The Texas Real Estate Commission (TREC or commission) proposes amendments to 22 TAC §535.400, concerning Registration of Easement or Right-of-Way Agents; and §535.403, concerning Renewal of Registration; new 22 TAC §535.404, concerning Fees; and §535.405, concerning Employee of Owner or Purchaser. The amendments and new §535.404 would increase the registration fee from $80 for a one-year registration to $200 for a two-year registration; and the renewal fee $160 ($80 per year) to $200 for a two-year registration. New §535.405 is proposed to clarify that an employee of an owner or purchaser of an easement or right-of-way is not required to be registered under the Act.

The justification for the fee increases is to generate sufficient revenue to fund operations of the agency and to comply with requirements of Senate Bill 1000, 82nd Texas Legislature, Regular Session (2011).

Senate Bill 1000 makes the Texas Real Estate Commission self-directed and semi-independent. The bill removes the agency from the legislative budgeting process, and requires the commission to adopt and approve an annual budget. The bill requires that the commission collect sufficient fees to fund operations to carry out its function and to fund the budget. In relevant part, the bill also requires the agency to remit $750,000 to the general revenue fund not later than August 31 of each fiscal year, to remit a non-refundable retainer to the State Auditor of $10,000 per fiscal year, a nonrefundable retainer to the Attorney General of $75,000 per fiscal year, and a non-refundable retainer to the State Office of Administrative Hearings of $75,000 per fiscal year. TREC will be required to reimburse each agency for all costs incurred in excess of the retainers for providing services to the commission. In addition, the bill requires the agency to pay rent in a reasonable amount to be determined by the Texas Facilities Commission with aggregate rent payments to be not less than $550,000 per fiscal year for state fiscal years ending August 31, 2012 and August 31, 2013; and not less than $425,000 per fiscal year for each year ending August 31, 2014, August 31, 2015, and August 31, 2016.

Karen Alexander, Staff Services Director, has determined that for the first five-year period new §535.404 is in effect there will be fiscal implications for the state, but not to units of local government as a result of enforcing or administering the section. Approximately 333 applicants and 115 renewal applicants would be required to pay the increased fees in the remaining months of FY 2012 with estimated revenue of $44,560. For FY 2013 and FY 2015, approximately 800 applicants and 750 renewal applicants would be required to pay the increased fees. The total estimated revenue per year would be $126,000. For FY 2014 and FY 2016, the estimated revenue per year would be $107,000. There will be no fiscal implications for the state or units of local government as a result of enforcing the amendments to §535.400 and §535.403 or new §535.405.

Ms. Alexander has determined that there is no anticipated impact on local or state employment as a result of implementing the proposal. However, there is an anticipated impact on small businesses and micro-businesses. Approximately 1747 easement and right-of-way agents are registered with the commission in Texas. It is estimated that nearly all of these registrants are small businesses and many of them are micro-businesses. The projected economic impact of this proposal on these small businesses will be negative due to the increased application and renewal fees. Under §2006.002, Texas Government Code, an agency is required to consider alternative regulatory methods only if the alternative methods would be consistent with the health, safety and environmental and economic welfare of the state. TREC has developed this proposal in accordance with a legislative mandate to cover all costs of operation under Senate Bill 1000, 82nd Legislature, Regular Session (2011).

Consequently, any variance from the legislative mandate would not be consistent with the health, safety, and environmental and economic welfare of the state, and no alternative regulatory methods have been considered.

Ms. Alexander also has determined that for each year of the first five years the proposal is in effect the public benefit anticipated as a result of enforcing the amendments and new sections is that the agency will raise sufficient revenue to fund costs of agency operations and required payments to the General Revenue Fund and other state agencies under Senate Bill 1000, 82nd Legislature, Regular Session (2011).

Comments on the proposal may be submitted to Loretta R. DeHay, General Counsel, Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188, or general.counsel@trec.texas.gov. The deadline for comments is 30 days after publication in the Texas Register.

The amendments and new sections are proposed under Texas Occupations Code, §1101.051, which authorizes the Texas Real Estate Commission to adopt rules necessary to implement Chapter 1101.

The statute affected by this proposal is Texas Occupations Code, Chapter 1101. No other statute, code or article is affected by the proposed amendments and new sections.