Insurance & Commerce- House

Yes. What representatives I would visit Senate bill three sixty eight that you're going to run okay yes there's that's the bill is going to run Senate bill three sixty eight. Read. You may proceed all right thank you Mr members Senate bill comes from US senator Boyd that's kind of a clarifying language bill he call the transparency bill past at once he said after passing it we work with State Farm and shelter insurance to amend the bill to make a more workable so what you have in funding now is a bill that simply requires an insurer of residential property which sells a policy with a percentage deductible to include a monetary amount for the deductible on the declaration page or the renewal notice. The what they're trying to clarifies its it's a percentage not of the claim. I mean of the property but it but of the claims so. They do wanna make sure that's written into the declaration page or the renewal notice that all does. The representative questions by the committee. Seeing none there's no one signed up but it would anyone like to speak for against this bill. Okay saying no one represent me to the right to close for this bill. Yes I am closed representatives is close for his bill and I make a motion to pass it make a motion to pass and all in favor motion do pass say aye. Deposed NO. Graduation you've passed your bill. Represent Lundstrum I believe you had a couple are you ready to do those or. Okay. Okay we will wait for amendments. Going to go ahead and if you would come to the table introduce yourself in the bill that you're going to present I know you had it the couple filed in the same one so that identify which billion ten the president and you may proceed. Thank you chairman representative Richard McGrew District eighty five it's house bill seventeen hundred. That have you today what this bill does is an exemption to allow the. Property management under their. Under the ridge state code. they exemption requires that a person has two or more years of property management experience managing fifty or more rental units. Or is certified as a property manager from a national certification institute and has not been convicted or plead guilty to a felony and has a one hundred thousand dollars the delegate bond. So what this is saying is this person has managed fifty units or more for two years so extensive experience that Four he has to be certified to a national certification which also requires a lot of experience and knowledge and also that is not a felon and it's important to fidelity bond is one hundred thousand this is something that does not exist for. Now to be a property manager. To manage third party properties you must be a real estate broker. To qualify for that last and you do not have to have any any experience is a property manager. You don't have to have this bond. so this in my opinion makes it stronger it also the main thing it does is make a path we have a huge shortage of property management all lower income in Arkansas we actually have a huge shortage of property management overall but especially on the lower end so this takes people that are managing property that are out there actually doing the work and allows him a path by which they can manage property for instance I have a brother for from the manager property for over ten years managing hundreds of properties. Has certified in in the fair housing act. And I'm getting when I retire she can't go into business is a property manager and let she becomes a real estate broker. And lot of people are not willing to give up to years they laughed to pursue a craft that actually has nothing to do with what to actually be doing in order to do that job so this opens up a path which I believe will grow property management in the state of Arkansas making available to more people people that are actually out there with the experience and knowledge of doing it. And. So that's what the bill does. And all appropriate questions. Thank you president if any questions about the committee. Restaurants term you're recognized for a question. Can we go back to the real estate. And discuss what it takes to get a real estate license. What you have to do to be a real estate broker today. Issued to take sixty hours of education on sales really on sales at the end of that six as you test it take the test if you pass that the Fisher price that lasted under a broker. For two years for taking continuing education on sales at the end of that two years you take sixty more hours of education that's on the roof on the broker's license. That that test has a very very very small part of property management less than ten percent. And at that point you're without basically any knowledge hi to better I had. Over four hundred units I wanted to many good people property I was being asked if we almost everyday the neighbors and friends and family members to manage your property but I couldn't legally do it. So I went to take. That education. To become a sales broker. And then found out when I got that last and and they want me to stay with the broker they also wanted me to pay the broker percentage of my property. Even though they had no knowledge about property management in order for me to stay there at that point I decided not to actually did take appropriate because I found out actually took that brokers thank twice over a period of years because later on my daughters wanted to be on property management so doing it for them. About the time that I decide to run for office and when I became a state rep I found out that there was a waiver by which you could buy past that I asked the Commissioner of asking how come Richard McGrew couldn't find out about that broke that waiver but state representative Richard McGrew could in the center was we don't want you to know. If you go try to find that waiver you have a very hard time finding it in the law it's only being used eight time in the last five years I was one of. To read more out of state and the Commission couldn't tell me who the other four. And so and I will also say in that all that education that I had to take the sixty hours for the first lesson sixty after the second. It didn't help me at all in any property management. And I'm actually having my own property management I have other realtors calling me asking questions because they they don't know as much as I do I don't mean that in a negative way but essentially what it did was block me I know of others this blocking because they won't spend two light years or the last to go do something else you know what other. Career in Arkansas you have to go spend two years on a different career path to do what you really want to do it so This blocks a lot of people and I believe that this exception you'll have property owners that own property that will become property manager that will manage that lower in there in the overall community so they care about the community they care about the tennis we have a huge problem with the entity shall no man that's something I'll be working on in the future but. Thank you Richard flowers did you have a question thank. I'm sorry. Thank you Mr I. I noticed that your bill prohibits anyone with a felony from being a property manager with any it's it with any kind of day are non violent. It is is the bill is with a felony the reason I put that in there is required under the existing code now and so I was I was trying to pacify some of the. Some of the real issues with that because that's an existing code I thought that in Arkansas it was for the prohibition was not necessarily automatic an automatic disqualification and for non violent offenders. And and maybe I can get some clarification and I could be wrong I know that you have to go through a background check and all that you get that license and all that that's right you know what I would be willing to make that a minute here to make this line up with exactly what's there okay thank you. Thank you represent any other questions by the committee. Personality recognized. Thank you Mr. You mentioned earlier that. That that you were able to go waiver is that correct only after I became a state recognized already questions about making the law okay he said that there was only eight times that it was used in the last five years the last five years okay do you know the reason why wasn't use. It has not been used when I started asking about a year if one of the other ones that we use with a legislator that was talking to them it's hit very deeply in the bill you know it's it's so if you don't know I mean I took their class kicking and screaming class I mean in the class I protest it I'm only coming here to get the lesson because you're making me too because I don't want to do sales I want to do property management and all of that nobody ever mentioned. I didn't find a man again at when I finally only found out when a commissioner told me and he told me he didn't want me to know you know because it had a lot of trouble with property managers they had the some of the bigger settle much was someone ran off with deposit money disability bond in my bill take care of that where they can't you know and so you know the real estate broker do a great job in selling real estate you're huge in that you know but property management not something you know may be in Northwest Arkansas in little rock but you go to the small communities you don't go to your small community find out who's managing lower in rental property. Nobody. You know even in hot springs when the problem one of the we state that does it won't manage property and lessons I think it's twelve hundred dollars or more a month they don't want to manage the orient you know intimate you've got people like me people in the community that care about what they're doing they live in the communities. The if they manage property that would be more care and actually care about the tenant to me to me this is about the tenants it's a it's about getting property manager where we can serve the whole population. Okay. Follow up help me help me to understand why you would need a broker's license and I'm just asking for clarification because I don't know help me to understand why you with the a broker's license to manage property. Well there in I went through affect part of the reason I went through all their education a step is because I could see if there was something in there my answer that question you don't absolutely do not getting the the broker's license at the bare minimum level that you can get it at there's absolutely nothing in helping you committee property it doesn't teach best practices it doesn't teach about the have the ability to bill it is a teacher about the the the have the handicap isn't teach you any of that it does teach you how to manage their County teacher out there let their forms it does teach some basic a law Arkansas real estate law which some of it the plant just a little bit like I said on the brokers test that I took it was less than ten percent on that tested it anything to do with property management okay. Mister chairman I have another question but maybe I need to save it for the realtors. Yep that's okay that that's that's absolutely okay fine with me. If any other questions by the committee. Okay. Saying none thank you Richard McGrew we do have some thought some people who have signed up to speak in regards to this bill it appears the first person signed up is Jeff Yates. Mr gates is going go to them to the table. He is against Introduce yourself who you're with then you can proceed with the testimony. Thank you Mr chairman members of the committee thank you for allowing me to be here my name is Jeff Yates I'm in Arkansas licensed real estate broker for about thirty years I do commercial real estate and property management and brokerage and leasing of commercial properties This is my first time to address a legislative committee so hope you give me a little bit of patience and maybe a little grace here I'm not here today speaking for myself individually outcome as a volunteer representing the building owners and managers association of greater little rock in the building owners and managers association of northwest Arkansas also on speaking on behalf of the commercial real estate council of of Central Arkansas and ICSE which is the market place industry and ICSE is innovating Committee commerce and serving communities. I'm grateful to be here to talk with you about house bill seventeen hundred which is the planet House Bill fifteen seventy three which previously had supplanted house bill thirteen sixty one. And these bills I have all these or have to do is change in the real estate license law. Now why am I here well I'm here to represent these folks in the concerns of the licensed real estate professionals. On behalf of the profession end of the public. The real estate commissions mission is to protect the public interest. I'm here to provide perspective on the licensing process being a licensed broker having taken the sales persons exam the broker's exam the classes all of that I can attest that the education is far more than sales you can go to the real estate commissions requirements and see what all's covered. I'm not here to ask for any changes to the property to the rights of the property owners already have. to manage lease rent sell or own property property owners do not have to be licensed to buy sell rent lease manage their own property The bill here is about changing the license law. In a way. Well. It's the title says it's going to it it's it's just not complete it says it's going to change for. It doesn't say some it should say some because it creates. He creates two groups it bifurcates the action of property management into two groups does not eliminate any licenses and so you gonna have some folks that are licensed and some folks that are not. That that seems confusing on its face. Is there going to be a way for the public to know which property managers license to which property manager is not licensed. The bill requires that all of the regular people in the state. Keep getting the real estate licenses the same way same way that I have in tens of thousands of other are can Kansans have. That's one group. The other group is the work that's. Wealthy enough for lucky enough to work for somebody wealthy enough to have fifty or more rental units of their own that they've been managing for two more years under their rights as a property owner nope nope no problem with that. What the bill does is it creates a situation where the second group will not have to get a real estate license to manage other people's property. They can just shift right over to managing other people's property no okay I get that but it seems like today that everybody requires a license or of the or or of there's regulations there's a whole lot of it out there and and I understand that it's easy to read this bill at face value I think well it's going to reduce the licensing requirements well it doesn't do that for everyone just for a few. So. The license requirement does not go away the second group will be exempt then going to business managing other people's property without a license in that group will not have the benefit of the education