As a Realtor® you are part of one of the largest special interest groups in this country – the Realtor® Party, and you have a noble cause – preservation of the American Dream of home ownership. You may not like the idea of being a ‘special interest’ and you may disavow any inclination to participate in the political process that supports it, but that doesn’t change the facts.

Pericles summarized the concept in 500 BC when he said “Just because you don’t take an interest in politics doesn’t mean politics won’t take an interest in you.” I’ve updated that somewhat with the Wunderlich codicil “If you’re not at the table, you’ll probably be on the menu.”

If you think the business of real estate is just about buying and selling houses, you only know half the story. The National Association of Realtors® is the largest grassroots political action group in this country representing more than 1.1 million Realtors® in our nation’s Capitol. Last year we invested more money in candidate elections and special campaigns than almost any other group. That’s the other business of real estate – the part that allows you to stay in your business.

A few members have voiced concerns over the recent decision by the California Association of Realtors® to increase our dues by $49 to cover this vital piece of our business. But in reading through those comments (comment summary on $49 investment), I realized some of you are simply not aware of what these critical funds are used for and the direct benefit you derive. For less than the price of 1 latte a month, you are insuring your political survival and generating a real and measurable impact to your bottom line.

So let’s break down what YOU get for that $49 investment.

• Just last week we defeated a proposal from CA Senate President Darrell Steinberg that sought to impose a 3% accelerated withholding tax on independent  contractors – that’s you. If you sold a $100,000 condo, the withholding from your commission check would be $90. On a median price home in Temecula last year that would have taken an additional $260.89 out of your check – every check all year long. If it wasn’t for our successful lobbying efforts you’d be  paying that already because Darrell tried the same thing 3 times last year. Is that worth $49 to you?

• Have you sold a home to a first-time homebuyer in the past year? Over 1.2 million first-time prospects have become owners since the inception of the tax credit last year – 450,000 of those would not have jumped into the market without that incentive. Who do you think lobbied to get that measure passed last February and then worked extra hard to get it extended and expanded in November against long odds? Selling side commission on a median price home in Murrieta last year was about $8,133. Is that worth $49 to you?

• Last year Canyon Lake proposed an ordinance requiring every Realtor® to pay a $90 business license fee every year. If you worked in, advertised in, sold a home in, or even mentioned Canyon Lake in your website – you would get a bill for $90. We worked hard to modify that ordinance – not just for Canyon Lake but so that other Southwest California cities didn’t get the idea they could just reach into your pocket without a fight. Is that worth $49 to you?

• Last election cycle we supported candidates in 9 local city council races. 8 of our candidates won including 3 Realtors®. Do you think it might be helpful to have people serving on our local councils and water boards who understand property rights issues, eminent domain, sign ordinances, zoning and so forth? How about in Sacramento? Or Washington DC? If we had more legislators in place who understood real estate or banking or appraisal issues do you think we’d be having some of the problems we’re having today? Is that worth $49 to you?

• Would the loss of the mortgage interest tax deduction have any impact on home ownership? How about capital gains tax benefits for home owners? The  mortgage interest tax deduction and capital gains benefits are on the table every couple years in Washington DC as a source of potentially significant tax revenue. They will be again this year. Without your NAR lobby, these significant advantages to homeownership would have disappeared along with a chunk of your business during the past decade. It that worth $49 to you?

• Would your business be impacted if a buyer could walk into any bank and buy a home from the same salaried employee who gave them a loan? NAR fought an 8 year battle to eliminate a loophole banks were trying to exploit to do just that. We won that fight in 2009. Is that worth $49 to you?
  

Those are just a few of the things your $49 does. Here’s a few things it doesn’t do:

• Realtor Action Funds do not support a political party platform or agenda – they support the Realtor® Party. We support candidates who understand our issues at the local, state and national level regardless of party affiliation. Historically our expenditures are split almost down the middle at the federal level.

• Realtor Action Funds do not support issues or legislation that is not real estate related. At the state level our analysts comb through every one of the 3,300 bills submitted in an average session. About 1,500 of these may be flagged as having some potential impact on either Realtors® or property rights. Our state directors discuss each of those bills to determine whether the Association will support it, oppose it, maintain a neutral position or if it really isn’t real estate related at all. We also sponsor our own bills to address specific real estate issues of concern to our members. You can read about the eight bills CAR  authored for 2010 here.

