Beverly Hills Greater Los Angeles Association of REALTORS® Centennial Club Legislative Luncheon March 4, 2011 David K. Milton, Government Affairs California Association of REALTORS®

C.A.R. Legislative Process  Approximately 3,100 Bills Are Introduced in First Year of Session  Approximately 5,500 Total Bills Are Introduced In a Two Year Session  C.A.R. Tracks Approximately 1,500 Bills

-Legislative Liaisons: Volunteer leaders in their community -Legislative Liaisons are kept up-to- date on the latest legislative and political issues affecting REALTORS® and asked to share that information with their colleagues Become a Legislative Liaison

P olitical A ction C ommittees CREPAC = Bi-Partisan Candidate PAC CREIEC = Independent Expenditure PAC

California Legislature – Assembly 41 54

California Legislature – Senate 21 27

Legislative Process “How a Bill Becomes a Law” 1 st H O U SE Policy Committee Fiscal Committee 2 nd H O U SE Policy Committee Fiscal Committee Floor GOVERNORGOVERNOR UN-AMENDED AMENDED Floor

State Budget Deficits: Recent Budget Turmoil

Source: Data Obtained From CA Department of Finance CA Budget History In Millions Fiscal Year

Source: Data Obtained From CA Department of Finance CA Budget History In Millions Fiscal Year

- $15 billion -Dec. ‘08: - $15 billion 08/09 fiscal year $41.6 billion -Feb. ‘09: Legislature resolves $41.6 billion deficit for 08/09 and 09/10 budgets - $24.3 billion -June ‘09: - $24.3 billion 09/10 fiscal yr. $24.15 billion -July ‘09: Legislature resolves $24.15 billion deficit for 08/09 and 09/10 budgets Setting the Stage: CA’s State Budget Problems

- $21 billion -Jan. ‘10: - $21 billion for fiscal yr. 10/11 $2.3 billion -Feb. ‘10: Legislature resolves $2.3 billion of the 10/11 deficit Setting the Stage: CA’s State Budget Problems

- $17.9 billion -May ‘10: - $17.9 billion for fiscal yr. 10/11 - $19.3 billion -Oct. ‘10: - $19.3 billion for fiscal yr. 10/11 $19.3 billion -Oct. 8, 2010: Governor & Legislature agree to resolve $19.3 billion 10/11 budget deficit Setting the Stage: CA’s State Budget Problems

- $562.5 million Compared to ’10-’11 Budget Act: Current General Fund revenues = - $562.5 million

“Like others of recent vintage, it’s ‘balanced’ with pie-in-the-sky revenues assumptions, back-door borrowing and Enron-like accounting gimmicks.” Dan Walters, Sacramento Bee October 11, 2010 Budget Solution in Short

“The budget they enacted is a sick joke of phantom revenues and low- ball expenditures that will almost certainly fall apart in a few months.” Dan Walters, Sacramento Bee October 20, 2010 Budget Solution Follow-Up After the General Election

“The latest analysis assumes that nearly one-third of the $19 billion in solutions state leaders enacted in October will fall short.” Kevin Yamamura, Sacramento Bee November 11, 2010 Budget Solution Follow-Up After the General Election

“... the state has faced an ongoing $5 billion to $6 billion gap between what it spends and what it receives.” Kevin Yamamura, Sacramento Bee November 11, 2010 Budget Deficit

According to the Legislative Analyst’s Office - $25.4 billion November 10, 2010 Budget Deficit Projection STAY TUNED

-Eliminate tax benefits for enterprise zones -Phase out redevelopment agencies -Program Reductions: $1.7b Medi-Cal; $1.5b CalWORKs; $750m Dept. Dev. Services; $500m University CA; $308m 8-10% pay cut/state employees; $200m state gov’t operations -Additional cuts to state gov’t, corrections, the judiciary and resources -June Ballot Measure: 5 yr. extension of VLF, personal income tax and sales tax Governor Brown Proposed Budget $12.5b - spending reductions; $12b - revenue extensions; $1.9b - other solutions

2011 State Threats State Budget - $?????? Tax Commissions Exchanges Flat Tax Transfer Tax Split Roll Withholding

Mortgage Interest Deduction “... the tax subsidy made available under this program undoubtedly accrues in many instances simply as a ‘windfall benefit’ to taxpayers who would have purchased homes anyway...” – LAO