it is necessary to get a license. Will not have the benefit of the annual education continuing education requirements about the fair housing act in dozens of other ever changing laws rules and regulations the second group. Will not have to pay into the Arkansas real estate commissions recovery fund. I'm not clear on how the. Background check works based on the bill's language says shall not be a felon but I don't see where the anyway and they will not be any oversight by the the real estate commission to be able to an active help with the recovery fund in the event that the public has a complaint the the brought the group will not be asked to follow the real estate commissions advertising best practices they they basically can do what they want until a member of the public one of their customers has to sue for damages. Administratively the real estate commission. Can help their the mill State Commission provides many valuable services to the public. One of which is to provide administrative option to the public when there is a problem with property management property management and trust funds or the lion's share of the issues the public brings to the real estate commission. Why would we take the largest area of public concerning carve out a special group that does not fall under review by the real estate commission. Members of the public to discover that they hired an unlicensed property manager. Would not have the real estate commission hearing process to help them. Creates a situation with the probability of increasing lawsuits because of the lack of that administrative situation the folks that are hard by property managers will have to spend time and money to hire an attorney. Licensed presumably to seek resolution in the court system. They will not have any help from the real estate commission or the state's recovery fund. Rules the Commission will not be able to check and see if the unlicensed property manager has that fidelity bond. To benefit the property owner is required by House bills seventeen hundred who will check for that bond. Will the public know to ask about a bond. Here's the thing there's already a solution. The Arkansas real estate commission has the waiver process that was previously referenced for individuals that have demonstrated experience proficiency in property management and in other areas of the real estate license law. I know people that have gone through the process of being granted experience waiver for the license there's one sitting in the room here with me right there it is not some sort of aecdirect that's hidden somewhere it is readily available and widely known. The The waiver. Is the crux of the issue relating to house bill seventeen hundred and and it it exists and you heard representative rigorous story and I understand the issue I really do. I've talked with them several of the members of the real estate community of talked with them we've met with them in person we've offered suggestions and alternatives and and expansion of the education opportunities available to licensees. But at the here's the bottom line. There's an experience waiver available. It's not hard to hear in your last role to a commission for it in the existing law and regulations in place today provide a path to protect the public interest. By granting a license waiver to that person doesn't have to be a state representative lady in the audience is not. To the person that is described in section three of house bill one thousand seven hundred it It it's all there now look licensing so House sometimes. It with the help of benefits to. And the hassles of any real estate license. Have not kept tens of thousands of our Kansans from getting a real estate license do you know anybody who said they couldn't pastoral studies and. House Bill seventeen under does not eliminate any type of licensure does not reduce the licensing requirement it does not reduce government involvement it does not reduce severity becoming a property manager. Anyone with experience in section three of house bill seventeen hundred. Can already get a waiver. What the bill does is it creates a group that does not answer to the roll state commission and a whole section of laws that the state of Arkansas put in place to protect the public. I appreciate the opportunity and the privilege to be here today. Appreciate your patience I'm glad to answer any questions that you have of me. Thank you for testimony I believe there are a couple questions are to Richardson I believe you. Have questions. Thank you Mr chair of. I had does have a couple questions yes so could you tell me what what specifically is the difference between managing a property and being a real estate agent broker what what was the working differences of those two. There's. It's basically if we were to draw a Venn diagram the overlap is substantial when if you're managing property we're gonna run into tenants rights leases you're gonna have all kinds of of real estate issues with when you're managing property you're managing real estate in the real estate licensing is called a broker's license and called salespersons license but I assure you it's broader than just those two things the state of Arkansas is elected to put property management in there with the the broker and sales people and those people who manage property residential and commercial deal with those real estate issues and learn additionally all of the issues that go with the fair housing act have laws of habitability and things like that that go with keeping tenants happy to have happy tenants you have a full property so there's there's there's no difference between the two there there's differences. But didn't you there's not a fine line you can't that it overlaps the. The with the issues you can't manage property. Without being knowledgeable of real estate because the property you're managing your managing real estate. I'll get back. Representative Eads yes okay okay. Any any other questions for this witness. St thank you Sir for your testimony thank you all okay maybe one month or so. Yes Sir so if if those items. If those items overlap you know so much then. You said there's already a waiver in the system that people can be can benefit from yes Sir right why is there a waiver then if those overlap so much the waiver is put in place by the real estate commission I don't know why I know that it's there and I know that exist and that they review the perfect the experience of the applicant whoever's applying for the waiver to see if they have the experience necessary. To be granted that waiver. You don't have to be licensed to manage your own property you don't have to be licensed to sell or lease or rent your own property and there are situations where you can work for an owner. And not be required to be licensed you there are certain tasks you can do for the owner. If you're being paid a salary. And that will give people experience that way that they would have probably better experience than they would have gotten from a course of any kind very much like representative McGrew said experience is the best teacher so the real estate commission has that opportunity to review that experience in grant that waiver thank you thanks thank regeneration any further questions thank you Tess Mercer. Is there anyone in the audience would like to speak for this bill for seven hundred. The. Sir I do not have anybody in the proposed come up and introduce yourself and presented the testimony. Yes Sir my name is Daniel brown from hot springs eight so I'll just briefly tell my story and why a for me personally I and for the bill I started in two thousand eight it bought my first rental property just a little duplex and started just my morning or just you know on my own just figured out how to do it built up to over three hundred dollars and in doing so I continuously what people are saying Hey we we see how your boots on the ground your you know I was mowing the yards I was did you know collecting rents doing leases and they so we love the hands on you're doing it personally would you manage ours and I had a guy in our church that came to me he had fifty four homes in the semi management company said that is not bad he said I just see the way you're doing it you're very invested he said would you manage right now it's like oh yeah that's great so a couple weeks later I was with a friend who's a broker in Little Rock and I was telling the story he said oh no you can't do that and I said why can't I do that I do this all day long I've got eleven full time employees this is what I do and he said no you have to be a real estate agent as a no I don't you don't understand I don't want to buy and sell real estate I manage properties two completely different worlds. And he said no you've got to be a licensed real estate it's actually got to be under a broker and I'm sorry man I so I put it off for a couple years I had over four hundred opportunities four hundred dollars that people wanted me to manage Isaac I'm sorry guys I can't do it I don't want to be a felon and it so finally I said you know what I'm just going to go get my real estate license I don't want to be a realtor I don't you know I've bought and sold hundreds of deals and that's not the path I want to go only be a property manager of of my colleague plus a let me help some other people out especially the low income that was the biggest burden I saw as the low income nobody wanted to mess with them because you get a percentage well you're right a six hundred dollar apartment sixty Bucks a month those are the ones that take a ton of time and effort nobody wanted to do those so I went and got my real estate license took the time to the sixty hours I would go up and ask my instructor questions during the you know what during the breaks and she she kept saying well this is real estate this by and so and I think I don't I just want to manage properties so I took my real estate license pass my. I got past all the the the the classes afterwards pass got my test went to a broker in hot springs I said to hate I want to manage properties is that what you know you're your real estate agent I said no I want to buy and sell real estate I just wanna manage properties and he this is a broker did not own any real estate and so I was asking questions is I don't know this I don't know that that's what I've done and I've got over three hundred doors have been doing it for years now and he said okay well you can put all your properties under bill they're gonna have to come to me and I said okay he said but you know we we were getting ten percent is what I was going to get and he said but you know we're gonna want forty five percent but I'm doing all the work I'm the one that's done all of this I know what I'm I'm you know nothing against him just this is what I do and so I saw a man I don't I'm not to be greedy but I won't pay you for five percent of my ten percent what I'm the one doing everything so I went to another broker and another one to three different brokers with combined experience of over fifty years in real estate and all of the same thing none none of those three unless I'm sure there are a lot to do on property but these three did not own any real estate and as a young guy and again not trying to be arrogant or cocky it's just this is what I do all day every day I knew what I was doing but I was going to have to pursue a whole another career as a real estate agent I don't want to be a real estate agent I wanted to manage properties in the world it's just like saying a car salesman. He is also a great race car driver and mechanic no that's just what they're selling a product and again I have been a part of hundreds of real estate deals to say that the car salesman is going to be a great mechanic and a great race car driver two completely different worlds one is very good at selling a product the other is very good at managing the product is so that's why I'm you know and I guess I'm not real political all I say or do but just as a young guy who started off and built this company and see such a need for people to manage properties I've got open would not now I've said call this company called this company owes to date over nine hundred and fifty low income doors that have approached me begging me to manage because nobody's managing them and I can't do it thank guys I don't felony I can't do this I would love the opportunity to help these low income tenants and all I can speak for the world but I'm in the hot springs that I'm in to help these low income tenants have somebody who's boots on the ground who owns multiple doors themselves who this is what we do I'm the race car driver and the race car mechanic I don't sell the race card I just operated on a day to day basis so that's why and for the bill. Thank you for testimony what would you take questions yes Sir there's a person you have a question. You're recognized. Thank you Mr. The question I call myself going to be a real estate agent that was probably about thirty five forty years ago and I went through this real estate course but when you went through the course I I caught something in your conversation you said there was nothing in the course to talk about property management is that what you said. I don't know what I'm supposed to say or not say but I'm just I'm just when we went through the course which again the only reason I went was for property management. There when we came to this section there was a small section of the book this state just a few pages on property management and we were running behind I did that thing where you to die twenty hours a weekend for three weekends and it our instructors and we'll get back to this whenever then. You said just one quick follow Mister chair he said it was a what three or four pages so I I don't know how many we didn't cover it I don't how many pages now I went home and read through it but we didn't cover any of the pages are thank you Mr. The road you're recognized for a question yes thank you Mr chair up why did you choose the route of going through the Wilder courses in taking the real exam instead of simply plan for the waiver didn't know about the waiver and from what I've learned with the waiver I'm still gonna have to be a real estate broker I would have or have to have a real estate broker company I would have to be I don't want to sell real estate I don't have to do continuing education on real estate I've got wonderful realtors that I use it again but let me say right after I met with those brokers I just want my act my license then I'd work for six eight months I just put it in active I don't want to do that I don't I find what I'm good at I'm good at managing my realist I'm good with dealing with tenants and get it right driving the debate race car maintaining the race car so I just put my in a licensed and active and I had a lot of people say well you could be getting that three percent I don't buy and sell real estate I buy it I don't want to represent myself I want to let people who are really good in that field do that I want them to buy and sell real estate I trust that they know what they're doing I want to manage the real estate. So that's why I don't go to that's why I haven't gone