BILL ANALYSIS Ó
AB 1381
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ASSEMBLY THIRD READING
AB
1381 (Weber)
As Amended January 25, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+---------------------|
|Business & |8-3 |Bonilla, Bloom, |Jones, Gatto, Wilk |
|Professions | |Campos, Dodd, Holden, | |
| | |Mullin, Ting, Wood | |
| | | | |
|----------------+-----+----------------------+---------------------|
|Appropriations |12-3 |Gomez, Bloom, |Bigelow, Gallagher, |
| | |Bonilla, Bonta, |Wagner |
| | |Calderon, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, Holden, | |
| | |Quirk, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires real estate appraisers to obtain education in
valuing sustainable real estate assets for purposes of meeting
educational background requirements and continuing education
requirements. This bill requires the Director of the Bureau of
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Real Estate Appraisers (BREA), for purposes of establishing
educational background requirements, to require education in
valuing sustainable real estate assets, which include, but are
not limited to, solar and wind power generation installations,
and energy efficiency measures.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, minor and absorbable costs to BREA.
COMMENTS:
Purpose. This bill is sponsored by the author. 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."
Background. In 1989, Congress adopted the Federal Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA),
which requires states to license and certify real estate
appraisers who appraise property for federally related
transactions (FRTs), as a result of the savings and loan
disaster. In short, FRTs are transactions involving loans
made, guaranteed, or insured by federally supervised financial
institutions. The FIRREA, and rules promulgated pursuant to
that act, require that real estate appraisals be performed in
accordance with generally accepted uniform standards as
promulgated by the Appraisal Standards Board (ASB) of the
Appraisal Foundation.
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The Appraisal Foundation also has an Appraisal Qualifications
Board (AQB) that establishes the qualification criteria for
state licensing, certification, and recertification of
appraisers. FIRREA mandates that all state certified
appraisers must meet the minimum education, experience, and
examination requirements promulgated by the AQB. These
criteria, among other things, establish four levels of real
property appraiser classifications, which are reflected under
California law, and have different education, experience, and
scope of practice requirements. As of January 1, 2015:
1)Trainee Licensees may appraise any property which the
supervising appraiser is permitted to appraise. Requires 150
education hours and does not require experience.
2)Residential Licensees may appraise any non-complex family
property with up to four dwelling units with a transaction
value up to $1 million, and non-residential property with a
transaction value up to $250,000. Requires 150 education
hours and 30 semester hours of college level education or an
associate's degree or higher in any field and 2,000 hours of
appraisal experience.
3)Certified Residential Licensees may appraise any family
property with up to four dwelling units without regard to
transaction value or complexity, and non-residential property
with a transaction value of up to $250,000. Requires 200
education hours and a bachelor's degree or higher and 2,500
hours of appraisal experience.
4)Certified General Licenses may appraise all real estate,
without regard to transaction value or complexity. Requires
300 education hours and 3,000 hours of appraisal experience.
Background Education Requirements. Educational requirements for
all certifications are based upon national standards
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determined by the AQB, and require specific modules to be
covered, such as basic appraisal principles and procedures and
a 15-hour National USPAP course, or its equivalent. The AQB
made changes relating to real estate appraiser qualifications
which became effective January 1, 2015. Among other things,
the qualifications specifically provide that 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. It is unclear the extent to
which these foundational courses already incorporate energy
efficiency items.
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. Of the remaining
hours, proof of completion of a four hour BREA approved course
covering federal and state laws and regulations and remaining
CE courses is required every four years. The cycle starts
with the issuance date of the current license. 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.
Valuing Sustainable Real Estate Assets. According to the
author, there have been concerns raised regarding the
consistent assessment of solar and other renewable
technologies when added to a home. While these retrofits are
often relatively costly, they are worthwhile, considering the
savings found in energy bills and a perceived increase in the
value of the home, and research shows that sustainable real
estate assets do indeed add value to a home. However,
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according to "The Challenges of Valuing Green," published in
the Winter 2015 issue of the Appraisal Journal, an industry
publication, valuation professionals, real estate agents, and
homebuyers face challenges in the process of valuing, selling,
and purchasing green and energy efficient homes due to a lack
of comparable properties and lack of data. When applied to
homes, the term "green" can take a variety of meanings, which
creates difficulty in the marketplace when valuing a home that
has been classified as green or has energy efficient or high
performance features. This bill would build upon current
efforts to appropriately value green features by requiring the
Bureau to require education in valuing sustainable real estate
assets.
Renewable Energy in California. According to the Solar Energy
Industries Association (SEIA), in 2014, California installed
4,316 megawatts (MW) of solar electric capacity, and of this
capacity, 615 MW were residential, 307 MW were commercial, and
3,395 MW were utility-scale. As of September 2015, the 11,535
MW of solar energy currently installed in California ranks
first in the country in installed solar capacity.
According to the SEIA, prices for solar systems for the
residential market continue to drop year after year, and have
fallen nearly 50% since 2010. In 2014, over 230,000 homes in
California had solar panels. According to the March 2015,
California Energy Commission's New Solar Homes Partnership
Program (NSHP) Case Study, the NSHP, part of California's
comprehensive statewide solar program, the California Solar
Initiative, had the highest market penetration in Southern
California, reaching 27% of new single-family homes in 2012.
Market penetration was 8% in Northern California and 4% in
Central California.
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Analysis Prepared by:
Gabby Nepomuceno / B. & P. / (916) 319-3301 FN:
0002593