General Spring Update
May 30, 2018
May 30, 2018
To: AAR Board of Directors
From: Jeremy Walker, Chief Executive Officer
Re: General Spring Update
Dear Board of Directors,
We hope everyone is having a great spring. We’d like to share several updates on Association business and activities from this spring and upcoming events:
Membership: Membership numbers have continued to increase and have surpassed 15,000. As of April 30, 2018, we have 15,013 members.
Audited Net Assets: The preliminary 2017 Audit report has been completed by the audit firm of Aldridge Borden and presented to the Audit Task Force. Staff from Aldridge Borden’s has been at the Association’s office throughout the spring. The audit takes into account the organization’s total financial picture and net assets. In 2017, we had an increase in net assets of approximately $438,375 bringing our total net assets to $6,615,312. In light of the significant expenses associated with the building maintenance and roof repairs, this is a very positive number. The 2017 Audit will be presented to the Board of Directors at the annual directors meeting in October.
General Fund: At the end of 2017, the general fund had a surplus of $643,776.
General Fund Reserves: General fund reserves currently stand at $1,289,196 after the audited general fund surplus from 2016 was applied. This represents 6.4 months of operating expenses.
Assets and Investments: Approximately $2,412,545 in Association assets are being managed by the Association’s investment advisor, UBS. Assets are allocated in a 100% CD portfolio with an estimated annual rate of return of 1.33% to 1.41%. All of the funds are FDIC insured, and there are no management fees for a CD-only portfolio.
Building & Assets:
Waterproofing: Summit Waterproofing has completed the exterior of the building waterproofing project. Summit They have completely removed and replaced the caulk at the doors, windows, and stone joints and sealed the building with a waterproofing agent. This new coat of paint on the building has given it a fresh and clean appearance. The waterproofing process will need to be planned for and repeated every ten years.
Roof Leak: Much of the repair work to stop many of the roof leaks has been completed. However, there is a recurring water leak near the east stairwell door that has not been successfully identified or repaired. Unfortunately, our building’s flat roof has many seams, joints, and unique surfaces (including a garden), so it has been trial and error in identifying and repairing this last water leak. Hixson Consulting, who is managing this project on behalf of the Association, has continued its work with Summit Waterproofing, the original building general contractor, Jesco Inc., the original building architects Goodwyn Mills and Cawood and others to continue to identify and address these last intrusion areas.
Interior Finishes: Once the roof repairs are complete, interior sheetrock, paint, and ceiling tiles will need to be repaired and/or replaced. The Association has begun receiving bids for the interior work so that this project can begin immediately once the last water intrusion points have been identified and repaired.
Costs: Final costs for all repairs and deferred maintenance, mitigation, and repair work is expected to range from $400,000 to $500,000. Current expenses are approximately $300,000.
Building Mortgage Update:
Current Balance: $4,067,905
TERM: 9 years with a 20-year amortization
Interest: Fixed rate of 3.75%
Payment: $18,920 principal plus interest. April payment was $31,632.70
Maturity: Balloon payment of $2,289,379 on March 11, 2026.
Public Policy: The 2018 Legislative session concluded on March 28. Our Public Policy Committee tracked a number of bills this year, monitoring all developments for any legislative initiatives that would harm our members or their businesses. As an industry, this is one of the most important roles we play. We also advanced several proposals to further the interests of our members.
- Alabama First-Time Home Buyers Savings Accounts (FHSA). Act 2018-467 is legislation that establishes First-Time Home Buyers Savings Accounts to help first time homebuyers save money toward the purchase of their first home. The FHSA program creates tax-free savings accounts that a first-time buyer can use toward the down payment and closing costs of a residence. These savings accounts will allow more people to experience the American dream of home ownership. NAR’s article on the passage of the program in Alabama can be found here. More information and resources on the program will come out later this year.
- Alabama Assistance and Service Animal Integrity in Housing Act. Act 2018-235 helps combat the misrepresentation and undocumented presentation of pets as service and/or assistance animals. The aim of this REALTOR® bill is to deter fraudulent activity, while protecting those with a medically documented need of a service or assistance animal, and provide clear guidance for real estate professionals working with consumers in this important area of real estate. More information about the passage of this bill can be found here and here.
