18VAC130-20 Real Estate Appraiser Board Rules and Regulations

REGULATIONS

Vol. 30 Iss. 6 - November 18, 2013

TITLE 18. PROFESSIONAL AND OCCUPATIONAL LICENSING

REAL ESTATE APPRAISER BOARD

Chapter 20

Proposed Regulation

Title of Regulation: 18VAC130-20. Real Estate Appraiser Board Rules and Regulations (amending 18VAC130-20-90, 18VAC130-20-130, 18VAC130-20-240).

Statutory Authority: § 54.1-2013 of the Code of Virginia.

Public Hearing Information:

December 2, 2013 - 11 a.m. - 9960 Mayland Drive, Suite 200, Board Room 4, Richmond, VA 23233

Public Comment Deadline: January 17, 2014.

Agency Contact: Christine Martine, Executive Director, Real Estate Appraiser Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone [phone], FAX [phone], or email [e-mail].

Basis: The proposed regulatory action is mandated by the following sections of the Code of Virginia. To comply with these statutes, the Real Estate Appraiser Board evaluates its current and projected financial position, and determines the type of fees and amounts to be established for each fee that will provide revenue sufficient to cover its expenses.

1. Section 54.1-113 (Callahan Act) requires the board to adjust fees levied by it for certification or licensure and renewal so that the fees are sufficient but not excessive to cover expenses.

2. Subdivision 4 of § 54.1-201 describes each regulatory board's power and duty to "levy and collect fees for the certification or licensure and renewal that are sufficient to cover all expenses for the administration and operation of the regulatory board and a proportionate share of the expenses of the department..."

3. Subdivision 3 of § 54.1-304 describes the power and duty of the director to "collect and account for all fees prescribed to be paid into each board and account for and deposit the moneys so collected into a special fund from which the expenses of the Board, regulatory boards, and the Department shall be paid..."

4. Section 54.1-308 provides for compensation of the Director of the Department of Professional and Occupational Regulation, employees, and board members to be paid out of the total funds collected. This section also requires the director to maintain a separate account for each board showing moneys collected on its behalf and expenses allocated to the board.

5. Section 54.1-2013 provides the Real Estate Appraiser Board with the power and duty to "levy and collect fees for the certification or licensure and renewal that are sufficient to cover all expenses for the administration and operation of the regulatory board and a proportionate share of the expenses of the Department..."

These Code sections require the department to:

- Pay expenses of each board and the department from revenues collected;

- Establish fees adequate to provide sufficient revenue to pay expenses;

- Account for the revenues collected and expenses charged to each board; and

- Revise fees as necessary to ensure that revenue is sufficient but not excessive to cover all expenses.

To comply with these requirements, the department:

- Accounts for the revenue collected for each board distinctly;

- Accounts for direct board expenses for each board, and allocates a proportionate share of agency operating expenses to each board;

- Reviews the actual and projected financial position of each board biennially to determine whether revenues are adequate, but not excessive, to cover reasonable and authorized expenses for upcoming operating cycles; and

- Recommends adjustments to fees to respond to changes and projections in revenue trends and operating expenses. If projected revenue collections are expected to be more than sufficient to cover expenses for upcoming operating cycles, decreases in fees are recommended. If projected revenue collections are expected to be inadequate to cover operating expenses for upcoming operating cycles, increases in fees are recommended.

Fee adjustments are mandatory in accordance with these Code of Virginia sections. The board exercises discretion on how the fees are adjusted by determining the amount of adjustment for each type of fee. The board makes its determination based on the adequacy of the fees to provide sufficient revenue for upcoming operating cycles.

Purpose: The intent of the proposed change in the regulations is to adjust licensing fees for regulants of the Real Estate Appraiser Board. The board must establish fees adequate to support the costs of the board's operations and a proportionate share of the Department of Professional and Occupational Regulation's operations. By the close of the next biennium, fees will not provide adequate revenue for those costs.