through the waiver I don't want to be a real estate broker. Thank you SO much to that question and I think you've just put this bill in the perfect light I'm I manage my own property I've thought about going to the real estate school but I don't want to spend two years to be told how to do my job how much does it cost to get a real estate license do you know offhand. No I don't I don't remember it other than two years of working for somebody else few hundred dollars maybe I'm it the money wasn't the issue I just I'm very good at what I do but I can't do what I do for anybody else without getting a Class D. felony unless I want to pursue a whole nother career unless I want to sell cars I don't want to sell cars I want to manage real estate for people who need good people. That know how to manage real estate managing the real estate and right now we have a shortage of that at least in hot springs a great shortage of that thank you yes. Thank you any further questions committee saying that they can protest Mr yes Sir thank you. Thanks person signed up to speak on this to speak against is politic Richey. Print. Representative rose you're recognized I have a motion stage motion was a move that we limit testimony to five minutes or less not including Q. and a time. represent road is made the motion to limit of five minutes or less not including Q. NA all in favor that motion say aye. It does say no. If the motion is passed ma'am I believe you heard it but if you if you did just say they just play try to limit your test one to five minutes yes Sir thank you can introduce yourself and present my name is Paulette Richey I am president of the Arkansas realtors association and I'm here representing the eleven thousand members of the Arkansas realtors association and bear with me like Jeff said I've not ever testified before a body like this so hopefully you will give me some leeway with that. One of the things that I wanted to address that I've been listening to is that the real estate class and test has nothing to do with property management and I would like to give you a different spin on that I am a licensed ARE C. instructor and there is a lot more to managing property that then what the gentleman over here was talking about that deals with protecting the public so. There may not be a lot of chapters on specifically how to manage property in the real estate exam but if if you'll give me a moment I will give you some things that is and the real real estate exam and that is in the real estate class so things that we learned and this has to do with whether it's residential sales commercial sales property management Agra form these are things we learn in real estate class we learn things about agency who represents whom we learn about disclosures so that the public knows what's going on we learn about our fiduciary duty we learn about material facts about the property. We also learn about handling and disbursement of funds which is a huge part of property management. We also learn about the accounting for those funds the record keeping we learn about contracts we learned about land use control we learn about liability due diligence advertising compensation following client instructions representing the clients best interest we learn about property condition maintenance and repairs we learn about dealing honestly with all parties complying with state and federal housing and environmental conditions and anti discrimination so all of those things apply to all different types of real estate and as far as teaching. The gentleman that was up here just before me and I'm sorry I don't remember his name said nothing was covered about property management when I teach and I'm assuming other instructors do that as well we tell our students that those are the basis that we're learning that I just said to you and then. Residential commercial address for property managers are told you need to go get additional education on that because if we went in depth and everyone of those different. Types of real estate. The class would be way much longer and much more arduous and so education to me is a very important thing I also. Have been part of helping develop some of the education and here are some statistics. Fifty nine of the sixty four broker learning objectives relate to property management roughly ninety four percent of the sales persons pre license course is material applicant will to property management Hendren and three of a hundred and ten items on the Aries the sales persons exam is apple will depart property management now is it about riding tenth leases or those specific types of things it's not. The real estate class also is not about how to write contracts we learn how to do that when we get under a broker and that's the reason that brokers licenses are required is because the broker supervises the rest of the people in their office the sales people to make sure that they are doing what they're supposed to do. And I know there's been some mentioning I know I'm about close to my time so somebody wave at me. I just wanted to follow up about. If you own your own property so if you own fifty dollars or a hundred and fifty dollars you do not have to have a license the only time you have to have a licenses if you manage for someone else. Also. Just a real quick is as far as the waiver being buried in the bill it from my perspective as a lay person guys there's all kinds of language buried in every bill so you have to read it and I would expect that folks that do that for a living would be able to read those. Why would you remove professionalism from our profession One of the things that we hear a lot and I think somebody mentioned used car sale sales people ma'am yes your time if you could just go ahead Rapert to art is. There are so many complaints at the real estate commission they have to do with property management and if you were to ask them and look at that you would see that probably eighty percent of the complaints that they deal with our property management. Thank you any questions by the committee the person you're recognized for a question. Yet and may be intended to finish that but what would typically be the most common complaint you get about property management it would be mostly about mishandling of deposits and rental funds. And they could also be fair housing the course that goes into Filing fair housing complaints if you go that direction but most of it has to do with mis handling of funds. Okay thank you. The Richardson. Transferwise. It representative first and you're recognized for a question thank you Mr quick question so if I hope you found fifty unit. I can hire my best friend who's retired Committee chose fifty units that is correct. So the way the law is written right now is. If you as a person own your property you can buy sale or lease. Because it yours at your property right you can also hire someone to do that has your employee and that's your right as well. Where the difference comes in is if you're managing for someone else's property. Okay thank you yes Sir. So I don't know what I'm sorry a question. I need to be patient. Revenue rose you're recognized I can yield the representative Richardson first. But will you represent I'm sorry I don't know if I understood what you just said because I well understood initially was in order to manage someone else's property you had to get the broker's license so if I'm hiring somebody to manage my property they're managing somebody else's property right I'm doing it as an employee of the owner so it the way the law is written it means that I am doing it as if I were the owner so that's already available in the law. Okay. The question was Mister C. thank you for your testimony yes I want to run through something you said just a minute I'll make sure I understand correctly you were mentioning complaints or made to the real estate commission you said eighty percent of those complaints roughly ballpark were with regards to property management you said something about deposits or mishandled or something along those lines yes who those complaints about. Are these bodies individuals who are not licensed property managers. I got to most of it our tenants or are property owners who. We try this again and I'm not on the real estate commission so I don't set and all of those that it's mishandling of a tenants are publics. Deposit money like rent deposit so when they move out they don't get it back or it's been spent some other way and it's not we're supposed to be the my question was who were the complaints not from but who were they about who is doing the mishandling. The property management people so are those licensed property management they are. Which begs to say if you have people who are even going through any education that would be a lot more of that. Okay he. I don't know if I answer your question no you answered it just it was contradictory to me because I heard you question the professionalism of individuals who don't have the license but then followed up with eighty percent of the complaints that are to the property manager of the real estate commission have to deal with property management specifically as I just kind of seemed contradictory to me and I see your point there I would just like to re iterate that. We all believe as Mr Yates said that education is a very important thing And we would love to have additional education maybe requirements for folks that may be delved into specifics. But if you have folks who are getting no education about how to handle people's money and what the rules and regulations are then there's no recourse at all when that does happen at least now there is recourse at the real estate commission and there is now recourse with the recovery fund if. Folks are harmed in any way if you're not a licensee then there's no way that they're regulated there's no way to look at that payment of restitution except to go to court just clarify my question if you to indulge me yes thank you Mr so does your assertion that of the majority of the complaints eighty percent of them against licensed property managers to the real estate commission those were about property management correct correct okay thank you. Representative Lundstrum did you have a question or did you hear good represent faster well you have a question recognized. Thank you Mr chair I was listening to your testimony about the things that that people learn to do this when they were standing for their real estate license. In a lot of it I mean it just a. Forgive me I don't remember everything you. Listed but a lot of it sounded like you know learning the correct clerical and bookkeeping skills honesty integrity how do you know account for money Which people learn those skills in many many ways not necessarily through a real estate license and then when you were speaking about a property management indicated that the people who want to be able to manage property need to go on and take additional education because they don't get what they need with the real estate license and that's really what we're talking about today is is the justification for having a real estate license to be able to manage property if they had if getting the license doesn't give them the education they need why should they get the license. And I obviously did not make myself clear that even if with a real estate license if I'm going to sell. Residential real estate. Then the reason for the two years of being under a broker is said that that broker who has been in business can teach me the contracts and can teach me how to do the finer points of doing that and that is the same with property management anything in real estate you still have to learn your fiduciary duty to your clients and that type of thing. Thank you. Thank you any questions. Walker. The so you mention the contract pays what I need to go the other two years of trying to and contracts is one of them the contracts that real estate would be dealing with of the buying and selling houses but in this case we're talking about property management so how would they be getting that experience by serving under a real estate agent for two years before they go and or before they fully understand how property may I'm just not I'm having a hard time figuring out how these to relate to each other I think we'd be better off trying to figure out what type of property management training that would bait and put them inside of the real estate world custom made As to don't really relate to each other and if you're able to help me understand that anyway okay I'll try to do my best Again we're back to so many of the things that we learn in real estate school we teach in real estate school have to do with. Property rights of those types of things and. The real estate class that we go through to get our license teaches us the basics on the foundation of real estate so if I were in your asking me if I were going to do property management I'm going to go put my license under a property management broker that that's what they specialize in and if I'm going to do commercial real estate and I'm going to go put my license with a commercial broker who specializes in that as well. So. If a property manager person came and set under me as a broker that specializes in residential real estate then I would be. It would be my responsibility to make sure that that person got the education that they needed in that particular field. And that is what would be my responsibility so by that logic though they would better they would better be served by being under an experienced property management and being trained in that will build in in real estate as with residential or commercial. It's the same thing but I mean if I wanted to do a real estate in the commercial commercial business and I would want to I guess you can say work alongside a professional commercial real estate person but we're talking about property management and so. To me we're not comparing apples apples and if we're comparing apples to apples we would be looking at have been people that are newly. Whatever it is in property management serving under. Question rocket I wanna catch up you have a question you get your question we will have a discussion buried. They are very. Thank you. House any other questions from the committee thank you just one. Is there anyone in the audience whose son there's no one signed up to anyone who was picked for the bill okay similar there are more people are signed up to speak against the bill the next person appears to be Wes women here in the room please come to the end of the table in addition self and who you're with and proceed with your testimony to a member of the way under the the five minute limitation period. Yes Sir thank you Mr chair thank you to this committee for allowing me to speak today I know it's been a long day and I appreciate your patience my name is Wes Freeman and I am the secretary treasurer for the Arkansas realtors association have been in real estate for twenty one years of owning my own company I did property management through my company so I would tell you that I do understand what the gentleman over here is talking about there are people that go and. In their own way in a lot of different