Mortgage Interest Deduction “The mortgage interest deduction could be revised to limit windfall gains and to reduce the incentive it currently provides to purchase luxury housing and vacation homes.” – LAO

Mortgage Interest Deduction The LAO has concluded “... that a case can be made for not having a state MID. This is primarily because the deduction is an ineffective means of increasing homeownership...” – LAO 2007

Service Tax Commission on 21 st Century Economy: Findings September 1, Sales tax on ALL services “... State tax rates on sales of goods and services could be set initially at about 4 percent...” -Real Estate Transaction Services Commissions Pest Control Home Inspection Title Insurance Loan Fees Escrow NHD/Prop. Disc. Reports Appraisal

’11 Legislative Threats

2011 Legislative Challenges Mortgage Interest Deduction Split Roll 1031 Exchanges Transfer Tax Service Tax 3% Witholding Homebuyer Tax Credit Energy/Audit Retrofit “PACE” Opt-In Liens Insurance Surcharge Loan Modifications Foreclosure Process Ellis Act Repeal

C.A.R. Sponsored Bills

C.A.R. Sponsored Legislation -SB 458 (Corbett) - Re-intro SB 1178 (2010): Expand anti-deficiency protections to refinanced purchase money, including debt for the construction or improvement of the home. -AB 771 (Butler) - Extend existing HOA fee limitation for providing documents/materials to companies retained by HOA’s

C.A.R. Sponsored Legislation -AB 278 (Hill) - Permits DRE to issue citations for minor infractions (aka “fix-it tickets”) and saves the administrative hearing process for major violations. -SB 510 (Correa) - Establishes a designated officer requirement for managing real estate offices and creates an office manager registration within DRE.

C.A.R. Sponsored Legislation -AB 392 (Alejo) – Modifies Brown Act to require local governments to post meeting agendas and summaries 72 hours prior to a scheduled meeting if they have web sites.

C.A.R. Sponsored Legislation -SB 837 (Blakeslee) Transfer Disclosure Statement Update – SB 407 (Padilla-2009), requires ALL residential properties be retrofitted with low-flow toilets, shower heads and faucets (remodels – 2014; all remaining homes – 2017). SB 837 adds language to the Transfer Disclosure Statement (TDS) notifying the purchaser of a property of these impending requirements.

C.A.R. Sponsored Legislation - Possible 2012 Introduction -Re-intro AB 2259 (2008): Protects a CID unit owner’s right to rent (pending) -Require "degree brokers" to have an undergraduate degree in real estate or two years of "general real estate" experience (pending)

Bills of Others AB 265 (Ammiano) Tenancies and Unlawful Detainer. Existing law states that a tenant is guilty of unlawful detainer upon default in the payment of rent under the lease after receipt of 3 days' notice of that violation and failure to correctit.This bill would increase the time of the notice period from 3 to14 days. CAR's Position: Oppose

Bills of Others SB 221 (Simitian) Small Claims Court Jurisdiction. Existing law specifies that the jurisdiction of the small claims court includes various actions in which the demand does not exceed $7,500.This bill would revise the jurisdiction of the small claims court by increasing that amount to $10,000. CAR Position: Support

Bills of Others SB 454 (Pavley)Energy efficiency standards by Energy Commission. State Law provides for the licensure and regulation of contractors by the Contractors' State License Board (Board). It prohibits certain actions by licensed contractors. This bill would subject a licensee to discipline for the failure to comply with specified energy efficiency standards and would require the Energy Commission to collaborate with the Board to identify and investigate the failure of licensees and unlicensed contractors to comply with those standards. CAR Position: Oppose

Bills of Others SB 588 (Evans) Coastal Resources and the Coastal Act of 1976 Penalties. This bill would provide that a person who violates the California Coastal Act is subject to an administrative civil penalty that may be imposed by the California Coastal Commission by a majority vote of the commissioners in an amount no less than $5,000 and no more than $50,000 for each violation. CAR Position: Oppose

Bills of Others SCA 5 (Simitian) Parcel Taxes and Educational Entities. The California Constitution conditions the imposition of a special tax by a city, county, or special district upon the approval of 2/3 of the voters. This measure would instead condition the imposition, extension, or increase of a parcel tax by a school district, community college district, or county office of education upon the approval of 55% of its voters. CAR Position: Oppose

Now... A Word From Our Sponsor

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