8:00 a.m. - 11:30 a.m.    
Thursday, October 7, 2010    
Marriott Hotel, Anaheim CA   
    
Mission Statement:
The Housing Committee is a Policy Committee. Its mission is to develop C.A.R.'s housing policy.  It has original jurisdiction to evaluate housing legislation and regulation in the following issue areas: Common Interest Developments; Fair Housing/Equal Opportunity; Housing Policy; Manufactured Housing; Multifamily Housing; Property Management; and Real Estate Finance.

Presiding:
LeFrancis Arnold, Chair
John Torres, Vice Chair

Issue Chairs:
Diane Conaway, Manufactured Housing  
Winnie Davis, Real Estate Finance
Miguel Garcia, Fair Housing/ Equal Opportunity
Rana Linka, Common Interest Development
Tica O'Neill, Property Management
Georgia Richardson, Housing Policy
Mike Riley, Multifamily Housing

Committee Liaison:
Kevin Brown

NAR Representatives:
Sandy Darling
Jeannette Way

Staff Coordinators:
Dave Milton
Matt Roberts

I. Welcome and Opening Remarks
LeFrancis Arnold, Chair

II. Common Interest Development - Rana Linka, Issues Chair
A. C.A.R.- Sponsored Legislation
AB 1927 (Knight) CID Right-to-Rent Legislation for 2010 - C.A.R. sponsored AB 1927 to re-visit the “right-to-rent issue” of 2008's C.A.R.-sponsored legislation (AB 2259 - vetoed).  As introduced, AB 1927 sought to address concerns raised by the Governor in his AB 2259 veto message, requiring two thirds of the unit owners in a CID to approve, by written ballot, any amendment of the governing documents that would prohibit owners from renting or leasing their unit. Following unanimous votes in both houses of the Legislature the Governor's Staff expressed additional concerns to C.A.R. regarding the AB 1927's two-thirds vote requirement. To specifically address this observation by the Administration, it was amended late in the legislative session to remove the two thirds requirement and instead authorize each CID to use its own voting approval standards for amending governing documents, as long as it was by a written ballot vote of the CID's homeowners.
Status: To Governor

B. State Legislation - 2010
AB 1726 (Swanson) HOA Board or Member Voting Quorums - This bill proposes to clarify the voting procedures in CIDs. It states that ballots should be mailed to CID residents in accordance with the model used by California counties for ensuring confidentiality of voter absentee ballots. It also modifies the quorum requirements for election of directors and provides for a reduced quorum requirement on a second election if a quorum was not achieved for the first election of the same directors. It also will permit the board of directors to participate in a meeting through the use of conference telephone or electronic video screen, if all participating board members are able to hear one another and members of the association speaking before the board.
Position: Watch     Status: To Governor

AB 1793 (Saldana) CIDs and Artificial Turf - Proposes to provide that any provision of governing documents of a common interest development would be void and unenforceable if it prohibits the use of artificial turf or any other synthetic surface that resembles grass. This prohibition would not prohibit an association from applying landscape rules and regulations established in governing documents that contain design standards and quality standards for the installation of artificial turf, or any other synthetic surface that resembles grass, to the extent the rules and regulations do not actually prohibit such installation.
Position: Watch     Status: To Governor

AB 2016 (Torres) CIDs and Notices of Default - Sponsored by the Community Associations Institute (CAI), this bill seeks to clarify the intent of SB 1511 (Chapter 527, Stats. of 2008), which permitted a homeowners association (HOA), in the event of a foreclosure on a separate interest within the HOA, to request that the lender or trustee mail to the HOA a copy of the trustee's deed upon sale, to ensure that the HOA has express knowledge of the name and address of the successor in interest. Following enactment of SB 1511, some county recorders were rejecting HOA filings on the grounds that other provisions of existing law required a separate request for each separate property. This bill seeks to clarify that an association's single recorded request applies to all of the separate interests within the association and only needs to include the name of the association.
Position: Favor     Status: Signed by the Governor; Chapter 133, 2010 Statutes

AB 2502 (Brownley) HOA Assessment Delinquencies - As introduced, AB 2502 would have increased the amount of delinquency required before an association could foreclose on a delinquent homeowner from $1800 to $3,600. It would also have required the discussion of such delinquencies to be in a public Board meeting if the homeowner so requested. C.A.R. opposed AB 2502 as introduced, for it would have made it more difficult for HOA’s to collect delinquent assessments and would have imposed additional costs on the remaining homeowners as a result. C.A.R. and other opponents succeeded in convincing the author to remove the objectionable provisions from the bill, leaving only a prohibition on homeowners waiving rights and protections provided to them in the Davis-Stirling Act. All other provisions of the bill were deleted. The sponsor, CA Alliance for Retired Americans, moved to an "oppose" position when the bill was amended to its current status and the Author withdrew the bill from consideration by the Judiciary Committee.
Position: Watch     Status: Died in Assembly Judiciary Committee

C. Potential State Legislation in 2011
Excessive HOA Fees imposed by 3rd Party Contractors*
The California Desert Association of REALTORS® (CDAOR) states that an emerging issue has become prevalent in the CDAOR region involving HOAs of CIDs charging excessive fees for required disclosure of HOA documents to purchasers of separate interests in a CID. Some HOAs in this area are delegating this process to third party agents who then charge fees far above "actual costs" and the "reasonable fees" standard required by Civil Code Section 1368 in the Davis-Stirling Act. The issue is whether, in light of the 2007 case, Berryman v. Merit Property Management, 62 Cal.Rprt. 3d 177, legislation is needed to make existing law applicable to agents of HOAs.

