CALIFORNIA ASSOCIATION OF REALTORS®
BOARD OF DIRECTORS
507^th SESSION
JUNE 6 - 7, 2003

The following is a summary of the significant action items approved by the CALIFORNIA ASSOCIATION OF REALTORS® Board of Directors at its June 2003 meeting.  Some additional information items are included, but do not necessarily represent Association policy.  A complete set of minutes is available for review upon request.  For more information please contact Pauline Avila at paulinea@car.org.

SPECIAL REPORTS

Lockbox Task Force
1. That C.A.R. move forward to obtain an outside legal opinion to evaluate all options for legal and regulatory challenges to Supra's actions.
2. That C.A.R. investigate technology solutions for future lockbox systems including the possibility of an open architecture design.

PUBLIC POLICY 

Federal Issues
1. That C.A.R., in conjunction with NAR, support policy to allow bonafide associations to offer coverage to their members via Association Health Plans (AHP) under a single set of federally prescribed rules.

Housing Affordability
1. That C.A.R. "FAVOR" AB1158 (Lowenthal), a bill that proposes to make a number of beneficial changes in the housing element approval process (e.g. housing element updates would change from a five-year to a six-year cycle to coincide with the state and federal transportation planning process).
2. That C.A.R. "SUPPORT" SB744 (Dunn), a bill that would establish a state housing accountability committee which would allow developers of low and moderate income housing to appeal certain adverse local land use decisions that result in denial of the project or conditions that render the project financially infeasible.
3. That C.A.R. "OPPOSE" SB289 (Murray), a bill that requires builders of single-family homes to offer purchasers the option to install a solar energy system, and which requires that an undetermined percentage of single-family residences constructed after January 1, 2006 include a solar energy system.
4. That C.A.R. "SUPPORT" AB304 (Mullin), a bill that requires the California Housing Finance Agency to administer a low interest rate and deferred payment down payment assistance program for first-time homebuyers.
5. That C.A.R. "WATCH" AB1426 (Steinberg), a bill that requires cities and counties in the Sacramento region to meet an affordable housing production standard; cities and counties would report annually to the state on their housing performance.  The performance standard could be met annually or in the aggregate over a three-year period.  Local governments will be required to streamline the permit review process.
6. That C.A.R., in conjunction with NAR, "OPPOSE" the proposal to block grant the Section 8 voucher program.

Land Use and Environmental
1.That C.A.R. "OPPOSE" proposals to eliminate state funding for the Williamson Act for long-term agricultural land protection, and "SUPPORT" continued state funding for the Act.
2. That C.A.R. "OPPOSE UNLESS AMENDED" AB 1492 (Laird), a bill that changes the parameters of the Williamson Act for long-term agricultural protection. The amendments would:
- clarify that changes to the lot line adjustment provisions will apply only to new contracts entered into after the effective date of the bill, and,
- remove, to the maximum extent practical, the heavy involvement of the Department of Conservation in the bill's breach of contract provisions, and protect local government control over land use under the Williamson Act.

Legal Action Fund
1. It was reported for information only that the Legal Action Fund Trustees have taken action in the following significant cases, or are monitoring developments.

City of West Hollywood v. 1112 Investment
An amicus brief was authorized in this case in which a condominium conversion project allowed its DRE Public Report to lapse for over a year and then renewed it.  The Court held that the developer must comply with laws enacted in between the time the first public report was approved and the date the lapsed public report was renewed.  C.A.R. supported the position that minor lapses in the DRE public report should not require compliance with all laws passed since the initial report was issued.  The parties were trying to get a hearing before the California Supreme Court;  it has been denied.

Howard Wright Construction v. Superior Court (BBIC Investors, LLC)
An amicus brief was authorized to support a petition for review in the California Supreme Court in this case in which a commercial landlord filed a notice of nonresponsibility to protect itself against contractors doing tenant-supplied improvements.  The tenant defaulted and the contractor prevailed against the landlord on the theory that the increased rents benefited the Landlord so the notice of nonresponsibility should not apply.  We supported the position that exceptions to the notice of nonresponsibility should not be expanded and the Landlord should not be held responsible to the contractor.  The Court has extended its time to decide whether or not to take the case.

