BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 1381         Hearing Date:    June 13,  
          2016
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          |Author:   |Weber                                                 |
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          |Version:  |June 1, 2016                                          |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Mark Mendoza                                          |
          |:         |                                                      |
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                          Subject:  Real estate appraisers


          SUMMARY:  Requires the Bureau of Real Estate Appraisers to provide  
          information on the Internet regarding the continuing education  
          courses taken by a licensee. 

          Existing law:
          
          1) Establishes the Real Estate Appraisers' Licensing and  
             Certification Law (Act), administered by the Bureau of Real  
             Estate Appraisers (BREA) within the Department of Consumer  
             Affairs (DCA), which regulates the licensing of real estate  
             appraisers.  (Business and Professions Code (BPC)  11300 et  
             seq.)  

          2) Requires the BREA to provide on the Internet information  
             regarding, among other things, the status of every license  
             and registration issued by the BREA. 
          (BPC  11317.2(a)) 

          3) Requires the Director of the DCA to adopt regulations for  
             licensure which shall meet, at a minimum, the requirements  
             and standards established by the Appraisal Foundation and the  
             federal financial institutions regulatory agencies acting  
             pursuant to Section 1112 of the Financial Institutions Reform  
             Recovery and Enforcement Act of 1989, Public Law 101-73  
             (FIRREA).  (BPC  11340(c))








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          4) Requires the director to adopt regulations governing the  
             process and procedures for renewal of a license, which shall  
             include, but not be limited to, continuing education  
             requirements, which shall be reported on the basis of  
             four-year continuing education cycles. (BPC  11360) 

          This bill:

          1) Requires the Bureau of Real Estate Appraisers to provide, on  
             the Internet, information regarding the continuing education  
             courses taken by a licensee.

          2) Removes obsolete references to the Office of Real Estate  
             Appraisers and inserts the word "Bureau".  

          FISCAL EFFECT:  Unknown for the current version of this bill.   
          The bill is keyed "fiscal" by Legislative Counsel but was  
          changed substantially since being heard by the Assembly  
          Committee on Appropriations in January.  
          
          COMMENTS:
          
          1. Purpose.  The  Author  is the sponsor of the bill.  According  
             to the Author, "In San Diego, the Broadway Heights Community  
             Council raised concerns about recent appraisals in their  
             neighborhood.  Many residents questioned whether this  
             appraiser was knowledgeable in renewable energy sources when  
             appraising residential homes.  When searching online for  
             additional information about real estate appraisers, very  
             little information is publically available.    
             
             To attain a license in real estate appraising, every  
             applicant is required to meet certain educational  
             requirements for the type of license he or she is seeking.   
             Once an applicant becomes licensed, at least 56 hours of  
             continuing education is required during each four-year  
             continuing education cycle.  The continuing education  
             requirement includes mandatory courses.  For the remainder of  
             the hours required, an appraiser is free to choose from a  
             wide range of courses.  This allows an appraiser to develop a  
             specialization for a certain type of appraising, such as  
             renewable energy."

              Broadway Heights Community Council  and the Author ultimately  








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             underscore, "AB 1381 would provide the public with additional  
             information on the continuing education courses taken when an  
             appraiser seeks to renew his or her license.  By listing an  
             appraiser's continuing education courses, the public will  
             have a better understanding of who appraises their property.   
             In addition, businesses would be better able to evaluate  
             candidates and select appraisers with certain  
             specializations."

          2. Background on the BREA.  In 1989, Title XI of the federal  
             Financial Institutions Reform, Recovery and Enforcement Act  
             was adopted by congress mandating states to license and  
             certify real estate appraisers who appraise property for  
             federally related transactions.  The federal law was enacted  
             as a result of the savings and loan crisis. 
             
             In response to the federal mandate, the California  
             Legislature enacted the Real Estate Appraisers Licensing and  
             Certification Law in 1990 (  AB 527,  Chapter 491, Statutes of  
             1990).  The OREA was established within the Business,  
             Transportation and Housing Agency, and charged with  
             developing and implementing a real estate appraiser licensing  
             and certification program compliant with the federal mandate.  
              In 2012, Governor Brown submitted a reorganization plan to  
             the Legislature. As a result, on July 1, 2013, OREA became  
             the BREA within DCA.

             BREA, which is entirely funded by licensing fees, is a single  
             program comprised of two core components, licensing and  
             enforcement.

             The Licensing Division implements the minimum requirements  
             for licensure, according to criteria established by the  
             federal government and California law, to ensure that only  
             qualified persons are licensed to conduct appraisals in  
             federally related real estate transactions.  Applicants must  
             meet minimum education and experience requirements and  
             successfully complete a nationally approved examination.  The  
             Licensing Division also registers Appraisal Management  
             Companies (AMC) in compliance with California law.

