Gene Wunderlich - Realtor®, Government Affairs Director

In a nod to bi-partisanship, Gov. Schwarzenegger has sent a clear message to one his Democratic legislators. Gov. Arnie always includes a note attached to a bill that he signs or doesn't signs letting the bills author know why he is taking the action he did. It's usually a boilerplate note either congratulating them on proposing a bill that serves the people, or telling them to try harder next time.

In addition to his boilerplate note, he attached the following missive to a bill he didn't sign authored by San Francisco Assemblymember Tom Ammiano. It should be noted that Ammiano was a prominent heckler of the Gov when he attended the State Democrats Convention last month at the request of former Speaker Willie Brown. Among other taunts, Ammiano is reported to have called the Gov a 'liar' and shouted that he could 'kiss my Gay ass' as he walked out of the event. So here's the Gov's message:

Now that in itself is hardly newsworthy - except that some sharpie noticed another message embedded in the text. And it's not that hard to find - just one of those simple 'Read Down the Left Margin' kind of things. If you're having trouble seeing it, the message begins with 'F' and the second word is YOU.

When asked about the note, the Gov's office replied:

"My goodness. What a coincidence," said Schwarzenegger spokesman Aaron McLear. "I suppose when you do so many vetoes, something like this is bound to happen."

Silly stuff - and if you want to read what the San Francisco Guardian had to say about the matter (as if you can't imagine what the liberal blogs are saying) just click here: Arnold to SF - FU

When you start your day attending two meetings where the speakers apologize for being depressing, the rest of your day can only improve. That was my day today.

I started with an early morning meeting of the Southwest California Economic Development Corporation where we were treated to remarks by John Rossi, General Manager of Western Municipal Water District. Apologizing for depressing us, John presented a factual summary of where our state is waterwise and how the water districts are dealing with our current situation. Having toured the Northern end of our state water supply system last year from Oroville Dam to LA, and having written about the issue on numerous occasions, I believe that rather than being depressed we should see this as a call to action. As Rossi did when he encouraged us not only to use our resources wisely but to engage our legislators in recognizing the complexity of the issue and dealing with it comprehensively.

With over 70% of SoCal water deriving from the north, another 25% from the Colorado River and about 5% from ground water & desalinization, it's clear where the answer lies. Prayer. But in addition to prayer, the water department is also working legislatively through the current 'special session' to address both conservation and infrastructure issues. Until and if those solutions ever bear fruit, they will also continue to squeeze their customers. Oh, by the way, if those solutions do bear fruit, they will still continue to squeeze their customers. Why? Because they can. And any fix - even the inadequate Democrat proposals, will come with a big price tag that somebody has to pay for.

Here's a fun factoid. During the past year our primary wholesale supplier of water, Metropolitan Water District, has instituted rate increases of nearly 40%. These increases were designed to encourage conservation - a very admirable goal and one that will certainly help us deal with the problem. There's another 20% increase due in a month or two. Why? Because our conservation efforts have been so successful at reducing water consumption that Metropolitan has less revenue coming in to service their bond debt and fixed expenses. So they need to raise rates again because the first rate increases were so successful at changing our consumption habits. Damned if you do, damned if you don't. Is there a win-win in here anywhere?

Think our bills will go down anytime soon? The you should have been to the EWDC luncheon featuring Senator John Benoit and Assemblymembers Brian Nestande and Kevin Jeffries. The operative words here were also 'depressing' and/or 'frustrating' by turns, for the state's economic outlook, any chance for real reform and for the water picture.

Assemblymember Jeffries, who was appointed to the state special commission on water, remains hopeful that some compromise solution will be reached soon, possibly as early as this coming week. He bemoaned the fact that water has become so politicized that true progress remains elusive. While the party in power in Sacramento thinks the problem can be solved by merely conserving more and restoring the Delta, the minority view prefers conservation coupled with additional infrastructure to provide long-term solutions. Capturing and storing rainfall and snowpack for future use, channeling current water resources without adversely impacting the Delta Estuary, new dams, an alternative conveyance AND continued conservation are all part of a comprehensive solution.

Our current drought is caused in equal parts by nature and regulation. Our dams truly are down by 1/2 to 2/3rds as a result of rainfall & snowpack the past few years. It is regulatory by virtue of the fact that judicial decree has determined the rights of the Delta Smelt take precedence over 18 million water users, farmers and food producers throughout the central and southern parts of the state. There are also complex water rights issues with people at the watershed source and with environmental groups concerned about preservation of the Delta. It wouldn't be an easy fix even on a level playing field - given the way our legislature operates it's a wonder anything happens at all.