The board provides protection to the safety and welfare of the citizens of the Commonwealth by ensuring that only those individuals who meet specific criteria set forth in the statutes and regulations are eligible to receive an appraiser, temporary appraiser, or appraiser trainee license; an appraisal instructor certification; or an appraisal business registration. The board is also tasked with ensuring that its regulants meet standards of practice that are set forth in the regulations. Without adequate funding, citizen complaints against regulants could not be investigated and processed in a timely manner. This could provide an opportunity for a dishonest appraiser, appraisal instructor, or appraisal business, waiting for action to be taken by the board, to continue to operate, harming additional citizens.

The department receives no general fund money but, instead, is funded almost entirely from revenue collected for license applications, renewal fees, and other licensing fees. The department is self-supporting and must collect adequate revenue to support its mandated and approved activities and operations. Fees must be established at amounts that will provide that revenue. Fee revenue collected on behalf of the various boards funds the department's authorized special revenue appropriation.

The board has no other source of revenue from which to fund its operations.

Substance: The existing regulations are being amended to adjust the fees related to obtaining and maintaining licensure, registration, certification, or approval as an appraiser, appraiser trainee, appraisal business, appraisal instructor, and appraisal course.

1. The registration fee for an appraisal business is adjusted from $100 to $160.

2. The application fee for an appraiser license is adjusted from $141 to $201.

3. The application fee for a temporary appraiser license is adjusted from $45 to $75.

4. The application fee for an appraiser trainee license is adjusted from $96 to $146.

5. The application fee to upgrade an appraiser license is adjusted from $65 to $130.

6. The application fee for an appraisal instructor certification is adjusted from $135 to $150.

7. The renewal fee for an appraisal business is adjusted from $60 to $120.

8. The renewal fee for an appraiser license is adjusted from $61 to $116.

9. The renewal fee for an appraiser trainee license is adjusted from $61 to $116.

10. The renewal fee for an appraisal instructor certification is adjusted from $125 to $150.

11. The reinstatement fee for an appraisal business is adjusted from $40 to $160.

12. The reinstatement fee for an appraiser license is adjusted from $60 to $180.

13. The reinstatement fee for an appraiser trainee license is adjusted from $60 to $125.

14. The reinstatement fee for an appraisal instructor certification is adjusted from $105 to $150.

15. The approval fee for an appraisal course is adjusted from $135 to $150.

Issues: The Code of Virginia establishes the board as the state agency that oversees licensure of appraisers providing services in Virginia. The board's primary mission is to protect the citizens of the Commonwealth by prescribing requirements for minimal competencies; by prescribing standards of conduct and practice; and by imposing penalties for not complying with the regulations. Further, the Code of Virginia requires the department to comply with the Callahan Act. The proposed fee adjustments will ensure that the board has sufficient revenues to fund its operating expenses.

There are no disadvantages to the public or the Commonwealth in raising the board's fees as proposed.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Real Estate Appraiser Board (Board) proposes to increase most fees paid by licensees, registrants and certificate holders that are subject to the Board's authority.

Result of Analysis. There is insufficient information to accurately gauge whether benefits are likely to outweigh costs for these proposed changes.

Estimated Economic Impact. Under current regulations, business entities that practice real estate appraisal pay $100 for initial registration with the Board, a biennial renewal fee of $60 and, when necessary, a reinstatement fee of $100. Temporary certification for general or residential real estate appraisers and temporary licensure for residential real estate appraisers currently cost $45. Certified general real estate appraisers, certified residential real estate appraisers and licensed residential real estate appraisers all currently pay an initial fee of $141, a biennial renewal fee of $141 and, if applicable, a reinstatement fee of $201. Appraiser trainees currently pay an initial fee of $96, a biennial renewal fee of $60 and a fee of $121 if they ever need to be reinstated by the Board. Instructors pay an initial certification fee of $135 for certification, a fee of $125 for biennial certification renewal and a $230 fee if they ever have to get their certification reinstated. Licensees currently pay $65 for upgrade of license. The fee for real estate appraiser training course approval is currently $135. The Board now proposes to increase all of these fees.

