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Washington Report & State News

Sept. 30, 2021

The Appraisal Institute’s Washington Report and State News quarterly e-newsletter summarizes AI’s recent federal and state legislative, regulatory and related activities in representing the interests of Designated Members, Candidates for Designation, Practicing Affiliates and Affiliates.

  1. Legislation for Transmission Facilities Contains Important Eminent Domain Language
  2. Legislation Targeting Conservation Easement Abuse Part of House Reconciliation Package
  3. Interagency Appraisal Task Force Convenes; Defines Scope and Objectives
  4. ASC Offers Additional Grants to States for Improvement, Expansion of Appraisal Processes
  5. California Enacts New Appraiser Requirements to Ensure Unbiased Opinions of Value  
  6. Pennsylvania and Wisconsin Considering Statutes of Repose Legislation
  7. Multiple States Mull Whether to Allow PAREA to Satisfy Experience Requirements
 

ON THE HILL                                                                                

Sens. Martin Heinrich, D-N.M., and John Hickenlooper, D-Colo., on Aug. 5 introduced S 2651, the Streamlining Interstate Transmission of Electricity Act, legislation that would establish a procedure for the siting of certain interstate electric transmission facilities. 
 
The legislation includes a provision for condemnation that allows landowners to pick a representative to value their property in accordance with the Uniform Standards of Professional Appraisal Practice before an offer of just compensation is extended. Additionally, a landowner’s representative will have the opportunity to accompany an appraiser during the inspection. The Appraisal Institute supports this provision.
 
A similar provision can be found in S. 641, the Landowner Fairness Act, legislation that was introduced in March by Sen. Ron Wyden, D-Ore. 
 
Both bills remain in the committee process, and no timetable for Senate review has been established. 
 
 
The Charitable Conservation Easement Program Integrity Act, bipartisan legislation that targets abusive conservation syndications, will be included in the budget reconciliation package that is being finalized by the House Committee on Ways and Means.
 
HR 4164/S 2256  would limit tax deductions for qualified conservation contributions made by certain partnerships if the amount of the contribution exceeds 2.5 times the sum of each partner’s relevant basis in the partnership. This limitation also applies to other pass-through entities, such as S corporations. 

IN THE AGENCIES                                                                       

The task force for the Property Appraisal and Valuation Equity Interagency, known as PAVE, held its first meeting Aug. 5 to define its scope of work in preparation for creating a final action report that is due within 180 days. President Joe Biden created the task force by executive order to address “inequity in home appraisals.” 
 
The task force determined that its scope of work will involve: 
  • Ensuring that government oversight and industry practices further valuation equity.
  • Combating valuation bias through consumer education and practitioner training.
  • Ensuring equity in valuation through the availability of high-quality data. 
  • Creating a comprehensive approach to combating valuation bias through enforcement and other efforts.
The task force also released its core objectives, which state it will work together and consult with civil rights organizations, advocacy and industry groups, and philanthropic entities to drive change by:
  • Coordinating efforts to evaluate and identify the extent of, causes and factors that contribute to the persistent mis-valuation and devaluation of assets. This includes evaluating issues related to biased appraisals in mortgage transactions and automated valuation models.
  • Coordinating agencies’ guidance, enforcement efforts and monitoring authority to the greatest extent feasible, This may include reviewing valuation-related authorities that are enforced by federal entities, determining areas of commonality and conflict, and creating a framework for appropriate information sharing among agencies with enforcement authorities regarding coordinated enforcement and compliance, respecting enforcement independence.
  • Leveraging the authority of the Appraisal Subcommittee to strengthen oversight of The Appraisal Foundation, encourage diversity of state appraisal regulatory agencies and create opportunities for transparent data sharing.
  • Coordinating data collection and reporting and maintaining data repositories, contingent upon feasibility and legal opinion.
  • Recommending and implementing actions within agencies’ authorities, including concrete steps that federal, state and local governments and industries will take as expeditiously as possible.
PAVE is expected to provide a final report of its findings and recommendations by early next year. 
 
The task force is co-chaired by Marcia Fudge, secretary of the U.S. Department of Housing and Urban Development, and Susan Rice, director of the U.S. Domestic Policy Council, and includes cabinet-level leaders from executive departments and members from independent agencies.
 
 
The Appraisal Subcommittee at its Sept. 15 meeting approved publication of a Notice of Funding Availability that provides an additional $3.3 million for “State Appraiser Regulatory Agencies Support Grants.” These funds are in addition to the $3.336 million that was made available via a NOFA published last year. 
 
Approximately $625,000 was awarded to eight states as part of the first round of funding, according to an ASC document
 
The first NOFA stated that the ASC would make grants of between $25,000 and $120,000 to states to assist with: 
  • Improvements to and/or expansion of the appraiser and appraisal management company complaint process, investigations and enforcement activities. 
  • Improvements to the process for submitting data on state-credentialed appraisers and registered AMCs to the National Registries. 
  • Participation in training and conferences to increase professional competency in the management and regulation of appraiser and AMC programs. 
  • Expansion of appraiser credentialing opportunities in underserved markets.  
  • Other areas proposed by state agencies and approved by the ASC. 
While not yet formally published, the new NOFA is expected to make funds available to states for the same purposes. One change will be the availability of supplemental awards up to $350,000 to states that received an initial award of less than $120,000. 
 
