Legislature(1999 - 2000)
04/09/1999 03:24 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 143 - REAL ESTATE:SURETY FUND & DISCLOSURES
Number 0279
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 143, "An Act relating to the executive officer employed for
the Real Estate Commission, to educational materials published by
the Real Estate Commission, to the Real Estate Surety Fund, to
contracts by the Real Estate Commission, and to disclosures in real
property transactions." The chairman noted the presence of a
possible committee substitute (CS), Version G, and a possible
amendment G.1.
Number 0379
REPRESENTATIVE HALCRO moved that the committee adopt the proposed
Version G CS for HB 143 as a working document. Version G is
labeled 1-LS0150\G, Bannister, 4/6/99. There being no objection,
it was so ordered.
CHAIRMAN ROKEBERG stated Version G is before the committee and
proceeded to explain the changes in the proposed CS. The chairman
noted he had spent several hours in two meetings with the Real
Estate Commission during the break and recognized that Larry
Spencer of the commission was present. The chairman indicated the
original bill had been reviewed and modified based on
recommendations from the commission, the chairman, and industry
members. The bill packet contains a number of letters in support,
including an endorsement of Version G from the Alaska Association
of REALTORS.
Number 0463
CHAIRMAN ROKEBERG pointed out that Section 1 had been changed
slightly in Version G: "executive secretary" remains the formal
title of the executive secretary of the commission, but use of the
title "executive director" is allowed during performance of duties.
The use of this title would be allowed to provide title parity when
the executive secretary has dealings with directors of other
states' real estate commissions, but it is clearly not intended to
result in a pay increase. Section 2 of Version G allows the
commission to adopt regulations regarding disclosure of information
on real estate transactions; this section replaces the original
bill's entire section regarding psychological impairment, HIV
[Human Immunodeficiency Virus], ghosts, and so forth. The chairman
indicated he thought it would be best to allow the commission to
address this issue through regulation rather than including
specific information in the legislation. The chairman further
indicated he has a legal opinion that the commission might not even
need this section.
Number 0598
CHAIRMAN ROKEBERG explained the core of the legislation begins in
Section 3 of Version G. The surety fund maximum is $500,000.
Beginning on page 2, line 6, the legislation provides that the
interest income earned by the surety fund returns to the fund - to
the licensees. The chairman reminded the committee the surety fund
was established in lieu of a bonding situation. It was done for
the convenience of the real estate industry, but, more importantly,
for protection of Alaskan consumers. Page 2, line 7, specifies
that the money appropriated to the fund does not lapse. The
chairman stated, "Currently it's been necessary to make the
(indisc.) appropriation in the front section of the budget to move
the lapse of the fund, so this would prohibit that, any potential
excess monies in the fund, for example, right now because ... the
publications specialist position is not funded, the ... monies are
not being used up so it could be potentially under future surpluses
in the fund and that that should not lapse into the general fund,
... this prohibits that." The chairman indicated the added
language on lines 9 through 11, "for claims against the fund, for
hearing and legal expenses directly related to fund operations and
claims, and", ensures that any other expenses concerning a claim
can be addressed. However, this would be relatively unusual
because there is no legal counsel involved with hearings before the
fund: the claimant and claimee bring their own cases.
Number 0741
CHAIRMAN ROKEBERG continued. Section 4 provides for an accounting
of fund balances to the Real Estate Commission by the Department of
Commerce and Economic Development (DCED). This allows the
commission to be aware if the fund is near the ceiling or floor
amounts; this was part of the original legislation. Section 5
provides for the averaging of the surety fund balance, which can
vary, over the two-year licensing cycle. The fund has a $250,000
floor and a $500,000 cap. Averaging the fund balance allows the
commission to make adjustments accordingly when setting the
two-year surety fund fee along with the licensing fee. One
significant difference in the proposed CS is that the legislation
would no longer affect the educational purposes of the surety fund.