D. Questions or Motions from Committee Members on Reported Items

III. Fair Housing/Equal Opportunity - Miguel Garcia, Issues Chair
A. State
AB 1641 (Hall) Redevelopment of Blighted Areas - Existing Community Redevelopment Law authorizes the establishment of redevelopment agencies in order to address the effects of blight. This bill proposes that blighted areas may also be characterized by the existence of housing constructed as government-owned projects prior to January 1, 1960, and that redevelopment agencies should seek to comply with the Community Redevelopment Law when finding such conditions in their respective areas. It also would authorize a project in these areas to include the development of other housing, including privately owned housing units available to persons and families of low and moderate income, and workforce market-rate housing units.
Position: Favor     Status: To Governor

AB 2327 (Harkey) Affordable Housing and the Risk Retention Pool - This bill would authorize an affordable housing entity to join with one or more affordable housing entities to pool self-insured claims or losses. The pool would be authorized to be organized as a nonprofit corporation, limited liability company, partnership, or trust, and would prohibit the pooling arrangement from being considered insurance or being subject to regulation under the Insurance Code.
Position: Watch     Status: To Governor

AB 2406 (Blakeslee) Redevelopment and Pooled Housing Funds - This bill would authorize contiguous agencies located within adjoining cities to create and participate in a joint powers authority in order to pool their housing funds to pay for the direct costs of constructing, substantially rehabilitating, and preserving the affordability of housing units affordable to extremely low income persons or households. It also establishes the process for creating such an authority, requires that pooled housing funds be spent within a project area of a participating agency, and "sunsets" its provisions on January 1, 2020.
Position: Watch     Status: Signed by the Governor; Chapter 209, 2010 Statutes

SB 1252 (Corbett) Housing Discrimination Guidelines and Federal Parity - Federal housing programs have renter eligibility criteria requiring that at least one member of the household be 62 years old or older. This type of requirement currently violates California law. Additionally, businesses may not discriminate in the sale or rental of housing accommodations based on age, with the exception of establishments which are designed to accommodate the unique social and physical needs of senior citizens. C.A.R. supports SB 1252 because it reconciles differences between federal law and state law by adding source of income to the list of protected classes in existing state law. The bill will also clarify that admission preferences based on age, imposed in connection with a federally-approved housing program, do not constitute age discrimination in housing under state law. 
Position: Support     Status: To Governor

B. Questions or Motions from Committee Members on Reported Items

IV. Housing Policy - Georgia Richardson, Issues Chair
A. State
AB 602 (Feuer and Steinberg) Land Use and Challenges to Local Planning Decisions - For nearly 25 years there has been a very short window for challenging land use decisions of local governments.  Advocates for low and moderate-income households enjoyed an exception to the review process, however, created to recognize that cities and counties have an obligation to ensure that such housing can and will be built. AB 602 clarifies this long-standing provision—recently misinterpreted by Urban Habitat Program v. City of Pleasanton (2008) 164 Cal. App. 4th 1561-- to ensure that local governments follow the law on housing elements, density bonuses and other requirements that ensure a healthy housing market for all economic segments.  The bill limits to five years the time period in which a challenge can be made to a general plan based on an inadequate housing element. This represents a compromise between the 90-day period established by the Urban case and the almost indefinite period, tied to the duration of the current housing element period, of between 5 and 8 years that existed prior to Urban. The bill also provides new protections to development projects from any court-imposed moratorium, once a project achieves a certain point in the entitlement process. This legislation establishes a "safe harbor" to protect tentative maps and development agreements from any subsequently imposed moratorium on the issuance of building permits and related permits; variances; zone changes; and/or subdivision map approvals.
Position: Support     Status: To Governor

AB 2207 (Fong) Utilities and Restrictions on Termination of Service - Proposed to require utilities to allow a customer who is subject to termination of service for nonpayment of a delinquent bill to enter into a bill payment plan. Also would have required a customer service representative to inform the customer that he or she has a right to arrange a bill payment plan extending the period for payment of the bill a minimum of 3 months, and possibly exceeding 12 months. The customer would be held responsible for any charges that accrue to the service account after entering into a bill payment plan. The bill also would have set up a process by which a utility could file with the California Public Utilities Commission (CPUC) a Tier 1 advice letter to open a memorandum account to track any significant additional costs associated with complying with the requirement to offer bill payment plans.
Position: Watch     Status: Died in Senate Energy and Public Utilities Committee         

AB 2536 (Carter) Housing & Emergency Shelter Trust Fund Act and Supportive Housing - Allows Emergency Housing and Assistance Program (EHAP)funds approved by the voters in the Housing and Emergency  Shelter Trust Fund Acts of 2002 and 2006 to be used for supportive housing programs. The approach in AB 2536 recognizes the new realities facing shelters and seeks to expand ways to assist the homeless population.  Making supportive housing projects eligible for bond funds under this program, while at the same time retaining the eligibility of shelters to also compete for the funds, helps to advance the policy goals of housing the homeless and putting bond dollars to work on shovel-ready projects.
Position: Watch     Status: To Governor

