City, County, & Local Affairs Committee- Senate and House

All right folks for a while take your seat for and get this made in started when I call the meeting the city county local order first up we got approval of the minutes i'll take a motion to approve the minutes from the last meeting at a motion in the second all in favor of say I opposed much carriers next up we've got consideration for adoption for an internet study by center brian. Send to bright you are recognized to proceed with your interns study or description of your interest study yes thank you thank you mister chair and thank you for committee for taking the time to consider this interest any proposal is about a year ago this time that the original bill house bill seventeen ninety nine by representative clear and myself went through both committees and both chambers received mostly unanimous support but what we've learned as we see here today is maybe some things within seventeen ninety nine need to be adjusted in the week so I just wanted to kind of set the set the backdrop of the context of house bill seventeen ninety nine as this legislator saw it when he was asked to sponsor and support such such a bill and during the general assembly last session. We already have crypto minds operating in the state we had at least half a dozen either operating or about to come online so there was no prohibition on crypto mind operating in the state but what we saw was nationally their restaurant some communities some local governments different states could preciously shut them down they didn't understand crypto mining the head other concerns so they just arbitrarily put it put a cabash on their operations I am a business friendly I believe a bit of business friendly legislature as long as a business is following the rule of wall and they're allowed to operate I don't believe that we should could preciously shut them down so in a sense hospital seventy ninety nine was maybe a blow preemption to things that we thought we knew at the time we knew the operations at the time least I did were american owned cause that's who the legislation was you know brought to through the argential assembly by their operating with approval from their local government they were quiet they were paying their taxes they were doing all the things that I thought a good business should do well then after session what we learned was they're also bad actors in this industry and those bad actors were now protected maybe it's to an extent by hospital seventeen ninety nine now I think the debate could be made did we protect them or did we just not realize that certain entities did not really have the tools and their toolbox to control their activity and that's decided that I can't wait to as I as I ask this association and counties because i'll i'll go back to say not only do we have unanimous support and both chambers it was in the session for relationships were already getting raw and nobody wanted to fight on their hands specially me because I had I have several bills that I was I was directly opposed by with our misbelieving association and counties just in that rub of what local control looks like. So I asked and specifically is there a problem with this bill because I don't I don't want to take it if it's gonna work or get into the end here let's let's it was in on a smile. In the answer I got was no I think we got all the tools we need to make sure this is good because they they obviously did know what we didn't know and so as I as I said hey as we look at the with problems arose with no ways and in the inability for maybe local governments to control some of these behaviors of the bad actors like said this industry has great actors that should be and considered our neighbor and a friend. If I if this just went away and it never never happened would you have the tools to solve the problem and it was a quick no we would not have the tools to solve the problem what a counties don't want the tools to solve the problem because that brings on planning and different regulations that are required within that within that uh government and so if if repealing it didn't fix it or not ever having it didn't fix it and i'm not in the business of banning businesses with this days is is takes tries to take a look at what the problems are the problems are obviously some of these facilities generate a lot of noise and even if you lower the db to what might be an acceptable limit for me it may not be a suffer limit for my neighbor the frequencies obviously are different in certain db levels and that creates concern the other is ownership of the facilities we passed a bill at six thirty six to the general assembly last year that limited the ownership of our lands agricultural lands by foreign adversaries well I also want to consider do we need to ban foreign adversaries from owning crypto money business if this is a means a method that we're going to use for our exchange of goods and services and in lastly is do we need to consider it may be a regulatory scheme and existing body or a new body that monitors and watches the activities of crypto minors and so that is just a broad hopefully context in discussion that I would like to continue to have on crypto minds in our state and with that mr chair I would like to make a motion to adopt the interim study all right members of her explanation in from study that a motion sent to bright adopters or second alright got a second up excuse me. Searching your discussion on the motion no I mean we're gonna have discussion on the buildings you can take questions or reduced adopting it more than I don't have a question so when you ran this bill originally we originally did you know that I mean a corner news reports the rose law firm drafted II did not. I mean so the sotoshi group is been reported as being behind this in the other states and what at least a part of news. What can you tell me about this total group there and about advocacy for crypto currency in general and. And they are advocating several states for this type of legislation the prohibits states from prohibiting crypto currently. Crypto money. Yes you're ok so what are these crypto mines producing are they all producing big coin that you know I mean it's at what they're mining for do you know what their action their mind their money for the block chain i'm sure some probably do the big corn some degree through him some do other other products that require data validation okay I mean so in the debate and washing dc and I talked to some people up there several people if they're their system baked called us about regularly I mean is it a security is a commodity I mean what do you consider it. Crypto currency I believe right now it's based on the commodity market now okay so that's kind of what you're going but they're not regulating up there so it's in the commodity market so you know it seems like in looking at this when it comes to digital currency since these is what they're supposedly producing that we don't know exactly what they're doing is this like a three car garage okay when I can explain it is a security is a commodity and then you have this nefarious aspect of what it's going on with digital currency out there mean her most it's been reported is using digital currency to drugs fitness all that's using digital currency ransom were is paid in digital currency all those things are going on in that aspect of everything. I mean i'm not legitimate thing do we know what role or anything they they are playing I mean maybe they're not involved in that necessarily but at least are they involved in that part of process I mean there was another report that asian in the south east asia their laundering money through a crypto currency through casinos and then i'm just throwing this out but it's been in news report thank you setter king I think for every story that you can find the deals with the issue you're talking about you can find a story that says the same thing for the upcurrency or you can find the same story that says that our prosecutors found that chase in the wall of an open block work bought ten network actually made it easier to catch the criminals and place the place the crime within their wallets there is some true to that it but to think about it is when you come to our currency part out here there's a amount anti money longer either know your customers there's things that bank go through that that without being a digital currency that somebody put something this like a safe deposit box I mean key that they open with this digital currency and hey i'm learning more about it you know there's some aspects of it that i've learned now that that they're not is bad at I think I think at the heart of every deal is are you who you say you are now you're going to do what you're going to do whether rochette check or whatever but in this aspect that you say that you don't think these business set me down there's no other business like this so we have to think that we deal with them differently certainly I can't build chicken houses over there at pinnacle golf course i'm shut down from building chicken houses over there. I mean why are we continuing to restrict people out here from say in what they want or have any voice and be and basically to control what they want me like I said I cannot bill chick I mean you supported me building chicken houses over and pinical golf courts as far as property writes because I can't do it are you are you in the county you're in the city. The I mean I i'm our chicken I would support