Legislative Committee Point of Sale Alternatives Working Group

Final Report June 4, 2009

Mission Statement: To explore alternatives that C.A.R. can utilize to avoid imposition of Point of Sale mandates, and to report to the Legislative Committee in June 2009 on the advisability of various alternative approaches.

Executive Summary: Point of Sale mandates for improvements in real estate are a bankrupt policy option that is harmful to individual transactions and the housing market, and will be ineffective in achieving desired improvements in existing housing stock.  C.A.R. should continue its policy to oppose point of sale proposals, but proposals vary so much that no single strategy will work for all and a menu of options will be required. When it appears that opposition will be unsuccessful, C.A.R. should advance community wide proposals and/or disclosures at time of sale as an alternative.  Educational efforts toward REALTORS®, clients and legislators is doubly important in both defeating burdensome mandates and reaching desired goals without time of sale mandates.

Members:   Liz Fitzgerald, Chair
Bob Hart        Gene Lentz     Barbara Lymberis       Kay Moore
Dianne Rath   Kim Tucker     Irma Vargas        Thresa Wilson-Allen

Laura Ohlasso reported to the Working Group, as both a Local Advocate and a member of a local city council regarding water conservation ordinances and the practical decision making factors. 

The Working Group considered material supplied by both its members and staff and has met twice by conference call in the spring of 2009. 

Early Areas of Consensus Include:
- C.A.R. should not abandon opposition to POS.
- C.A.R. may have to compromise (or lose) on some issues, especially "green" issues. In some circumstances compromise may not be acceptable.
- Each bill/proposal should be analyzed on its own merits and the same strategy may not work for all.
- In rental property the separation of usage and ownership/control of property makes conservation (energy, water) a particularly difficult problem.
- Education is needed to make an incentive program work; often when people don't respond to incentive programs it is because they don't understand how the need applies to them.  Example cited of an 80% acceptance rate of a sewer district's door to door campaign.
- Pre-emption of local rules is a good idea; but the language needs to be cautious to avoid the state law becoming an incentive for the locals to act.
- C.A.R. members will need to be educated on how any new alternative works if we are to keep their buy-in to the approach.
- Utilities should be used to reach customers for audits and inspections; C.A.R. should support building the cost into the rate structure.
- C.A.R. should be proactive rather than reactive; getting ahead of the proposals of others is an advantage.
- One bill at a time - Each proposal should be evaluated on its own merits as to cost, burden to transactions, and "win-ability."
- C.A.R. should not sponsor legislation to invite mandated upgrades to be tied to the anneversary of home's purchase or first occupancy.

Possible Alternatives to POS Considered:
 The Working Group discussed the following as the possible approaches that C.A.R. might choose from in a menu of alternatives to a POS requirement. They are not exclusive and more than one might be required in order to avoid C.A.R. opposition.
A. Comprehensive (Society-wide) Requirements instead; especially incentive-based programs. Note: education is important to incentive or voluntary programs  
B. Disclosure Instead of Mandate.  Note: if it is effective at changing behavior, a disclosure will eventually result in costs to someone, but at least it will be negotiated. 
C. Incentive and Rebate Programs with or w/o Mandate. Subsidies can take much of the cost impact out of a mandate, even one occurring in escrow. 
D. Trigger Events Other Than Sale. Note: care must be taken to ensure that adequate implementation occurs; otherwise disclosure of the facts may create a de facto POS trigger.   
 
Education is Critical
Education of local and state legislators as to why POS doesn't work will be critical in turning them to other more constructive options.
Education is critical to the success of incentive and voluntary programs; as most consumers (and REALTORS®) don't know what incentive programs exist, or don't know that they need them.
REALTORS® need to be reminded about the POS resources (model letters, arguments) available on the C.A.R. government affairs website.