The chairman indicated his original idea of transferring these
purposes to the licensing fee would have subjected the Real Estate
Commission and the administration of this area to the whim of the
House Finance Standing Committee regarding funding because of the
budgetary statute regarding program receipts. The chairman
commented on the entire Real Estate Commission staff turnover
occurring in Anchorage - executive secretary, the publication
position under the surety fund, and the licensing examiner - and
indicated this lack of continuity was the reason to avoid
jeopardizing the commission's operating ability. Chairman Rokeberg
noted they have taken a different approach, referring to page 3,
subsection (d) of Version G. Subsection (d) read:
(d) If the salary of an employee is entirely or
partially paid for from money in the real estate surety
fund, the employee may perform administrative duties for
the commission in addition to any duties the employee
performs that are related to the real estate surety fund.
AS 08.88.910 does not apply to this subsection.
CHAIRMAN ROKEBERG indicated the industry complaint has been the
alleged misuse of surety fund monies for educational purposes.
However, one existing problem is that the publication specialist
funded out of the surety fund has not been allowed to perform
administrative duties and assist the executive secretary because of
the statutory construction. The chairman noted the executive
secretary also receives some allocation from the surety fund.
Subsection (d) would allow the publication specialist to perform
administrative duties for the commission in addition to duties
relating to the surety fund, which is the education. This approach
has been discussed with the legislative committee of the Alaska
Association of REALTORS and they are in agreement at the current
juncture.
Number 0956
CHAIRMAN ROKEBERG referred to the possible G.1 amendment before the
committee. This amendment would provide for the insertion of a new
subsection (b) on page 2 [later discussion amends the lettering of
this subsection to (c)]. The chairman declared a conflict of
interest, noting he is a licensed real estate broker and does not
wish to be excused. Chairman Rokeberg indicated the original bill
had sought to remove the responsibility for publication of the
landlord-tenant booklet from the Real Estate Commission. From the
chairman's discussions with the commission and the legislative
committee of the Alaska Board of REALTORS, the licensees are
willing to pay the approximately $6,000 publication cost of this
booklet for both the public benefit and the education of the
industry members [testimony is unclear as to whether the cost is
annual or for the two-year licensing period]. However, there is no
statutory authority allowing the $6,000 removed for publication
from the surety fund to be replaced into the fund. The commission
charges $1 per booklet, but that $1 has to go into the general
fund. In addition, there are sometimes surplus funds from entry
fees for educational seminars the commission might hold. This
amendment provides that program receipts from any type of activity
funded by the surety fund go back into the surety fund, not into
the general fund. The chairman designated this G.1 amendment as
Amendment 1.
Number 1118
REPRESENTATIVE HALCRO moved Amendment 1. Amendment 1, labeled
1-LS0150\G.1, Bannister, 4/9/99 read:
Page 2, line 6:
Delete "and"
Page 2, line 7, following "in the fund":
Insert ", and money deposited in the fund under (b)
of this section"
Page 2, line 12:
Delete "a new subsection"
Insert "new subsections"
Page 2, following line 12:
Insert a new subsection to read:
"(b) If money from the real estate surety fund
is expended to prepare, print, manufacture,
sponsor, produce, or otherwise provide an item or a
service to a member of the public, to a real estate
licensee, to a potential real estate licensee, or
to another person, any money paid by the person to
the commission, either directly or through an agent
or contractor of the commission, to receive the
item or service shall be deposited in the fund. In
this subsection, "an item or a service" includes an
information pamphlet, an examination preparation
packet, an educational course, the certification of
a real estate education course, and the approval of
a real estate education instructor."
Reletter the following subsection accordingly.
CHAIRMAN ROKEBERG asked if there was any discussion of Amendment 1.
REPRESENTATIVE MURKOWSKI questioned if the existing subsection (b)
in Version G, beginning on line 13, page 2, was being deleted to
insert Amendment 1's language, or if the existing (b) remained and
was just relettered. The existing subsection (b) in Version G
read:
(b) The Department of Commerce and Economic
Development shall provide the commission every three
months with a statement of the activities of, balances
in, interest earned on, and interest returned to the real
estate surety fund."
