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PA Bulletin, Doc. No. 02-1740

PROPOSED RULEMAKING

STATE BOARD OF CERTIFIED REAL ESTATE APPRAISERS

[49 PA. CODE CH. 36]

Biennial Renewal Fees and Examination Fees

[32 Pa.B. 4871]

   The State Board of Certified Real Estate Appraisers (Board) proposes to amend § 36.6 (relating to fees) to read as set forth in Annex A.

Description of Proposed Rulemaking

   Section 36.6 sets forth a schedule of fees charged by the Board. The proposed rulemaking would raise the biennial renewal fees for certified real estate appraisers and certified Pennsylvania evaluators from $105 to $225; establish a biennial renewal fee of $225 for certified broker/appraisers; and delete the examination fees for certified real estate appraisers and certified Pennsylvania evaluators.

Background and Need for Proposed Rulemaking

   a.  New Biennial Renewal Fees

   Section 9 of the Real Estate Appraisers Certification Act (REACA) (63 P. S. § 457.9) provides that the Board's biennial revenues from fees, fines and civil penalties shall meet or exceed the Board's biennial expenditures. Because fines and civil penalties historically account for a small percentage of the Board's total revenues, the Board must generate most of its revenues from fees.

   The Board's principal sources of fee revenues are the fees charged to certificateholders for biennial renewal of their certifications. The biennial renewal fees account for approximately 88% of the Board's fee revenues during each biennial renewal period. The biennial renewal fees defray general operating expenses and overhead--primarily in the areas of investigation, prosecution and enforcement--that are not susceptible to being apportioned to a specific segment of persons and entities regulated by the Board and, therefore, are borne equally by the entire regulated community.

   The Board established biennial renewal fees of $105 for certified real estate appraisers in 1992 and for certified Pennsylvania evaluators in 1993. These fees have not been raised since their adoption. Additionally, the Board has not yet established a biennial renewal fee for the recently created certification class of broker/appraiser, whose initial biennial renewal occurred in 1999. Meanwhile, the Board's annual expenses have risen steadily, from $113,104.50 in FY93-94 to $413,000 in FY00-01, with expenses for FY06-07 projected to be $570,000.

   According to an analysis prepared by the Department of State's Bureau of Finance and Operations (BFO), the Board's current biennial renewal fee structure is inadequate to meet the Board's revenue needs. Unless the biennial renewal fees are increased, the Board faces large deficits in upcoming years as reflected in the following projections made by the BFO in February:


Financial Status FY01-02 FY02-03 FY03-04 FY04-05 FY05-06 FY06-07
Beginning Balance:418,463.31 (39,153.83) (96,775.46) (407,400.56) (445,275.46) (787,900.46)
Revenue: 149,500 499,125 210,375 499,125 210,375 499,125
Prior Yr. Returned Funds: 0 0 0 0 0 0
Total Revenue: 568,013.31 459,971.17 113,599.54 91,724.54 (234,900.46) (288,775.46)
Expenses: 445,000 506,000 521,000 537,000 553,000 570,000
Prior Yr. Expenses: 162,167.14 50,746.63 0 0 0 0
Remaining Balance: (39,153.83) (96,775.46) (407,400.46) (445,275.46) (787,900.46) (858,755.46)

   To close the widening gap between the Board's projected revenues and expenses, the BFO recommended that the Board adopt uniform biennial renewal fees in an amount between $200 and $250 for the Board's certificateholders, effective with the biennial renewal period that begins July 1, 2003. The proposed biennial renewal fee of $225--representing the midpoint of the BFO's recommended range--would raise biennial renewal revenues by approximately $621,000, from the current $346,500 to $967,500, according to the BFO's estimates. The BFO projects that these additional biennial revenues would enable the Board to have comfortable positive balances at the end of the next several fiscal years, including approximately $180,600 at the end of FY03-04.

   b.  Deletion of Examination Fees

   The examinations for certification as a real estate appraiser and certified Pennsylvania evaluator are developed, administered and graded by Assessment Systems, Inc. (ASI), an independent testing organization under contract with the Commonwealth. The Board has no role in establishing or collecting examination fees. Examination fees are established by contract between ASI and the Commonwealth and are collected from Board-approved examination candidates at ASI's testing centers. The Board proposes to discontinue the practice of periodically amending its regulations to publish updated schedules of examination fees. Accordingly, the proposed rulemaking would delete all references to examination fees for certified real estate appraisers and certified Pennsylvania evaluators. The Board will continue to provide current examination fee information to examination candidates on its website.