of you following look regulations and a very there are ten of the original bill tied the hands of those local governments but you said here in the business to unstrap themselves now this is just a a study proposal if you want to get into the merits of crypto as as a business model this probably different debate that we can have at a different time but I said this is just to look at the aspects of how crypto mining effects of citizens yeah in understand about that and I thought that was the discussion part about isps because I think that work with everything going on we need to be able to discuss that and know I cannot build chicken houses they were locally allowed to to regulate that to do that but your bill did the opposite of that and continually during the process when we were glitched at harrison that you said that no cities in counties can locate it you put a statement out and now you're back tracking on that the last thing I want to say years this is a new industry and I agree it's happening and going to happen to go but yet there are a lot of aspects that need to the foreign ownership part of it I mean this all came out in hairs and when I was contacting you about the foreign ownership in sir king we get to the question here at some other I am getting the question but on the foreign ownership if you do things like that it's almost like with these lcs in the sham things set up when they were in the newspaper did a story they were tracking down the green digital it went back to brooklyn new york no one answered the phone I mean arkansas we're gonna have to set up a whole new division or something to find out who these people are and what they're doing. So that's going to be substantial and probably needs to be started now because. This bill that was ran that was sold about local control and its night these things are popping up like spring mushrooms after rain and so the amount of energy uses let me assist one point question we talk about the energy use and I know that's me to debate enough let's look at the water use of these things these things are used in a lot of water to be able to produce so center bright assault article in the paper that northwest arkansas may be in me and people bar a certain day everybody's getting the water out of be related even in carolina boom so we're going to have a water usage aspect that no one wants to talk about with the growth the northwest arkansas in so the interest he use has been debated but the water usage of this as night you have areas of the state that the awkward for several years ago got depleted in there was issues of locked the rose farmers if the question here so it you consider the water issue of issue to II would consider an issue and I can tell you that of the operators that i've talked to the good operators they do not use systems that consume water at the rate of which would deplete our officers they use close systems or they just replace it at that the same rate as a single household would replace the water so I am concerned and I believe if you share that concern i'm welcome to to look at that and studied it as well so is any of the law firms that are mentioned or defending the people where they bought any proposal that you're working on they are part of that in communication with you about it senator if you want to get back in the queue i'm getting cut off on it i'll explain to you later on the borrowity of the asking direct question all right represent a white occur thank you miss chair among them and pull this back down to like boring procedural stuff up I notice in that in subtier it specifically talks about uh ownership of real property. From a procedural standpointing opening the idea at some point splitting that off as a separate bill since the deals with the states and land and not with the regulation of commerce. Yeah. Separate bill yeah just it I mean to because it it could be better countified in in our changes to the right to own real property and leasehold rights that's a whole different title than they are regulation commerce at just just it just the own lawyer and me want thinking that would be a little cleaner sure yes yes representative I mean glad to look at that I think as I took a snapshot of this i'm kind of looking bald in the case the case is involving act six thirty six and our agglings and talk to the digital office about you know what hang up has your sheriff bound so i'll be happy to talk about splitting that I appreciate. Thank you all right represent a ray you're recognized for a question thank you mister chairman center brand I just there is a point brought up a minute ago that I just want to get some clarification from you on. Because there are so much stuff that gets said on this topic that it's difficult to know sometimes what's true and what's not I was just going back and reading the the original act that was passed it doesn't limit a city or county's ability to zone or plan does it it does not okay that's what I thought cause I think some people are saying that and that's just not it's not factual it does prevent them from rezoning but in terms of zoning and planning they this doesn't undercut any local control in that regard right that that was going to be my intent to the bill okay thank you. Alright thank you representative representative dollar thank you mister chair i'm over here center I think this is a good idea to study and really appreciate the fact that you're bringing it forward kind of uh bouncing off represent wood occur and represent you free I would also like for you to look in to so we'll have a clear picture as to what cities and counties can do and I understand the zoning but what else because you know when we start regulating from the state what may be good in northeast arkansas not good in southeast arkansas and i'm a proponent of the local control so if you'll kind of look at those issues too i'd appreciate it by appreciate you bringing this forus cause I think it is something we need to do so if you consider that too in your study I would certainly appreciate it and would look more favorably on a upcoming bill if we could address some of the yes if thank you represent me thank you all right thank you representative aren't members or any more questions i'll see anybody to q at seen over the questions we got a motion in the second all in favor of adopting senator bryant and from studies say I opposed. All right your studies been adopted senator. Alright representative a group and recognize you you you can set there you go the front all it be your call all right perfect. Hang out let me let me hit your. Well here get back in there. Okay we go thank you very much thank you like a welcome to here and thank you for coming to look at in it and landlord issues that we're looking at i'd like to think the chairman in the code chairman for allowing this in the committee I think it's an important important issue to arkansas until all of our citizens here we have a job some of you well know we had a meeting at hot springs and they were having this one in fast we won more and they were going to be looking at and working group looking at how we can affect those issues the issues that it cannot came to the top are property management issues squatter issues and taking a look at the habitability to be there's others that make him laugh at those of the ones that are at the top of the of what we need to look at I still want to think that presenters for taking their time to come here today miss andrea offered the director from the research commission and wanted to say that I have worked with the commission on looking at bills last session and and moving forward with their misoffered his been it's been very professional and efficient to work with I believe she's an asset to the commission and I don't you've been sick so thank you for coming forward I also wanted to point out that the commission has formed a task force to look at essentially property management there is AAA bill that was filed less session house bill fifteen seventy three I want to look at it that's one that's being discussed in the commission will say that the terrace who's at sparks is is also being very good to work with the sender I believe we're making headway in that. I do believe that we have a to get the last into an arkansas for property management you do not have to have any knowledge of any experience in property management than we're also blocking people from being in property made about requiring them to be a sales agent and take a lot of education it's on sales and stood upon property management to and so I commend the commission for putting this task force together looking that in hoping we'll make some headway in there though I think i've said an iphone again welcome ready to thank everybody's for their interest in the will be quite met the important people though thank you all right thank you represent the group alright what's going to have andrew offered a mark barrier and marty north going to come up here on the charge. And if you can introduce yourselves until here with before you perceive the remarks. Injury are offered executive director arkansas real estate commission. Yeah. But you get a party to push that there's a little button on there which is marty north or chier change. And i'm mark burier with landlord association bargain saw all right welcome guys we're have to have you here today all right andrea you're first on there so we're going to start with you. Thank you chairman thank you members thank you representative for inviting me to