SB 1374 (Kehoe) Redevelopment Plan Amendment Procedures - Existing law authorizes a redevelopment agency to amend a redevelopment plan to extend the time limit on the effectiveness of the plan for up to 10 additional years beyond the initially specified limit. In order to adopt this amendment, the Agency is required to send a report to the legislative body no later than 45 days prior to the public hearing on the proposed amendment.   This bill sets up a process for more extensive public exposure to such changes, modifies the information required to be included in the agency's report to the legislative body, and requires it to consider any objections with the proposed amendment expressed by affected taxing entities, project area committees, residents, and/or community organizations at a public hearing.
Position: Watch     Status: Signed by the Governor; Chapter 182, 2010 Statutes

B. FYI: a C.A.R. Project
Environmental Hazards Booklet Update - C.A.R. has entered into a contract with the Department of Toxic Substances Control (DTSC) to develop a section on carbon monoxide hazards for an updated edition of the "Environmental Hazards: A Guide for Homeowners, Homebuyers, Landlords and Tenants"(available as a C.A.R. Booklet), necessitated by the enactment of SB 183 in 2010. DTSC has agreed to deliver a rough draft of the Booklet language to C.A.R. for comment by December 1, 2010 and the final version of the Booklet will be released by February 1, 2011. The addition of carbon monoxide to this booklet will ensure that REALTORS® and sellers satisfy their disclosure obligations, thus entitling them to a liability shield.

Note: SB 183 requires ALL existing single-family homes to install a carbon monoxide (CO) detector by July 1, 2011, and all other dwelling units (i.e. multifamily, new homes, etc.) to do so by January 1, 2013. The bill further requires that a CO detector check-off be added to the Transfer Disclosure Statement (TDS) and that, as public and/or private resources are made available, the Environmental Hazards Booklet be updated to include a section on carbon monoxide. In addition, the bill consolidated existing Smoke Detector and Water Heater Strapping disclosures into the TDS and thus eliminated separate disclosure forms from the transaction.

C. Questions or Motions from Committee Members on Reported Items

V. Manufactured Housing - Diane Conaway, Issues Chair
A. State
AB 761 (Calderon) Vacancy de-control for manufactured housing communities - California has had vacancy decontrol for apartments since 1995 under the Costa-Hawkins Rental Housing Act, which C.A.R. successfully co-sponsored. AB 761 proposed to create a "Costa-Hawkins-Type Vacancy De-Control" for mobile home parks and manufactured housing communities. In an attempt to gain sufficient votes for passage by the Senate Judiciary Committee, the bill's sponsor, Western Manufactured Housing Association (WMA), amended the bill to restrict mobilehome park owners' ability to raise space rent for new residents, setting the maximum possible increase at $100 or 20% of the previous tenant’s rent, whichever was greater. Owners also would have been prohibited from increasing space rent more then once within a 36 month period, regardless of a change in tenancy. C.A.R. supported AB 761 because even limited vacancy decontrol reforms would give mobilehome park owners greater flexibility than most existing mobilehome rent control ordinances currently provide. These efforts were not enough to garner a majority of votes in the Judiciary Committee and WMA lost the bill.
Position: Support     Status: Died in Senate Judiciary Committee

AB 1964 (Torres) Inspections of Mobile Home Parks - This bill proposed to extend the Department of Housing and Community Developments Mobile Home Park Maintenance Inspection Program from its current "sunset date" of January 1, 2012 to January 1, 2019.  The Mobile Home Parks Act requires the Department of Housing and Community Development (HCD) to regulate the construction, installation, use, maintenance, and occupancy of mobile homes and mobile home parks. Under the Mobile Home Park Maintenance (MPM) Inspection Program, existing law requires HCD or a local enforcement agency, until January 1, 2012, to inspect mobile home parks with a goal of inspecting at least five percent of the parks per year, focusing on those parks for which the enforcement agency has received complaints about serious health and safety violations. 
Position: Watch     Status: Died on Senate Floor (See also SB 951.)

AB 2029 (Cook) Exemptions from Annual Mobile Home Registration Fee - The Mobilehome Parks Act requires the payment of an annual registration fee for a manufactured home or mobilehome.This bill proposed to exempt a manufactured home or mobilehome household whose income was below the federal poverty level from the annual fee requirement.
Position: Watch     Status: Died in the Assembly Housing & Community Development Committee

AB 2120 (Silva) Revisions to Mobile Home Residency Law (MRL) Annual Distribution Mandate - Revises the annual MRL distribution requirement imposed by the State on mobile home park and manufactured housing community management. Existing law requires the management of a mobile home park or manufactured housing community to provide all homeowners with a copy of the Mobile Home Residency Law (MRL) by February 1 of each year, if a significant change was made to the MRL by legislation enacted in the prior year. This bill instead gives management the option to provide all homeowners with a copy of that law as currently required, or to notify all homeowners in writing that a significant change has been made in the MRL and a copy of the revised MRL is available to homeowners upon submission of a written request to management.
Position: Support     Status: Signed by Governor; Chapter 90, 2010 Statutes

AB 2439 (Nestande) Subletting of Mobilehome Park/Manufactured Housing Community Spaces - Existing law permits mobile home owners to rent or sublease their home in the event of a medical emergency. Current laws also allow mobile home park management to require its approval of the prospective tenant, limit the term of the sublease to no more than 12 months, and prohibit homeowners from charging more then an amount necessary to cover space rent, utilities and loan payments. AB 2439 would expand this rental provisions to allow mobile home owners to rent or sublease their home for any reason. The bill also proposed to exempt subleased mobile homes from rent control. C.A.R. supports AB 2439 because it affords homeowners greater flexibility to rent their homes during difficult financial periods.
Position: Support     Status: Died in Assembly Housing & Community Development Committee