Fiscal Impact

   The proposed rulemaking will generate approximately $621,000 in additional biennial renewal fee revenues, broken down as follows:

Certification Class No. of Renewing CertificateholdersFee Increase Additional Revenues
General Appraiser 1,088 × $120 $130,560
Residential Appraiser 1,700 × $120 $204,000
Certified Pennsylvania Evaluator    512 × $120 $  61,440
Broker/Appraiser 1,000 × $225 $225,000

Paperwork Requirements

   The proposed rulemaking will require the Board to change its biennial renewal forms to reflect the new fees. The proposed rulemaking will not create additional paperwork requirements for the regulated community.

Effective Date

   The proposed rulemaking will become effective upon publication of the final-form regulation in the Pennsylvania Bulletin. The new biennial renewal fees will apply to certificateholders who renew certifications for the biennial renewal period beginning July 1, 2003.

Statutory Authority

   Section 5(6) of the REACA (63 P. S. § 457.5(6)) authorizes the Board to establish fees for its operations. Section 9 of REACA requires the Board to establish fees by regulation and to ensure that revenues derived from fees, fines and civil penalties are adequate to cover the Board's expenditures over a biennial period. Section 9 of the Assessors Certification Act (63 P. S. § 458.9) authorizes the Board to establish renewal and other fees relating to certified Pennsylvania evaluators by regulation.

Compliance with Executive Order 1996-1

   In accordance with Executive Order 1996-1, ''Regulatory Review and Promulgation,'' the Board, in drafting and promulgating the proposed rulemaking, attempted to balance its statutory obligation to generate adequate revenues to support its operations against the objective to minimize the fiscal impact on the regulated community. The Board considers the proposed rulemaking to be both required by law and the least restrictive means of covering the cost of activities that the Board is required to perform.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 25, 2002, the Board submitted copies of this notice of proposed rulemaking to the Independent Regulatory Review Commission (IRRC), the Senate Standing Committee on Consumer Protection and Professional Licensure, and the House Standing Committee on Professional Licensure. The Board also provided IRRC and the Committees with copies of a Regulatory Analysis Form and Fee Report Form prepared in compliance with Executive Order 1996-1. Copies of these forms are available to the public upon request.

   Under section 5(g) of the Regulatory Review Act, if IRRC has objections to the proposed rulemaking, it will notify the Board within 10 days of the close of the Committee's review period, specifying the regulatory review criteria that have not been met. The Regulatory Review Act sets forth procedures that permit IRRC, the General Assembly and the Governor to review any objections prior to final-form adoption of the proposed rulemaking.

Public Comment

   The Board invites interested persons to submit written comments, suggestions or objections regarding the proposed rulemaking to Steven Wennberg, Counsel, State Board of Certified Real Estate Appraisers, P. O. Box 2649, Harrisburg, PA 17105-2649 within 30 days following publication of this notice of proposed rulemaking in the Pennsylvania Bulletin.

GEORGE D. SINCLAIR,   
Chairperson

   Fiscal Note: 16A-7013. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 49.  PROFESSIONAL AND
VOCATIONAL STANDARDS

PART I.  DEPARTMENT OF STATE

Subpart A.  PROFESSIONAL AND
OCCUPATIONAL AFFAIRS

CHAPTER 36.  STATE BOARD OF
CERTIFIED REAL ESTATE APPRAISERS

Subchapter A.  GENERAL PROVISIONS

§ 36.6.  Fees.

   The following is the schedule of fees charged by the Board:

*      *      *      *      *

Certified Real Estate Appraisers

*      *      *      *      *

   [Examination fee$100]
*      *      *      *      *

   Biennial renewal fee$[105] 225
Certified Broker/Appraisers
*      *      *      *      *

   Biennial renewal fee$225
Certified Pennsylvania Evaluators
*      *      *      *      *
   Biennial renewal fee$[105] 225
*      *      *      *      *

   [Examination fee$200]
[Pa.B. Doc. No. 02-1740. Filed for public inspection October 4, 2002, 9:00 a.m.]



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