professions I think we're what we are looking at and or at least in my perspective is I'm looking at consumer protection now. The gentleman over here it is is he capable. Sounds like it is everyone that wants to be a property management cable capable probably not is everyone that wants to be an attorney but is not licensed are they capable probably not can they go in court if they're taking the court can I go on court and represent themselves. Yes can they go in court and be hired to represent someone else not without a license. It's not advised by a lot of people that they do that for themselves but they have that right. They have the right now for their own property. My question with this bill is. If they are licensed. And the ARCC is not overseeing them. Who is the regulatory body who was the oversight for licensed property managers. Who's going to make sure that they have the experience required who's going to make sure that they have the education needed in the continuing education. No license. Means. No education most people not gonna go out and get their own education of the I'm all for on the job training I've done it in a lot of different fields. You also need training or education and fair housing laws. The gentleman may have done that that doesn't mean that everyone else will. Agency everyone wants to know who's representing them and was not representing them. That's very important do these German know that probably is everyone else who wants to be a property manager probably not. The material facts about a property when you start talking about low income properties. That becomes more and more important. When you start talking about fair housing unfortunately a lot of times when you're talking Get pushed aside because as the gentleman said you're making sixty dollars a month you're making a hundred dollars a month we'll take your money will give you a key. But that's all you're gonna get for I'm not saying that the German do that but that's what you're going to get from a lot of people minimum money minimum service. I'm not saying it's right I'm saying that's what you run into in a lot of cases with licensed property managers with a licensed they are regulated by the RAC who regulates unlicensed personnel in any business. I heard mention this morning with the farm bureau bill it was the gentleman was presenting the farm bureau bill. That there was a big concern for consumer protection. Where's the consumer protection for license property managers. That's a big question for me if any of us in this room. If our parents or grandparents want to hire someone to manage their property and they get. Taking advantage of because that happens to elderly people a lot more than we like to see. What is the recourse for that. I understand the the fidelity bond my understanding of the fidelity bond and I'm not as well versed in that is everyone else but. My interpretation of fidelity bond is that protects. The owner. That doesn't protect the consumer. One other thing I know I'm probably getting close on time your time is running make it please press one if you would allow me. We spent several years between A. R. A. in the legislature. Coming together with the landlord tenant bill for habitability we just passed that last session. If you go into this. Path of unlicensed property managers you run the risk of I'm doing a lot of what we have built a lot of years in accomplishing and working together. I appreciate your patience thank you any questions rather quickly. Thank you for testimony Sir thank you. Anyway I speak for the bill. Snow level there's one more person who signed up to speak against the bill. Stacey Hamilton. Yes the go then the table introduce yourself and reserve Richmond recognized. Question for you for the chair. Do you know that could you provide with the definition of a fidelity bond is. I can get you that okay. I think you have understanding because I've I've I've heard it mentioned but I've heard two different responses one is on one side one of the other so I don't know if we have an attorney or somebody that could give us some we will we will work to get to that answer I bet so I would imagine representative will will take care of that in this close. Ma'am I'm sorry may already have delimitations self figure within particular testimony when it five minutes okay thank you I'm gonna keep this pretty short my name is Stacy Hamilton I'm a realtor here in Little Rock I'm here on behalf the Arkansas realtors association and the Little Rock realtors association and I'm here to speak against bill seventeen hundred and less Freeman the German who just spoke got a lot of my key point so he I think he did an incredible job of expressing what's really important about why this bill should not be passed and one thing that I want to add because the question was raised earlier how do real estate and property management how are those two related I have sold real estate that manage property for fifteen years I will tell you the two are very similar jobs I'm advertising property I have to always be mindful of fair housing and my one biggest thing with this bill is if you remove professionalism from these property managers fair housing is going to become a large issue we are educated about fair housing we respect fair housing and it is at the top of our minds at all times when we're meeting with the public if you remove that requirement from property managers you're gonna see a lot more fair housing issues in the future so for starters we meet with the public we show on property when they're interested in that property we disclose the finances of that property whether to purchase or lease how much is that going to cost them is this property can be a good fit for them next we move into disclosure of what are the things that we know about this property that's important to both the buyer or to the tenant so they need to know what's going on with the home is it close to noise disturbances are there issues with the home that need to be disclosed that affect the health or condition of the home what does that tenant or buyer need to know in order to move forward then we prepped the contracts we do have real estate contracts for purchase we also do I leases so we have seller's disclosure. As we parked after all the leases we get everything together lead based paint if they're gonna lease a home that was built before nineteen seventy eight they need to be aware of the concerns with that all of those things that paperwork that we draft that's legal paperwork we've been given the right to draft that if you have unlicensed property managers they're not gonna be correctly filling out those leases for those tenants or those landlords and will open you up to a lot of lawsuits. And again I go back again and he hit all the key points that I thought were very important today I'm talking about who's going to oversee complaints if we remove this license for property managers who who oversees those complaints when their finances are mishandled when the money's taken when the money's not given back who's going who's gonna hold those property managers to the fire and and make sure the public's taking care of their one question you represent you asked was about the complaints to the real estate commission and yes it's true a majority of them are property managers I think that tells you that this is an industry that has a lot of issues and that that need to be corrected removing education removing licensing does not solve that problem that sends us in a backwards direction and finally again fair housing if you enforce this bill if you remove the professionalism of property managers you're gonna send us decades back in regards to fair housing that concludes my comments. Thank you would you be willing to take questions yes okay reserve road do you have a question yes thank you Mr thank you for testimony you mentioned the need for education and from both sides of testimony and this afternoon it seems like. With regards to the realtors education real estate licensing education that there was not substantial property management. teaching course materials etcetera etcetera would you agree with that Hey unfortunately I do not agree with that and I real estate school I went to actually did go at length on that and we did spreadsheets on collecting rents and where deposits held and where the escrows and when those are deposits returned where does that money come out of it and when repairs are made to the property so they're different real estate schools of course there statewide maybe some have lacked in that area but the one I attended did cover it greatly would you go to school just off David appearing North Little Rock okay thank you. Thank you Mr thank you any other questions by the committee racialised recognized are you ready it's also property management schools and also certifications that you can take yes and I do take those as well they do take those too but I think this licensure is an extra step in protecting the public because if you only go to property management school and you Miss handle a person's fines or you are discriminate against them if they can't come back to the real estate commission and get some protection them you have caused a huge disservice to the public follow up. But then you would come back to the owner. To the landlord yes to the owner of the property correct you could get taken to court if you're low income and you've got five thousand dollars laying around that sometimes hard to do to hire attorneys and taken to court there's always an attorney that's willing. With the right dollar about thank you resumes question the the real estate schools today are the answer to the real estate commission the real estate schools are governed by the real estate commission yes they're watching why would teach property management one not I think they all its you're talking about difference of instructors I can't say that one does teacher one not that the way one expounds upon it is probably different depending on instructors. Any other questions for the person. Thank you Mr how much. Teaching did you have under for housing when you want to release state school. How to take over I can't remember the exact hours of it but we re fresh on it every single year and so I get at least one to three hours of fair housing education here. Okay. Thank you thank you as if I was recognized. Thank you Mr hi. I have to say that before I heard your testimony I really. I was leaning toward this bill because it made sense and your focus on fair housing is of great concern but we had a bill here earlier also that caused me concern because there was no where for you know the the citizen take out if there's an issue. If so. Number one I guess I would ask you if those two issues were Addressed in the bill then do you think that the bill would be Viable fair you know that makes sense. You never know until you see it in black and white exactly how it played out so I can't say for sure but it does concern me greatly I feel like this session previous sessions have gone to great lengths to improve the relationship between tenants and landlords in our state if you remove the professional licensing of the middle man of the property manager you only decrease those relationship you lessen them and make them more difficult to encourage more landlord tenant issues and so a bill could but without seeing the words in black and white it's hard for me to know for sure thank you so much. Thank you any other questions by the committee saying none thank you for testimony ma'am thank you for each. There's no one does there's no one else on that was there anyone else not into like to speak for against this bill. They say no one. Recommend or you're recognized to close for your bill. Thank you chairman. First there dressed a facility bond is I was going through this and I was working with the lashings in turn with lasting board with discussing different kinds of bonds a fidelity bond if I understand it is up for monetary reasons if the owner runs runs off with the deposit which is one of the biggest thing to the commission is that happened it pays to the tenant for the deposit if the. Doesn't pay if they pay the rent and he runs out for the money it's happening it's monetary take care of all the money so that it's to protect the tenet not the owner. You know if anybody in the owner's employee miss manages money to take care of that it protects monetarily it doesn't take care of if someone is Wrongfully evicted. But it take care of them the money issue so that when that that's ability bond The sale also want to make clear that in in my bill it doesn't say you have to own fifty unity to you have to have experience of managing fifty unit kind of the analogy that we used about the car on the mechanic. Would you rather have the person that selling the car to the mechanic work for would you rather have the mechanic did mechanic work you know that's what this is just about would you rather have a real estate broker that actually has no weak spirited managing property and no education at managing property or would you rather have someone that has a the national certification or someone that has experience of managing fifty properties for over two years we take for someone who's done it we're not going to manage fifty property for two years and not fully understand the fair housing act I also want to point out that in mind. Courses that I took which were three. I did learn nothing absolutely nothing about managing property to be perfectly honest they did touching the fair housing act the hair in the broken glass and but it was a smidgen he was nearly nothing. You know when I question one of the instructors about property management not being taught she said you don't need any of that really you could teacher better I could anyway there's nothing on the test I'm not gonna waste my time teaching it. You know and so. That's the experience I had And I will say this that we've heard a lot of brokers we haven't heard from the general public. I'm gonna the cares about the tenant. I don't think we're you talk about the legislation we passed for tenet landlords one honestly we haven't passed much we have a very weak have ability bill you know I am committed to moving forward at this session to work with the working group on on landlord tenant rights I care about this industry this is this is a way to start growing in Arkansas we get too much out of state property management the two biggest complaint I've heard lately is the one here in Little Rock I can't remember where they they had to have someone coming in taking over we get hot spring Housing Authority in hot springs they're both huge out of state management companies. You know we need to do something about that that don't have anything to do with this bill what I would say this. The real estate commission has been in charge of lessening property manager for a few years now. And I don't necessarily mean to be critical but you just heard them they made my thing they get more complaints about property management lap because they don't teach anything on it they don't require anything on it at least this requires insurance experience education. They don't require