SB 951 (Correa) State Inspection of Mobile Home Parks - The Mobile Home Parks Act (MPA) requires the Department of Housing and Community Development, or a local agency that has assumed responsibility for the enforcement of the act, to enter and inspect mobile home parks and manufactured housing communities. The statutorily required goal is to accomplish the inspection of at least 5% of the parks or communities each year. Existing law repeals these provisions on January 1, 2012.This bill would extend the "sunset date" (repeal) of these provisions to January 1, 2019. Additionally, the MPA imposes a fee of $4 per lot to be used exclusively for the inspection of mobile home parks and mobile homes to determine compliance with the requirements of the MPA. Existing law repeals the $4 fee per lot on January 1, 2012.This bill would extend the January 1, 2012, "sunset" (repeal) date to January 1, 2019.
Position: Watch     Status: To Governor

SB 1047 (Correa) Resident Owned Parks -The Mobile home Residency Law (MRL) governs the terms and conditions of tenancies in mobile home parks and defines a mobile home park for purposes of these provisions. The law also sets forth the rights of a resident who has an ownership interest in a subdivision, cooperative, or condominium for mobile homes or a resident-owned mobile home park. SB 1047 provides that in a mobile home park owned and operated by a nonprofit mutual benefit corporation whose members consist of park residents, where there is no recorded condominium plan, tract, parcel map, or declaration, Article 1 (commencing with Civil Code Section 798) through Article 8 (commencing with Civil Code Section 798.84) shall govern the rights of members who are residents that have a rental agreement with the corporation.
Position: Watch     Status: Signed by Governor; Chapter 175, 2010 Statutes

B. Questions or Motions from Committee Members on Reported Items

VI. Multifamily Housing - Mike Riley, Issues Chair
A. State
AB 1867 (Harkey) Revision to Housing Element Criterion for Multi-family Housing -.This bill allows a city or county to count against its housing need the conversion of existing homeownership units in complexes of three or more units to affordable rental housing, provided an equal number of new-construction multifamily units affordable to lower income households have been constructed in the city or county within the same planning period.
Position: Watch     Status: To Governor

AB 1975 (Fong) Water Meter Installation Requirements for New Multi-unit Residential Complexes - Proposed to require the Department of Housing and Community Development (HCD) to adopt building standards requiring the installation of individual water meters or sub-meters in newly constructed multi-unit residential buildings. It would have required HCD to convene a stakeholder group to make recommendations regarding procedures for property owners' billing of occupants of rental housing units for water use. It also proposed to require water suppliers to determine whether the installation of individual water meters or sub meters should be required for new connections to multi-unit residential buildings.
Position: Watch     Status: Died in Senate Appropriations Committee

AB 2243 (Smyth) Prohibition of Discrimination Against Search and Rescue Dogs -  Existing law provides that a peace officer or firefighter assigned to a canine unit, who is assigned to duty away from his or her home jurisdiction because of a declared federal, state, or local emergency, may not be discriminated against in hotels, lodging establishments, eating establishments, or public transportation by being required to pay an extra charge or security deposit for the peace officer's or firefighter's dog. This bill also prohibits such discrimination against the handler of a search and rescue dog and prohibits those entities from denying service to the peace officer, firefighter, or handler based on the presence of the dog. The bill also requires the handler to be liable for any damages to the premises or facilities caused by the search and rescue dog.
Position: Watch     Status: Signed by Governor; Chapter 92, 2010 Statutes

AB 2293 (Torres) Construction Loans for Multi-Family Housing - AB 2293 provides the Department of Housing and Community Development (HCD) several options for moving stalled  Proposition 46 and 1C projects forward that have not been able to move because they have not been able to secure the needed construction loans.  The sponsor of this bill, Housing California, identified stalled affordable housing projects which could produce 849 housing units, 1,129  construction jobs, and 441 permanent jobs if they could secure construction loans and move forward. Under the provisions of the bill, HCD could contract with private lenders to provide construction loans to projects by making the permanent loan funds available during the time of construction.  The lender would monitor the construction of the project as they normally would, but the upfront bond funding would reduce the size of the private construction loan.  During the construction process, lenders would engage a construction inspector to oversee the project; HCD  would be required to co-engage the inspector so that they are aware of the progress of the project. 
Position: Watch     Status: To Governor

SB 958 (Lowenthal) Federal Housing Trust Fund and HCD's Multi-family Program - This bill proposed to dedicate funds that California receives from the National Housing Trust Fund to the Department of Housing and Community Development's (HCD) Multifamily Housing Program (MHP), and would have permitted the Legislature to appropriate up to 10 percent of the funds to the CalHome Program. Current law establishes the MHP, administered by HCD, as California's omnibus rental housing finance program. MHP provides long-term deferred loans to the developers of affordable rental housing to cover the gap between development costs and the amount of debt that can be supported by affordable rents. Current state law also establishes the CalHome Program, administered by HCD, as the state's omnibus homeownership program. CalHome provides grants to local governments and non-profit organizations to help low-income families become or remain homeowners.  Recipients may use funds to provide home-buyer counseling, home rehabilitation loans, down payment assistance, self-help mortgage assistance, and technical assistance for self-help and shared housing.
Position: Watch     Status: Died in the Assembly