- Right of Redemption Clarification. Act 2018-126 provides a technical amendment to the statutory redemption law to clarify certain timelines during and following the foreclosure process. The aim of the proposal is to make clear certain notice requirements required by law and does not change any existing timelines in the current law. More information on the passage of the bill can be found here.
2018 Elections and ARPAC Endorsements:
- State Elections and ARPAC Endorsements: Primary elections for all state constitutional offices, statewide offices, and all legislative offices will be held on Tuesday June 5. The ARPAC Trustees met in early April to review and consider candidates. Throughout the month of April, state and local leadership held meet and greets with endorsed state legislative candidates. The list of ARPAC endorsed state candidates can be found here.
- Congressional Elections and NAR Supported Candidates: NAR has released its list of NAR RPAC supported candidates for Alabama Congressional races. All Congressional incumbents have been supported by NAR. (U.S. Rep. Bradley Byrne, 1st Congressional District; U.S. Rep. Martha Roby, 2nd Congressional District; U.S. Rep. Mike Rogers, 3rd Congressional District; U.S. Rep. Robert Aderholt, 4th Congressional District; U.S. Rep. Mo Brooks, 5th Congressional District; U.S. Rep. Gary Palmer, 6th Congressional District; and U.S. Rep. Terri Sewell, 7th Congressional District.) The release can be found here. (Note: NAR requires the release to be behind the member firewall on the AAR webpage.)
Professionalism and Code of Ethics:
- Fair Housing for All. The Fair Housing for All class was offered throughout the spring at 7 locations and reached almost 300 members across the state.
- GRI Program. Over 30 Graduate, REALTOR® Institute courses are being offered this year with more still being added. Check out the scheduled dates here.
- All Course Offerings. For a full list of other courses being offered, including REBAC courses, click here. (SRS, SRES, and MRP are scheduled in the Fall)
- NAR Code of Ethics-Deadline December 31, 2018:
- REALTORS® are required to complete ethics training for the two-year cycle by December 31, 2018. Between January 1, 2017 and December 31, 2018, every REALTOR® is required to complete 2 ½ hours of Code of Ethics training. REALTORS® who have completed this training as a requirement of membership in another association are not required to complete additional ethics training until the next two-year cycle.
- NAR offers two options for Code of Ethics courses online. Both meet the NAR Code of Ethics requirement, however, the paid version is eligible for three hours Alabama CE, but the free course is not approved for CE.
- To sign up for the free or paid Code of Ethics training, more information is here.
- Fundraising: ARPAC fundraising and investments are off to another great start this year. As of April 30, 2017, total state fundraising stands at $476,446 or 79% of our annual goal.
- PAC Legal Compliance: As reported in great detail at the February 5, 2018 Board meeting, the PAC has worked with the Secretary of State’s Office to correct historical discrepancies in our PAC filings going back many years. The PAC amended approximately 105 Secretary of State reports and corrected all known past issues. It is not yet known whether there will be a financial fine or penalty as a result of the past discrepancies. However, the Association has done everything it can to work with the reporting and enforcement agencies to identify and correct these past issues.
NAR’s Tech Edge Event at Capitol Hill: Alabama was fortunate to host one of NAR’s TechEdge events in March of this year. The sold-out event featured short sessions on new trends in technology and their practical application for real estate professionals. The event brought in REALTORS® from Florida, Georgia, Louisiana, Mississippi and Pennsylvania. More information and photos can be found here.
Leadership AAR 2018. Leadership AAR has returned in 2018 with a newly re-designed curriculum aligning our Association’s mission with each session’s focus.
- This year’s leadership class is an amazing and talented group of REALTORS® from across the state. More information about the class can be found here.
- The first session of the Leadership class was held in April and focused on advocacy. It included meetings with state and federal representatives in Montgomery and Washington, D.C. More information about Session 1 can be found here.
Legal Helpdesk: Utilization of the Legal Helpdesk has increased each month since its launch. Most weeks, new articles and information are published in Real Estate Alabama. Plus, you can view previously published articles on our website here.
NAR Core Standards, Fourth Compliance Cycle: Every local board making up the Alabama REALTORS®, plus the state Association, were certified as having met NAR’s Third Cycle of Core Standards as of December 31, 2017.
- The Core Standards Fourth Compliance Cycle has begun and boards are now able to use the NAR compliance database to track their events, activities, and progress. More information on the fourth compliance cycle can be found here.