anything. In the end speaking with them trying to first thing they want to do when I was working with them as they wanted to take the recovery from away from property managers this covers it on the fidelity bond. You know it's a. And it also might say this doesn't affect anything else in their last and. It doesn't affect the real estate commission can still come against someone in property management to doing something illegal. This will strengthen property management in Arkansas it's the starting point we got a lot of work to do this is not a perfect bill but it leads let our Kansans Sturch managing property and start filling in the lower end because we do need to care about the attention what goes on there this is beginning and imploring. To please support this bill. Thank you very much. Questions were as close for his bill one of the ways of the committee to pass by the laws term is amended to pass motion that's a proper motion is there any discussion on the motion. Okay Senate. Discussion on the motion represent flowers. Collins mentioned before I really was leaning toward voting for this bill and as I've listened to more and by the way at I took a real estate class before and in my class we did learn some about property manage ment not a lot but some and a lot you know about habitability a lot about fair housing practices and. two things first of all it seems that what what the bill does is sort of. Moves property managers out of. Regulatory oversight. And. when it sounds like the problem the real problem. Is it all I keep hearing is about how you know that schools don't teach enough of it. teach enough about it if that's the issue then let's address that. But the analogy but I kept thinking about. Is how medical schools some medical schools focus a great deal on different aspects of medicine but at the end of the day every medical school student a graduate still has to take the same boards they still have to get the same license they still have to do residencies different residencies look different. And then when you want to get a subspecialty you have to do a fellowship. And it. So I've. I see the issue I really do. But at the end of the day. Not. Not having a commission to go to if there's an issue and saying that at the end of the day a person has to get a lawyer is a step backwards for for people for renters. And the other problem That I see of course is. And I'm no I don't mean any harm I haven't heard any side really prioritize landlord tenants rights. Legislation that would. Fix that issue first I would like to see that issue fixed first always for we go tooling around with the regulating in a way that would affect renters who don't have the benefit of the same resources that many of us have on property who can hire an attorney so I'd like for us to think about the lion's share of our constituents and how this might not protect them if we do this and I'm saying this largely agreeing with what this bill does but I think we have to think about people who don't have what we have. Thank you and I ask that you not vote for this bill thank you thank you any further discussion on the motion. Person Richardson you're recognized for discussion on the motion thank you Mr chair and I typically don't even get involved in discussion but I think this this bill I think it's use what we've been trying to do making making it easier for people to. To work in and and do the things that they're good at This it's my opinion that this meets the need that we're not having met right now of when we talk about. People being accountable date in the bill it says is a certify is certified as a property manager from a national certification institute so that in itself says that they're getting some training and some ongoing training to maintain the certification I think Mr McGrew is done a his work really really hard to get where we are on this bill and I would tell you colleagues that I think this is a step in the right direction and I ask you to support. Any other discussion on the motion. Saying none we have a motion do pass by which the ones term all in favor say aye. In a post I know. The motion is carried summary congratulations you passed your bill thank. Representative Meeks said there's requested makes. You have witnesses. You're gonna be here. What number is this. Graduations. Resident makes I believe you have a couple of bills on the agenda but I believe you're on sixteen twenty eight is that correct the noncompete bill correct yes at sixteen twenty eight in my understanding is your other bill you're not going to pursue that one as engrossed I know fifteen eighty eight it's been withdrawn so thank you that one is Become toxic for various reasons I know we won't be presenting that thank you so fifteen eighty eight is going to be withdrawn members Russian president makes you're recognized to proceed on sixteen twenty nine thank you so representative Stephen Meeks District forty two with me I have Mr also with the knowledge immunities himself real quick. My name is Josh so first. My name is Josh Silverstein I'm a professor at the university of Arkansas at Little Rock William H. Bowen School of Law but I'm here only in my individual capacity I'm not speaking on behalf of the university. committee so this bill was brought to me by a constituent who Unfortunately is. Found himself in a situation where he feels that he's been trapped by a non compete clause he works in an industry that is a very well to say it's a very small under straight and everybody within that industry requires a non compete law so you can't enter this profession in this state generally unless there's a non compete clause and what that non compete clause does is it locks you in to that employer you are almost becoming indentured servant and the only opportunity that you have to improve your place in your career or if you are in a hostile work environment the employees that find themselves in this situation the only opportunity they have to get out from underneath that is to leave the state or to go somewhere else. And. If you have. Family you've developed your whole life in the community your are a pillar of the community. It's not fair to put you in a situation where you're deciding between I'm stuck here. In what is potentially hostile work environment I'm stuck here and I can prove my work conditions. To compete to go. File somewhere else because I'm under this contract and so what this bill does is it tries in the very best possible way to meet the concerns of businesses within our state but also to protect the rights of an individual and the way the bill does that now they are just briefly go through most of its on page on page four what it says is that dower basically going to be getting rid of non noncompete clauses however. Non solicitation agreements still remain in effect. Confidentiality agreements remain in effect the players not going to take the employee is not going to take his job secrets and take it to a competitor. cabinets are prohibited or trade secrets or inventions are talked about that coveted entered into by a person purchasing or selling the good will of a business or otherwise acquiring or disposition of an ownership interest the individual who Chefs cannot actively solicit the customers from the old business so for example if I'm in sales I can't go to a competitor and solicit those customers I can't learn all the trade secrets of being a property manager and then my current employer and then go out start my own business and solicit those customers I had you have to go after a so this is a a fair way to give these employees the opportunities to improve their situation while also at the same time trying to protect those business interests of that I know need to be protected and with that I'm I'll pass it over to servicing. Covenants not to compete for non competes for short Page two fundamental American values against each other freedom of contract and competition that's what we'll states at least regulate such provisions more heavily than nearly all other types of contract clauses and in many cases the ban or large we restrict non competes the in a trust laws that we have in this country actually flow out of the historical common law governing covenants not to compete the adopted many of the same principles into the Sherman anti trust act that were contained in the common law rules governing non compete clauses in the nineteenth century not many employers in Arkansas and generally require prospective or current employees to sign a non compete to gain employment or remain employed and employers regularly require non compete clauses solely to restrain competition employment market rather than to protect the various legitimate business interests the representative Meeks explained such as trade secrets and genuinely confidential information. Many employers include these restrictive covenants has also called simply to create a disincentive for their employees to try to leave they know the clauses are not enforceable for example certain food delivery services that have no confidential information at all I requiring their delivery people to sign non compete clauses those clauses are clearly on enforceable but most non compete most of those employees subject to those non competes don't have the resources to hire an attorney to challenge the call. Okay because is critically harm our labor markets the make it much harder for businesses to hire people that we know how different difficult it is right now for employers to hire folks and make it harder for consumers to use their provider of choice because if they want to purchase from someone stopped to a non compete they often can't do so. Many states enforce non competes in many fewer circumstances the Arkansas including Colorado Idaho Illinois Louisiana Maine Maryland New Hampshire Oregon Rhode Island Virginia and Washington and states from across the spectrum politically have actually banned are almost entirely banned non complete competes including Oklahoma North Dakota on the right in California on the left yet those states have a vibrant flourishing economies and so Arkansas does not need non compete clauses to have a well functioning dynamic economy the other two main Connor arguments for why we need to keep non competes the first is that it encourages employers to invest in their employees but this isn't supported by the bulk of the empirical evidence and the fact that so many states have limited or banned non competes and not had trouble with their employer is investing in their employees shows that this is just not a concern we need to worry about the other in the spring of contract doesn't banning non competes restrict freedom of contract sorts of contracts that we limit and the most important type of contract we limit our those that restrict competition that is what the anti trust laws are designed to do to restrict contracts with the principal purpose of limiting competition which is unfortunately what large numbers of non competes do. And what ends up happening then is we heard our labor markets we heard employers who are trying to find employees we had competition and we restrict consumer choice and so I support this bill strongly because I believe it's strikes the right balance in limiting non competes but preserving things like non solicitation clauses in trade secret protections that give employers the genuine protections they need while not giving them the power over our labor markets and over their own competitors but they have when they can have non compete clauses. Thank you very much for listening thank you and then just one final point that I'll make. By getting rid of our non compete and and this bill is modeled after the legislation at Oklahoma Oklahoma has successfully passed this. By getting rid of the non competes what we do is we encourage businesses within our state to compete for that talent that they have to develop strong work places to try to attract and to keep the talent that they have and also to try to attract talent from other states this is an opportunity to help us bring talent to Arkansas and not force our talent to leave to go somewhere else simply because of these non competes so with that we will open it up to any questions from the committee. Thank you representative questions by the committee. representative Ferguson recognized for a question. Sorry yeah it typically these noncompete stuff they have a geographic component what what would be a typical geographic limitation on on these non competes. Our. So it it's it's generally probably gonna depend on what the industry is on what those those are they can die generally So for example if an and in the news media it might be that that news media market if it's a a sales position or a a shelf for example it executive restaurant it may be a fifty mile a hundred mile geographic but generally it's going to be to the extent that if they want to switch employment they're gonna have to move they won't be able to speak to continue in that field and still live in the same spot where they live practically. That's a critical point is that they're generally broad enough that people would have to leave where they currently live and that makes the geographic range effectively infinite because most people don't want to or have the resources to leave with the. Yeah I I mean I remember right I had a non compete with the higher disassociated my dental office and I remember the attorney telling me that really beyond a mile or two and it was not enforceable so maybe rather than not allowing them is there some way to limit the geographic reach of them up I don't know and I'm just asking questions. Okay. just musing on that and and you know then that gets into account as arbitrary situation and then you start picking winners and losers we say nobody within five miles of that business well then the employees of that business to live within five miles said can't and the ones who are outside of that can so we can create a. So in the states that allow non competes there generally is a restriction on how broad the jury after Grange can be the problem is is that in the states that have non competes the ranges always lot large enough that effectively makes it impossible for employees to work we could narrow it a lot more and they could just a couple of miles perhaps but as the representative said that would still be huge problem for most people and employers don't really want non competes in those circumstances anyway so what kind of stopped either we're going to have the bill we're not. His or someone to testify against this yes Alice the Amendment. The person was to recognized Just a couple questions first of all a contract as a consensual agreement between two groups correct and so I'm a little confused we have Northwest Arkansas which has some of the largest companies like Walmart and all vendor bill and Tyson and Simmons and they have all kinds of people coming in and buying to go work for these companies I have a hard time believing that a non compete contract is keeping anybody come in Arkansas keeping anybody out I. This bill is to me almost frightening that we would get in the middle between a consensual contract agreement between a