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Legislature hears complaints about real estate license fees

Agents, brokers urge huge increase be scaled back, costs cut

Posted: November 1, 2011 - 12:01am
Rep. Cathy Muñoz, center, along with real estate brokers Mimi Rothchild, left, and Errol Champion join in on a House Finance Committee meeting in Anchorage via teleconference at the Capitol on Monday to deal with a proposed real estate license fee increase.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Rep. Cathy Muñoz, center, along with real estate brokers Mimi Rothchild, left, and Errol Champion join in on a House Finance Committee meeting in Anchorage via teleconference at the Capitol on Monday to deal with a proposed real estate license fee increase.

Alaska real estate agents say a proposed leap in state licensing fees threatens to drive many of them out of business, and urged the Parnell administration and legislators to balance the budget by reining in state regulators to cut costs instead of jacking up fees.

“It will harm the real estate community and it may be the tipping point for many of those who are on the edge,” said Nancy Davis, a longtime Sitka real estate broker.

Davis serves on the state Real Estate Commission, which is funded by the fees, but questioned whether they were justified.

Leaders in the industry turned out at sites around Alaska for a teleconferenced hearing by a legislative committee looking into the proposed fee increase.

A two-year license would go from $275 to $685, said Don Habeger, director of the Division of Corporations, Business & Professional Licensing.

That increase is needed, he told Rep. Mia Costello, R-Anchorage, because a huge increase in investigations in recent years had led to a deficit of more than $600,000 in the last two-year licensing period.

Juneau’s Errol Champion, president-elect of the Southeast Alaska Board of Realtors, said it was hard to believe expenses could have gone up that much, and questioned the division’s accounting and the speed at which the fee increase proposal was moving.

“This is going way too fast,” Champion said.

Legislators also questioned the increase, saying they wanted to ensure that Alaska remained “open for business.”

Habeger said there had been a gradual increase in cases needing investigation over the last 10 years, reaching a “crescendo” in fiscal year 2010.

In that year cases reached 130, although they then dropped to 80 the next year for unexplained reasons, he said.

Former Real Estate Commission member David Somers attributed some of the increased cases to the recent boom.

“A lot of this came from the increase in activity that came during the boom cycle,” he said, though some of the complaints stemmed from disputes that happened when things didn’t continue to go up.

“People are pretty upset when they don’t see the market going up,” Somers told the legislators.

Current Real Estate Commission Chairman Brad Cole of Wasilla said he was aware that with the current real estate climate, the fees would hit hard.

“This is a poor man’s business, anymore,” he said.

The commission itself has done what it can do to hold down the few expenses it controls. As a cost savings measure, it now meets only in Anchorage, instead of taking its meetings around the state.

Fairbanks real estate broker Hank Bartos said he’s had run-ins with the state’s real estate investigators, who he said “vilified” him, and he wanted the state out of the real estate regulation business.

“We should be in a situation where we police ourselves,” he said.

The violations against Bartos were largely upheld by the Superior Court, but Bartos said they never should have been investigated in the first place.

“If we get rid of a lot of investigating people, we’d be better off,” said broker John Todd of Anchorage.

Many investigations resulted in no actions at all, and the board should cut costs by opening fewer investigations, the legislators were told.

Raising fees “goes against the grain” of the Department of Commerce, Community & Economic Development, said Deputy Commissioner Curtis Thayer. Still, statutes require license fees cover the program’s costs.

“Ensuring that Alaska is open for business is something we take very seriously at the Department of Commerce,” he said.

Department staff said they did not have a timeline on a final fee decision, and were still researching the issue and additional cost cutting and accounting options.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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