In addition, there have been some significant developments in the Freeman case.

Freeman v. San Diego (Freeman II) and Freeman v. Lasky (Freeman III).
First, there was a significant setback in the main Freeman federal case, which some are now calling Freeman II.  Although we have won at the state appellate court (Freeman I) and the federal district court had issued a summary judgment completely in our favor, the U.S Ninth Circuit Court of Appeal has reversed.  The decision did affirm C.A.R.'s dismissal in the case but the balance of the decision was devastating.  The court not only reversed the significant win from the district court, it also issued summary judgment in favor of the plaintiff.  It held that although the centralized regional MLS structure was procompetitive and could charge its participants the same amount for this new regional MLS, payments to the Associations for services which were the same amount per participant were per se unlawful.  Obviously we vigorously disagree with the decision and are seeking a hearing before the U.S.Supreme Court.  Although these hearings are difficult to get, only 6% of petitions are granted, we are making every effort to succeed.   Amicus briefs from other industries are extremely helpful in this context.  Anyone having contacts with other industries or organizations that we could speak with to determine if they would file a brief should contact June Barlow by phone or e-mail as soon as possible.  Regional MLSs or Associations that are part of such MLSs which think they are at risk or have questions on how this affects their situation should seek advice from antitrust counsel. 

Freeman v. Lasky (III)
Freeman then started a new suit against all of the lawyers representing the associations, the Association Executives personally, C.A.R. (again) and its general counsel.  Freeman is claiming that the lawyers actions with relation to part of the discovery proceedings, and acts by the AE s signing discovery documents made them personally part of the alleged conspiracy.  Because Barry named all the lawyers, a whole new cadre of lawyers had to be engaged.  Motions to dismiss are in process.  This has made a difficult situation very complex and more difficult.  We will keep you posted as developments occur.

ForSaleByOwner.com v. DRE
A Libertarian Group that opposes government regulation has sued the Department of Real Estate claiming that a site that lists properties and provides help for real estate transactions does not need a license.  They are claiming First Amendment Free Speech issues preclude the DRE from regulating this site.  They claim it is just electronic advertising and should be given the same treatment as newspapers.  The motto of the site is "Our mission is to eliminate commissions."  We are monitoring developments closely. 

Legislative
1. That C.A.R. join with the California Coalition for Jobs, a coalition of employer and business groups in support of workers compensation system reforms being advocated as a part of a state budget compromise, and that C.A.R. explore the possibility of capping the premium assessed for highly paid employees at a level reasonably related to their compensation.
2. That C.A.R. "OPPOSE" AB 728 (Leno) unless amended to remove its change to the existing 3 percent presumptive cap on liquidated damages.
3. That C.A.R. "WATCH" SB 344 (Speier), a bill to allow sale of Lien guarantee insurance.

Real Estate Finance
1. That C.A.R., in conjunction with NAR, "SUPPORT" the development of a subprime loan product for FHA.

Taxation
1. That C.A.R., in conjunction with NAR, "OPPOSE" the introduction of income limitations on the proposed mortgage insurance deduction provisions of the Internal Revenue Code.
2. That C.A.R. take a "FOR" position on ACA11, the March 2004 ballot proposition that constitutionally dedicates specified portions of the general fund each year for statewide infrastructure projects.
3. The following motion was referred back to committee for further study.
That C.A.R. take a "SUPPORT" position on Assembly Bill 1221 (Steinberg), a legislative proposal to exchange a portion of local sales tax revenues with property tax from the state.
4. That C.A.R. create a task force, including representatives from affected policy committees, to review and establish policy parameters in connection with the two-thirds vote threshold requirement for local bonds and special taxes.