business and an employer an employer is making it a tremendous amount of investment to bring in somebody in the hire good talent why why are we doing this I'm a complete loss. I think we've explained it and if a. The federal police signed a non compete that non compete is generally in a FAQ for the full time that they're there. And while the you know the conditions may have been great for six months what happens if management changes and all of a sudden. Things are so great that contracts are renewed and that's why we have attorneys so by. That's why you're renew a contract and these are not unsophisticated folks if you go into these fields they're professionals and they understand contract when they go into the negotiate these contracts and usually this type of a person is somebody is making a hundred thousand dollars a year and this is a pretty big deal Sir but we're feeling when somebody's lives in people's businesses and negotiating contracts that are just gonna some long term implications I'm I'm just I'm just concerned I'll just stop there and let other people ask questions representative I'm sorry if. If you don't mind going to continue to mobile at the time that our generation ballot you're recognized. Thank you Mr chairman. I understand. Noncompete clauses. Many years ago I went to work for a pharmaceutical company. They invested a lot of money me and trying in They invested online tickets in me They sent me to some of the best schools around. And I was very knowledgeable of the product and before I went to work for them I had to sign a non compete agreement. It was on the phone and not only that the short term we want twice but it was three times in the contract so would Pete will employee enters into those type of agreement no hidden agenda try this on the funny so I can understand why we're doing this with this clear it be different imposing a little small His words to the paragraph and buried in a bill appearing in a contract but it's not like that so you know they they mold all for him to sign on loan compete agreement and that agreement and inspected the honor that agreement because they gave me an opportunity to work for that company now for me to come back and finally that. That's a violation of my integrity is also a violation of what my contract call for me to do would you agree so just so just a couple points there companies you know I've I've obviously work for companies over the year and they've invested that kind of stuff in me as well without a compound compete so that soon but not compete or or non compete and there are employers are there are employees who in in certain fields they can't get a job unless they sign a. One of these non non competes and let me let me say that I couldn't get the job either unless I sign. I agree to sign it I agree to the terms of the contract so if you agree to the terms of the contract wouldn't you agree you should all of the contract I don't disagree with that okay thank you the the question is though should you be forced to sign that contract in order to get a job. Because that's the position these employees are that that's the position these people are being put in is if I want to get a job in this field I have to sign one of these but the and then they're trapped in that. Just wanna fall. You're you're recognized let's try to move this line of work and. But but I agree to do it. So when people agreed to do it. They're going to do it L. am I correct yes okay thank you. Thank you SO was recognized. Yes I think the president Love Lundstrum and representative Alan kind of hone in on where I was going but. Two questions the first one is. are you seeing a a large number of employees being deceived into signing non compete clauses so I don't know that they're they're being deceived on the front end the question is so to fold sorry represented makes unamended catch on but that's just what I wanted to know first and I've got a follow up alleged okay expand on from there so So no I don't think they're being deceived into these I think in some some cases they're being forced into the eighties because of the field they've chosen to go into and the only way they can get employed is to either side of these or you just don't work in that field because of that that would limitation so. What I'll say is I'm almost the opposite of what representative Allen situation was was I had a couple different job opportunities that would have required me to sign non compete clauses and ultimately I decided to not take those jobs because I didn't like that and end up actually taking lesser job at the time and I counted deferred back to I hear the word you say is that they're forced into this decision but is not a gun to the head situation that's true there they are willfully deciding to enter into a contractual agreement and so I I come back to. Why do we need to. Change what a consenting adult and either another or a company have agreed to. Why do we need to do that if they're choosing to. Because of the the reasons I have given. Because you're trapping them in that position I mean I can put the question around what is it's a lot of these companies a lot of these companies want the non compete. As as as you just said. Most of the time there's not like company secrets they're they're not that they're doing it because they want to keep that believe there which I understand they want to keep him there not because they're offering them good benefits or great job environment we wanted to keep them there so that they don't have to compete with other opportunities Meeks I'm sorry what was the question it to page on Oct and close your bill I think we can was let's move this along if we cannot and I did mention that you off but and let's try not to be repetitive if we can representative Richardson I think you're recognized yes thank you of. It's my understanding that most non competes come with an expiration. Would would you agree. I'm sorry he's gonna have to I have twenty minutes I got to leave in about one minutes my apologies as I said can you repeat your question please it's my understanding when you signed a noncompete there's an expiration date of that noncompete would you agree. I have a motion motion on competes to over one or two year when that so if that's the case an individual who signed a non compete they're not happy with it they don't have to move they just can't move in that industry four year to correct so in other words they're not employed for the possibility that and that's that's the situation so for example we that's all I needed okay actually people see maps are ACT seven questions for the professor if you wouldn't mind I just clarification for me my understanding right now is Arkansas with color blue pencil state is that correct correct I'm not compete so what that means is any noncompete that's entered into it a judge has the ability to come in and say no that was overly burdensome that's too onerous and I'm going to modify it and make it fit the situation is that is that your Senate to centrally correct yes Sir thank you that was my question I just if that's one of the biggest problems though is that it encourages employers to draws brought a provisions they want knowing the worst case scenario is they'll still get it result provision that they're reasonably happy with and they know that most people won't sue anyway so the blue pencil provisions actually create bad incentives for the drafters of non competes to over extend the clause knowing that most people won't zero knowing worst case scenario they'll still get a reasonable restriction anyway. Thank you. Right now okay were presented. Brokerages for questions. Thank you Mr chair it's been quite awhile since I dealt with anybody that had signed a non compete. But it's my understanding trying on. Past. Experiences that oftentimes an employer will ask a new hire to sign a non compete in events are very professional position with the the person they're hiring has to be very qualified and then like I work for a pharmaceutical company in California and I'm I'm certain that our sales reps that we hired had to sign a non compete because you know you learn a lot of proprietary information about the products type of research that's going on you learn and the fabulous benefits humming you get fabulous benefits and it's all to entice those people to stay with the company they they they provide all this because they want them to stay they want them to develop and grow with the company and and and they they have to sign a non compete because a. Corporation can't afford to lavish that much on an employee if that person is just going to pick up and go to the competitor with their knowledge. that's been my experience of non competes I mean people who are hired for hourly jobs are monthly salary jobs they generally don't sign a non compete correct yes that would be correct I would just make one other comment for the point so you're correct with a non compete that employee could go to another company by the same token if that other company had an outstanding employee it now creates opportunity for company a to be able to compete to bring that player over to that that employee over to them. That. Well yes. This is one of those issues there there there's a lot of pluses and minuses on both sides. Thank you any other questions of the committee. Okay saying none thank you as the makes we do have some people who are signed up to speak on this bill. The first poster signed up is Randy's UC Mr look if if you don't mind introducing yourself who you're with and you can just proceed with the testimony. Thank you Mister chairman and thank you members of the committee for your attention and. And the considering this issue it is a complex issue but I would let me just set the stage for a second and then I'd like to talk about a couple particulars in regards of the bill generally speaking Arkansas head is considered a pro business capital attractive. growing economy I can think of very few issues that could undermine that and interrupt that delicate balance or jeopardize it. Any more effectively than the passage of this bill this bill strikes at the heart of the the private employee private employer or public employer contractual arrangement for employment for services I lived and worked in private for thirty four years under a non compete agreement first in sales and then ultimately in executive roles and ultimately the CEO of a pretty good size company and does it noncompete agreements were a critical asset for about how business it was very important to us that in the event that. Somebody happy somebody did like the way we're doing things and decided to leave they couldn't just load up all the customer files and relationships and business knowledge and understanding and go down the street and and commenced to compete with us I have a family member who had a very has a very successful you would call it a relatively small business in northwest Arkansas. He had an employee walk out the door and take all of this customer files and all of its pricing information and all of those details of the transactions between the the company and the customers within an almost broke the company fortunately with the the lawyers they got all got a lawyer it up and everything worked out in the business has moved on and the. Yeah that almost destroyed the company was unsuccessful in his efforts to do some other things but there are very few issues that prompted a matter response from our membership both in the General chamber side as well as the associated industries the the manufacturing. Community in Arkansas the president provoke as that have provoked as much response as this bill and this cuts across banking health care hospitals securities businesses insurance companies manufacturing companies transportation companies construction companies one of our current chairs the chair of our associated industry sector our membership is Sierra chairman of the board of a major construction company and Conway. and he says this would this is this is just threatening to our business it's terrible it's not good we need to do everything we can to oppose it so I've heard that from. Member after member company after company sector after sector that this bill it will undermine the business climate in Arkansas and set us back instead of moving us forward. I don't know that I can add much more to it than that that those are the facts from our point of view. We urge you to vote against the bill I'd be happy to take any questions if you have any thank you Mr any questions by the committee. Same thank you for testimony Sir thank you appreciate it thank you Committee misters spoken against the bill as everyone in the audience would like to speak for the bill. Nineteen no one is there anyone else in the audience would like to speak against the bill. Doesn't it. We do have we have someone so if you wouldn't mind just introduce yourself who you're with then proceed with the testimony thank you Mr chairman I'm Kelly R. Stein I represent the independent insurance agents of Arkansas we represent over three hundred independent agencies across the state of Arkansas I'll be very very quick yes so representive Lundstrum this is a consensual agreement and I would also say that this is up totally wiping away a standard practice of business especially in the insurance industry it only applies really to well paid highly commissioned producers we're not talking about clerical staff would not talk about customer service representatives we're talking about investing in highly commission well paid producers so that is my comment that those are my comments and something that is very strange to the the regular course of business in the insurance industry thank you Mr chairman members of the committee thank you Mr sound any questions for him by the Committee saying that thank you for testimony Sir thank you. We have one other person I believe I would like to speak I believe against of the bill is that correct so if you would bless yourself who you're with and proceed with your testimony. Yes Sir. Too short to get that might Randy Mastella University of Arkansas fable and I'm representing the fable institution only you're not the UT system but we're opposed to this bill for the many reasons you've heard here today all of our coaches have an SEC non compete clause and as a school in the SEC that doesn't have the resources of several other schools in SEC to include two more that are coming and one in particular in the southwest we will get out paid very quickly on our coaches are coaches coming to those agreements with an agent and is a consensual agreement that is not gonna have negotiated part of the contract and when that contracted up is up that is re negotiated again if you follow sports of a coach is doing well they usually don't wait until the contract is up to come in for re negotiation it can't and there is you all know they're very well paid to do this if this bill was to pass what it will cost us to do to go to our coaches of all nineteen sports and have to re negotiate every contract at that point if unscrupulous agent you know you can you've got us over a box you can demand more money relief for more money so this would