SCR 90 (Lowenthal) Multi-Family In-home Internet Services - Proposed to provide encouragement to all state and local affordable housing lenders who administer competitive multifamily housing programs to follow the California Tax Credit Allocation Committee policy on high-speed Internet access by providing competitive points for developments that provide high-speed Internet service to each unit for a minimum of 10 years, free of charge to the tenants. It further proposed to encourage all state and local affordable housing lenders to recognize the costs for installing high-speed Internet network infrastructure, ongoing Internet service, and network maintenance as eligible operating expenditures.
Position: Watch     Status: Died in the Assembly

B. Questions or Motions from Committee Members on Reported Items
 
VII. Property Management - Tica O'Neill, Issues Chair
A. State
AB 331(Hall) Residential Rental Property and Foreclosure Notices - Tenants - AB 331 proposed to require rental property owners and landlords, prior to the execution of a rental agreement for a one to four unit dwelling, to disclose to a prospective tenant if the property is subject to any pending foreclosure or short sale process. C.A.R. supported AB 331 because it would have assisted potential tenants in making an informed decision about whether to rent the property in question. The Senate Judiciary Committee Chair sought to have the bill's sponsor, California Apartment Association (CAA), amend the bill to apply to ALL residential rental complexes irrespective of the number of units. CAA chose to drop the bill rather than make such amendments.
Position: Support    Status: Died in Senate Judiciary Committee

AB 737 (Chesboro) Solid Waste Recycle Requirements - This bill proposes to "ramp up" the current recycling mandate on businesses by increasing the compliance standards and bringing multi-family residential properties into the mix. The definition of "Business" as proposed by this bill places multifamily residential dwellings of 5 units or more in the same category as commercial entities. California Administrative Code Title 25, Section 42 requires multifamily residential rental units of 16 units or more to have a manager or other staff person residing on site of such rental properties. C.A.R 's position was that  implementation of the recycling responsibilities proposed in AB 737 can only be effectively imposed on residential rental properties when on-site staff is present and over-seeing the program. C. A.R. opposed AB 737 because the Author was not willing to revise his bill to apply only to residential rental complexes of 16 units or more.
Position: Oppose     Status: To Governor

AB 1800 (Ma) Unlawful Rentals of Residential Dwellings - AB 1800 (Ma and Hagman) Unlawful Rental of Residential Dwelling - Under existing law it is a misdemeanor for anyone to claim ownership, or take possession, of a residence with the intention of renting or leasing the residence to another person without the owner’s or owner representative’s permission. C.A.R. supported AB 1800 as introduced because it would have increased the penalties for such criminal behavior, making that crime a felony. June amendments to this bill eliminated the felony language and instead increased the financial penalties for committing this misdemeanor. C.A.R. remained in support of AB 1800 as amended because the penalties for renting or inhabiting a residence without permission are increased.
Position: Support     Status: To Governor

AB 2337 (Ammiano) Pension Fund Investments and Rent Control Jurisdictions - AB 2337 proposed to prohibit CalPERS and CalSTRS from investing in business operations that resulted in the displacement of renters living in rent controlled housing, either through significant rent increases or the destruction or replacement of the housing units. The bill also proposed to require CalPERS and CalSTRS to develop a rent control housing compliance policy by January 2, 2012 that provided guidance for such investments and offered suggestions to mitigate any negative impact on rent controlled housing. C.A.R. opposed AB 2337 because it could have discouraged pension fund investment in housing within rent control jurisdictions.
Position: Oppose     Status: Died in Senate Public Employment & Retirement Committee

AB 2743 (Nava) Restrictions on Rental Property Management re Animals - AB 2743 initially proposed to prohibit a landlord from requiring that prospective tenants declaw or debark their animal as a condition of tenancy. Landlords would have been prohibited from denying tenancy because their animal has not been declawed or debarked. If a landlord violated any of these prohibitions the renter could have held the landlord personally liable for civil penalties up to $2500. The pet owner could also seek financial penalties against the landlord of up to $1,000 per animal. C.A.R. joined the Apartment Association of Greater Los Angeles (AAGLA) and the Santa Barbara Apartment Association (SBAA) in opposing AB 2743 because of the draconian penalty provisions as well as it's creation of a private right of action against landlords; a potential litigation nightmare for residential rental property owners. C.A.R., AAGLA and SBAA recommended amendments to the author which removed the private right of action and lowered the possible financial penalty from a minimum of $3500 per incident to a maximum of $1000. The author incorporated all of the recommended amendments and C.A.R. removed its opposition to the bill.
Position: Watch as Amended     Status: To Governor
 
SB 782 (Yee) Residential Tenancies and Domestic Violence - This bill proposes to limit a landlord’s ability to terminate a tenancy based upon acts of domestic violence, sexual assault, or stalking against the tenant or tenant’s household member. It also permits a tenant to change the locks of the dwelling unit, or request the landlord to do so, if the tenant has obtained a restraining order against an individual based upon acts of domestic violence, sexual assault, or stalking against the tenant. As introduced, SB 782 would have permitted a landlord to terminate a tenancy only after providing three days notice and BOTH of the following occurred: the protected individual allowed the perpetrator back on the property and the landlord believed that the perpetrator is a threat to the well-being of the other tenants. If the landlord followed the procedures established by SB 782, the landlord would be exempt from liability for such actions as to all tenants in the rental complex. C.A.R. opposed SB 782 because it limited the ability of landlords to deal with such incidents and placed them in the middle of domestic disputes. C.A.R. worked with AAGLA and SBAA to obtain amendments to SB 782 that permit landlords to terminate the tenancy of a protected individual if the tenant allowed the perpetrator on the property, OR if the landlord believes that the perpetrator is a threat to the other tenants. These amendments provide landlords with more control over such tenant domestic disputes and allow them to better protect their other tenants. With these amendments C.A.R. removed its opposition.
Position: Watch as Amended     Status: To Governor

