The Texas Real Estate Commission (TREC or the commission) proposes amendments to §535.210, concerning Fees. The amendments would increase from $61 to $230 the fee for taking the licensing examination or retaking the national section of the examination; from $0 to $25 the fee to request an active license be placed on inactive status; increase from $20 to $50 the fee to request an inactive license be returned to active status; increase from $20 to $40 the fee for preparing a license history; increase from $25 to $50 the fee for the filing of a moral character determination; add a fee of $50 plus $10 per classroom hour for each core education course for a period of four years; add a fee of $50 plus $10 per classroom hour for each MCE course for a period of two years; increase from $25 to $150 the fee for the filing of an application for approval as an instructor for a two-year period for real estate core or MCE courses, or both; clarify the fee charged by the Federal Bureau of Investigation and Texas Department of Public Safety for fingerprinting or background check in connection with a license application or renewal; clarify the fee required by the Department of Information Resources as a subscription or convenience fee for use of an online payment system; and increase from $25 to $30 the fee for processing a returned check.

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 (SB) 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 non-refundable 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 $555,100 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 the amendments are 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 amendments. Annually, the agency receives approximately 257 requests for active inspector licenses to be placed on inactive status, 8 requests for inactive inspector license to be returned to active status; 13 requests for preparing a license history; 3 requests for a moral character determination; and processes 4 returned checks on inspector-related fees. Over a four-year period, the agency receives 120 requests for approval of core inspector education courses. Over a two-year period, the agency receives 60 requests for ICE course approval; 67 applications for approval as an instructor for a two-year period for core or ICE courses, or both. For FY 2013, the total estimated revenue increase would be $27,285; for FY 2014 $39,995; for FY 2015 $52,835; and for FY 2016 $39,605.

Ms. Alexander has determined that there is no anticipated impact on local or state employment as a result of implementing the amendments. However, there is an anticipated impact on small businesses and micro-businesses. The Commission processes approximately 180 inspector core and ICE course approval requests per year. The agency receives 257 requests for active inspector licenses to be placed on inactive status, 8 requests for inactive inspector licenses to be returned to active status; 13 requests for preparing a license history for inspectors. In addition, approximately 420 applicants take the licensing examination each year. It is estimated that nearly all of the transactions with the agency listed above are conducted by small businesses and many of them are micro-businesses. The projected economic impact of this rule amendment on these small businesses will be negative due to the increased filing and new course approval 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 proposed rule in accordance with a legislative mandate to cover all costs of operation under SB 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 increased fees under §535.210 are in effect the public benefit anticipated as a result of enforcing the amendments 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 SB 1000, 82nd Legislature, Regular Session (2011).

The amendments are proposed under Texas Occupations Code, §1101.151, which authorizes the Texas Real Estate Commission to make and enforce all rules and regulations necessary for the performance of its duties and to establish standards of conduct and ethics for its licensees in keeping with the purpose and intent of the Act to ensure compliance with the provisions of the Act.

The statutes affected by this proposal are Texas Occupations Code, Chapter 1101 and Chapter 1102. No other statute, code or article is affected by the proposed amendments.