CHAIRMAN ROKEBERG initially responded that Amendment 1 was simply
deleting the words "a new subsection" and inserting "new
subsections". However, he also questioned why the new subsection
was designated (b). He discussed this briefly with Janet Seitz,
aide to the House Labor and Commerce Committee and legislative
assistant to the chairman.
Number 1196
CHAIRMAN ROKEBERG called an at-ease at 3:42 p.m. The committee
came back to order in less than a minute.
CHAIRMAN ROKEBERG announced the committee would make a technical
amendment to line 10 of Amendment 1, the G.1 amendment, relettering
the subsection lowercase "(b)" to lowercase "(c)". The chairman
clarified that Amendment 1 is only intended to add that new
subsection. There being no objection to Amendment 1 as technically
amended, Amendment 1 was adopted as amended.
Number 1244
LARRY SPENCER, Real Estate Commission, came forward at the
chairman's invitation. He stated the commission appreciated the
opportunity to have input through the chairman's office and is in
support of the legislation.
Number 1279
TOM MARTIN testified next via teleconference from Kodiak in support
of HB 143. He testified as a private citizen, stating he is a
licensed real estate agent. Mr. Martin noted Linda Freed had also
been present, but had to leave. He conveyed that Ms. Freed is in
support of HB 143 and had said she would be sending a POM [public
opinion message]. Mr. Martin thanked the chairman for the bill's
introduction; he indicated he thinks it corrects some long-standing
problems with money going out of the surety fund inappropriately.
Number 1332
MICHAEL HUGHES, Board of Directors, Alaskan AIDS Assistance
Association, testified next via teleconference from Anchorage. Mr.
Hughes confirmed from the chairman that the committee was dropping
the miscellaneous provision specifying people exposed to HIV
[Section 8, original bill, 1-LS0150\D]. He indicated that
provision had been his reason for participating.
CHAIRMAN ROKEBERG questioned whether Mr. Hughes was aware that
provision is currently a matter of federal law under HUD [U.S.
Department of Housing and Urban Development].
MR. HUGHES replied he had not been aware.
CHAIRMAN ROKEBERG indicated the legislation's former provision had
basically been redundant, and was more or less included for the
information of Alaska licensees. The chairman noted Mr. Hughes
should be aware that currently any licensee is forbidden from
making that disclosure. The chairman added that Dr. Middaugh, the
chief state epidemiologist, had indicated his support for
broadening that provision to all infectious diseases, if the
provision had been retained, because there is no need to do so
[disclose].
MR. HUGHES said they had just been concerned with specifying one
disease versus any others.
Number 1413
CHARLES SANDBERG, President, Alaska Association of REALTORS,
testified next via teleconference from Anchorage in support of HB
143. He thanked the chairman for allowing the association's input
on this issue and expressed the support for this legislation by the
Alaska Association of REALTORS, representing over 1,100 members
statewide.
CHAIRMAN ROKEBERG questioned Mr. Sandberg regarding the importance
of passing the legislation this year because of the two-year
[licensing] cycle.
MR. SANDBERG replied they are ending their current licensing cycle.
The legislation affects how the Division of Occupational Licensing
and the Real Estate Commission calculate the license fees. If this
legislation is passed, it puts some finality on how that
calculation is made.
Number 1485
ART CLARK, Chairman, Industry Issues Working Group, Alaska
Association of REALTORS; Member, Legislative Committee, Anchorage
Board of REALTORS, testified next via teleconference from Anchorage
in support of HB 143 on behalf of the Alaska Association of
REALTORS. Mr. Clark indicated the issue of how the surety fund
monies were allocated has caused quite a bit of controversy
industry-wide in the past. He thinks the legislation goes a long
way toward clearing up some of those issues in an equitable manner.
REPRESENTATIVE HALCRO mentioned that airport noise is a huge
concern "out in our area," as Mr. Clark knows. Section 2 of the
legislation [misstated as "8"] gives the commission the power to
adopt disclosure information. Representative Halcro questioned if
Mr. Clark's committee has examined or addressed anything about
disclosures, or plans to do so, when someone buys or sells homes
within a certain noise corridor of the Anchorage International
Airport.