be a part of this today I representative mcgrew asked that I share a little bit with you all about the real estate commission and what we do I will keep that brief and I promise to try to make it interesting and the mission of the real estate commission is to protect the public interest through the examination licensing and regulation of real estate brokers and sales persons and through administration of the real estate education program in the arkansas time she act. We currently license just shy of sixteen thousand licensees in arkansas we have not seen numbers like that since nineteen ninety. So it's been an interesting time at the commission for sure when I came in it was two thousand eight and our license numbers were just starting to bottom out in response to the recession. And so it it's been very interesting and exciting to watch as some years we have had over three thousand new applicants for a licenser in the state and it's been exciting to see citizens recognize real estate as a viable profession for them specifically during the pandemic I would have expected application numbers to fall off drastically because the pandemic posed very specific challenges to the real estate industry but we saw the opposite because of what was happening in the housing market. I do think those numbers are beginning to level off just a little bit but I think it's going to be a slow leveling off and any movement in the market will be reflected in our license numbers the commission consists of five members who are appointed by the governor for three year terms three are industry members and two are consumer members we have fifteen staff positions that are divided equally among investigations licensing and administration we currently have two vacant positions in our investigations division I don't mind sharing with you that those are some of our most difficult positions to fill and some of you as members have spoken with me about that so so you're familiar with this issue as well. Arkansas has some of the lowest real estate licensing fees in the country we require among the fewest hours of education to both obtain and maintain a real estate license but here's the here's the point that I think you'll enjoy hearing we have one of the lowest percentages of complaints per licensee in the nation but specifically among our bordering states. So for our purposes i'll refer to workable complaints rather than total complaints received workable complaints or those that we actually have the authority to investigate in twenty twenty three we received one hundred and thirty two workable complaints for a complaint to license you ratio of point seven eight percent in other words that's around one complaint per one hundred and thirty licensees now of those complaints around five to seven percent may actually go to formal hearing. So in terms of complaints and how that's where representative among the licensee population we're in and we're in a pretty good place but we need to stay there and we need to work hard to stay there. Moving on from complaint issues as I mentioned we've seen a drastic increase in license applications we've also seen an increase in the agencies revenue. The commission has two fines the general fund is funded by licensing fees and it funds the agencies overall operations we also have a recovery find which is a committed consumer protection find that supported by a one time fee of twenty five dollars that's charged to every licensee when they first become licensed. If damages are assessed against a licensee who is insolvent then the commission can cover the claim from the fees collected by this phone the recovery fund can also be used to support the commission's education efforts to keep its licensees and the general public informed of changes in rules market conditions and illegal practices. With the exception of an it capital outlay in fiscal year eighteen and nineteen the agency last stepped into cash reserves in fiscal years ten through thirteen which corresponds to the recession and a consistent decrease in total license numbers areas he has several best practices for regulating that have been developed in time tested and there's one that I want to address. Oh we have we have worked hard to foster a spirit of collaboration with local and national trade associations we actively engage with the arkansas realtors association and the national association of real tours. But we are not the real tourist association we are we are the state government entity that licenses real estate brokers and sales people in arkansas not every licensee belongs to the realtors association we do work closely with them and we are we are unique and that aspect in many other jurisdictions the regulators amitrate associations they don't mix their oil and water but here we've worked hard to try and collaborate on as much as possible. That having been said we also recognize that there will be issues on which area and area's paths may diverge or in some cases there will be issues of concern for the commission that are not necessarily an issue of concern for the realtors and vice versa one such issue is that of landlord tenant law. Simply put a receipt is not the legal authority for landlords and tenants except where the lanoring question is a licensed property manager and the activities that they are performing our brokerage activities as licensie property management oversight at present we do not require a separate license for those real estate brokers or sales persons who wish to perform property management activities however the law currently does address property management activities and certain requirements that are necessary for consumer protection. An important consideration in property management oversight and something that we have discussed quite a few times with representative agree is the extent to which the public stands to suffer harm at the hands of real estate licensees due to incompetence negligence or mail fees we have a pretty high dollar amount associated with recovery find payouts for property management in fact since twenty twelve. The fine has paid out over two hundred and fifty thousand dollars in property management claims to give you an idea of the scope of a property management claim that two hundred and fifty six thousand dollars represents around five license e. Five licensees were involved in those firelations it was a total of four cases. Numerous complaints complainants were involved in those the biggest ways a case that involved sixty two complainants this was a firm out of hot springs village this was around twelve years ago. Over the sixty two complainants fifty seven other complainants where the property owners. Not the tennis the property owners. Five other complainants were attendants the commission awarded over one hundred and seventy five thousand dollars in that case roughly six thousand went to the tenants the remaining one hundred and sixty nine thousand and change went to the property owners for an average of around three thousand dollars per property owner in damages. And that's when we kept the activity after a handful of months. When it has gone on for longer than that. That that dollar sign just keeps growing. Thankfully the commission's promulgation of property management record keeping rules in twenty fourteen and our subsequent education efforts in property management workshops have resulted in a decrease in our property management complaints never the last the case that I just told you about and others like it demonstrate how the actions of one licensee alone can represent tens of thousands of dollars and damages to consumers. This was the case that an arkansas started the conversation about whether or not a separate property management license was needed and so I want to thank representative agree for the opportunity to continue that conversation around the issue of property management license. The department of labor and licensing secretary there all by set recognize the importance of this issue and at the end of the twenty twenty three session here he commissioned a property management task force to work with representative magro and reach consensus to find a solution that asked force has been meeting for almost a year now and i'm glad to report that we are much further along then when we first begin. I don't think it's any secret that this has been a sensitive and even device of issue. However airy c remains committed to working with representative magro with this body and the governor's office and the task force in crafting sound policy in this area while we don't have a finished product yet we are on target to have a proposed draft or framework ready for secretary bassets review before this summer. That's all I have and i'm happy to answer any questions that the members may have. Excuse me thank you andrea for you to question recognize senator love for a point of personal privilege central of your recognized thank you mischier in nrm common into everyone before we consider to continue your conversation I do want to recognize we have could get from youth challenge if you are not. In these these fan students are actually met with them last week to do a tour you challenge in so they they're coming to the capital so. If we could just give them a round of a place I would like to thank you for being here and I hope that you all can pick up something in here just watch how do I set and sometimes just don't act like us now thank you mister wise words from center love thank you senator and were happy to have you