All panelists agreed that jobs are the answer for our state. "Not bigger government, not more taxes, more jobs", according to Senator Benoit. "Taxes up, jobs down, legislature ineffective", according to Jeffries. '450,000 jobs lost this year at an average $68,000 per, 150,000 jobs created at an average of $52,000 per - not good' according to Nestande.

Jeffries also pointed out that the party in power, regardless of which party, has shown they will do darn near anything to perpetuate that power. There was some disagreement as to whether term limits have been effective at making our state more governable but all agreed that term limits have resulted in shifting power from the people who should be accountable, (our legislators), to people who are not accountable, (staff and lobbyists). The people who make the decisions aren't around long enough to have to deal with the consequences of their actions so what's their motivation to work for the long-term good? (Please keep in mind that all legislators are not altruistic by nature. Some just love the power, some just love the perks, and some just want to have a lobbyist mistress who wears a thong).

Agreeing that reform must occur if California is to turn itself around in any meaningful and sustainable way, they admit that if the legislature is not prepared to reform itself then the public will have to do it for them. When asked about the prospect of that occurring through Constitutional Convention, Jeffries voiced some concern about what could result from opening that can of worms while Nestande opined that any result probably couldn't be much worse than the status quo.

Depressed yet? You shouldn't be. This is California politics at its best. The more you know, the better prepared you are to deal with it. If you're not at the table, you'll surely be on the menu. Sometimes you might be anyway. Of course that's just my opinion, I could be wrong.

In addition to the Action Items summarized in the previous article, CAR Legislative Agenda Shapes Up, there was another Action Item that came before the 526th Board of Directors session on October 10, that being a motion from the Real Estate Finance Committee. 

By way of background, here's a brief primer on how things happen at our state association level. Any member can bring forward an issue through their local association representatives for consideration at the state level. The matter is brought into the committee structure so that a decision can be made on whether the matter is appropriate, whether the impact is significant and what action should be taken. I mean, face it - Just because you've got a beef about a local lockbox issue or had a problem with some lenders short sale negotiator may not qualify the issue for consideration by a state committee. 

If the committee determines the issue is of sufficient import to tackle it, it will be placed on the agenda for discussion along with supporting documentation. The committee will then determine what, if any, action should be taken.

Should they decide to recommend some form of action they will determine whether they will go forward with a request to SPONSOR a bill, SUPPORT a bill that's already in process or just ask CAR to devote some staff time to further research the most appropriate course of action. That recommendation, in the form of a motion or report, will then proceed from the originating committee to a policy committee, generally the Legislative Committee. That committee can decide to approve the committees motion, oppose the motion, or draft an amended version. One or both motions will then proceed to the Executive Committee where they will look at it, approve it for the general session agenda, draft an amended or competing version or, in rare instances, oppose the motion.

One such motion came before the session on Saturday having to do with the current FHA 90 day anti-flipping rule. Originally drafted in 2001, the FHA rule was intended as a consumer protection back in a day when FHA loans, especially in California, were the exception rather than the rule. Due to the FHA's unwillingness to keep pace with escalating prices, again especially in areas like California, the use of FHA mortgages fell to single digits by 2005 contributing to the widespread reliance on sub-prime and other more exotic financing methods. 

Today FHA loans are becoming more the standard again with increased loan limits in our area. This is especially true for first time and other low-to-moderate range buyers, currently estimated to account for as much as 40% of todays loans statewide. The anti-flipping rule, originally intended to prohibit investors/intermediaries from acquiring cheap homes and simply 'flipping' them with no value added thereby driving prices up, doesn't really apply in this market. In fact the argument was made that investors play a very significant role in todays market buying abandoned and stripped foreclosures that would not qualify for an FHA loan to begin with. They rehab the home, often within 30 days, and then put a move-in-ready home on the market (at market price, not inflated). But 40% of buyers who might otherwise qualify for that home with an FHA loan cannot because of the anti-flipping rule.

As you might imagine there was substantial debate at every level of advancement for this motion. But when it came to the floor on Saturday it carried an almost unheard of prohibition - a recommendation from the Executive Committee that the motion be defeated. Why? Their stated reason had little to do with the particulars of the rule or the motion but a general caution that in todays political climate of increasing regulation, they simply didn't think this was a winnable fight.  HONEST.

After about 45 minutes of spirited back-and-forth on the motion before the general assembly, members delivered a stinging rebuke to Exec. Not only was it determined that C.A.R. in conjunction with NAR 'SUPPORT' the elimination of the anti-flipping rule, an amendment was inserted telling CAR we want them to write a letter to the FHA Commissioner and others appropriate parties advising them of our opposition to the rule. NOW. 

It's kind of fun to see the members get riled up sometimes. In an environment that at times resembles a convention of rubber stamp politics as usual, passion can carry the day. Enough of our member/Directors realize the impact this is having on you and your Buyers and decided political correctness and/or lack of balls be damned. This was the right thing to do and we're by God gonna do it. 