MR. CLARK indicated the issue has just recently come to the
legislative committee's attention and no formal position has been
adopted. Mr. Clark urged caution in this area. The Real Estate
Commission has the ability to pass regulations concerning this
matter; he would recommend that be the avenue addressed in seeking
any kind of noise level disclosure, rather than addressing it in
statute. Mr. Clark indicates there are difficulties with regards
to this information for both real estate agents and homeowners. He
thinks the noise level data are generated through the airport; he
is not aware how those calculations are made and where any problems
are.
REPRESENTATIVE HALCRO agreed that the commission would be best
suited to handle this. He stated, "My concern is - I'm not quite
sure if you remember - a year ago when the local assembly tried to
free zoning out in a certain corridor out by the airport, which
would have affected a number of subdivisions in our area and a
number of vacant lots." Representative Halcro indicated the
concern is for the commission to address the issue preemptively so
there would be something in place "versus ... kind of tying folks'
hands when it comes to zoning changes."
MR. CLARK replied he thinks that is probably a good way to handle
things. He expressed concern regarding anything "stuck in stone"
regarding zoning regulations or statute. He thinks it is better to
make the information available to people and let them decide
whether they wish to live there or not.
CHAIRMAN ROKEBERG thanked Representative Halcro for bringing the
issue up. Proceeding to further teleconference testimony, the
chairman invited Ron Johnson in Kenai to speak. He noted there is
a communication in the committee packet from Mr. Johnson.
Number 1671
RON JOHNSON testified next via teleconference from Kenai. He is a
licensed real estate broker and former member of the Real Estate
Commission. Mr. Johnson indicated his faxed comments to the
committee provide his views but he would like to reiterate
somewhat. He indicated he might be able to offer the committee
some insight as a commission member during the change from
executive director to executive secretary. His concern is that the
statute specifically precludes a licensee from misrepresenting
designations [from Mr. Johnson's fax, AS 08.88.401(a)]. He has not
seen that the "executive secretary" position is of less importance
than "executive director" in his attendance at industry meetings.
Mr. Johnson sees this as a potential step in the wrong direction:
the reason for allowing this title use might be forgotten in the
future and the position might be funded as an executive director
position. Per statute, the duties of the executive secretary of
the Real Estate Commission are specifically duties that would be
assigned to a secretary. In some states where there is actually a
director and/or a real estate commissioner, it is a different
position totally. Mr. Johnson indicated he does not see the logic
or reasoning behind allowing the executive secretary to use the
title of executive director.
CHAIRMAN ROKEBERG noted, though, the current executive secretary
[Grayce Oakley] is retiring. The commission is attempting to fill
the position and the chairman commented it is not an especially
high-paying job. The chairman questioned whether Mr. Johnson
didn't think that could be helpful in recruiting, or if Mr. Johnson
thought that was not important.
Number 1762
MR. JOHNSON indicated he didn't think it was at all important. He
thinks the position pays well enough to the duties. He indicated
the only place where he sees the duties being somewhat different
from the duties of a secretary is when the executive secretary, at
times, during surety fund or license hearings, acts as a
representative of the commission. Mr. Johnson noted that is part
of the surety fund travel budget he had planned to address a little
later - that is one of the reasons the executive secretary will
have to be allowed some money for travel. Mr. Johnson reiterated
his disagreement with allowing the executive secretary to use the
title of executive director; he sees it as a "pitfall down the
pike." He commented Governor Cowper perceived the only way to
regain control of the Real Estate Commission, forcing the board
itself to control the real estate business, was to eliminate the
director position and put it into a secretarial position.
CHAIRMAN ROKEBERG noted he appreciated Mr. Johnson's testimony.
The chairman indicated Mr. Johnson's suggested additional wording
in his fax, "into the general fund but is returned to the surety
fund.", to be placed after "does not lapse." on page 2, line 7 of
Version G, was not necessary from a statutory or drafting stand
point.
