BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1381


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1381 (Weber)


          As Amended  August 26, 2016


          Majority vote


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          |ASSEMBLY:  |      |(January 27,   |SENATE: | 36-0 |(August 30,      |
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                 (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.









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          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  








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            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  








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            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  








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          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.  










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          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