all here today thank you for being with us all right with that I got representative agree and recognize you for a question thank you very much and thank you for the explanation also just wanted to add a little bit on the task for the problem with property management in arkansas that I see we have a huge out of state property management that has been drawn to attention of the the commission in all that they are the ones in madish regard violating they're not being pleased they are supposed to be under the direct vision of a broker in many cases the broker hadn't been there in over two years the people that are doing the leases and all are doing it illegal so there's there's a big problem in that in the lack of education there's no best practices education there's no continuing education on property manager I believe the reason that we've had search big payouts and property management is because we are requiring nothing ever the property managers and in the state of arkansas although I had over four hundred units and let me also say that I am retiring and getting out of slow and down i'm under under now so it's not madrab to help me it's to help grove the area proceed mansion strengthen property menu so we'll have not only more local property manager but better educated property management and part of the problem that brought this to that for me me having over four hundred units and managed and then for twenty years it was a fallen from me too managed your property better resistant age in a broker. With know experience and no knowledge his legally do that so again and glad to work with the task for some will say that I was an initially embarrassed for meeting but when I approach him average out which brought to their task force and have worked very well with them at looking at which say we don't we don't always agree that the debate is went back and forth in his good debate and so I am glad to see it's moving forward in that and thank you. And I guess the only question that I have is. How do you see addressing those issues with outer state property managers that you are aware and know that they are violating the yet aren't placing at this time. Thank you representative agree i. I will tell you one and and you know this one of our biggest concerns are biggest challenges at the commission is staffing specifically in our investigations division we have we have had quite a hard time recruiting and retaining a investigators the the pay level is is of concern we have around a six months turn around are on our investigation positions I have so we we've only just begun to get them trained when they are able to find a job for a higher grade with another agency and state government and and make the switch to that and real estate investigations can be very complex if you've had any dealings in real estate you can probably imagine just how complex as investigations can become and so I in a perfect world and we would be fully staffed and I would be able to send investigators out to look into those issues I am certainly any complaints that come in regarding those companies and their practices we will investigate we do have the authority to investigate unlicensed activity but then if property management license or. The. Becomes. Becomes a program that we have here and are consider I think there are ways that we can we can address that enforcement and oversight piece within that to to approach it from a preventive proactive standpoint with legislation. Thank you representative all right hammerberry that to you thank you miss sure good afternoon can you tell me about your board and do you have all your board positions filled three separate boards or just educate me about the board structure of the entities listed certainly a sir so we have five commissioners on our board they are three of those are industry members so they are real estate brokers and then two or can some consumer members one of which represents the senior population of arkansas they're required to be sixty five or older and we do have one position on the board that expired our current chair susan sparks and industry member from rogers her term expired in december at she we are waiting to hear from the governor's office on on that seat at president do you have trouble keeping board members or are there is there another board that you could combine with without compromising what you do in order to. Just kind of tightened up a little bit so we we actually do not have trouble keeping board members especially on the industry side and if any of you have ever known a broker that knows your legislator and they want to be a commissioner you've probably heard from them so there's there is a great deal of interest in our board seats I so II don't know that that that's an issue have and in terms of combining with with other boards I that's a good question I know i'm not sure but that's certainly something that we could discuss would you put that match when you have you know have your discussion to see if there's maybe maybe strengthening by combining which mutual interest to you to do that and then my last question is is on the report has been handed to us that it so homeless students and arkansas schools by year is this year is the shelves report the no that's right we haven't gotten to have got through okay we'll get there are the hold of thanks thanks to the payment are at senators double filled you're recognized for a question thank you miss chairman just one question you mentioned in your testimony that there was a large number of formal complaints that one particular yes sir was a common thread that run through those are you referring to last year of that large number of formal complaints was some common thread it was sure so are most common complaint issues centers around property description property inspection and property repairs those those are buying large are biggest number of complaints and they're hugely filled by buyers sometimes by sellers but especially in the market that we have seen since twenty nineteen twenty twenty you know there were buyers that knew that if their offer was accepted there were. Maybe twelve buyers behind them with backup offers just waiting to take the replace in line so they were waving inspections they were. Waving any any repair allowances from the seller they were stipulating that they would not request any repairs from the sellers I have basically there was there was an element of due diligence that that buyers were a little hesitant to do because they were. Feeling the crunch of the market and they needed a place to live. And so that's a very common issue in complaints for us. Thank you mister thank you center at center love you're recognized for questions thank you miss shirt now miss offer I know we've discussed a few things in regards to property management following up with a representative and crew sell in your test money you were saying there if we were to to adapt new property management regulations. Home in in regards to the oversight what I guess why don't other states do any regards to other site that we are not doing that could possibly help you certainly so. Most states in in the country have all inclusive broker in sales agent licenses which means there are broker license allows them to do everything from leasing property to selling property to form an agsales hunting land sales all of that but there are seven states in the country that have either a separate or additional property management license or or certification requirement and then are there a three states that do not license property management at all and one of those states has actually been trying to to get property management licensed but but has not been successful and there are there are likes that we can learn from from our other our other jurisdictions in the country. Specifically when it comes to education the models for property management education are very different across the board and so there are a lot of good ideas that we can take away for example in oklahoma uh they don't require a separate license but they have recognized a need similar to in arkansas when it comes to property management education and so their commission has developed a voluntary fifteen hour property management specific education that they offer to licensees and they were in the beginning phases of rolling that out when I first put all this data together but from from what i've seen of the course it looks like a very comprehensive course so that's that's certainly something that the commission. Could do under its existing authority but then we can also look at the models in these other states that have separate licenses and and see how they're requiring and structuring their education okay well I guess this is this is what i'm also asking is there any additional laws outside the property manager and I don't want to focus just on the property management aspect but actually you know out of state property managers coming in here not really inherent to what arkansas doing is there any additional loss that we can do the strengthened commission to actually go after these band actors. I have wouldn't rule it out and there you know there's there are certainly things that that we can look at that we give the commission. The needed authority although we do we do have. We do have a fairly good amount of authority right now when it comes to unlicensed unlicensed practice. The. Again it it really comes back to resources I think senator okay so basically that the investigators the your staffing is