BILL ANALYSIS Ó AB 1381 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1381 (Weber) As Amended August 26, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | |(January 27, |SENATE: | 36-0 |(August 30, | | | |2016) | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (vote not relevant) Original Committee Reference: B. & P. SUMMARY: Requires the Bureau of Real Estate Appraisers (BREA) to provide information on the Internet regarding continuing education courses taken by a licensee, in addition to other specified reporting requirements pursuant to the California Public Records Act. The Senate amendments delete the Assembly version of this bill, and instead: 1)Exclude from the definition of "real estate broker" persons acting in the capacity of an outdoor advertising representative in connection with a specified transaction. AB 1381 Page 2 2)Define an "outdoor advertising representative" as an employee of a corporation or a limited liability company or a general partner of a partnership that holds a license issued by the Department of Transportation to engage in the business of outdoor advertising, arranging for the lease or transfer of real property by his or her employer, or an interest in real property solely for the placement of, access to, or operation of, an advertising display and appurtenances thereto, as defined. 3)Require in every transaction involving the transfer, lease, or use of real property for the operation of an advertising display negotiated by an outdoor advertising representative, the owner or operator of the advertising display to maintain liability insurance coverage for death, bodily injury, and property damage arising out of, or in connection with, its acts, omissions, or operations on the real property, as specified. 4)Require the BREA to provide, on the Internet, information regarding continuing education courses taken by a licensee. 5)Replace obsolete references to the Office of Real Estate Appraisers with the word "Bureau". FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, this bill will result in negligible state costs. COMMENTS: Purpose. This bill is sponsored by the author. According to the author, "[This bill] would provide the public with additional information on the continuing education courses taken when an appraiser seeks to renew his or her license. By AB 1381 Page 3 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. Additionally, [this bill] clarifies that employees of outdoor advertising companies can continue to conduct business negotiations related to the placement and operation of outdoor advertising displays without seeking licensure as a real estate broker for specific transactions related to the placement, access, and operation of an outdoor advertising display. This bill takes a measured approach explicitly detailing the types of transactions that outdoor advertising representatives may negotiate and further requires that the outdoor advertising company maintain appropriate liability insurance - a model that has served the film industry well." 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. 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 AB 1381 Page 4 property appraiser classifications, which are reflected under California law, and have different education, experience, and scope of practice requirements. Background Education Requirements. Educational requirements for all certifications are based upon national standards determined by the 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. 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 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. Currently, the AQB allows, 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, according to "The Challenges of AB 1381 Page 5 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. Outdoor Advertising. According to the author, "Outdoor advertising companies have operated within the State of California for nearly 100 years. These businesses must comply with federal and state laws, as well as municipal ordinances that mandate permitting processes, spacing and size requirements for the placement of outdoor advertising displays. Municipalities throughout the state have opted to negotiate agreements with outdoor advertising companies to generate important local revenue." Recently, a member of the public made a complaint about a negotiation that had taken place between two outdoor advertising companies and a private property owner at a CalBRE forum. The complaint raised the question of whether employees of outdoor advertising companies were required to be licensed real estate brokers under existing state law. Under current law, any person or company wishing to display advertising, other than a display on a building within 660 feet of a highway right of way, must comply with federal and state law relating to display size, distance between displays, and certain content limitations. The person or company must be licensed by the State Office of Outdoor Advertising, within the Department of Transportation, obtain a permit from the state Office of Outdoor Advertising, and comply with all local permitting requirements. The State license and permit must be renewed each year. AB 1381 Page 6 The Department of Transportation is responsible for enforcing compliance with federal and state laws governing outdoor advertising. If the state fails to properly administer the federal program, the state shall lose 10% of its federal highway funding. Given the level of regulation already placed on the outdoor advertising industry, the Department of Consumer Affairs does not believe an additional real estate license for outdoor advertising representatives is needed. The proposed language is modeled after an existing exemption for film industry employees who negotiate lease agreements for filming and are not required to obtain licensure as real estate brokers. Analysis Prepared by: Gabby Nepomuceno / B. & P. / (916) 319-3301 FN: 0004973