Below is a comparison tale for current and proposed fees:

FEE TYPE	CURRENT FEE	PROPOSED FEE	% INCREASE
Initial Registration of Business Entity	$100	$160	60%
Initial Temporary Certification for General Real Estate Appraiser	$45	$75	67%
Initial Temporary Certification for Residential Real Estate Appraiser	$45	$75	67%
Initial Temporary Licensure for Residential Real Estate Appraiser	$45	$75	67%
Initial Certification for General Real Estate Appraiser	$141	$281	99.3%
Initial Certification for Residential Real Estate Appraiser	$141	$281	99.3%
Initial Licensed Residential Real Estate Appraiser	$141	$281	99.3%
Initial Registration of Appraiser Trainee	$96	$146	52%
Upgrade of Licensure	$65	$130	100%
Initial Instructor Certification	$135	$150	11%
Renewal of Certification for General Real Estate Appraiser	$141	$196	39%
Renewal of Certification for Residential Real Estate Appraiser	$141	$196	39%
Renewal of Licensed Residential Real Estate Appraiser	$141	$196	39%
Renewal of Appraiser Trainee Registration	$61	$116	90%
Renewal of Business Entity Registration	$60	$120	100%
Renewal of Instructor Certification	$125	$150	20%
Reinstatement of Certification for General Real Estate Appraiser	$201	$376	87%
Reinstatement of Certification for Residential Real Estate Appraiser	$201	$376	87%
Reinstatement of Licensed Residential Real Estate Appraiser	$201	$376	87%
Reinstatement of Appraiser Trainee Registration	$121	$241	99.3%
Reinstatement of Business Entity Registration	$100	$280	180%
Reinstatement of Instructor Certification	$230	$300	30.43%
Training Course Approval	$135	$150	11%

Board staff reports that, although revenues have fallen short of being able to pay for all expenditures in this and the last biennium, the Board had excess balances that covered budget shortfalls. Absent some fee increase, Board staff reports that the Board will run a deficit in the next biennium. In addition to a surplus finally being depleted, Board staff reports that fees will need to be raised because expenses for developing Department of Professional and Occupational Regulation's (DPOR's) new customer support and licensure software have greatly increased information technology costs over the last several years.

While the number of entities that the Board regulates has increased, other things being equal, the fees from additional regulants would be expected to cover application costs, customer support services costs and any other expenses that the Board might incur in regulating them. Because fees have been kept artificially low so that the Board could use up the surplus that it had accrued, fees from each new licensee or registrant may not, in this instance, been enough to cover the per person application and customer support costs. This notwithstanding, it is likely that the necessity of raising fees would not be as urgent as it now is without large and continuing increases in information technology (IT) expenses over the last few years.

Board staff reports that the DPOR has already paid $3.6 million, and expects to pay an additional $1.6 million, for its new automated licensure system. These costs are additional to other IT (VITA) costs which have increased for all state agencies. It is likely that most of the per regulant expenditure increase in the last decade is due to these increased information systems costs. Given this information, it is not at all clear that these increased information systems costs represent a net benefit for the Board's regulated entities.

Increasing fees will likely increase the cost of being licensed or registered and, so, will likely slightly decrease the number of people who choose to be remain in these jobs or businesses. To the extent that the public benefits from the Board regulating these professional populations, they will also likely benefit from the Board's proposed action that will increase fees to support Board activities. There is insufficient information to ascertain whether benefits will outweigh costs.

Businesses and Entities Affected. Board staff reports that the Board currently regulates 4,243 real estate appraisers.

Localities Particularly Affected. No locality will be particularly affected by this proposed regulatory action.

Projected Impact on Employment. Fee increases in this regulatory action will likely marginally decrease the number of individuals who choose to work in professional fields that are regulated by the Board. Individuals who work part time or whose earnings are only slightly higher in these regulated fields than they would be in other jobs that do not require licensure or registration will be more likely to be affected.

Effects on the Use and Value of Private Property. Fee increases will likely slightly decrease business profits and make affected businesses slightly less valuable.

Small Businesses: Costs and Other Effects. Board staff reports that most of the entities regulated by the Board likely qualify as small businesses. Affected small businesses will bear the costs of proposed increased fees.