that what you're saying all right thank you thank you miss chief thank you center. Kind of follow up on the the large number of complaints specific to property management and the payouts you said that there were sixty two five of which were were ten the other were the owners. Can you expand a little bit on the owner are we talking about owners that have one or two properties are we talking because in in in my business most of the professionals are our third party management companies that that do large apartments or or or you know commercial and and so can you expand on that is in in tells the tap of a property manager that created these complaint certainly senator so and I apologize senator stubblefield I was buying answered the wrong question for you so in in this one case with the sixty two complainants of the fifty seven property owners most of them I would say a good a good deal of them owned a single property they were largely residential homes and hot springs village I am these were either properties that the owners had purchased to use as a retirement income or two eventually be their own retirement properties that they were running out in the meantime there were some of the owners who owned multiple properties and we had two owners who suffered damages into the tens of thousands of dollars and so those those are the owners that would have had multiple units and possibly even some higher ends units we also saw a great deal of activity with nightly reynolds in in this in this case where cash was. Changing hands and not making it to the owners and so that it's kind of a mix across the board and it really depends on the area we had another case with a fairly significant payout out of northwest arkansas not long after that and. Again it was a mix of residential homes one door maybe I have her owner and owners that had multiple nightly rentals in the area. And so it was it was criminal in in nature then as opposed to just not very well educated and well qualified so there we did actually find in private activities yes sir we uh we found specifically in the hot springs village case I hear where the brokers had their trust account with a debit card set up on the trust account and of course there shouldn't be a debit card associated with the trust count and and on that debit card we had receipts to oakland we had receipts for a pizza delivery obviously receipts for expenses that were not not related to property management activities where owner's fines were being used for personal purposes and that is mishandling of fines as buying large the biggest concern in property management for the commission in in in the majority of those cases do they have property management agreements with the management company in place they are required to if they do not that's a separate violation but under the property management record keeping rules that the commission promotated in twenty fourteen they are required to have an owner agreement attended agreement they're required to keep very specific records and letters thank you missed she thank you center all right it representative ray you're recognized for a question thank you mister chairman there there's five positions on look the commission right in three of them are brokers or are all three of them members of the of the brokers association at the realtors association I believe so yes ok. Does they give you an e call cause for concern for the potential of like regulatory capture. That's a tricky question so it. It is something that we are very aware of and were very careful about and I will say that we are fortunate in that are commissioners. The commissioners that i've worked with since i've been with the commission are very conscientious about the need for them to take their realtor hat off when they came to be a commissioner on on the day of commission meeting but of course we have which. Will legislation and litigation in other parts of the country around this area specifically the north carolina dental board that gave us a run for our money where we took a hard long look at at how things are structured. So at present I think I would say were in a good place but it is an issue that that we are concerned with and that we do keep an eye on okay appreciate your response I think a representative are at representative white occur you're right question sir thank mister miss alvard you alluded to it and we're speculating that uh you didn't name a specific member because it's so horribly low but you were you were discussing your difficulty in finding and retaining investigators what are your investigators being painted per year now thank you so are too we have three investigator positions to our investigators one is a senior investigator are two investigator positions are at a gso six which I believe starts at thirty six and then our senior is a gso seven which starts around I believe thirty nine. And so that's that's been difficult. For us to to find people that are willing to do the work and have the experience honestly to to do the work out following us to have you looked at what surrounding states and or your main competitors for these employees are what lower the funding those at yes are I have looked at that and I do have some data on that I apologize I don't have it with me today if you could provide that to staff and they certainly did to the rest of the committee certainly thank you so much absolutely thank you mister chair thank you sir. If you just select a staff negative spurs that are to the member of the committee. Alright hammer you reclasser the commission couple quick lunch the activity such mentioned while go about the receipts and all that stuff where those turned over the prosecutor were those illegal activities prosecution could be pursued as far as the mishandling of the funds. They were not turned over to the prosecutor that i'm aware of. And you'll you'll have to forgive me senator hammer the I was night in this position at that time and. I believe why it's once a matter is handled by the commission is considered adjudicated and however I can tell you there are cases where we will see the property owners actually go to civil court and either in conjunction with our complaint or or after the fact after they you know after they have come to us specifically in this case because there's a cap on recovery find payouts the total of word of one hundred and seventy five thousand dollars had to be pro rated down to one fifty because of the statutory caps and so the property owners in those cases could have gone on to civil court to file claims for any additional damages I have specifically because with the recovery find we only will pay out actual compensatory damages so anything simplery punitive like that they would have they would have wanted to go to civil court to pursue and we do see that from time to time. I'm just unjust regular my mind round it it seems like it was if it if it wasn't by accident or ignorance it was wilful and fraudulent why would it not be either by your is there maybe that's an avenue that you need created in order to be able to turn that over four prosecution you know aside from the civil side of things so may took somebody else's money and i'm i'm just curious do you have any inside on that or maybe that's something that will require further you know investigation or i'd like to look into that and speak with our attorney and see how we might create a link there okay wish you would lodge it together on there and then the other question I have regarding the board is are there any discussions for potential legislation in the real estate board structure or potential mergers as cannot go back to think to what asked while go but within the confines of the border year entity are there any discussions on there no sir not that i'm aware of okay thank you thank you all right members and just regardless of what question that you hear but would you have to be able to hear about about ten fifty five six is about thirty five minutes so we got two more folks up so and make sure we got time for questions there so we can kind of be briefing and pointed with our questions that make sure we can get her body in and with that representative of clinton. I'll let you start with you thank you thank you for being here interact a quick question for you I just want to follow up on senator left question about what other states are doing can you tell me what you're seeing so you said there are severance states that have separate licenses are using them wanting to move to an all inclusive broker license or are you seeing the forty some odd states that have that i'll inclusive wanting to move to separate vice like what are you seeing in the trends across the country right so in terms of trans I would say we're more likely to see the all inclusive jurisdictions want to separate out the states that have a separate or additional property management certification that I have visited with have said that the program is working well for them and they they did not express any interest in pulling that back at quick follow up is that is that something that they've done recently or is that something that they kind of have had for a while right so most of these have had this in place for quite a while since the eighties are nineties okay thank you thank you chairman yes me thank you representative all right mark. You're up a friend. I think this working thank you for having your thank you representing group for inviting us to list group in this meeting I just prepare the statement i'll just