SB 1149 (Corbett) Residential Tenancies and Required Notices re Foreclosure Status of Property - Sponsored by the Western Center on Law & Poverty,  this bill prohibits a court clerk from releasing records in an eviction action involving a residential property that has been sold in foreclosure unless, after 60 days have elapsed since the complaint was filed, a judgment against  all defendants has been entered for the plaintiff. It further provides that if judgment is not entered for the plaintiff the clerk could only allow access to court records by parties to the action. The immediate successor in interest in the property is required to attach a prescribed cover sheet to any notice of termination of tenancy served on a tenant of that property within one year after the foreclosure sale. The above cover sheet shall not be required if any of the following apply:
1) The tenancy is terminated due to a tenant's violation of the terms of the tenancy pursuant to 
    Code of Civil Procedure Section 1161;
2) The successor in interest and the tenant have executed a written rental agreement or lease; or 
3) The tenant receiving the notice was not a tenant at the time of the foreclosure.
Position: Watch     Status: To Governor

B. FYI - A C.A.R. Project:
CalRecycle Program and Multi-Family Rental Properties; C.A.R.'s Position -
The California Association of REALTORS® (C.A.R.) and the California Apartment Association (CAA) sent a joint letter to CalRecycle in September, indicating support for reasonable recycling programs and willingness to work with CalRecycle and its staff to develop a workable commercial recycling regulation for multifamily housing. It was indicated in this correspondence that C.A.R. and CAA believe the definition of "Business" as proposed in the CalRecycle draft regulatory text is simply not workable as it applies to multi-family rental properties of 5 units or more. Our correspondence took the position that rental property owners without professional management on site are ill-equipped to implement and enforce the proposed recycling requirements. Imposing this regulation on any residential complex under 16 units would, in our opinion, set this regulation up for potential non-compliance.

California Administrative Code Title 25, Section 42 requires multifamily residential rental units of 16 units or more to have a manager or other similar staff person residing on-site. Both C.A.R. and CAA believe that implementation of the recycling responsibilities can only be effectively imposed on residential rental properties with such on-site staff who are present and who can over-see this program. (See attached copy of C.A.R./CAA correspondence to CalRecycle.)

C. Federal
1. EPA Lead Paint Update
Starting on October 1, 2010, contractors had to have at least one person on every qualifying job either have a certification or be enrolled in a class in order to comply with the Environmental Protection Agency’s 2008 Lead Renovation, Repair and Painting rule.  This was a new deadline which extended the original April 22 deadline.  According to the new rule, if a home was built before 1978 it may require additional precautions in order for a contractor to do almost any renovation or repair on the property. 

This summer four industry groups brought a lawsuit against the EPA.  The suit was brought by the National Association of Home Builders, the National Lumber and Building Material Dealers Association, the Window and Door Manufacturers Association, and the Hearth, Patio & Barbecue Association. The focus of their lawsuit was the removal of an opt-out provision for homes with no children under the age of six.  As of the posting of this paper there has been no update on the status of this lawsuit.
 
D. Questions or Motions from Committee Members on Reported Items

VIII. Real Estate Finance - Winnie Davis, Issues Chair
A. C.A.R. Sponsored Bills
AB 1796 (Knight) Appraisal Management Companies and OREA Oversight - Appraisal Management Companies (AMCs) have grown enormously over the last few years, driven primarily by the Home Valuation Code of Conduct adopted by Fannie Mae and Freddie Mac. In 2009, C.A.R. supported SB 237 (Calderon), which was signed into law. It subjects AMCs to registration and review of their practices by the Office of Real Estate Appraisers (OREA). C.A.R. sponsored AB 1796 to clarify and enhance OREAs ability to oversee Appraisal Management Companies, specifically in connection with conflicts of interest, “out of area” appraisers, timeliness and accuracy of work product, and to ensure compliance with other requirements of law applicable to licensed appraisers. While this bill did not move from committee, the chair of the Assembly Business and Professions Committee, in discussions with C.A.R., committed to have an interim hearing on appraisals and AMC’s in the fall.
Status: Died in Assembly Business & Professions Committee

SB 206 (Dutton) Tax Credit for Purchase of REO Properties as Principal Residence - SB 206 proposed to establish a tax credit of limited duration for the purchase of foreclosed homes by individuals that do not have adjusted gross income over ninety-five thousand dollars ($95,000) or one hundred seventy thousand dollars ($170,000) for joint filers. C.A.R. hoped to utilize this bill to "brighten the housing picture" by helping reduce the REO (foreclosure) inventory in California.  Given the current fiscal challenges facing the State, the tax credit proposed by SB 206 was predicated on securing federal funding from the American Recovery and Reinvestment Act (ARRA) of 2009 through the Neighborhood Stabilization Program 2 Funds administered by the Department of Housing & Community Development, or through the Neighborhood Stabilization 3 Funds. Neither source materialized and the bill never moved out of its first policy committee.
Status: Died in Senate Revenue & Taxation Committee