• Realtor Action Funds do not support travel by Directors, they don’t pay for lobbyists salaries and they don’t pay for ‘pet projects’. If it doesn’t directly support a candidate or real estate related issue or campaign, it doesn’t come out of these funds. They are too precious to squander and the real need is growing exponentially.

I hope this gives you a better feel for why this latest move was made by our state association. It was not a capricious decision and was discussed in detail for more than a year. In order to continue to be effective at the level our members have come to demand, we
must have the support of all members. 10% or 20% can’t continue to pay for benefits demanded and enjoyed by 100% of the membership. That’s neither fair nor equitable.

We welcome your input and questions and I encourage you to visit http://gadblog.srcar.org/ to take part in the discussion.

Today marked the 6th Annual Riverside County Water Symposium. The event featured a series of panels and speakers discussing the water challenges facing our state today. The keynote was delivered by Michael Chrisman, California Secretary for Natural Resources.

Riverside County Supervisor Marion Ashley set the tone by stating that we are literally playing Russian Roulette with the Sacramento Delta. One little mis-hap, a flood, an earthquake, terrorist threat or an angry gopher could disrupt the water supply to 25 million Californians and dramatically impact the economy of this state for decades. As he noted, we’d be up a creek all right but it would be a dry creek. We can’t conserve our way out of this mess – we must address and resolve some of the fundamental problems with our systems starting with the Sacramento Delta. When the Delta fails – not if but when, it will make Katrina and Andrew look like childs play in terms of damage to the area, the ecosystem and the state’s economy.

I don’t think it comes as a big surprise that our water systems, much of it built 30 – 50 years ago, was never designed or intended to meet today’s demand. And while environmental concerns have acted to restrict the flow of existing water (see Delta Smelt), those same concerns have prevented us from developing new resources or re-working other solutions (peripheral canal). In the past 100 years we’ve relied on big projects, big technological developments and throwing big money at it. That’s not viable in the 21st Century where we face higher demand with fewer resources and less money.

One thing they all agreed on, we’ve witnessed the end of the era of cheap water. You are no longer assured of getting all the water you want – rather they’ll be working hard just to get you all the water you  need, and at a price you can still afford. After all, Western Municipal, which provides most of  Southern California’s water to our local providers, is implementing a 19.7% increase this September followed by another 21% jump in 2011.  Tiered pricing will become the norm with conservation being rewarded while profligate use will be penalized. After all, upwards of 80% of domestic water use is OUTSIDE the home with as much as 50% of that is wasted in run-off, over-spray, etc.  If homeowners worked their land like farmers, we could dramatically decrease water usage. But even reduced usage will eventually result in higher bills as infrastructure improvements are required.

Some positive notes – from John Rossi, GM of Western Municipal – ‘In every crisis is an opportunity’.  This may be the best time in 25 years to actually fund and implement some real solutions in the Delta in spite of California’s economy. But the timing is critical and they are forming coalitions to get active on this NOW. They are encouraged to be working with some of the groups that have been adversaries in the past but have a new view of what can and should happen to the Delta going forward. They are asking Sacramento to stop politicizing the issue. The resource is neither a Democratic nor a Republican resource and the resolution to the issue will be derived by working together. They also wish Sacramento would focus on getting it’s own act together and quit issuing new and/or redundant requirements and compliance reports about issues they have no clue. Well, good luck on that one.

They are further encouraged by the possibility of obtaining some bail-out funds for critical projects. However, as one noted, the structure of the bail-out rewards the inept. If you’ve managed your business right, you probably don’t qualify. (Hmmmm, where have we seen that before?) For example, one of the requirements to qualify for Federal funds is to have ‘shovel-ready’ projects – yet few associations or water departments can afford to plan and implement a project to a shovel-ready state without having had the funding mechanism for the project in place from the out-set. It’s one of those catch 22′s – you can’t develop a project unless you have money but you can’t have money until your project’s developed. Duhhhh.

