BILL ANALYSIS Ó AB 1381 Page 1 Date of Hearing: January 21, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1381 (Weber) - As Amended March 26, 2015 ----------------------------------------------------------------- |Policy | Business and Professions |Vote:| 8 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires real estate appraisers to obtain education in valuing sustainable real estate assets, including solar and wind power generation installations, and energy efficiency measures, for purposes of meeting educational background requirements and AB 1381 Page 2 continuing education requirements. In addition, the bill prohibits the renewal of a license unless the licensee provides evidence of continuing education in valuing sustainable reals estate assets. FISCAL EFFECT: Minor and absorbable costs to the Bureau of Real Estate Appraisers (BREA). COMMENTS: 1)Purpose. According to the author, "California has been at the forefront of the expansion of the green economy and has continued to make strides to support growth within the renewables market. As this growth continues it is critical that homeowners who make investments in renewable residential retrofits with the reasonable expectation of adding value to their homes are ensure to be assessed as such. Having required education for the appraisal of sustainable real estate assets makes sense as the way to make sure homeowners have these changes adequately valued." This bill would build upon current efforts to appropriately value green features by requiring the BREA to require education in valuing sustainable real estate assets. 2)Background. The BREA, within the Department of Consumer Affairs, is responsible for regulating the practice of real estate appraisers in California, by ensuring that only qualified persons are licensed to conduct appraisals in federally related real estate loan transactions and that all real estate appraisers licensed by the state adhere to applicable laws, regulations, and standards. There are four levels of appraiser licensees: appraiser trainee; appraiser licensee; certified residential; and AB 1381 Page 3 certified general. Levels of licensure are distinguished by increasing levels of education, experience, and scope of practice (property type, transaction value and supervision level). When a licensee wishes to move to a higher level of licensure, she or he must meet the qualifications and apply to upgrade the license. 3)Educational requirements. Education requirements for all certifications are based upon national standards determined by the Appraisal Qualifications Board (AQB), and require specific modules to be covered, such as basic appraisal principles and procedures and a 15 hour National Uniform Standards of Professional Appraisal Practice (USPAP) course, or its equivalent. Case studies relating to special energy efficient items (i.e. "green buildings") may be used as a part of the curriculum required under certain education modules for certified residential and certified general licensees. 4)Continuing Education Requirements. The current term of a California real estate appraiser license is two years, and all licensed appraisers must meet minimum continuing education requirements (CEs) before renewing their license. A total of 56 hours of CEs are required every four years, although proof of completion of the seven hour National USPAP Update Course, or its equivalent, is required every two years and must be submitted with each renewal application. Currently, the AQB allows, and the BREA may grant, CE credit for courses that cover topics including, but not limited to, energy efficient items and "green building" appraisals. 5)Arguments in Support. A local community group has noted, "Renewable technologies are quickly becoming a fixture in residential and commercial markets as a way to not only to save on energy costs, but also to increase the value of a property. Although the trend of retrofitting real estate with green technology is a promising one, there have been a number of complaints from those who received these updates that additions are being undervalued or not taken into account at AB 1381 Page 4 all. These situations are detrimental to those who have invested a great deal in these green technologies, and if issues with valuing persist over the long term, they have the potential to hinder the ability of the renewable industry to continue to grow." 6)Arguments in Opposition. Appraisers argue it is inappropriate to impose a CE requirement on all appraisers when some may specialize in types of appraisals, such as right of way or drainage, where valuing sustainable real estate is not part of their practice. 7)Prior Legislation. a) AB 2519 (Berryhill) Chapter 683, Statutes of 2012, among other things, prohibited the renewal of a license if the licensee failed to satisfactorily complete the additional education requirements imposed by a citation. b) SB 706 (Price) Chapter 712, Statutes of 2011, required licensees to take a four-hour course relating to federal and state appraisal laws instead of certifying that they have read and understand specified state and federal laws. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 AB 1381 Page 5