make it real quick and then you guys can ask i'm mark burger and here on perhaps of the landlord association i'm here with bill jones he's our vice president of our sociation that serves the legislative chair our state organization consist of a little over five hundred members. We manage just under five thousand single family homes and little over eight thousand apartments. And these units are across the state are organization was bounded in about two thousand four and currently has about seventeen active chapters working in about eighteen counties and we're growing. It's part of our mission statement to improve the living conditions in value of rental properties in arkansas well as developed reputations of landlords is carrying business people. We offer suggestions of best business practices and work to educate landlords on current legislative affairs and new laws that affect landlord businesses. I would first like to start off with the recognition that we do have a looming housing affordability issue not only in the united states but also here in the state of arkansas the cost of everything in the past few years has grown extensively according to the national association relatives home prices have gone up nearly thirty two percent since twenty nineteen some of the reasons why the pandemic created a tremendous demand of housing as people learned a war remote and no longer had to be in an office setting. Supply chain issue strangled housing growth during this time the administration port six trillion dollars into the economy to try to help support it through the pandemic with poor oversight from what I see on where that money went I believe the state actually had left over funds from the rent relief act the federal reserve kept interest interest rates at zero or barely above these low rates also created more demand which in turn calls pricing some homes to escalate. In a ten year period the state of arkansas mandated nearly doubling the state minimum wage which in twenty fourteen was six dollars and twenty five cents an hour and is now eleven dollars an hour. This raise in labor again contributed to higher costs of goods and services and ultimately results in higher housing costs. As a point reference in twenty nineteen a typical single family home three bedroom two bath twelve hundred square feet was priced at around nine hundred dollars a month in where my home town is in somewhere city limits that same house now goes for about fourteen hundred remarks. Here's just some of the reasons we see why in twenty nineteen I could replace a complete hbac unit for about thirty five hundred dollars that same unit today which really isn't the same unit due to legislation now costs around seventy five hundred dollars to replace. Pre pandemic we could get a typical two bedroom apartment rent ready cleaned for around two hundred bucks this same unit now is a five hundred dollars minimum. Insurance rates have jumped about seventeen percent in just the last year but they've now added a new caveat to us if your roof is older than five to seven years depending on the insurance provider they'll no longer cover the cost of replacing the roof. It is now an exception on your policy. So roof to a landlord that previously could be covered by insurance a landlord now has to budget for. Pre pandemics standard twelve hundred square foot starter home tear often reroof would have run about fifty five hundred. And that included the shangles. It's now nearly fifteen thousand dollars and there is no storm that is going to help cover on there all of this and i've I haven't even talked about the rising cost of taxes for real estate taxes. I say obvious to point out a simple thing and ask consideration if we're thinking about doing something that might cause an increase to a cost of anything. Please don't. Over legislating can have an unintended consequence. Our tenants can afford it and our landlords can absorb it. And if there's anything else I can help with them take what would you have question alright center. Hammer you are recognized thank you thanks for your presentation you're coming about the hec being created by or caused by legislation you're talking about legislation that at the federal level not at the state level of second trick yes okay I just want to make that distinction we're trying to totally again here but the thirds and in some other the nonsense it's coming out of DC I want to make sure that they own it now though so yes but appreciate to work you don't like you thank you centre representative. Yes thank you chairman one totally agree with your statement about we is legislative need be pairful with legislation understanding that anything we can we do that increases a coffee to the landlord also increases the cost to the ten in its already such a shortage of units couple questions one if you know how many year members are licensed property managers and what do you do you see losing units because of the way thanks for moving forward how do you see them the market going boy. I do not have an exact part thank you for the question II do not have an exact number of how many of our members are licensed and full disclosure I do have a real estate license i'm under miss offered there as well so they regularly what I do we are five hundred members i'm gonna say it's a very low number very low most of ours are moment pop business owners who are running their own small business that is a rental property management business of their own properties. There is no licensing requirement to manage your own properties that's entirely now if you do it for a fee for someone else you have to avoid license so in the our group there's very few that have licenses nor the need for one to meet the regulations as they are. Yeah. With that being said to see where the market is going in howard those again the price of housing going up as much as it has the cost of labor the cost of materials everything increasing makes it every more concerning that we're not going to be able to get to a place where we can have more units it's gonna slow things now. Ballara and one other question if. You said you had a low number I think forty one percent of the units in arkansas did did exact at rome by mum and pop organizations and we do know that if you own your own you don't have to have license. Do you think it would be a plus. And your members would take advantage of it if there was easier access to the license along with education on best practice it made them better managers do you think if that was easier access to an available that you're members would take advantage of that. The. I really hate to speak on behalf of members I haven't had that opportunity to ask him that question I do know of the few that i've talked to some of them have expressed interest. In moving towards a property management knowing that they've managed their own property and can bring that expertise to others to help them with theirs arm so I do believe that there is a. Probably a desire for it but to say how much of our organization is I couldn't answer that thank you right thank you central of your record question thank you miss chair first of miss offered i'm gonna come to you so in safe for instance we were to to have a separate property management tracked in the real estate it would currently have. That means every property manager would have to. Would have to be. Will have to have the license to do property management is that correct was so the model that we're looking at under house bill fifteen seventy three would allow existing real estate agents and sales persons to continue doing property management under their existing license but then there would be a separate property management license for those individuals who only wanted to do property management okay so that means everybody would have to have a property's management license to the real estate commission in it whether as a real estate agent or as a property management licensee yes in order to manage for others okay so the I guess I want to ask mr burier is it so because he made a statement to say you know if we want to do something then don't do it I guess I guess it's as additional costs if if we were to reto have the separate property management track for property managers only. Would there be an additional burden I mean how do you see that I do not an additional burden up on the parked are just well that's what I want to understand because I don't you know if if we were to pass it and then people start young and saying hey weight mean I didn't I didn't have to have the license before to do property management now I have to do it have a license you are but is your testimony or are you speaking for yourself are you speaking. For them for on behalf of this organization the landlord association. We're ok with licensing folks who are working for other folks. If they're if they're working on behalf of the fee for another owner of property they should that licensing is absolutely fine with us these folks that I work with manage their own properties they don't need to have a license to do that currently the way they don't have to have license but under this new track they would have to have nelsor they would not are you saying they wouldn't software as this when i'm trying i'm trying to understand it that's why can't tell you for the question so used to those people would not have to have the license correct you would not we wouldn't we would not be changing and the fact that in order to manage your own property you do not have to have a license