B. State
AB 183 (Caballero & Ashburn) Tax Credit for First-time Homebuyers - This bill, sponsored by the Governor, authorized a $10,000 income tax credit (or 5 percent of the purchase price if that amount is lower) for taxpayers purchasing existing or new homes between May 1, 2010 and December 31, 2010, or any taxpayer who purchased a new home on and after December 31, 2010, and before August 1, 2011pursuant to an enforceable contract executed on or before December 31, 2010. Qualified homes must be the principle residence of the taxpayer to be eligible for the tax credit.  The bill allocated $100 million in credits for the taxpayers purchasing previously unoccupied homes and $100 million in credits for first-time homebuyers purchasing existing homes.
Position: Support  Status: Signed by Governor; Chapter 12, 2010 Statutes

AB 2043 (Torrico) Redevelopment Funds and Mortgage Assistance to Troubled Borrowers -Proposed to expand the eligible uses of redevelopment funding to include mortgage assistance to homeowners. It would have permitted redevelopment agencies to issue subordinate loans using the non-Low- & Moderate-Income Housing (L&M) Funds for qualified homeowners. It was intended to prevent foreclosure inside or outside a project area; allowing redevelopment agencies to issue subordinate loans to qualified homeowners of no more than 15% to reduce the principal balance of a primary loan under specified conditions; and prohibited use of the L&M Fund for funding of subordinate loans (second mortgages).
Position: Watch  Status: Died in Assembly Appropriations Committee

AB 2651 (Knight) Creation of Veterans Bonds Payment Fund - This bill establishes a Veterans Bond Payment Fund to be financed by money from the Veterans’ Home Building Fund. This new fund will be used to make debt service payments on CalVet general obligation bonds, thus allowing rating agencies to better recognize the department’s ability to repay the bonds and lead to higher bond ratings, lower interest rates and ultimately, lower costs to veterans participating in the CalVet program. C.A.R. favored AB 2651 because of the benefits it provides to the veterans in the CalVet program.
Position: Favor  Status: Signed by Governor; Chapter 27, 2010 Statutes

C. Federal
1. National Down Payment Assistance Program *
Some REALTORS® have advocated for the creation of a National Downpayment Assistance Program (NDAP) at the national level.  The program would provide funding in the form of a loan for the downpayment on a home for first-time homebuyers.

2. FHA Update
a. FHA Working Group on Condominium Loan Approvals; an Update – John Torres, WG Chair (IBP)
In response to new FHA condo approval guidelines, C.A.R.’s Housing Committee created a Working Group to look at these issues and recommend changes they believe would benefit FHA production in California.

b. New FHA Mortgage Insurance Premiums
In August, the President signed H.R. 5981 into law and thus provided FHA greater flexibility to increase its annual premiums which had been statutorily limited to .55 percent.  With the new law, FHA now has the flexibility to increase the FHA mortgage insurance annual premium to 1.55 percent.  FHA had asked for the ability to increase its annual premium as a tool to address the depleted Mutual Mortgage Insurance Fund which had fallen below Congressionally mandated levels. 

Effective October 4, 2010, FHA loans will now have the following insurance premium structure. 

Annual Premiums for 30 Year FHA Mortgages

Annual Premiums for 15 Year FHA Mortgages

All FHA purchase and refinance loans will have an upfront premium of one-percent.  While there are some exceptions to the new premiums, including HECM loans, all traditional purchase and refinance products will have the new premiums.

c. Loan Limits
REALTORS® have successfully extended the current FHA and GSE loan limits on an annual basis since 2008.  While C.A.R. and NAR continue to work hard on making these loan limits permanent, Congress has included language in its proposed appropriations bill that would extend the current limits for another year.  C.A.R. and NAR will work to ensure this language is included in any final version of the appropriations bill. 

3. GSE Update
a. Loan Limits
REALTORS® have successfully extended the current FHA and GSE loan limits on an annual basis since 2008.  While C.A.R. and NAR continue to work hard on making these loan limits permanent, Congress has included language in its proposed appropriations bill that would extend the current limits for another year.  C.A.R. and NAR will work to ensure this language is included in any final version of the appropriations bill. 

b. First Look Program*
Fannie Mae, Freddie Mac and FHA have all implemented one form or another of a First Look Program designed to prohibit investors from purchasing their REO properties for a specified amount of time and giving homebuyers and community groups an opportunity to purchase those properties.

c. Private Transfer Fee
The Federal Housing Finance Agency (FHFA) has issued a proposed guideline stating “the Enterprises (Fannie Mae and Freddie Mac) should not purchase or invest in mortgages encumbered by private transfer fee covenants or securities backed by private transfer fee revenue, as such investments would be unsafe and unsound practices and contrary to the public missions of the Enterprises and the Banks.”  Both C.A.R. and NAR have asked for this prohibition on private transfer fees (PTF) and are supportive of the proposed guideline’s intent. 

An area of question is the guideline’s failure to grandfather in existing PTFs.  This may make properties with existing PTFs unmarketable to anyone who would otherwise utilize conventional financing.  In the example of where a homebuilder placed a PTF on a property sold years ago there is little to no leverage to force the homebuilder to remove the PTF as they no longer own the property. 