Will it result in an immediate change? Not likely. But the message is being delivered. As we continue to define what is the new 'normal market', your Association of Realtors will be at the table assisting in that process. It was a proud moment to stand up and be counted.

On October 10, The California Association of Realtors in it's 526th session, brought forward a number of 'Action Items' that will result in forward progress and, in some cases,  calls on C.A.R. to sponsor and/or support legislative action. 

C.A.R.'s legislative agenda contains several ways to address issues. The call to 'SPONSOR' legislation is our highest level of action requiring a significant commitment of time and resources to accomplishing our goal. This generally means drafting a bill, finding a legislator to carry it on our behalf, and involves significant efforts by our lobbyists and members to ensure the success of the resulting bill. After a year where C.A.R. played a very successful defensive game, we are again going on the offensive in 2010 on behalf or Realtors® and our clients. 

Additional levels of legislative involvement include 'SUPPORTING' a bill that has been drafted by others, 'OPPOSING' a bill, taking a 'NEUTRAL' stance, taking a 'WATCH' status on a bill, 'SUPPORTING OR OPPOSING PENDING AMENDMENT' or just deciding a bill is not real estate related.

From the Legislative Committee:

AA#1 calls on C.A.R. to 'SPONSOR' legislation to subject Appraisal Management Companies to increased regulatory control by the Office of Real Estate Appraisers (OREA). They currently appear to operate outside of any regulatory control. Further, while the stated goal was to keep appraisers and lenders at arms length (the purported cause of the housing meltdown, according to NY AG Cuomo), in fact most of the largest AMC's are owned by lenders. The HVCC accord between Cuomo and Fannie & Freddie is wreaking havoc on the industry, delaying or canceling sales and increasing costs for homebuyers and has interjected another level of bureaucracy  and inefficiency into the process..

AA#2 calls on C.A.R. to 'SPONSOR' legislation to require lenders to accept a 'portable' appraisal at the request of the borrower. If your customer obtains an appraisal from one lender but wants to shop the loan, or want to switch to or from a lender mandated lender, they don't have to keep dropping $450 for another appraisal. 

AA#3 calls on C.A.R. to 'SUPPORT' legislation setting up a program to use electronic scanning technology to filter title records for unconstitutional transfer restrictions and redact the illegal covenants in a way that does not destroy the original and does not add prohibitive costs to the process. A bill currently in process ignores the advancement of modern technology, would require all pages to be scanned visually for these covenants, and then would remove the offending passage permanently at some undefined cost to the customer. This is revisionist history applied to the housing market saying, in effect, no those restrictive covenants never existed. Yes they did and we've come a long way toward addressing the issues - let's not forget where we came from and who fought for those changes on homeowners behalf. 

AA#4 calls on C.A.R. to 'SPONSOR' legislation to apply the so-called 'poison pill' of business and professional code section 10226.5 to 'loans' from DRE to other special funds.  This provision, which has existed for years, triggers an automatic roll-back of DRE fees to 1982 levels if the state 'takes' or 'borrows' money from the DRE reserve. This year the state came up with a new euphemism for this theft calling it simply a 'loan' from one department to another. So we have to come up with a new response to their creative pilferage.

AA#5 calls on C.A.R. to 'SPONSOR' legislation to redraft the existing 'advance fee' statute contained in SB94. While we support SB94, the language defining 'advance fees' could be construed to apply to all manners of receiving or even contracting for payment before a service is performed. Under the current wording, even a listing agreement could be interpreted as running afoul of the law as it contracts for payment in advance of services being performed. 

All of these activities come with a cost - your basic cost of political survival. When your dues billing statement comes out next month, please be sure to include your investment of $49 in the Realtor Action Fund. We're either at the table on these issues or we'll be on the menu. A seat at the table costs money.

On a day when, ironically, the Obama administration summoned state officials and interest groups to a lecture from the Colorado Cowboy Hat about California water issues, the Temecula Chamber of Commerce presented its 2009 Legislative Summit. If the giant water spigot overshadowing everything was too subtle for you, the fact that the only two speakers this year were Tim Quinn, Executive Director of the Association of California Water Agencies (ACWA); and Assemblyman Kevin Jeffries, who was recently appointed to the (bi)-partisan, joint committee charged with producing a workable bill to resolve the states current water crisis should have given you a clue to the subject at hand. 

Moderated once again by the Sacramento Bee's longtime political columnist Dan Walters, the event brought out the areas business and civic leaders for some discussion of water, infrastructure, taxation and other issues affecting our state. Walters led off the panel referring to this years motto for the event, California, Looking Forward. He applauded the decision to look forward - because looking back is 'just too depressing'. He noted California's Boom & Bust history saying it's almost like 'we're addicted to it'.

