HB 129-POWER TO REVOKE REAL ESTATE LICENSES  1:57:39 PM CHAIR FRENCH announced the consideration of HB 129. [Before the committee was CSHB 129(RLS).] He welcomed the sponsor, his counterpart in the House, and apologized that he didn't have a cookie to offer. REPRESENTATIVE JAY RAMRAS, sponsor of HB 129, introduced Margaret Dowling who will explain the details of the bill. CHAIR FRENCH asked for the record to reflect that Senator Therriault brought Representative Ramras a cookie. MARGARET DOWLING, staff to Representative Jay Ramras, said HB 129 makes a simple, but needed, correction to existing law that says that the Alaska Real Estate Commission must revoke the license of a real estate broker or associate broker who has been convicted of forgery, theft, extortion, conspiracy to defraud creditors, or fraud. The commission can refuse to grant a license or deny renewal of a license on the same grounds. The problem is that the law does not apply to Alaska's 1,460 licensed sales people; it applies only to the 411 associate brokers and 483 brokers in the state. This issue was brought to the sponsor's attention by the Real Estate Commission. She opined that this is a field where customers place faith in an agent's trustworthiness; these people have unfettered access to clients' homes, and they often assist clients with sometimes complicated negotiations and financial transactions. HB 129 will empower the Real Estate Commission to appropriately regulate this profession, which will protect both the profession and the public. 2:01:28 PM CHAIR FRENCH disclosed that his wife is a real estate licensee. He remarked that he thought that in the recent past real estate agents, brokers and sales persons were renamed as licensees, but he now sees that pertains to a different part of the real estate statutes. He asked for enlightenment. MS. DOWLING responded she only knows is that under this section the individuals are referred to as sales persons, brokers, and associate brokers. 2:03:13 PM SENATOR THERRIAULT pointed out that bills typically are prospectively applicable, but this bill is applicable both prospectively and retrospectively. MS. DOWLING said that clarifies the intent, which is to protect the public. It enhances the regulatory scheme so that the Real Estate Commission can police the profession. SENATOR THERRIAULT asked if this would affect a person who had a felony conviction 10 years ago. MS. DOWLING explained that the existing statute states that a person who is convicted of a felony is barred from receiving a license for seven years from the date they complete their sentence. 2:04:44 PM SENATOR MCGUIRE asked if she has looked into the constitutionality of that provision because she recalls that you can place terms on or after the effective date, but you can't reach back to prior criminal acts. MS. DOWLING said she would defer questions about ex post facto laws to Gayle Horetski, but it's the sponsor's view that this does not increase punishment for a crime. This enhances an existing regulatory scheme so that the state's interest in protecting the public can be met. She reiterated that sales people have unfettered access to peoples' homes and they assist in sometimes complicated financial transactions. The public assumes that the person they are dealing with will be trustworthy. 2:06:12 PM CHAIR FRENCH clarified that this does not increase any criminal punishment that has already been imposed. GAYLE HORETSKI, Attorney, Civil Division, Commercial/Fair Business Section, Department of Law, said HB 129 makes a minor change to existing law. Currently brokers and associate brokers are under these provisions and the bill adds sales persons to the existing law. The existing law provides that if a person is convicted of certain offenses the Real Estate Commission shall revoke their license. "So you have a revoked license or this doesn't even apply," she said. CHAIR FRENCH asked her to say that again. MS. HORETSKI explained that this doesn't apply in and of itself to convictions. It applies to people whose licenses have been revoked because of their conviction. Page 3, paragraph (10) says the commission shall revoke the license of a broker or associate broker who has been convicted of a felony or other crime. You have the criminal conviction and then the commission has to take a separate step to file an accusation and revoke the license. Once the license is revoked based on the conviction, the person cannot get relicensed until seven years after they have served their sentence. CHAIR FRENCH posed the circumstance of someone who was convicted five years ago of a DUI and asked if this bill would allow the commission to revoke that person's license if they are currently practicing real estate in the state of Alaska. MS. HORETSKI directed attention to page 3, line 20, and said only if it is the commission's judgment that it affects the ability of that person to practice. CHAIR FRENCH observed that there is something of an ex post facto issue because it's a conviction from the past for which someone is being repenalized. He added that it's his analysis that it's not a criminal penalty so it's not an issue. 