Small Businesses: Alternative Method that Minimizes Adverse Impact. There are several actions that the Board could take that might mitigate the necessity of raising fees overall. The Board could slightly lengthen the time that it takes to process both license applications and complaints so that staff costs could be cut. This option would benefit current licensees but would slightly delay licensure, and the ability to legally work, for new applicants. Affected small businesses would also likely benefit from increased scrutiny of the IT costs that are driving increases in Board expenditures.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to Economic Impact Analysis: The Department of Professional and Occupational Regulations concurs with the approval of the economic impact analysis.

Summary:

The proposed amendments increase fees for (i) obtaining and maintaining licensure, registration, or certification as a real estate appraiser, appraiser trainee, appraisal business, and appraisal instructor and (ii) approval of a real estate appraisal course.

18VAC130-20-90. Application and registration fees.

There will be no pro rata refund of these fees to licensees who resign or upgrade to a higher license or to licensees whose licenses are revoked or surrendered for other causes. All application fees for licenses and registrations are nonrefundable.

1. Application fees for registrations, certificates and licenses are as follows:

	Registration of business entity	$100 $160
	Certified General Real Estate Appraiser	$150 $281
	Temporary Certified General Real Estate Appraiser	$45 $75
	Certified Residential Real Estate Appraiser	$150 $281
	Temporary Certified Residential Real Estate Appraiser	$45 $75
	Licensed Residential Real Estate Appraiser	$150 $281
	Temporary Licensed Residential Real Estate Appraiser	$45 $75
	Appraiser Trainee	$105 $146
	Upgrade of license	$65 $130
	Instructor Certification	$135 $150

Application fees for a certified general real estate appraiser, a certified residential real estate appraiser, a licensed residential real estate appraiser and an appraiser trainee include a $30 fee for a copy of the Uniform Standards of Professional Appraisal Practice. This fee is subject to the fee charged by the Appraisal Foundation and may be adjusted and charged to the applicant in accordance with the fee charged by the Appraisal Foundation.

2. Examination fees. The fee for examination or reexamination is subject to contracted charges to the department by an outside vendor. These contracts are competitively negotiated and bargained for in compliance with the Virginia Public Procurement Act (§ 2.2-4300 et seq. of the Code of Virginia). Fees may be adjusted and charged to the candidate in accordance with this contract.

3. An $80 National Registry fee assessment for all permanent license applicants is to be assessed of each applicant in accordance with § 1109 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 USC §§ 3331-3351). This fee may be adjusted and charged to the applicant in accordance with the Act. If the applicant fails to qualify for licensure, then this assessment fee will be refunded.

18VAC130-20-130. Fees for renewal and reinstatement.

A. All fees are nonrefundable.

B. National Registry fee assessment. In accordance with the requirements of § 1109 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, $80 of the biennial renewal or reinstatement fee assessed for all certified general real estate appraisers, certified residential and licensed residential real estate appraisers shall be submitted to the Appraisal Subcommittee. The registry fee may be adjusted in accordance with the Act and charged to the licensee.

Renewal and reinstatement fees for a certified general real estate appraiser, a certified residential real estate appraiser, a licensed residential real estate appraiser and an appraiser trainee include a $30 fee for a copy of the Uniform Standards of Professional Appraisal Practice. This fee is subject to the fee charged by the Appraisal Foundation and may be adjusted and charged to the applicant in accordance with the fee charged by the Appraisal Foundation.

C. Renewal fees are as follows:

Certified general real estate appraiser	$150 $196
Certified residential real estate appraiser	$150 $196
Licensed residential real estate appraiser	$150 $196
Appraiser trainee	$70 $116
Registered business entity	$60 $120
Certified instructor	$125 $150

D. Reinstatement fees are as follows:

Certified general real estate appraiser	$210 $376
Certified residential real estate appraiser	$210 $376
Licensed residential real estate appraiser	$210 $376
Appraiser trainee	$130 $241
Registered business entity	$100 $280
Certified instructor	$230 $300

18VAC130-20-240. Course approval fees.

Course Approval Fee

$135 $150

VA.R. Doc. No. R12-3187; Filed October 23, 2013, 12:43 p.m.