BUSINESS

MLS/Computer and Business Technology
1. The following motion was referred back to the committee for further study.
That, subject to NAR approval, C.A.R. Model MLS Rule 7.22 be amended as set forth below:
7.22  Dual or Variable Rate Commission Arrangements.  The existence of a dual or variable commission arrangement shall be disclosed by the listing broker by a key, code or symbol as required by the MLS.  A dual or variable rate commission arrangement is one in which the seller agrees to pay a specified commission if the property is sold by the listing broker without assistance and a different commission if the sale results through the efforts of a cooperating broker, or one in which the seller agrees to pay a specified commission if the property is sold by the listing broker either with or without the assistance of a cooperating broker and a different commission if the sale results through the efforts of a seller.   The listing broker shall, in response to inquiries from potential cooperating brokers, disclose the differential that would result in either a cooperative transaction or, alternatively, in a sale that results through the efforts of the seller.  If the cooperating broker is representing a buyer, the cooperating broker must then disclose such information to his or her client before the client makes an offer to purchase or lease.

Professional Standards
1. That C.A.R. legal staff develop a form for waiver of the arbitrator disclosure requirements of California law and that the leadership of the C.A.R. Professional Standards Committee be authorized to approve the form for use by local associations prior to the next C.A.R. meeting.
2. That C.A.R. approve a change in policy that would add a new membership duty, effective January 1, 2004, to require members to waive the arbitrator disclosure requirements set forth in the California Code of Civil Procedure and Judicial Council Rules and, further, instruct staff to take all steps to implement policy priorto the end of the year.
3. That C.A.R. approve revisions to the C.A.R. Code of Ethics and Arbitration Manual to increase the maximum fine that can be imposed at a disciplinary hearing from $2,500 to $5,000, as allowed by NAR, as follows:

Section 1. Definitions
As used herein,
(o) "Appropriate and Reasonable Fine" means a fine commensurate with the gravity of the determined violation of the N.A.R. Code of Ethics or any other membership duty or MLS rule, not to exceed $5,000 per party, per hearing, and payable to the Association

Section 6. Nature of Discipline Against an Association Member
(a)               Disciplinary action may consist of one or more of the following:
(4)                                      Designation of an appropriate and reasonable fine as defined in Section 1(o) commensurate with the gravity of the determined violation not to exceed $5,000 per party, per hearing

Section 7. Nature of  Discipline Against an MLS Participant or Subscriber
(a)               Disciplinary action for violation of an MLS rule may consist of one or more of the following:
(4)            Designation of an appropriate and reasonable fine as defined in Section 1(o) commensurate with the gravity of the determined violation not to exceed $5,000 per party per hearing

4. The Professional Standards Committee recommends that C.A.R. hold AB 1231 (Simitian) as a two year bill, and not seek additional action on the bill, including a Legislative Counsel opinion regarding the authority of local Associations of REALTORS® to utilize a waiver mechanism regarding arbitration services.

Standard Forms Advisory
1. It was reported for information only that the Standard Forms Advisory Committee received reports from its regional representatives that the response to the April 2003 revision to the Lease & Property Management forms was very positive.

The Committee reviewed and considered a request that the Seller's social security number be removed from the Seller's FIRPTA (Form AS).  In response, the Committee recommends that:
- Further education be provided to membership regarding the federal legal requirement for the information; and
- That C.A.R., possibly in conjunction with N.A.R., seek an IRS ruling that would allow the Seller's social security number be provided directly to escrow holder (rather than to buyer) in order to protect Seller's privacy.

The Committee received a report from the Insurance Availability Task Force and a request that an insurance availability form be created.  The Committee believes that the three references to insurance availability in the RPA-CA and the detailed reference in the BIA, paragraph 11, when combined with the reference in the new Supplemental Statutory and Contractual Disclosures (Form SSD), sufficiently address this issue.  The Committee recommends that C.A.R. create a consumer information publication or Q & A addressing insurance availability because such a document could be more easily discontinued than a form when the issue is resolved. 