             The Enforcement Division investigates the background of  
             applicants, licensees, and AMC registrants to ensure they  
             meet the standards for licensure. The Enforcement Division  








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             also investigates complaints of violations of California law  
             and national appraisal standards filed against licensed  
             appraisers and registered AMCs.

             BREA is responsible for the accreditation of educational  
             courses and providers for real estate appraisers.  BREA has  
             reviewed and approved over 1,800 pre-licensing and continuing  
             education courses.  In addition to the real estate appraisal  
             related 
             3 courses offered by California's community colleges and  
             universities, over 70 proprietary schools provide appraisal  
             education.

          3. Continuing Education for Licensees.  The term of a California  
             real estate appraiser's license is two years. All licensed  
             appraisers must meet minimum continuing education  
             requirements before renewing their license.  A total of 56  
             hours of continuing education is required during the  
             four-year continuing education cycle including the following  
             mandatory courses for all license categories.

                       7-hour National Uniform Standards of Professional  
                  Appraisal Practice (USPAP) course-required every two  
                  years.

                       4-hour Bureau approved course entitled "Federal  
                  and State Laws and Regulations"- required every four  
                  years.  This 4-hour course is an addition since the last  
                  sunset review. (California Code of Regulations, Title  
                  10,  3543)

             In practical terms, this requires a renewal of the 7-hour  
             USPAP course every two years on its own, and a full  
             continuing education (56 hours) renewal every four years.   
             Generally the requirement is a full CE 56 hour renewal every  
             other two year cycle, with a reduced 7 hour CE renewal cycle  
             in between.

             Continuing education courses or seminars must cover appraisal  
             related topics including subjects such as land use planning,  
             appraisal computer applications, cost estimating, and green  
             building appraisals.

          1. BREA Continuing Education Course Approval.  Continuing  








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             education courses, both classroom and online, must meet the  
             requirements of the Appraisal Qualifications Board (AQB). The  
             AQB is within the Appraisal Foundation, a non-profit  
             organization that works to advance professionalism for  
             appraisers through the promulgation of standards, appraiser  
             qualifications, and guidance regarding appraisal methods and  
             techniques.  The AQB establishes the minimum education and  
             experience requirements as well as the examination  
             requirements for appraisers.  
             
             The requirements for BREA approval of continuing education  
             courses are:

                     Courses must be a minimum of two classroom hours  
                 long (classroom hour means 50 minutes within a one-hour  
                 period actually spent in presenting the course content).

                     Participants must have been present for at least 90%  
                 of the course hours to obtain credit for the course. 

             Continuing education courses that BREA has already approved  
             allow for faster processing of renewal applications.  Courses  
             offered by providers that are private vocational schools or  
             professional organizations are assigned a BREA course  
             approval number.  In addition, some college and university  
             courses may be acceptable if the courses cover one of the  
             topics listed below.

             The AQB allows, and BREA may grant, continuing education  
             credit for courses that cover topics including but not  
             limited to:

               a)     Ad Valorem Taxation
               b)     Arbitration-Dispute Resolution
               c)     Practice of Real Estate Appraisal
               d)     Development Cost Estimating
               e)     Ethics and Standards of Practice
               f)     Land use Planning-Zoning
               g)     Property Management-Leasing-Timesharing
               h)     Property Development-Partial Interests
               i)     Real estate law-Easements-Legal Interests
               j)     Real Estate Litigation-Damages-Condemnation
               aa)    Real Estate Financing and Investment
               bb)    Real Estate Appraisal Computer Applications








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               cc)    Real Estate Securities and Syndication
               dd)    Real Property Appraisals-Personal Property-Business  
                 Valuation
               ee)    Seller Concession Impact on Value
               ff)    Energy Efficient-Green Building Appraisal

           1. Policy Issue  : Do continuing education courses demonstrate  
             expertise in a specific area of appraising?  The Author's  
             office underscores that, "By listing an appraiser's  
             continuing education courses, the public will have a better  
             understanding of who appraises their property.  In addition,  
             businesses would be better able to evaluate candidates and  
             select appraisers with certain specializations."   
             Representing a continuing education course as equitable with  
             a "specialty" may be questionable.  The Author may wish to  
             clarify to the committee how posting these courses outweigh  
             the fiscal costs of this program (posting courses for 11,278  
             licensees) and the aforementioned issue.         

          
          SUPPORT AND OPPOSITION:
          
           Support:  

          Broadway Heights Community Council 

           Opposition:  

          None on file as of June 7, 2016.  


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