it's if you if you agree to manage for a fee for someone else. So if I wanted to manage your property senator love I would have to have a license if I wanted to manage my own property I would not. The. I'm confused because then what what what is it to have a training for property management if I don't have to a t and if if I mention my own property I don't have to. I'm i'm a little confused because we're saying that we're developing our wearing thoughts of developing a property management track. And you're gonna hear you're saying that the work on the exclude people they do property management but they manage to properties. Correct so the the purpose behind the separate property management track would be to allow those individuals who do not want to do everything else in real estate they don't want to sell they don't want to buy they don't want a deal with anything bite property management this would allow them to get a license that has education and an exam and qualifications targeted specifically toward property management okay all right thank you thank you center alright see no for the questions in the yeah I got that used to betty all right they'll be mindful regardless of fifteen minutes left we got one more to go so centre petty thank you mister chair just on them because he triggered a question from me on the again sincing requirement is there consideration for grandfathering in companies like representative mcrew and and and others that have been doing it for you know years and years and years rather than having to set through sixty or hundred and twenty hours of continuing education and then take an exam certainly so I think I think representative magree would not mind if I said that one of one of the biggest hurdles currently is for a property manager who already has experience to be able to go straight to the broker level without having to meet a two year experience requirement which is required under our law and the the draft that we are working on would provide for a waiver of that experience requirement for individuals like representative macro who have been doing it for years and have their own experience to bring to the table. Thanks for betting all right sir and we're going to wait for marty on the next presentation your question for the next one okay no that perfect art all right never seen over a questions mark president being here probably missed north welcome thank you recognize and rate present thank you and good morning I may be a little nervous because I never spoke in fine of such a body before but thank you for this opportunity on behalf of a change which is the artness our coalition of housing in neighborhood growth for empartment a statewide nine private membership organization devoted to affordable housing issues here and are against that we been around sent two thousand and five and I just asked there's no way i'm going to get through all of this information I just wanted to make sure that everyone had some of these data points for your reference. N arkansas the two previous speakers hit on a couple of the issues that stand before as in which I think we have great opportunity if we choose to tackle them wine break at a time we have a supply issue or protections issue and a quality issue as that is impacting our renter households and families here across arkansas. The national level income housing coalition does a lot of analysis as it pertains to the impact and availability of housing for low and berry low income families in our state and across the nation so a couple of points of interest when we're talking about a lot of the tenants that are impacted by comes out of the task force we're talking about a lot of households that are disabled elderly and working often referred to as hours which are asset limited income constrained but employed individuals these are individuals that are working. As was stated eloquently by the previous speaker the cost of housing is becoming less and less affordable ebid for those end of adults who are at at the mid point and higher of housing and then the supply and availability of housing is constraint so the availability and quality of that housing has many impacts and implications on our communities there are several slides in here that give you the numbers as to what that looks like in arkansas from an impact perspective you can see the housing wage that is necessary to be able to afford a fair market rant unit which speaks to you we do need additional subsidy dollars here in arkansas to support increasing supplying and making sure that renters can't afford and the housing that's available in this I am going to skip there about some sites you can see also the income change over a ten year period has been rather flat for some whereas cause I have gone up extremely high especially after the pandemics of the disproportionate impact of the availability and quality of rental housing is falling upon our lower income citizens and additional information regarding cost and availability is available looking at urban versus rule markets our i'm thinking when I hopefully answer this question in advance as it relates to homeless students and arkansas so we have individuals then we think of homelessness and kind of a static way but a homelessness is barry fluid situation whether we have individuals who were leaving and cars individuals who are doubling up with other families there's different counts that are performed annually regarding students and the one thing that is I am starting to show up in an impact even in a roman in schools is having to change the rules. So kids without an address are now being allowed to enroll in schools whereas before you've had to have an address so they don't lose some of those children. Are subsidized housing we have a great need and appreciate it there. The weight list in order to be able to access any type of funding to help a forward the rants that are available is getting longer and longer in some places and the question becomes where are these individuals living in the meantime so if it takes you up to three years to get a housing voucher where you living during that three year period as well. In arkansas we have a great opportunity and i'm excited about the task force and as we can continue to work towards habitability concerns we have and implied residential quality standards for sound structure running and drinkable water available electricity heating and are in conditioning and I do believe that most landlords are responsible and actually are providing a a great service to their ten but we do have some challenges here in some opportunities for improvement in the state however landlords are not required to repair or provide any provisions for repair the only remedy to attend it is to move out of the property notice we have a supply issue a cast issue and now you got this tension that exists as well. We are the only state in the nation the only state and the nation that actually takes a civil breach of contract for rant and you can actually be convicted of a crime. I think that is an opportunity for great change in arkansas without causing additional opinions to be able to at least decriminalize and individual who was unable to pay rent we have conflicting are large currently so in a few counties here in the state ever landlord chooses to vile a criminal suits the individual may have ten days to respind in court if you are a lower income individual may night understand and they need to go to court it may be fearful of going to court you could end up with a failure to appear between. For your rest benight ultimately paying rent so failure to pay rant can result in a criminal conviction and you can imagine the additional issues there back at cars as well so a few things are to address a lot of these different issues that could be deployed and would definitely look forward to working with any of you that are interested is how do we help address the affordability this apply the protections and quality needs that are here in this date additionally how do we make sure that there is additional emergency rental assistance to households and crisis because that also contributes to the well being of children and impacts crime so if we want to get into public saving and others will need to make sure that people are properly housed i'm strengthened information renter protections thereby decreasing housing instability and homelessness. I went through that very quick leak because I know of time and i'm sure there are a questions. More if this year first time they're speaking before distinguished body such as this then you have all of us forward great job great job succinct to the point all right sin or hammer you've been waiting on there some more recognizing. They press chair a couple questions on the hand out on the homeless student and are concerned the can you expand the definition of what qualifies we don't have the color version of trying to catch it on the stream talk about what constitutes homeless as far as the student. So I had a student without an address and individual address so you have individuals who are students when they are registered. How are they registering for a school how are we counting them during various moments of counting homeless households as well so the definition has had to ebal as our society has evolved so for an instance children living in cars you have situations where you have two to three families tripling up so those other two families would be considered to be harmless and then you children involved in that