The Committee further reports that it has reviewed 80 member comments received since January 2003.  Further, the Committee has determined that a study group will be created to review and revise as appropriate the following forms for October 2003 release:
- Receipt for Reports and Contingency Removal (RRCR)
- Contingency for Sale or Purchase of Other Property (COP)

POLITICAL

CREPAC Trustees
1. The CREPAC Nominating Committee met on Tuesday, May 20, 2003, and recommended the following slate of Nominees for CREPAC Trustee and CREPAC Alternate.   Per the Bylaws, the followingslate of candidates is duly noticed, for approval in October 2003.   Trustees serve for a three-year term. Alternates may be selected to fill the remainder of a vacant term during the year:

NOMINEES FOR CREPAC TRUSTEE
(November 2003 - November 2006)
Susanna Schlendorf, Region 5
Judy Jarvis Ellis, Region 9
Jim Link, AE, Region 18
Rick Violett, Region 23
Nancy Hunt, Region 32

NOMINEES FOR CREPAC ALTERNATE
(November 2003 - November 2004)
Marian Norris, Region 7
Tawni Patrick, Region 16
Irma Vargas, Region 17
Wendy Furth, Region 18
Paul Stewart, AE, Region 19
Le Francis Arnold, Region 22
Roland Soo Hoo, Region 23
Cheryl Betyar, Region 24

IMPAC Trustees
1. It was reported for information only that the IMPAC Trustees approved the following contributions at the June 3, 2003 meeting:
- California Natural Resources Group (CNRG), an advocacy/education coalition focused on endangered species issues--including critical habitat designations and the proposed listing of species--that identifies the onerous regulatory burdens and costs placed on businesses, property owners and local governments...$20,000.
- Community Renewal Project for its Community Renewal Summit, a one-day conference that provides practical instruction to individuals who desire to foster renewal of their local communities...$5,000.
- Reason Foundation for a California-specific media and government outreach campaign that targets the negative consequences of smart growth regulations, and illustrates the benefits of market-based land use policies...$15,000.
- C.A.R. GAD Institute 2003, a C.A.R.-sponsored educational event for local government affairs directors (GADs) that helps improve the advocacy and public relations skills of local association GADs...Up to $9,000.

2. The IMPAC Nominating Committee met on Tuesday, May 20, 2003, and selected thefollowing individuals as nominees for IMPAC Trustee and IMPAC Alternate. Per the Bylaws, the following slate of candidates is duly noticed, for approval in October 2003. Trustees serve for a three-year term. Alternates may be selected to fill the remainder of a vacant term during the year.

Nominees for IMPAC Trustee:
(November 2003-November 2006)
Aida Dimejian, Region 13
Steve White, Region 18
Greg Haas, Region 19
Sandi Pfister, Region 21
Matt Giacalone, Region 24
Mark Marchand, AE, Region 30

Nominees for IMPAC Alternate:
(November 2003- November 2004)
Dale Gray, AE, Region 7
Leannah Hunt, Region 9
Rose Marie McNair, Region 10
Carol Banner, Region 15
Carol Facciponti, Region 16
Rose Borne, Region 17
Jeanne St. Clair, Region 23
Marjorie McLaughlin, Region 24


OPERATIONS

C.A.R. Scholarship Foundation
1. It was reported for information only that funds were awardedf or scholarships totaling $40,000, and that a fund established in memory of C.A.R. Staff Member Kelly Braden has exceeded $10,000 in contributions.

California REALTOR®  EXPO Advisory
1. It was reported for information only that the California REALTOR® EXPO 2003 will be in San Diego from September 30 to October 2.

Membership Committee
1. That the following applicants be granted C.A.R. Honorary-Member-For-Life status:

Beverly Hills/Greater Los Angeles AOR
Edith Newman

California Desert AOR
Patricia L. Reed

Central Valley AOR
Joseph Belohlavek

Downey AOR
Lucy Guastella
Tito Romero

East San Diego County AOR
Jerome Hurrle
Arnold Martin
Opal Mc Cracken
Mildred McKerney
Fred Mhoon
Roy Williams