Secretary Chrisman noted that we have recently had two prominent California water experts placed in high Federal office, which bodes well for some of our projects. The new Director of the Department of Water Resources has mandated that human costs be factored into consideration along with the customary environmental impact and structural costs. They’re also evaluating California Water Law, which currently ranks as the most complex water law in the country. Our combination of old British Water Law, adopted in the 1850′s, usufructuary, riparian and appropriative water rights creates quite a challenging environment to work in. He also noted that the Endangered Species Act has been used at times as a very blunt instrument to craft laws and they are petitioning for reconsideration of the Delta Smelt and other ‘endangered’ species.

As with so many issues facing California today, we are at a crossroads in our water supply. As Mark Twain opined, “Whiskey is for drinkin’, water is for fightin’ over.” It looks like we’re coming into the fightin’ season for California water right now and, as with all our endeavors, we as Realtors had better be at the table with them – or we’ll sure as hell be on the menu.

Let’s start with the Land Use, Property Rights and Environment Committee. I enjoy being a part of this committee because to me, this is what real estate is all about – the preservation of property rights and the advocacy thereof. Of the numerous issues discussed today, I’ll comment on my favorite – and please keep in mind these are my comments and observations, not that of the committee and certainly not NAR.

The first issue, which you’ve probably heard about and hopefully responded to the recent Call-For-Action on, is the so-called ‘American Clean Energy and Security Act of 2009′. Jeez what a moniker, eh? How can you possibly be against anything that promises both clean energy AND security? Well it’s easy.

This bill, introduced by one of my favorite (heh) state legislators, Henry Waxman (D-CA), is the so-called Energy Star Building Efficiency Bill that seeks to develop a labelling system for every home & building in America.  Yeah, really! There are so many problems with this 685 page bill it’s hard to enumerate them all – but let me mention a couple.

First off, it contains the deadly ‘Point-of-Sale’ provision similar to the language in the Nunez Home Audit bill we defeated in CA last year. Also similar to that bill, this POS would mandate an inspection prior to COE by person or persons unknown, to determine the energy efficiency of a home or commercial building. Who knows what all they would be looking for (as usual, it’s not spelled out in spite of the 685 pages), who would be certified to do the inspections or how sweeping the search would be. But the goal is to be able to certify the ‘energy efficiency’ of a structure and give you a little gold star to put by your door with that inspectors opinion on it.

So, for example, if you’ve got single pane windows, they might knock 10 points off. R-30 insulation? add a point. Low-flow toilets? Add 15 points. Gas bill comes to $187 in December? Hmmm, how much was your neihbors bill? Electric bill comes to $347 in July, lose 15 points. And so on. The higher your home scores, the more money you can sell it for. In theory.

So lets say the above scenario garners a 325 Energy Star rating for your home. But your neighbor pulls down a 479 for the same house. Why? Is his home more energy efficient? No, he only comes home on weekends so the AC rarely runs and his electric bill is only $64. His lawn is dead because he spends no money watering and he passes out drunk on the couch in front of the fireplace so his gas bill is only $11. Yet his home will be ‘Energy Star’ rated higher than yours and should sell for more as a result. Make sense? It does to Henry Waxman.

Both CAR and NAR oppose this legislation as it includes POS mandates, adds unnecessary costs to transactions and has been shown to be an ineffective tool for implementing energy efficiency. It will also stigmatize older properties, cause a further deterioration in home value and will further weaken the national economy. Labeling every structure in America will not, in and of itself, save energy or reduce costs but try telling that to Henry Waxman. Fresh off a 15 year battle with big tobacco and recently ensconced in his cushy new committee chair, Waxman’s got a bug up his butt about energy now and has the bully pulpit to try to pull this off.

On the other hand, NAR wholeheartedly supports increased energy efficiency, especially as  outlined in HR 1778 (Welch, D-VT) and HR 1573 (Van Hollen D-MD) which provide incentives for energy retrofits, provide matching grants to states to encourage energy conservation and provide zero interest loans to make it happen. That’s the way to get something done – identify the goal and incentivize people to get there – not create a whole new level of bureaucracy, inspections, little energy stars and point-of-sale mandated costs.