familiar situation are considered to be homeless as well children who don't seem to have stable housing that keep continuously moved as well okay so they could be moving from grandmother to a to maybe the motel exactly those are going to find with a classic cache for homeless because they don't have. A permanent address was at the key that is correct okay as far as your organization you mentioned about the criminal conviction of somebody that doesn't pay the rent what is the what is your position as far as criminal charges regarding renners who may be tear up a place and cause three five six thousand dollars damage when they leave out which your thought process about how to hold the renter accountable for destroying the property as they are moving out. Sell thank you for the question center to hammer I think it is provides an opportunity for us to exploit maybe a viction diversion courts and which these type of matters could be resolved so judgments could come out of such a situations I too and landlord of my own property so I have ten it's myself so II do believe that there could be an additional structure there are models of them all over the country in which issues are pertaining to tend it in landlords go into this system versus potentially the system in which they could be resolved at that place and then simple judgements and other remedies can be explored and I could occur there and i'm all about landlord i've got house we take care of it our writers take care us we are good than going civil. Trying to get money out of somebody that can't even afford to pay the rant or choose not to pay the ran as one thing but if they have a history of going for property to property in just destroying it and with no account built here but curious to have ongoing conversations with with you about that try to protect the landlord too because if they go go back and put in ten thousand dollars worth repair the next person is going to pay for that which jacks up these rates and is contributor to the problem because of the bad actors both landlords and so we cares have ongoing conversation with you and welcome that opportunity thank you they do some job thank you. All right representative agree here recognize request and keep germany i've got a statement and then a question on your last issue about the criminal very bad and in business several years and used that law many times never did I have anyone go to jail for failure to pay I work to lied in drug and alcohol and out of her department to people who could not read otherwise people were trying to turn their laugh rounding in in great now and i'm sorry there's no better feeling the work when you're helped then in the succeed but in that because I work the treatment centers in my area I always had failures so I had to a vehicle as it failed our judges and are no longer used there and allowed to be used even though I still on the book. Now it cost me twelve hundred fifty to fifteen hundred dollars to a vic someone because I have to get an attorney to do it by some markets alone. So a year or so ago I had to go to my leasing agents and say as I know we have a heart for this I know we care that we can no longer release to that group so that's the the other side of there I helped a lot of lower income and people in that area that now are going to the street because we don't have a way of evicting them without paying an attorney to do it. So that's that on the warranty they have ability and I understand and this is a challenge that we have before us how do we affect the bad landlord without affecting the good landlord and is is the gentleman besides you said any time we put legislation so we put the ability for the tenant they come after the landlord and we increased the cost then the result is gonna be harants and loss of units so how do you see that working that it doesn't affect the good landlords but only fix the badly thank you for that question and that statement i'll start with the statements are replying to you I have adding additional context for that if we establish the beach and diversion courts that could address your needing to get into turning in paying that fee as well by moving in out of a criminal setting and setting in an operating these type of challenges and obstacles in that form at that could provide a cheaper and easier and faster pathway let me be clear we do understand they are bad actors that are tennis absolutely acknowledged that and there will not be a quick fix or easing answer on how to address that there are going to be some good bad actors as it relates to landlords as well we're dealing with human beings here there's not going to be a one sized bits island in addresses every situation so I definitely acknowledge that as a related to habitability and caused I think erm great progress has been made even if we take it an increments by and safety could be one of them where they were talking about landlords providing smoke detectors and carbon monic site that's not a large expense item but it could be the difference in saving lights and so that's an example i'm not necessarily saying we need to do these fifty items. In order to get there but I do believe the conversation and walking through what are some of those basics that could get us to a farm and solid law consider in cost because of these low income families I do understand they can't absorb any additional cost and once again I too landlord if and I can't absorb some of these costs either but I do believe there is a room to work on this even if it's incrementally are you aware that the arkansas law already requires those smoke detectors and crop in not that detector so it was my understanding it depends upon the units of housing so if we get to the individuals is that in create that is incorrect I have been informed incorrectly and I apologize i'm pretty sure that the smoke detectors are required by state law they enforced by the city ministrialities and code enforcement in all and I believe in the common access has been added to that but our counties places don't have zoning I will follow up with without and so I could have. Incorrect or information is not fully updated thank you thank you thank you very presentation alright thank you all right representative all your recognition for a question sir thank you mister chairman and my question was remark I believe the free market works every time it's tried what what would you suggest we do as on state level two strapped government from the process to make the free market work better because obviously there's there's a problem with supplier and demand right now there's more demand that are supplier and I think it's probably due to people maybe being afraid to get into the renewal business I know for years i've considered doing it better I was really afraid of people turn up my property or not being able to get him out of the of the house once they were in there could you give some suggestions on what we could do to might be help the free market work in this situation thank you thank you for the question. Honestly. You hate use the old address of the aim broke don't fix it however we do recognize there's an affordability issue here but you don't want a new jerk reaction either. Markets do fix themselves they do so if you go trying to fix it by throwing money at it it typically works the wrong way and we end up with a worse problem than we started with I think that's where we're out now. I don't I can't say. I have any ideas on how to fix the problem now other than it will fix itself. It just does it always happen but it's going to take time. It's really going to take time. And good policy. Thank you all right representative in it. Thank you mister chair I got represented I think at europe. Yeah. Here you go thank you mister share am I that they marty north recommend one says short notice our work group with mcgrew and several of us we are trying to tackle this situation so your presentation was good master like to ask you in your presentation you didn't mention subsidies what type of subsidies are you referring to thank you representative in it in arkansas our subsidies are totally tied to federal allocations. And we're a low population state with their being the case we have needed one level are population at another funding comes in and another place so we have a gap in an opportunity here in the state of arkansas to where we could for the first time take the bold move up actually funding and supporting affordable housing here in this day we start we currently have enabling legislation that would allow us to do that through a housing trust phone that's never been funded and sell we ended in it's been enabled since two thousand and nine and we've never funded the housing trust fine that would allow moneys at the state level to help bridge the gap of affordability in helping to subsidize and help individuals be able to obtain housing where the rental rental or ownership so we have the enabling legislation we've had zero dollars actually allocated to make it possible or reality at the state level so we continue to be limited by the funds that we receive from dc from primarily from here even at the city county level and state level we are limited by where dc decides arkansas can get. Great thank you miss north all right numbers and you are questions. All right seen over the questions we appreciate shall be in here today thank you very much for taking the time appreciate the conversation. Numbers see no further business to come before this committee we are adjourned.