Glendale AOR
Doreen McCormack Swager

Greater Antelope Valley AOR
Jim Russell Williford

Inland Valleys AOR
Cecil Rigney

Monterey County AOR
Georgia Frances Dunlavy
Daun Lewis LaGrange
Inez Virginia Lockwood
Robert Lee Mast
James Barnett Poland

North San Diego County AOR
Chiquita Abbott
Mabel Motz
Betty Vlahos

Northern Solano County AOR
Doris Bremer

Pacific West AOR
Jean M. Dale

Santa Clara County AOR
Emilio Mendoza

Santa Maria AOR
Leona Marcella Naumcheff

Southwest Riverside County AOR
Eleanor Smith

Tri-Counties AOR
Edward P. Sauer

Watsonville Association
John W. Kane, Sr.

Nominating
1. That the following be designated to serve as NAR Directors for a term ending November 2006:
Toby Bradley
Diana Bull
Tom Carnahan
Wendy Furth
Jeanne Garde
Jim Hamilton
Dorothy Jackson
Ted Loring Jr.
Richard Rosenthal
Jeanette Way

Alternates: (in priority order)
David Barca
Mel Wilson
Mary Funk
Pat "Ziggy" Zicarelli
Greg Pawlik
Dennis Mason
Mary Dee Karp  (tie between 7 & 8)
Sandra Mays

2. That the following be elected as Directors-For-Life of the California Association of REALTORS®:
Sereta Churchill
Mary Funk
Pat "Ziggy" Zicarelli

3. That Joel Singer be elected Executive Vice President/State Secretary for the year 2004.
4. That Colleen Badagliacco be elected Treasurer for the years 2004-2005.
5. That Jim Hamilton be elected President-Elect for the year 2004.
6.  It was reported for information only that the bylaws specify that President-Elect Ann Pettijohn will become President for 2004.

Strategic Planning and Finance
1. That the Association's Audited Financial Statements as of December 31, 2002 be approved:

The Statement of Income and Expenses for the Twelve months ending December 31, 2002.
Total C.A.R.
-Revenue of $20,801,300
-Expenses of $18,926,400 (including federal income tax)
-An excess of income over expenses of $1,874,900

Political Activities Fund
An excess of income over expenses of $387,800.

Issue Action Fund
An excess of income over expenses of $462,700.  This amount will be allocated to IMPAC asapproved by the Directors.

The C.A.R. Balance Sheet as of December 31, 2002
- Total assets of $18,927,500 (of which $16,265,700 are current assets)
- Total current liabilities of $2,416,100
- C.A.R. Fund Balance of$16,511,500

2. That the Statement of Income and Expenses by program for the three months ending March 31, 2003 be approved.

Total C.A.R.
- Revenue of $13,582,500
- Expenses of $ 4,051,400 (including federal income tax)
- An excess of income over expenses of $9,531,100

Political Activities Fund
An excess of income over expenses of $972,200

Issue Action Fund
An excess of income over expenses of $881,000

The C.A.R. Balance Sheet as of March 31, 2003
- Total assets of $31,565,000 (of which $24,216,700 are current assets)
- Total liabilities of $4,942,300 (of which $4,825,800 are current liabilities)
- C.A.R. Fund Balance of $26,622,700

3. That the Projected Statement of Income and Expenses by program for the year ending December 31, 2003 be approved.

Total C.A.R.
- Revenue of $19,962,800
- Expenses of $18,731,800 (including federal income tax)
- An excess of income over expenses of $1,231,000

Political Activities Fund
An excess of income over expenses of $495,700

Issue Action Fund
An excess of income over expenses of $593,900.  This amount will be allocated to IMPAC as approved by the Directors.

4. That the 2003 Sacramento office Capital Budget augmentation be approved.  The proposed capital budget for furniture and fixture improvements to complete the renovation of the Sacramento office totals $30,000.  This includes replacement of tables, chairs, upholstery and artwork.


OTHER

Future Meetings Working Group
1. That future meetings be scheduled during the last week of April or the first week of May, subject to hotel and convention center availability, beginning in 2007 or sooner, in order to increase the effectiveness of Legislative Day.