This bill is also referred to as ‘the environmental attorney’s wet dream act of 2009′ because it would allow ANY individual to stop ANY development or project simply by claiming it did not meet federal standards, forcing costly legal battles and project re-designs to attempt to comply with specious requirements. While most people realize there are necessarily regional differences in building design and and construction, this bill ignores all that with a one-size-fits-all approach mandated nationwide.

It’s not good legislation and we’ll be talking with our legislators over the next couple days so they get the point too.

So why the big increase this year? Two reasons – first, as discussed before, there is overwhelming drive for anything GREEN this year. The science behind, or the cost of the associated project is almost irrelevant in the crush to implement anything GREEN. This is the type of group-think mentality that pervades our government from the top down these days and will be responsible for significantly increasing the costs of all our goods and services until this greensanity is brought under control.

The second reason we’re seeing an influx of POS bills is that there is a perception among some of the lobbying groups that Realtors are suffering from diminished influence these days. With increased union/liberal/Democrat control of Sacramento, the lobby for reason, for fiscal responsibility and private property rights is fighting the battle against longer odds. Second, they feel that with our membership numbers in decline that we are less prepared both numerically and monetarily to wage our battles.

The vanguard bill will likely come out of an effort by the State Water Department to inflict a POS bill on homeowners. The verbiage is being finalized and they will start a series of statewide public hearings on the matter within 30 days. Based on the information they collect from the public, they intend to modify the State Water Code to require property owners to retrofit ‘existing outdated, high water use plumbing fixtures upon resale’ with ‘water conserving plumbing fixtures’ and mandates that the seller and/or agent disclose compliance.

Existing plumbing fixtures defined as the following:

• any toilet that uses more than 1.6 gallons per flush
• any urinal using more that 1 gallon per flush
• any showerhead with a flow capacity more than 2.5 gallons per minute
• any interior faucet that emits more than 2.2 gallons per minute

Water conserving plumbing fixtures are defined as ‘any fixture that uses less water than the existing fixture.

So what’s wrong with this POS POS bill? Where t start.

First of all, POS bills NEVER accomplish what the authors claim they will. In this case the water department is under pressure to comply with the recently adopted ACWA standard mandating a 20% reduction in water use by 2020. Let’s put aside the argument that there really is no water shortage in the state but simply a politically motivated transmission problem (Delta Smelt, peripheral canal, etc). So the goal is to conserve water – an admirable goal. Does this POS bill accomplish that?

Not even close. Even the water department will tell you that household domestic water usage only accounts for about 20% of gross water usage and only a small percentage of that is considered waste. That leaves 80% of our domestic water usage outside the home – watering our lawns, washing our cars, cleaning our driveways, etc. Not only is the majority of water used outside our homes but the percentage of wastewater generated is significant – over spray, run-off, etc. So this bill doesn’t even address the largest are of water waste in domestic consumption. It addresses a small percentage of a small percentage of our usage – hardly likely to produce the desired 20% cut in usage. And don’t even ask about non-domestic water consumption. But it is a great excuse to jack our water rates through the roof.

Further, POS is a notoriously ineffective way to accomplish even this limited goal. On average statewide between 2% and 3% of homes change hands every year. Given that degree of penetration, you do the math on how many years it will take to reach enough homes in the state to register any statistical impact.

So the water department is going after a small percentage of a small percentage of water users in the least effective way possible. Yet they might succeed because the stated purpose of the regulation is to ‘conserve water’ a very GREEN goal. In the meanwhile, it will increase the cost of buying or selling a home in the state by anywhere from a few hundred (just for the inspection) to a few thousand – depending on the age of the home and the number of fixtures that need to be replaced.

In typical fashion the deparment hasn’t addressed the issue of inspection – who will do it, what will they charge, and how pervasive will their powers be to enter and cite homeowners for other violation they may observe (electrical, structural or other plumbing issues not in compliance). Anytime you increase the cost of buying or selling a home, you decrease the affordability of that property and while that may not seem an issue at current pricing levels, the bottom line is that every $100 increase to the price of a home eliminates nearly 1,000 potential buyers for that home across all levels of home from first-timers right on up the ladder.

So we’re looking at a proposed bill that doesn’t address the biggest issue of water usage at the home, inflicts unknown costs on homeowners to meet these specious goals, and doesn’t even mandate a degree of compliance – just that the new fixtures use less water than the existing fixtures.