Number 1845
MR. JOHNSON explained he suggested the additional language for
clarity. Mr. Johnson also indicated he thinks the portion of the
legislation allowing the Real Estate Commission to adopt
regulations concerning disclosure should cite the enabling statute
[from Mr. Johnson's fax, AS 08.88.071(H)(7)]. Mr. Johnson
expressed his view of the importance of the newsletter, which gives
the commission the ability to communicate with the membership. He
further expressed his opinion that the budget, travel fund, et
cetera, should be controlled by the commission, and that the
director position should be vacant so the real estate commission is
able to direct the secretary.
CHAIRMAN ROKEBERG confirmed there were no questions for Mr. Johnson
and noted he thought Mr. Johnson had made some excellent comments.
Number 1917
DAVE FEEKEN, Kenai Peninsula Association of REALTORS, testified
next via teleconference from Kenai in support of HB 143. The Kenai
Peninsula board's legislative committee has met and is in total
agreement with the other witnesses who have testified, including
Mr. Johnson, in support of this issue.
Number 1959
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development, came forward to
testify in support of HB 143. The division employs the Real Estate
Commission's staff. Ms. Reardon appreciates the work done on the
draft CS and anticipates the fiscal note will be zero.
CHAIRMAN ROKEBERG asked if Ms. Reardon had a comment on the issue
Mr. Johnson raised concerning the executive director/executive
secretary title change.
MS. REARDON appreciated the change from the original bill because
of her expressed concern about it triggering a salary change.
Currently, the executive secretary is authorized by Ms. Reardon to
use the working title "executive administrator" when useful. Ms.
Reardon indicated she had not heard a lot of concern about negative
effects resulting from use of the "executive secretary" title, but
it is not a big issue to her either way.
REPRESENTATIVE HALCRO sought clarification on the committee's
positive fiscal note of $104,000.
Number 2020
MS. REARDON explained that fiscal note from the original bill had
been created with the intention of showing $104,000 less being
spent from the surety fund, with the money being moved straight
over as a "wash" to the general fund, but had not looked that way
as was pointed out at the previous hearing. In the proposed CS,
that shift from the surety fund no longer occurs and the issue
becomes moot. Ms. Reardon indicated the original bill's fiscal
note could have been presented differently to show the intended
zero wash, but a new zero note would be required to go with the CS
once it is adopted. In response to the chairman's comment, she
explained the department is not allowed to present fiscal notes
until committee substitutes are formally adopted.
REPRESENTATIVE CISSNA questioned if Ms. Reardon thought there might
possibly be a good reason to change the title since Ms. Reardon had
informed the executive secretary there was another title which
could be used if needed.
MS. REARDON indicated she has informed the three people in the
executive secretary job class that they may use the title
"executive administrator." Besides the executive secretary to the
Real Estate Commission, there is the executive secretary to the
State Medical Board and the executive secretary to the Board of
Nursing. Ms. Reardon further indicated at times one or the other
had mentioned it might be helpful to use a different title when
signing correspondence to avoid confusion that the executive
secretary was a clerical position rather than the top staff person
for the profession. They had arrived at "executive administrator"
or "administrator" as a working title. Ms. Reardon noted that
since "executive director" is another job class in the state
system, she did not switch to "executive director" at that time.
"Executive director" goes with autonomous commissions such as the
Alaska Public Utilities Commission. Ms. Reardon agreed she had
heard it might be useful to not always require the "executive
secretary" title be used, but indicated she has not heard of any
ongoing problem since that time.
Number 2142
CHAIRMAN ROKEBERG requested Mr. Spencer of the Real Estate
Commission rejoin the committee at the table. The chairman
indicated he wished to hear what Mr. Spencer thinks the
commission's position would be.
MR. SPENCER replied the idea did not originate with the commission
but it was brought to their attention in the drafting of this
legislation. He thinks the commission felt that it would useful to
provide the incoming secretary with possibly somewhat more of a
position of authority in dealing with the public, with licensees,
and people outside the state. If more respect for the position
could be engendered without necessarily increasing the pay, that
might be desirable.
CHAIRMAN ROKEBERG questioned the use of "executive administrator"
to be consistent with the directive of the division director.
