BILL ANALYSIS
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|Hearing Date:April 19, 2010 |Bill No:SB |
| |1123 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: SB 1123Author:Negrete McLeod
As Introduced: February 18, 2010 Fiscal:Yes
SUBJECT: Real Estate Fund.
SUMMARY: Provides that there shall be a reduction in fees and other
specified fees for licensees under the Department of Real Estate (DRE)
if there is a transfer or loan from the Real Estate Fund to the
General Fund or any special fund by the Budget Act or any other law ,
except for a transfer or loan of funds from the Education and Research
Account of the DRE to a special fund consistent with the purposes for
which this account was created.
Existing Real Estate law:
1) Establishes in the Business and Transportation Agency (BT&H)
the DRE, the chief officer of which is the Real Estate
Commissioner (Commissioner), and specifies that the
Commissioner, through the Department, is responsible for the
regulation of real estate transactions and licensure of real
estate agents, brokers and salespersons.
2) Provides for the examination, licensure and regulation of real
estate brokers and real estate salespersons by the DRE and for
payment of specified fees for licenses issued in that regard, which
fees are deposited into the Real Estate Fund.
3) Creates the Education and Research Account in the Real Estate Fund
for purposes of real estate education and research and provides for
the Commissioner to require up to 8% of license fees to be
deposited into that account.
4) Requires the Commissioner to reduce license fees and other
specified fees to specified levels within 30 days if the balance of
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the funds in the Real Estate Fund exceeds 150% of the DRE's
authorized budget for the following year.
5) Requires certain fees to also be reduced to specified levels if
funds are transferred or loaned from the Real Estate Fund to the
General Fund by the Budget Act.
This bill:
1) Extends the application of the requirement to reduce license fees
and other specified fees as provided above, if a transfer or loan
is by the Budget Act or any other law and the Budget Act or new law
requires a loan or transfer to any other special fund.
2) Provides, however, that the provisions above to reduce license fees
and other specified fees shall not apply to a transfer or loan of
funds from the Education and Research Account to a special fund
consistent with the purposes of the account as specified, and which
transfer or loan is approved by the Commissioner.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1. Purpose. The Sponsor of this measure is the California Association
of Realtors . According to the Sponsor, this bill closes a loophole
in the so-called "Poison Pill" statute (as indicated under the
"Existing Real Estate law" section of this analysis). The statute
rolls back the license fees of the DRE if funds from the DRE's
reserves are transferred to the General Fund. The Sponsor
indicates that the bill closes the loophole by applying the law to
transfers to non-real estate special funds as well. As explained
by the Sponsor, this is because of action taken last year by the
Legislature pursuant to AB 180 (Bass) which contained a $500,000
loan from the reserves of the Real Estate Fund to the Department of
Justice (DOJ) as start up money for the foreclosure consultants'
registration program created by this measure. The rationale for
not invoking the "Poison Pill" statute was that (1) the bill was a
loan to a special fund (a new DOJ program) and not to the General
Fund; and, (2) the bill also said "notwithstanding any other law"
which arguably exempted the loan from the "Poison Pill" anyway.
2. Background. The existing "Poison Pill" statute is a response by
realtors to the budget "raids" on special fund reserves that took
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place in the early 1990's, which resulted in extensive and
expensive litigation. After litigation, the transferred reserves
were required to be replaced. The existing statute was enacted to
deter future raids, and later amended to include loans within the
definition of "transfer." If a transfer or loan is made part of
the Budget Act, the statute operates to roll back the DRE fees to
amounts in place prior to the original statute, the 1982 statutory
fee requirements. However, a transfer or loan from one special
fund to another would not invoke the "Poison Pill" statute.
SUPPORT AND OPPOSITION:
Support:
California Association of Realtors (Sponsor)
Opposition:
None received as of April 14, 2010.
Consultant:Bill Gage