Of course if the water depsrtment is correct then most of you won’t even read about this. And if you do, you won’t do anything about it until the bill has passed and it’s too late to do anything but bitch about it. I’m hoping the water department is wrong on this because if they’re not, we’ll be seeing more and more incursions into our business by people that wouldn’t have dared take us on a year ago. And your business and your customers will be on the losing end.

This Committee deals with a fascinating range of problems related to federal land use legislation. I’ve posted info on some issues like the checkerboard land use issue, water rights, coastal and riparian issues. As you might imagine, in this great land – from sea to shining sea, there is a wide variety of issues. But some consistently emerge at the top of the list, things like water rights, land grants/transfers, the gamut of ‘green’ issues and zoning/domain issues, to name a few.

In DC the committee will hold a Forum on Tuesday, 5/12, in the Omni. It’s an open forum to bring your own state, regional or local concerns to the committee. If you have local concerns, make sure your state/NAR Directors are aware of them. I will also be happy to pass along any comments made to this post.

Water is a pre-eminent issue across the country. From California to Maine, from Texas to Minnesota – water is king. And where there are water issues there are often collateral issues like endangered species, anything green, land use & water rights.

This also morphs into a second major concern right now, that of the checkerboard land use problem. Over the years land trusts have built up to manage these ‘public’ lands. In the absence of strong federal policy, they have pushed their own agenda’s, often to the detriment of adjacent property owners and communities. Stories were shared of these landowners doing land swaps of 100 acres for 600 acres, or swapping land rights but keeping water rights – minor annoyances like that.

Anyway, if you’re going to be in DC in May, stop by the Omni on Tuesday morning at 9. Or, if you don’t want to be up that early, just leave a comment here and I’ll let them know it’s from the ActiveRain Land Use Group.

Gene, the biggest land use issue where I’m from is:

This morning we had an opportunity to get an update from and hold a Q & A with Alex Creel & Stan Weig. For those of you who don’t know these two, Alex is our chief state lobbyist and Stan is deputy chief. Alex has been with CAR for something like 22 years now and as a team they know more about what happens in Sacramento than most of our legislators do. (Ooooh, like that’s a challenge.)

In response to a question, Alex said that if history is any indicator, CAR will not be taking a position on Propositions 1A – 1F as they are ‘not real estate related’. The last time we stepped outside our box was to endorse the 1980 Jarvis-Ganz tax bill known as Prop 13. (You can read a summary & recommendations from our partners at the Southwest California Legislative Council here)

He also noted that CAR would not be sponsoring any bills this session. Citing a difficult political and economic climate, any bills that involve spending are DOA but ‘revenue enhancement‘ bills and anything ‘green‘ are on the fast track. Of course by ‘revenue enhancement’ bills, we’re talking taxes. With the state facing an immediate deficit of $8 billion (just announced by LAO), or the $14 Billion projection if 1A doesn’t pass, taxes and fees are back on the table. He said it could go from not pretty to pretty ugly real fast.

Between the tax & fee bills and a number of point-of-sale bills, Alex feels this will be a strategically defensive year both at the state and local level. The more spending is curtailed at the state level, the more burdens fall to our local governments to off-set losses. That leaves us liable to tax attacks.

In other updates we learned that the Septic Regulations we have been arguing against are going back for another revision. I’ve lost track of how many this makes and if history is any indicator, the new regs will just find new ways to be bad. Or maybe they finally heard the people and will realize new regs aren’t necessary, or they can draft some regs to reinforce the regs that already exist. Naw – they’ve been justifying their existence for 9 years now. No use jumping off this milk train too soon. How would you like to have spent YOUR last 8 years studying sewage, wastewater and septic systems? And still not learned anything? Talk about your life being in the crapper.

Anyway, look for new regs maybe by late summer with another brief round of public hearings in the fall.

We have lobbied hard to expand the $10,000 statewide new homebuyers credit to include the purchase of any home – unfortunately with the state on track to log 600,000+ home sales this year, that’s a $6 billion plus pricetag nobody’s willing to pick up.