- The NAR Core Standards Compliance Tool can be found here. (NAR Log in required to view the Core Standards compliance tool)
- The Alabama deadline to submit Core Standards for certification for review is Nov. 1.
Local Board Mergers, Name Changes, Territorial Applications and MLS of Choice:
- At the end of 2017, two local Alabama boards made the decision to merge with other boards – the Bessemer board merged with the Birmingham Area Association and the Selma board merged with the Montgomery Area Association. The Alabama Association of REALTORS® now has 26 local boards/associations.
- With passage of the MLS of Choice policy by the NAR Board of Directors in November 2017, developments have moved rapidly at the local board level in Alabama. Several boards have proposed name changes. Some boards have or are in the process of challenging the proposals.
- The MLS of Choice policy is also leading to new discussions on the future of board Multiple Listing Services within and between boards.
- There is a lot going on and a great deal of uncertainty with respect to these and related issues.
NAR Mid Year Legislative Meetings: Approximately 100 Alabama REALTORS® attended NAR’s Mid Year meetings in Washington, DC. An overview and photo log of Alabama related events can be found here. With respect to the NAR Board of Directors meeting on Saturday May 19, several significant proposals were passed. An overview from NAR can be found here.
- SMART Budgets: NAR Directors passed a $30 dues increase to begin in 2019. Background can be found here. In short, NAR presented several reasons to justify the dues increase. One was significantly depleted reserve funds that funded operational programs and services for several years. NAR leadership cut some of those programs and shifted some of the remaining programs into the operational budget and away from the reserve funds (RESERVE FUNDS). The second was deferred maintenance of the NAR buildings in Chicago and Washington of approximately $45million (DEFFERED BUILDING MAINTENANCE & EXPENSES). The next was increased operating costs to maintain current services and programs (GENERAL INCREASE IN OPERATING COSTS). And the last was expanding advocacy and consumer outreach initiatives for NAR, State, and Local boards (INCREASED ADVOCACY and REALTOR® Party Initiatives).
- Changes to Code of Ethics Enforcement to enhance professionalism:
- Under changes to Sections 23(j) and (n) of the NAR Code of Ethics and Arbitration Manual, local associations that choose to adopt the policy can publicize the names of members and the nature of their violations after a second violation of the Code of Ethics. They can also release a photograph of the member as part of that public disclosure.
- In another big change, to Standard of Practice 1-7, a listing broker or agent is required to respond in writing that an offer was submitted to the seller if the cooperating broker who submitted the offer so requests. The listing broker or agent must respond in the affirmative unless the seller has provided written notification waiving the obligation to have the offer presented.
- Another change, to Section 13(d) of the Code of Ethics and Arbitration Manual, clarifies the rights and role of REALTOR® principals in an ethics hearing.
- Alabama’s Peyton Norville, announced as 94th recipient of NAR’s Distinguished Service Award (DSA): No one is more deserving than our friend, Peyton Norville, of one of NAR’s highest honors. More information on Peyton’s achievement can be found here.
Alabama Disaster Relief Training:
- Alabama REALTORS® has partnered with the Alabama Emergency Management Agency to offer Community Emergency Response Team Training (CERT) on June 13-14. The event has sold out and there is a waiting list. The Association may offer this program again in the fall due to overwhelming interest. More information about the program can be found here. If you would like to participate in future offerings, please email Jennifer here.
- Association leadership has made an ongoing effort and commitment to highlight and promote the important work of the Alabama Disaster Relief Fund, which is the Association’s 501(c) (3) charitable organization. REALTORS® play a vital role in helping build communities. In times of natural disasters, REALTORS® can play an important role in helping those communities rebuild and recover. More information about the Disaster Relief Fund can be found here.
2018: What’s ahead?
Alabama Primary Elections: Tuesday, June 5.
Alabama Primary Run Off Elections: Tuesday, July 17.
NAR Leadership Summit: August 6-7 in Chicago, IL.
AAR Public Policy Forum: August 21-22 in Montgomery, AL.
AAR Annual Meeting: October 14-15 in Montgomery, AL.
Alabama NAR Core Standards Deadline: November 1, 2018.
NAR Annual Convention: November 2-5 in Boston, MA.
Alabama General Election: Tuesday, November 6.
NAR Code of Ethics Deadline: December 31, 2018
Please reach out if you have any questions!