2:09:30 PM MS. HORETSKI said from a legal standpoint this is not a penalty issue at all. A person does not have a constitutional right to a license unless they meet the criteria. If a person gets a license then they would have a property interest. CHAIR FRENCH said he agrees, but someone who is making a good living as a real estate agent might have a different view. MS. HORETSKI added that the purpose of licensing a profession is to set a minimum standard below which the public can be confident that the person has not fallen. That doesn't mean he or she will be any good at what they do, but if the person does not meet the minimum criteria for initial licensure or renewal, he or she is not entitled to hold the license. She reiterated that this isn't an issue of punishment. This is a public regulatory measure. 2:11:07 PM SENATOR MCGUIRE cautioned that this is ripe for litigation because revoking someone's license is certainly an economic penalty. When the legislature wanted to register all individuals in the state who were prior sex offenders, the court said absolutely not. It was an ex post facto problem to try to reach back. If the underlying statute has that language applying to brokers she said she would be curious to know if the commission has had to address that. If this were to pass it's likely that sales people in this state will have their real estate licenses revoked, she said. It's a risk the sponsor takes. 2:12:54 PM MS. HORETSKI offered the view that that exact reason is the purpose for the language in the bill that makes it clear that it is intended to apply to offenses that occurred before the effective date of the bill. She continued: As you know under our state law, the idea that something is retroactively or retrospectively applied does not make it unconstitutional. But there is a state statute that says that that intent in intended that it should be exclusively stated. So it's an attempt to minimize the legal issues on appeal or if it's challenged that that language clarifying the legislation's intent was added. And we're really glad that that language is in there because it does clarify the scope… MS. HORETSKI related that this has come up in other circumstances such as driver's licenses and situations where the licensure criteria for a particular profession has been upgraded or narrowed. There is an affect and people do drop out, but the courts have by-and-large said that the legislature can change the criteria if it's a rational requirement. If that weren't the case, standards wouldn't rise over the years. 2:14:57 PM SENATOR MCGUIRE said that makes sense, but this isn't about raising professional requirements. This is about reaching back into someone's criminal record. Criminal and civil penalties and offenses are treated differently. The trigger here is if additional burden is placed on a person's criminal past. CHAIR FRENCH said he agrees with Ms. Horetski but Senator McGuire's point is valid because economic pain is real. He suggested the committee imagine a somewhat analogous situation of a state that employs teachers that are only required to have a high school education and a college degree. Assume that system works for 20 years when it suddenly comes to light that 50 sex offenders are teaching in the schools. A decision is made to raise the bar and require a high school education, a degree from college, and a record free of being a sex offender. The effect of the bill would be to strip teaching certificates from all the sex offenders and legislators would readily sign off on that. The sex offenders might complain, but they'd be told that's tough luck. The bar has been raised. SENATOR MCGUIRE warned that that may work, but they will sue. 2:17:22 PM CHAIR FRENCH asked Ms. Walsh if the Real Estate Commission looks at criminal histories of individuals who come before the commission seeking sales person, associate broker, and broker licensure. SHARON WALSH, Executive Administrator, Alaska Real Estate Commission, Alaska Association of Realtors, answered no and they don't do fingerprinting either. Applicants fill out a self- disclosure form. CHAIR FRENCH asked if she has any reason to believe that this would apply to licensees currently working in the state who have disqualifying felony convictions. MS. WALSH replied she knows of one case. 2:18:23 PM REPRESENTATIVE RAMRAS related that he believes that case is the reason the commission contacted him asking for clarification. The intent of the bill is to give the commission the authority to police their own because this is a profession that thrives on trust. CHAIR FRENCH closed public testimony. He said he is comfortable with the state of the bill and solicited a motion. 2:19:41 PM SENATOR MCGUIRE moved to report HB 129 from committee with individual recommendations and attached fiscal note(s). There being no objection, CSHB 129(RLS) moved from the Senate Judiciary Standing Committee.