Finally, what we’re seeing locally is being repeated in numerous markets around the state. Sales are on the rise while prices continue to decline. As this was a legislative update rather than a financial one, no prognosis was rendered on how and when we would be through this.

From an advocacy standpoint, sometimes a good defense is the best offense. Your legislative team will be doing our best to keep you at the table.

At our recent mid-winter business meetings, point-of-sale ordinances were debated in several committees. Why? Because this year we are likely to face more point-of-sale ordinances at the state level than we have in the past decade. During his 20+ years as our Chief Lobbyist, Alex Creel has met and defeated more than 20 point of sale ordinances that would have resulted in thousands of dollars of increased cost to homeowners and resulted in even less affordable housing across the state. He’s expecting an onslaught of this type of bill this session.

In spite of the fact that there is currently a dearth of legislation on the table (see CAR Update Post), we already know of several bills waiting in the wings that will have point of sale provisions. Among these:

• ACWA (Association of California Water Agencies) is circulating a point of sale water conservation (toilet) retrofit.

• The CEC (California Energy Commission) may re-introduce AB2678 with point of sale energy audits (a bill we successfully fought last year).

• The PLC (Planning and Conservation League purportedly has a similar bill it is waiting to introduce.

• The ARB (Air Resources Board) will approve an implementation plan that includes point of sale as a trigger for retrofits.

• Water agencies & county governments are rumored to have at least two different bills requiring sewer/septic inspections and retrofits.

• Local governments continue to push point of sale as a trigger event for fireplace, water use and energy retrofits.

• There are additional calls for more ‘safety’ mandates for items like the carbon monoxide alarm bill narrowly defeated last session as well as for the next iteration of pool safety barriers.

Why all these and why now? Well, you may notice that most of those proposals have one thing in common – they deal with conservation issues and right now GREEN is in. Our new President is GREEN. Our lame-duck Governor can’t get a budget in place but if something is GREEN, he’s all over it. Our liberal legislators are increasingly GREEN. Want to make money off some lame product or get some lame bill passed? Make them GREEN.

And if CAR stands up in opposition to these worthless and costly mandates – well, as one member put it, we stand to become a red smear on the GREEN road.

There is an excellent series of briefing papers available at CAR.org dealing with how to address  point-of-sale retrofit bills. And it’s not an easy battle because many of the bills are actually for a good cause. Even if you’re not GREEN it’s hard to argue with water conservation, especially in Southern California, or pool safety or energy efficiency. If you can save time, energy, water and money, it’s gotta be good, right?

But the bottom line is that point-of-sale mandates are about the LEAST effective way to accomplish something. First of all it transfers the cost of compliance to only those parties involved in a transaction and not to ALL homes. It even does that inefficiently since studies show that within a 25 year time span, less than 22% of homes will be impacted by the measure. The impact us further diluted since those same studies show that newer homes, those already most in compliance with energy saving features, change hands most frequently while pre-1979 homes, those most likely to offend, change hands much less frequently.

What CAR has been very successful at doing is pointing out those dismal penetration results. We suggest that if their widget or gizmo is of such universal benefit, then it should be applied to ALL homes to achieve the promised benefit, not just burden 5 or 10 or even 25% of homeowners with the ‘tax’. We are also supportive of a time-certain feature.  We have employed this very successfully when the situation called for it by specifying that the measure apply to ALL homes, that compliance be mandated within a specified time period and, when possible, the utility or agency provide some incentive for compliance paid for out of the up-front savings that agency will enjoy from the retrofit. Water heater strapping, smoke detectors and pool barriers are examples of this and are now standard issue on every home and subject to disclosure by the Seller on the TDS or WHSD forms.

Keep your eyes open for local municipalities attempting to implement these measures as they look for ways to ‘enhance revenue’ and/or reduce consumption. We have successfully avoided the imposition of these items in several local cities in the past few years and will work with them to augment the program in such a way as to ensure it’s maximum efficiency with minimum impact to home owners and Realtors. If you hear of any city or commission thinking about any point-of-sale retrofit mandates, please contact GeneWunderlich@SRCAR.org right away.

After all, the easiest way to do something isn’t always the right way and the right way is seldom easy. Point-of-sale mandates are certainly easy but that doesn’t make them right.