The deadline for submitting comments to the FHFA is October 15, 2010.  NAR has sent a Call-For-Action to State and Local Associations asking them to sign onto a form letter supporting the guidelines.  

d. PACE
In an effort to address the high upfront costs associated with energy efficient upgrades for properties, the White House has developed the Property Assessed Clean Energy initiative (PACE).  PACE allows property owners to take a 15 to 20 year loan to make energy efficient retrofits to their properties.  The loans are funded by local governments which finance the loans through a municipal bond program.  To ensure repayment, a special assessment is added to owners’ property-tax bill. 

Recently, this program has come under fire from Fannie Mae’s and Freddie Mac’s conservator, the Federal Housing Finance Agency (FHFA).  The FHFA has declared PACE loans that place the tax assessment in a senior position to the first mortgage are not in line with the GSE’s guidelines and are therefore not eligible for purchase or guarantee by the two mortgage giants. 

This issue will be addressed in the Taxation & Government Finance Committee during these meetings. 

4. Wall Street Reform Bill
On July 21, 2010, President Obama signed into law the Frank-Dodd Wall Street Reform and Consumer Protection Act.  The legislation is intended to provide consumer protections and reign in what many perceived as an out of control financial and lending market.  Below are some of the more notable provisions of the bill that will impact the real estate market.

•Require Lenders Ensure a Borrower’s ability to Repay: Establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.
•Prohibit Unfair Lending Practices: Prohibits the financial incentives for subprime loans that encourage lenders to steer borrowers into more costly loans, including the bonuses known as “yield spread premiums” that lenders pay to brokers to inflate the cost of loans.  Prohibits pre-payment penalties that trapped so many borrowers into unaffordable loans.
•Establishes Penalties for Irresponsible Lending: Lenders and mortgage brokers who don’t comply with new standards will be held accountable by consumers for as high as three-years of interest payments and damages plus attorney’s fees (if any). Protects borrowers against foreclosure for violations of these standards.
•Expands Consumer Protections for High-Cost Mortgages: Expands the protections available under federal rules on high-cost loans – lowering the interest rate and the points and fee triggers that define high cost loans.
•Requires Additional Disclosures for Consumers on Mortgages: Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.
•Housing Counseling: Establishes an Office of Housing Counseling within HUD to boost homeownership and rental housing counseling.
•Skin in the Game: Requires companies that sell products like mortgage=backed securities to retain at least five percent of the credit risk, unless the underlying loans meet standards that reduce riskiness.  That way if the investment doesn’t pan out, the company that packaged and sold the investment would lose out right along with the people they sold it to.
•Better Disclosure: Requires issuers to disclose more information about the underlying assets and to analyze the quality of the underlying assets.
•Home Valuation Code of Conduct: The HVCC will sunset following the issuing of new appraisal independence guidelines by regulators.  It is unclear exactly what the new guidelines will look like; however, FHFA has indicated there will be little change from the current appraisal process.  Additionally, the Appraisal Qualification Board Qualification criteria for licensing and training appraisers becomes mandatory for the states.

(The summary above was taken from the Dodd-Frank Wall Street Reform: Conference Report Summary, except for the HVCC summary.)

5. National Flood Insurance Program
As of the posting of this agenda, Congress had failed to extend funding for the National Flood Insurance Program (NFIP) past the September 30 deadline.  This will be the third time this year that Congress has allowed the NFIP funding to expire forcing delays and confusion for homebuyers purchasing in flood planes that require flood insurance. 

For some time now Congress has been approving a series of short-term extensions of the NFIP while discussions continue over comprehensive reforms to improve the program's actuarial and financial foundations.  Without the NFIP, property owners in federally designated areas across nearly 20,000 communities nationwide could not obtain a mortgage or flood insurance to protect their properties.

D. Questions or Motions from Committee Members on Reported Items

IX. HCD Proposed Funding Sources for Development of Affordable Housing - LeFrancis Arnold - The State's Department of Housing & Community Development (HCD) conducted 13 regional forums throughout the state in 2008, seeking input from the "public" on proposed permanent sources of funding for affordable housing. REALTORS® participated in these forums where numerous funding sources were proposed. They have subsequently been researched over the last two years by HCD. The department's most recent work has narrowed the field to two sources that HCD predicts would produce an estimated $1.2 billion annually:
     1) $75 Recording Fee on all Real Estate-related Recorded Documents; and
     2) A Non-conforming Loans Guarantee Program.
According to HCD, The State's Prop 46 ($2.1 billion in 2002) and Prop 1C ($2.85 billion in 2006) raised a total of $4.95 billion for affordable housing in the past eight years. These bond funds are all but depleted and future bonds are unlikely, given the state of the General Fund and the less-than-positive political climate in California. The affordable housing community, aware that bond funds is an undependable and expensive source of housing finance, has been working for years on establishing a permanent funding source (PS) for affordable housing. In 2008 the Department of Housing, in collaboration with the Affordable Homes Collaborative and other stakeholders, began developing funding source recommendations. Senate Pro Tem Darrell Steinberg introduced SB 500 in 2009 as a placeholder for PS legislation. He deemed it imprudent to move during the on-going budget crisis, however, but has pledged to reintroduce a PS bill in 2011. *

X. Other Business/General Questions

XI. Adjournment

"*" indicates that issue briefing materials are included with the reporting committee's agenda materials.