be pretty devastating to us. Thank you Sir any questions by the committee. You saying that they give their testimony. we have this or anyone else with another person is there anyone else I could for the bill. Okay single as anyone else like speak against the bill so if you would just introduce yourself to your within particular testimony. Thank you Mr chairman members committee I'll be brief I know today is getting low I'm not a Baker how represents the Arkansas side as certified public accountants and Association as as become today and and share with you their opposition to the bill these kind of contracts are something that are used with our managers and in our farms and long with the higher paid employees it is something that would be dangerous for our of our state our communities our businesses skews me to to alleviate this not only I think it's also interesting talking with the office they've not only of our members are not only one concern but their customers are calling them and saying we're concerned about this what's going on with this this is part of what we do and again I would assume that if enticed to sign a contract with a clause in here there's something in that agreement in there for me also maybe later on I find I made. A choice of model made differently but again that's individual choice that's individual contracts and thank you Mr chairman I appreciate talking to be here thank you for testimony questions by the committee the same nine thank you Sir thank you. Well signed up to the one the other side speak for against the bill. The thing that one person makes you're recognized to close for about. Thank you Mr chairman thank you Committee not I've been doing this long enough that I can read the temperature in the room but before so just gonna make a few brief proved to be that now can we talk a few brief closing remarks obviously as I said this is a constituent bill so I felt compelled to do it for that reason because while the business community they have the resources to hire lobbyist to come down and lobbyist on these bills the average citizen doesn't we are the lobbyist for the average citizen right that's our job that's what we get paid for and so that's who I'm down here lobbying for because for the average citizen the other comment that I will make as you've heard concerns from the business community and and and we all know this I support of business computer I want thriving economy in Arkansas I want us to be able to compete they have expressed doom and gloom of this bill has been passed in Oklahoma and several other states they do not have non compete contracts and the economy's of not falling apart it's not been the end of the world. The last point that I'll make an office my comments with this. I understand both sides of this argument I understand there's good to both sides here you've got the group versus the individual is what it boils down to what our founding fathers we're looking at which whites dropped his they founded our country based upon that the rights of the individual. Trump the rights of the group. And that's what this to me boils down to it is that the individual who has a greater rights or the group slash business that has the greater rights and with that. Share a good vote. Thank you at cemex ready mix as close for his bill. The members was the will of the committee. Okay it appears that there is no motion at this time of the makes the the your bill itself like a motion thank you for your time Committee thank you represent makes. I believe represent less terms and waiting patiently if you like to go to the end of the. Table and. Mr. Yes well resent Lundstrum goes in the table I just would like to say for the record that for two times in a row this week the state chamber and I'm issues that have been vehemently on the same side. Let's be taught the session must be drawing near near. Thank you for the there's amendment being passed out members and while the amendments being passed out on seventeen twenty I believe right now it's. Yes. Seventeen twenty is about digital currency. It's just old protects digital content protects privacy for the individual currency that currently we have eighteen different types of digital currency and this allows for individuals to have privacy and also requires that Requires that privacy be maintained for that digital currency it also the amendment is provided by the banking industry to help them stay in line with federal law and there's no controversy on this bill with that I would appreciate a do pass how's that for so we have to do pass on the amendment at this time so just to do pass on the amendment Collins favor say aye opposed I know that the members pastors and western if you would just present your bill as amended yes the bill as amended is to protect privacy for individuals using digital currency and that's pretty much it. Thank you representive any questions by the committee. Okay. No questions by the committee. We have no one who was signed up to speak either for or against this bill represent lost would you like to close for your bill. Yes I am hoping this will keep privacy and check with the coming changes in digital currency with that I would ask do pass the representative was a roster of many motion do pass as amended all in favor say aye. The post I know graduation pastor bill thank you colleagues house bill seventeen eighteen is just a refill reaffirmation on legal tender being of course the calendar and also silver and gold and it also is permissive so that we don't have if a city or county should somebody desire to pay with silver or gold obviously I don't think that's going to happen but that they could use that for payment what weapon was about a minute I'm sorry we do have an amendment that is permissive sorry I'll go with the amendment referred to them in the first yes I'm sorry I'm trying to go as fast as possible. This is just a. Amendment that just has a may instead of a shall. Thank you. We have a motion to adopt the amendment balancing Eubanks on favor say aye. Seven no the amendment has been adopted you may proceed with your bill thank you representive Eubanks this is just confirming of reaffirming legal tender in the State of Arkansas in and and this is in line with federal law that so in gold is also part of the legal tender process coined and stamped by federal government. Thank you for your testimony any questions by the committee on this bill. Pretty straightforward sorry the question by the committee okay we do not have anyone who signed up on this bill either is there anyone would like to speak for against this bill. Saying no one so as to be close to the bill yes recommend due pass reserve western has closed for bill I have a motion to pass all in favor say aye. It post say No thank you colleagues thank you for your time your bill is passed as amended thank you. Johnson you're recognized. I try to be quick this afternoon if I could have J. dates come to the table again This is Senate bill. Seeing Senate bill three twenty four. I believe there is no limit on this one correct and members that amendment is being passed out at this time. While the amendment is being passed out. President Josh if you just wanna explain them you can commit to explain the amendment if you'd like sure so members who you there are some concerns addressed about that to reproach about this bill this morning this is a bill this is amended to try to address those concerns it is two things one it requires farm bureau to pay the insurance premium those were the questions that came up so requires them to pay that it doesn't within the trust facility but requires that you've added some language to provide for committee and I'm but it's been an individual service and budgeting to address any concerns that are brought out in real time if those concerns were to happen to come into the Arkansas insurance Department they would be required to enter for those concerns to farm bureau to provide some better ways of community of consumer protection and happy to take any questions on the amendment. Members any questions just on the amendment. The questions. Eleven we have a motion to adopt the members of the banks all in favor say aye. Filippos NO. President representative Johnson you may proceed on the bill as amended members we had this bill this morning I understand the members that have concerns help addressing these concerns with the amendment I will say that you know farm bureau serves a very reliable reputable entity in our state for many many years there person do this exemption that we're offering to them and I'm certain that they'll be good stewards of that responsibility on behalf thank you more questions. The president person recognized for a question. It's you know I live in West Memphis so I'm more familiar with the Tennessee plan these plans they don't accept people with pre existing conditions is that right. I would have to look at seat but there are well which set of pre existing conditions they don't include but there is that option correct yeah I'm not familiar with what to what their criterias yeah and at I guess my question is my concern but setting a precedence by allowing these plans to exist outside of insurance markets not a recess self insured on our state insurance plans you're allowing policies like that to drive up the price for the everyone else in the insurance market because you're excluding preexisting conditions and all kinds of things like that so when you do that you no longer have a community rating in insurance so you by allowing these exceptions you're driving up the cost of insurance for everyone else in the market that it is can you explain to me how that would not be true. Was first all I can all I can say is that what what they have seen in the six states where they're doing this that that is not been there experience in those states that this is not have that impact beyond that. I don't you know I. That's that's all I know to say on that on that specific deals we would have no evidence of that in Arkansas until we have some type of experience with these plans in the state. Yeah well I mean at I think we have X. rays like I said I'm aware the experience intend to say because I'm close I'm ten miles of but in and really excluding all of the other things that we talk about it's not just thank you added in the amendment but you're also not having to comply to any of the laws that we've worked so hard to pass to review time at privatization that that doctor Johnson passed I mean it it won't run apply to this semi right doctor Johnson. That's correct and I guess what I would say is that there under the organizations that we've made these exceptions and exemptions for and I'm comfortable making those exceptions and exemptions for farm bureau. So none of the bill to pass this session would apply to this. That's my understanding. The person for initial question thank you Mr chairman is insurance department here. Mr move plan. The free. He's not. But I don't I don't see him okay I had a question for him but he's ninety thank you. Thank you any other questions about the committee. Okay saying none. No one signed up either for or against this bill however is there anyone in the audience who would like to speak for against this bill. Okay saying no one. President John feel to close for your bill I'm close on a bill to make a motion to pass Ferguson Johnson as close for his bills madam motion do pass as amended that's a proper motion is there discussion on the motion. Pepsi NO discussion all in favor say aye. Hippos NO. Yeah I said that you have passed your bill is a Johnson. Thank you. Since you were down there. Just go back in. Proceed with your other bill. Thank you committee I try to be brief so is which bill we do and access at twelve seventy six thirteen forty eight. Thirteen forty eight house house bill thirteen forty eight we do have an amendment or this bill there is amended and passed out members. President Johnson you're recognized to present your management thank you ma'am madam chair members the technician is always one was harder to present the member without presenting the bill Senate standing committee jet understand a little bit about the bill the federal government passed an act called the nurse is part surprises act is a federal like to try to address issues with surprise medical billing that act The defense has a process for adjudicating disputes for out of network charges it's a federal process but there's also opportunities for states to weigh in in individualized the process they want to do in the state is a relatively new ACT and then talk to the insurance department initially the bill I was trying to pass had a fairly detailed approach as to how I was going to recommend the insurance department do audits on some of these issues in educations in talking to them they felt like the better approach having received some of these complaints already was to do that to a rule making process that could be a little more broad in its scope and have a better chance of addressing some of the concerns that they think you're gonna come up with the in dealing with this new new law under federal law and so this and then it strikes all the language that I was trying to do and replaces it with this more broad language to study the tasking in authorizing the state insurance department come up with rules for that audit process and we have take any questions on the amendment. Representative Richardson did you have a question. Well motion to adopt the amendment. All those in favor hi. You may proceed the members that I don't have a lot more to add to this this bill is again designed to empower our centrist department to help develop rules for adjudicating if you can issues that are coming up now even as we speak with this new federal law they just need the authority to come up with a better process for reviewing some of those complaints and concerns and I have to take any questions. Any questions from the committee and they're all good with it. The insurance department yes in fact they they made the suggestion that I try to make these changes I worked with that be three and on okay making this change thank you. is there anyone in the audience who would like to speak for against the bill and the amendment. Are we on the well the bill skis me. Seeing none President Johnson's are you ready to close for your bill yes I'm close from a bill I make a motion to pass. As amended. On. What there any discussion on the bill. We have a motion and do pass on a bill thirteen forty eight all those in favor say aye. All those against. Congratulations representative Johnson you have passed your bill thank you members. Representive lost waiting patiently over there to. Sixty eight zero. Okay. Just last one this is what we actually heard and and this is the committee process get it works this is house bill twelve seventy six there there's amendment being distributed and it's coming around. This is your last one this month yes for ever. Thank you clothes read the. They all. Yeah and then we had some issues with the fix. If you want to proceed on the amendment notify members this bill we passed out of committee other some questions raised to represent personally