The State Appraiser Regulatory Agencies Support Grants are part of the ASC’s broader program that helps fund The Appraisal Foundation and training and technical assistance for state appraiser and AMC regulatory agencies. The ASC funds its grant program from “fees paid by appraisers and AMCs to be on the National Registry of Appraisers and the National Registry of AMCs” and is authorized by federal law. The ASC’s grant making authorizations were significantly expanded as part of the Dodd Frank Act of 2010. 
 
Find more information on the ASC’s grants programs.
 

IN THE STATES                                                            

California Gov. Gavin Newsom on Sept. 28 signed into law AB 948, legislation that contains multiple provisions related to appraisal bias. Beginning July 1, all residential sales contracts must include a statement promising that appraisals are unbiased and not influenced by improper or illegal considerations. Refinance transactions must have the same statement included within the loan documents provided to borrowers.
 
Additionally, the state’s Bureau of Real Estate Appraisers must change its complaint form to include a way for individuals to note their belief that their appraisal was below market value; BREA is required to collect data regarding complaints that allege low valuations and report its findings to the state legislature on or before July 1, 2024.
 
Further, the legislation makes it a violation of licensing law for appraisers to base their opinions of value on any of the generally recognized protected characteristics and makes it a violation of the California Fair Employment and Housing Act for appraisers to discriminate on the basis of any of the generally recognized protected characteristics. Beginning Jan. 1, 2023, appraiser pre-licensing education must include one hour of instruction in cultural competency, while continuing education must include two hours of elimination of bias training and one hour of cultural competency instruction. 
 
“We applaud Gov. Newsom for signing AB 948, which will require real estate appraisers to complete qualifying and continuing education in cultural competencies and the elimination of bias,” said Appraisal Institute President Rodman Schley, MAI, SRA. “The Appraisal Institute recognizes that unconscious bias is human and exists in various forms, and no profession is immune from it. We need to educate ourselves about potential bias and how to interrupt it, and the state of California is taking a great step in ensuring this happens. Creating a more equitable housing environment is a top priority for the Appraisal Institute, and we will continue to work with the state of California and other states to identify solutions that will effect positive change.”
 
 
Pennsylvania and Wisconsin are both considering legislation to create a statute of repose that would limit the time lawsuits could be filed against appraisers. Nine states already have enacted such legislation. 
 
The Pennsylvania House of Representatives on June 24 unanimously passed HB 1255, legislation that would create a statute of limitations on actions to recover damages from appraisers. If the legislation becomes law, most civil lawsuits against appraisers would have to be filed within one year from the discovery of an act or omission that gives rise to the action and no later than five years from the date the appraisal was performed. This bill is being considered by the state Senate. 
 
Wisconsin is considering AB 340 and SB 341, companion bills that would limit the time an individual has to initiate a lawsuit for damages against a licensed or certified appraiser to five years from the date an appraisal report was submitted to a client. The limitation would not apply to an appraiser who “commits fraud or concealment in the performance of real estate appraisal services.” SB 341 awaits consideration by the full state Senate while AB 340 is pending in the Assembly Housing and Real Estate Committee. 
 
Find more information on states in which statutes of repose have been enacted.
 
 
Appraiser regulatory officials in multiple states are debating whether to accept completion of an Appraisal Qualifications Board-approved Practical Applications of Real Estate Appraisal, known as PAREA, to satisfy the experience requirements for licensed residential credentials and certified residential appraiser credentials. 
 
Further, 15 states have fully adopted by reference the AQB’s Real Property Appraiser Qualification Criteria, known as RPAQC. PAREA is part of RPAQC.
 
Colorado, Iowa, Montana and Ohio have definitively stated that completion of PAREA programs can satisfy up to 100% of the required experience hour requirements for licensed residential and certified residential credentials, and up to 50% of the total experience hours required to obtain the certified general credential.
 
Appraiser boards in New Mexico and Utah are in the rule-writing process, which should result in full acceptance of PAREA. 
 
Aspiring appraisers in California can receive credit for 50% of the experience hours required for both the licensed residential and certified residential credentials by completing the appropriate PAREA program. 
 
The Pennsylvania Board of Real Estate Appraisers clarified its position that completion of a PAREA program can satisfy 25% of the experience hour requirements for certified residential and 15% of the requirements for certified general.   
 
The states where RPAQC is incorporated by reference are Arizona, Iowa, Louisiana, Michigan, Minnesota, Mississippi, Montana, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, Tennessee, Texas and Vermont. Because PAREA is part of RPAQC, it should be permissible for aspiring appraisers in these states to satisfy their experience hour requirements in a manner equivalent to how others satisfy experience requirements through the supervisor/trainee model. 
 

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