MR. SPENCER thought either of those languages would assist.
CHAIRMAN ROKEBERG asked if Ms. Reardon had an opinion.
MS. REARDON answered she is very happy with the bill so it is a
minor detail to her. She supposes she prefers "executive
administrator," but does not want hinder the legislation in any
way.
Number 2219
CHAIRMAN ROKEBERG questioned if anyone else wished to testify on HB
143. He noted the committee's dilemma regarding what this position
would be called and requested input.
REPRESENTATIVE HALCRO indicated he would recommend the committee
adopt the language currently in the bill.
MR. JOHNSON commented the National Association of REALTORS has been
endorsing the "executive administrator" title for some time now,
moving away from the executive officers and that sort of thing. He
thinks it would really have a significant impact if they put the
"executive director" back.
CHAIRMAN ROKEBERG closed the public testimony on HB 143.
REPRESENTATIVE MURKOWSKI referred to the language in Section 2 of
the proposed CS which would be added to AS 08.88.081, "The
commission may adopt regulations concerning the disclosure of
information in real estate transactions.". She sought
clarification on the change from the specific language in the
original bill to this language which would allow the commission to
do the disclosure simply through regulation. Representative
Murkowski apologized if the chairman had made the explanation
already. She noted Mr. Johnson had touched on it briefly when he
said it might be wise to include the enabling statute.
Number 2322
CHAIRMAN ROKEBERG moved an amendment to remove Section 2 from
Version G. He indicated his reason for the amendment is that the
Real Estate Commission already has the authority to make
regulations and that he has a legal opinion supporting this. The
chairman noted, "The records of the Real Estate Commission will
show the discussion at which I requested them (indisc.) request the
Attorney General ask whether or not they have authority to make
regulations on any of the issues that were covered in the first
portion (indisc.) first draft of the bill. They have agreed to do
that. They also request[ed] to me that I request legal counsel,
our legal affairs, to do the same and I have done so. I have in
hand an opinion that says that the Real Estate Commission does have
the authority to draft regulations on those issues currently. This
is consistent with what the committee staff has found to be the
case in the state of New York where, relying on a real estate
opinion from the attorney general of the state of New York, the New
York Real Estate Commission has promulgated regulations as to
psychological impairment." He commented the form of disclosure
statement is AS 34.70.050 and there is an additional specific
portion of the chapter that allows the commission to draft
regulations to implement the chapter. He asked Ms. Reardon for
confirmation.
MS. REARDON indicated it looked like the existing language in AS
08.88.081 allows this.
Sec. 08.88.081. Commission regulations. The
commission shall adopt regulations necessary to carry out
the purposes of this chapter.
REPRESENTATIVE MURKOWSKI confirmed the chairman only intended to
remove the language which was to be added, not to remove the
existing statutory language.
Number 2425
CHAIRMAN ROKEBERG noted with that he would move Amendment 2: that
conceptually Section 2 be removed from the bill. There being no
objection, Conceptual Amendment 2 was adopted.
Number 2442
REPRESENTATIVE HALCRO moved Amendment 3 on page 1, line 10, after
"executive" to delete "director" and insert "administrator".
CHAIRMAN ROKEBERG asked if there were any questions or objections
to Conceptual Amendment 3. There being none, Conceptual Amendment
3 was adopted.
REPRESENTATIVE MURKOWSKI indicated the bill title would need to be
changed because of the wording "executive officer".
CHAIRMAN ROKEBERG indicated the amendment should include the
appropriate title change, noting that was the reason it was
conceptual.
TAPE 99-35, SIDE B
Number 0001
There was brief discussion regarding "executive officer" in the
bill title and whether another amendment was necessary. No
additional amendment was deemed necessary.
Number 0053
REPRESENTATIVE HALCRO made a motion to move CSHB 143, Version G as
amended, out of committee with individual recommendations and the
attached "zero" fiscal note. There being no objection, CSHB(L&C)
moved out of the House Labor and Commerce Standing Committee.
| Document Name | Date/Time | Subjects |
|---|