They were in general consensus that something will be done legislatively to address the issue, maybe soon. They're just not sure what it will look like. One segment of our legislature believes we should continue to address the issue through conservation measures and higher user fees while another segment agrees with conservation but insists on infrastructure improvements for long term reliability. Guess which side's in the minority. 

I've written on the Delta Region (Follow the Water Tour) and followed the water trail from the Oroville Dam to my spigot in Murrieta courtesy of the MWD. A recurring but new theme is emerging - the concept of an 'alternative conveyance'. Defeated as a solution in 1982, the recent actual drought, coupled with severe regulatory drought has brought the system to it's knee and the despised 'peripheral canal' has morphed into the 'alternative conveyance'. But as Quinn said "It's a very different political climate than it was in 1982." In Sacramento 'money is the lubricant for true water change. Every interest group comes with a price tag.' And they say lobbyists day are numbered! . 

The 'alternative conveyance' could take the form of a 44 mile long river around the Delta, a hardened canal through the Delta or a tunnel under the Delta. Each alternative has it's pro's & con's, but they're all better than what we have today. Whichever it turns out to be will come with a high price tag - some of which will certainly be borne by ratepayers (you & me). The reward for this is a reliable supply of water to the breadbasket farmers of the Central Valley and enough to keep the deserts of Southern California Green (you & me).  Arguing that water is not so much a partisan issue as a regional issue, they nevertheless succumbed to the reality of politics. Central Valley Farmers (current unemployment rate - 40+%) represented by Democratic Legislators are being increasingly vocal and it's got some Democrats scrambling to save their seats. 

Similarly, some environmental groups are coming on board as they understand the need to preserve the Delta. The 100 year old hand made peat-moss dykes keeping the region arable are in critical condition. Susceptible to earthquake, fire, flood and sabotage, the Delta is a fragile and unnatural ecosystem. It will require a major effort to preserve and will likely still involve some 'loss' of land to the estuarial condition that existed until a century and a half ago when the levee & dyke system was introduced to the region. First developed as subsistence farming for small communities, the region is not considered to be a high-producing agricultural mecca - it costs the state more to keep it farm-able than the farms actually produce every year. 

Still more strange bedfellows involves a schism between the dwindling ranks of trade unions (workers) and groups like the SEIU, CTA and Prison Workers Unions (public employees unions). The public unions don't really care one way or the other on the water issue. They are following the money. They know that if California launches the kind of effort necessary to truly address the matter, it will take potential bond money out of the same general fund they're trying to tap. Besides having 70% of the earmarks already in the budget, they want access to more and infrastructure will compete for the few funds that are available in the shrinking pit that is our state economy.  

The best hoped for outcome in the water wars, it appears, would be for the legislature to get out of they way and allow the state to proceed with the recommendation of the Bay Area Conservation Committee. This group has been meeting for the past 3 years or so and has formulated a series of, what appear to be, pretty sound proposals. Certainly better than the proposals considered by the (bi) partisan Joint Water Committee, currently meeting in Sac. 

Why is it so many real solutions to problems begin with the words - 'Well, if we could just get the legislature out of the way...' 

Moving on to other areas, Walters bragged about what a real success it has been to go from a quarterly annual budget meltdown to one that will probably at least last until the first of the year before it unravels. "Only in Sacramento is that considered a success".  He also related a recent meeting with the Governor of Montana during his (Walters) recent vacation tour of the west. With all the major issues confronting us, the governors first comment was 'Boy, what about that Mike Duval.' Kind of keeps our perception in perspective.

The panel also talked about other aging infrastructure like the state's highway system , our tax system and Nancy Pelosi. Our roads are rated 2nd worst in the nation (only New Jersey scores lower). We haven't invested significantly in our roadways & bridges since the late 70's, when Jerry Brown decided if we don't build it, they won't come. As our population soars past 38 million heading toward 50 million by 2030, that theory doesn't seeem to be holding much credence these days. We have twice as many cars on the road today as we did in 1982 but we still take in the same amount in gas tax. Why is this? Because cars are so much more fuel efficient today that we have twice as many on the road to produce the same revenue for repairs. Yet another unintended consequence of well-intentioned legislation. 

Assemblyman Jeffries had the last word admitting that "we are in a mess. The only way we can sustain a recovery is to put people back to work." He noted that the legislature 'has either failed to prioritize its expenditures or has prioritized badly handing out money to every interest group with it's hand out. US! We continue to reward our politicians who consistently bring home the pork for us by re-electing them, while criticizing the pork laden coffers of others.' "The only way we can take control back is for each of us to get engaged." He was preaching to the choir.