send your questions about the Medicaid issue in looking at that bill closer those questions It made us at looking a little more debt this to the bill we're passing it the actors quite a bit of discussion back and forth the bill we passed did not apply to Medicaid and exploit further it would seem that some of the issues around Medicaid have already been addressed but that we but that the the issue were trying to usher us step there for Instacart we were placing it in the wrong place in code in the bill are attorneys the the the advocates for this bill felt like we need to bring it back to committee so we brought it back here so we can amend it to put it in a different place in catus essentially doing the same thing that we talked about before which is eliminating stepped therapy for psychotic drugs it's just putting into place we're we already had some language about that that was missed the first time we pass the bill I'll be happy to try to answer any questions. Thank represent Johnson any questions by the committee. We're doing a motion to adopt the amendment all in favor say aye. A post and no question Johnson proceed I think I've explained the bill and and I have to take any questions any any questions on the bill as amended represented. Two for one term And yeah just one quick question yes you're recognized you said psychotic thank you after drugs Roggen the Amendment that this has metastatic cancer yes and if you look at so this was there were there was already and that's was part of the problem that was already into stepped therapy law regarding metastatic cancer so they did some clean up with the with the language is what looks like it appears if you look is struck from the amendment it was already in law the covered person with metastatic cancer undergoing stepped therapy so there was already a law on the books metastatic cancer the reason it looks like new language is because because we added something second had to pull it down a lot of that did you see what I'm talking about that's fine I just yes yeah it was it that we're not creating new law about metastatic cancer that was already low and that's why this loss should have been placed in code but because we're adding something they created a list form incident narrative okay I was just like I'm tired I just want to catch everything thank you. Thank you excellence from any other questions by the committee. Say none. In Joshua's close close from bill make a motion to pass. It's close for his bill of the motion do pass as amended all in favor say aye in a post I know graduations you've passed your bills. Thank you president Johnson representative long you've been patient and I think you have. Hello you have to bills just one okay if you would just proceed to the end of the table and Identify yourself and let us know which bill at issue are going to proceed on. Thank you Mr chairman of the house bill sixteen thirty. State representative in district thirty one but before you start represent along is so sixteen twenty you're not going to proceed on that no Sir it doesn't being amended. You're going to be okay thank you so proceed on sixteen thirty thank you Sir. Sixteen thirty at the request of a constituent constituents and it has no no no opposition and As a nonpartisan bill bills does two things it removes state capital gains taxes from the gains realized from the sale of gold or silver in the last legislative session held removed goals over from a sales tax and this is basically kind of the person or to the next room because of historically have inflation we're currently expect experiencing of when a citizen fails gold or silver they're being for their pain tax inflated gained not necessarily a real game of this discourages people from buying gold silver as a hedge against inflation. Last but not least the bill in Abel's private individual's record companies to voluntarily The. Voluntary contract with payment in gold or silver. Of if inflation becomes worse in the future of this bill would of could encourage businesses to enter into long term contracts by having a more stable value of payment instead of a inflated US dollars. We'll be happy to try to answer questions. Thank you representative long her question by the committee. What age you're recognized for a question the Senate and inflated pain would what are you can explain that will attract okay your based on servers always work for goals are really as the value of our currency your browser notes is basically is what fluctuates are you currently we're experiencing higher than normal inflation due to basically the production of a more dollars in the. so when a person if this year they bought gold or silver the society two thousand dollars an ounce in the inflation continues on it your ten fifteen percent of if I go to sell the gold texture of a whole lot of the of the the game that they would realize would really have not been relocated all because of of the loss of value of the of the U. S. currency. I hope that. It's clear have have you kind of look at what the fiscal impact of this bill would be at all yes Sir Can I just a couple of quick pack today and thank you for. Should this compact distributed to over twenty seven thousand dollars. Thank you for. The flowers to the you're recognized for a question. Thank you Mr the United States and if it's the gold standard In the seventies I can seventy six as an uptick nineteen seventy one was fully decoupled of a dollar from from gold right final de coupling it actually started back in the thirties when the when the correct incorrect person. Okay I mean I I thought I heard you reference that okay I'm sorry I missed thank you. Representative Richardson recognized for a question thank you so the. I see my answer number sorry. There is reason. The road you're recognized for a question yes represent wrong could you give me just in brief form summary again of the bill please. those two things reported permits capital gains state cabins tax from the sale for the gain realized from the sale of gold or silver and to basically enable private citizens for businesses to voluntarily contract with payment being made in gold or silver or rather than right now the only choice I have this is contracting. It in the. yes dollars. Follow Mister recognized other states doing this or anything similar to this yes certainly there are actually a kind of a movement going on I think it's due to the inflation everybody's come trying to prepare them for their citizens to have the options basically you and this may not be something that of people started right away but if we have been on the books inflation gets out of hand transitions they're something already there in the longer term contracts you know people not really benefit from having a stable and stable value rather than guessing at what the dollars can be worth five or ten years now. Thank. Representive road do you have any other questions I then you're finished any other questions by the committee. The first is you have a question well I just had a question so like this morning it seems like this ought to be a tax bill it seems like it under revenue tax if it's affecting the income tax. I just go ahead and tell me thank you for that and I understand that. I mean this this is insurance dot com what we are going to do that before we voted we're going to get over a ruling from the parliamentarian if this is in the correct Committee because the monument on networks that had one that was that was not supposed to be here this morning so we'll find out frankly that I'm I'm not certain so what are there any so before we vote I'm going to try to get a ruling on that and authority on that but other any other questions by the committee. This matter okay it may have been difficult see saw the words contracts and performance of contract there and it's going to happen to. But a lot at that point I mean if we're talking about the affecting income tax there should be a fiscal impact if it a contact here there's a fiscal impeachment I didn't get it what where I didn't think that I'm sorry. Two zero two twenty seven of an okay. Represent vice chair brown is recognized for a question. Thank you Mr chair I'm just curious representative long do people do a lot of trading in gold and silver in Arkansas. Well I guess not officially because right now there's your term you would that you would be paying a capital gains of possibly old on the increased value of your gold or silver. So this year it probably is happening but this would basically encourages a good to be done nor well I'm just curious because I bought some so for a few years ago and had pickets it's worth what I paid for it yet so I'm gonna hang on to it until I can breaking the. Thank you. Thank you represent right any other questions by the committee at this moment. We have no one I don't believe there are this is no one assigned that was anyone like to speak for or against this bill. Is anyone have questions does anyone in the Committee of questions regarding the fiscal impact. Okay would you would you go into the table introduce yourself and be ready to take questions please. Thank you chair good evening Committee my name is keep under I represent the department finance administration I'm here today just to speak on the revenue impact of the bill. H. B. sixteen thirty exams the gains on the sale of coins and bullion from gross income therefore those gains would not be taxed the Department calculated the revenue impact as a loss of two hundred and twenty seven thousand dollars available for any questions you might have. Yes yeah I just have a couple questions if I can one is your act that we all always we wonder how you calculate those numbers is that based on Reported income to the label that when someone sells go to that level the capital gains specifically is related to gold bullion or coins or is it something that you're you're kind of doing the best guesstimate on this was based on the numbers that the department was able to put together for two thousand nineteen bill that would have exempted these types of materials from sales tax we took those numbers of gross sales which is roughly nineteen million was this man at that time raised it based on inflation over the years since then cut it in half assuming that the people have a basis in their goal there for only the gains would be taxed it was cut in half again because they're only taxed at half anyway so we came out to about five million dollars of taxable gains which would lead to a tax loss of two hundred twenty seven thousand dollars. Not in that would be an estimated annual loss or is that a one time awesome is that is that the loss for one year so so. The two twenty seven would be for fiscal year two thousand twenty four but there would be a loss each year yes. Thank you John any other questions by the committee this time. President Klaus recognized. So this is thank you Mr if this is predicated on. Other current financial environment you know. What happens when that changes to. It. I mean. So the question is what it is now. What happens when inflation is no longer what it is. In my understanding if your question comes down of the the games go down to the loss to the state also go to. US force because the inflation is what's driving the price higher if the if we have to have a reverse about then people would be getting of gaining as much. Because the loss of the state we're if we're getting rid of the capital gains. Tax. Predicated upon at. What. Inflation may or may not be doing to this falsely. When there's no more I mean we're sort of getting rid of annual income for this state based upon the current environment when obviously at some point that current environment will change but we won't get that back. Your course if inflation does start reversing you basically get back to the more normal three percent or so that the fed has shop for the past of the park would see a reduction because the of value of gold and a committee set motor guy. Instead of having a gain people actually have a loss face all the gold that port. I think we're kind of insured you're if it goes down we're in the state for not losing losing money at that point. So if the inflation for sister gets worse if. Mr Chaykin I've asked for the AHCF in a and I'm sorry for. Keep under okay you can ask Mister lander question absolutely so Mr Linder when Inflation was much lower. Was there still a. Game for the state any word taxes collected It in this area and it may be less or I don't know I mean did we generate any income from this to the extent that DFA has any information that it tracks about actual gains and losses for individuals on the sale of coins or bullion I could try to get you that information once the meeting is over but I don't have that currently. Thank you. Johnson you're recognized for a question and I'm not sure if you have the answer this question just curious you know there are certain things that exempt from sales tax right there there are I'm just consider things we exempt from capital gains tax now with this would be a unique entity as far as things that are exempted. That would probably be other questions I can get with you after the meeting on I don't have a and the full answer for you currently. Any other questions by the committee. US president long based on a couple questions that were just ask the DFA wasn't able to answer how would you feel about waiting until those answers could be given before we vote on your bill. We'll with the in the session possibly burning out of town I'd say probably like to go ahead and try to get out of committee today some might have a chance to get her. Thank you any further questions by the committee. Okay saying none. There's no one else on that anyone else in the audience would like to speak for against this bill. To I do want to stay before we proceed that we did get we do get clarification on this but this bill was sent here properly so that that's correct sounds good we did have that issue this morning so would you like to close your bill representative. Yes Sir it has to has to represent his flowers question about the constitution made remember I'm on my notes some particle one section ten calls one the talks about in the U. S. constitution their state shall make any thing but gold or silver corn as tender in payment of debts this is basically going back to historically the white gold and silver was intended to be used in it is just basically gives people the opportunity to do that if I choose to enter into these kind of type of contracts. A good vote. Thank you represent law firms and lawyers close for his bill what is the will of the committee make a motion to pass a motion do pass by words the road during discussion on the motion. Okay saying no discussion on the motion a motion to pass over the road all in favor say aye. All posts and no. The nose habit your bill is building so long thank you for your. Thank you for your consideration appreciate thank you. Committee good work today we have cleared a lot of bills I don't see any other representatives or senators who are here present your patients and what your calendars for our next meeting I think we'll have Senate bills left the which was my intent so ordered.