations.                                                                      
                                                                                                                                
3:48:24 PM                                                                                                                    
                                                                                                                                
STEPHEN TURNER,  Past President,  Board of Certified  Real Estate                                                               
Appraisers  (BCREA), explained  that the  federal Appraisal  Sub-                                                               
committee  visits  the  board each  year  to  review  procedures.                                                               
However, the 2007  audit was a more thorough  audit than normally                                                               
conducted.  He  related that the number of  certified real estate                                                               
appraisers is  up considerably  from the 2003  - 2004  period, by                                                               
about 50  additional members.   With respect to the  fiscal note,                                                               
since the  licenses are  biennial, they  are renewed  every other                                                               
year.    Thus,  the  cash  flow  looks  uneven  with  some  years                                                               
reflecting  a  surplus  and alternate  years  depicting  negative                                                               
figures, but that it nets out at the end of the two-year cycle.                                                                 
                                                                                                                                
3:49:58 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 342.                                                                                     
                                                                                                                                
3:51:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  disclosed that he currently  holds an Alaska                                                               
Associate Broker's license.                                                                                                     
                                                                                                                                
3:51:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  moved to  report HB  342 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 342 was reported  from the                                                               
House Labor and Commerce Standing Committee.                                                                                    
                                                                                                                                
The committee took an at-ease from 3:51 to 3:55 p.m.                                                                            
                                                                                                                                
3:55:39 PM