2011 GAD Institute Alexander E. Creel Senior Vice President / Chief Lobbyist California Association of REALTORS® August 25, 2011

C.A.R. Sponsored Bills 2011

C.A.R Sponsored Legislation - SB 458 (Corbett) – Expansion of SB 931 (2010) that requires 1 st mortgage holders to accept agreed upon short sale as full payment of outstanding loan balance: Extends SB 931 to junior liens. Urgency - Signed by the Governor

C.A.R Sponsored Legislation - SB 150 (Correa) – Protects a CID unit owner’s right to rent – If owners had that right when unit was purchased – they continue to have that right as long as they own it. - Signed by the Governor

C.A.R Sponsored Legislation - SB 837 (Blakeslee) - Follow-up SB 407 (2009): Implements TDS disclosure requirement for the installation of water conservation devices in ALL housing. - Signed by the Governor

C.A.R Sponsored Legislation - AB 771 (Butler) – Statutorily details the materials that must be given to prospective HOA unit buyers; prohibits the bundling of those with other materials. - On the Governor’s Desk

C.A.R Sponsored Legislation - AB 278 (Hill) - Permit DRE to issue citations and fines > $2,500 for minor infractions and allows appeal through the current hearing process. - Pending on Senate Floor

C.A.R Sponsored Legislation - SB 510 (Correa) - Establishes a designated officer requirement for managing real estate offices. - Pending on Assembly Floor

C.A.R Sponsored Legislation - AB 392 (Alejo) - Require local governments to post meeting agendas and staff reports 72 hours prior to a scheduled meeting - “Two Year” Bill

State Budget Deficits: Recent Budget Turmoil

First Quarter 2011 Budget Deficit Projection According to the Office of the Governor - $26.6 billion

Gov. Brown Proposed Budget $12.5b - spending reductions; $12b - revenue extensions; $1.9b - other solutions - Eliminate tax benefits for enterprise zone - 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

Enacted Budget Solution - $11.2b $8.2b - spending reductions; $0.3b - revenues; $2.6b - other solutions - Program Reductions: $861m Mental Health Services; $82.2m Healthy Families; $1.127b CalWORKs; $1.78b In-Home Support Services; $177m Supplemental SSI; $272.6m Dept. Dev. Services; $500m University CA - Additional cuts to state gov’t, corrections, the judiciary and resources - Increased higher education student fees - Loans, transfers, deferred payments and tax enforcement

Budget Deficit Projection Remaining Deficit - $15.4 billion $6.6b in additional revenues received by the State in early June

Additional Enacted Solutions in July - $ 9.6 billion $4b - additional revenues (estimated); $3b – spending reductions; $3b – delayed payments -Delayed payments and cuts to education -Eliminating/restructuring redevelopment agencies -Cuts to the court system/court construction -Fee increase for rural homeowners - $90 ($150) increase -VLF increase for drivers -Amazon Tax

Proposition 26 -Broadened the definition of a “tax” – now included many payments that used to be considered fees -Some things remain “fees” (i.e., User fees; Property development charges; Property assessments)

Current Budget Situation - As of August 16 th, the CA state Controller shows revenues down 10.3% from the estimates in the July budget We will be short again !!

Shortfall Trigger Cuts Beginning December 15 -$1b shortfall = $600m in cuts Cuts to higher education, health and human services, public safety Increase community college fees by $10 a unit Increase fees for counties sending juveniles to state facilities

Shortfall Trigger Cuts Beginning December 15 -$2b shortfall = additional $1.9b in cuts Cuts to community colleges Shorten K-12 school year by 7 days Eliminate school transportation

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

“... 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...” Mortgage Interest Deduction Legislative Analyst’s Office Conclusion 2007

Service Tax Commission on 21 st Century Economy: Findings September 1, 2010  Sales tax on ALL services “... State tax rates on sales of goods and services could be set initially at about 4 percent...”

Issues Briefing Papers September Meetings -Confidential Brown Act hearings -New issues following up on SB 458 and short sales, e.g. State Bar bill -Foreclosure debt relief/dual track prohibition -Mortgage Interest Deductibility -Statutory definition of "cost effective" for retrofits. -Considerations in sponsoring legislation

Task Force Reports September Meetings -Distress property progress report. Include dual track and press conference agenda -Political Activities Task Force -Report on the Public Policy survey

Questions?