Fiscal Note - 5050 SB Real Estate Firms & Brokers (Department of Licensing, 2021-01-21)
Summary
An Individual State Agency Fiscal Note for Bill Number 5050 SB, Real estate firms & brokers, for agency 240-Department of Licensing. Part I shows estimated cash receipts to the Real Estate Commission Account-State of $55,000 in FY 2022 and $664,000 in FY 2023, estimated operating expenditures of $737,000 in FY 2022 and $522,000 in FY 2023, and an estimated capital budget impact of NONE. The narrative states that the Real Estate licensing program is 100% license fee supported and that a fee increase will be required. It states that the agency estimates investigating approximately 340 additional commission dispute complaints annually.
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“Fiscal Note - 5050 SB Real Estate Firms & Brokers (Department of Licensing, 2021-01-21).”
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Individual State Agency Fiscal Note
Bill Number: 5050 SB Title: Real estate firms & brokers Agency: 240-Department of
Licensing
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
ACCOUNT FY 2022 FY 2023 2021-23 2023-25 2025-27
Real Estate Commission Account-State 55,000 664,000 719,000 1,328,000 1,328,000
026-1
Total $ 55,000 664,000 719,000 1,328,000 1,328,000
Estimated Operating Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 6.3 4.9 5.6 4.9 4.9
Account
Real Estate Commission Account-State 737,000 522,000 1,259,000 1,047,000 1,050,000
026-1
Total $ 737,000 522,000 1,259,000 1,047,000 1,050,000
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/08/2021
Agency Preparation: Xia Zhan Phone: 360 902-0113 Date: 01/15/2021
Agency Approval: Kristin Bettridge Phone: 360-902-3644 Date: 01/15/2021
OFM Review: Kyle Siefering Phone: (360) 995-3825 Date: 01/18/2021
Form FN (Rev 1/00) 162,296.00 Request # 5050 SB-2
FNS063 Individual State Agency Fiscal Note 1 Bill # 5050 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
This bill requires:
• Real Estate firms and managing/designated brokers to pay the portion of commissions due to their brokers
pursuant to their agreements and within a reasonable time period after receiving the commissions.
• DOL to investigate complaints made regarding commission payment.
• DOL may take action if they find a violation occurred.
Sec. 1 – Amends RCW 18.85.361:
(26) Adds a new subsection states the director of DOL may take disciplinary action against real estate brokers or
firms who violate RCW 18.85.275(7) after DOL investigates a complaint or as evidenced by a final
judgment/court order as provided in RCW 18.85.275(7).
Section 2 – Adds a new section:
(7)(a) – Real estate firms and managing/designated brokers must pay their brokers the portion of commissions
due pursuant to their agreements within a reasonable time period after receipt of the commissions.
(7)(b) – An individual aggrieved by a violation of the statute above may:
(i) file a complaint with DOL for the violation; or
(ii) bring a civil action in superior court to recover the portion of the commissions, to enjoin future violations, or
for an order requiring DOL to suspend/revoke the license of the guilty individual. DOL must follow any court
order requiring DOL to suspend/revoke the license of a licensee for violations.
(7)(c) – Upon complaint, DOL must investigate to determine if there has been a violation of subsection (a), and if
they find a violation has occurred, the director may take action pursuant to RCW 18.85.361.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
The Real Estate licensing program is 100% license fee supported. A fee increase, equal to the costs contained in
the expenditure section of this fiscal note, will be required to implement this legislation. For efficiency purposes,
the department will add this increase to a planned fee rulemaking process in the spring of 2022, and assumes an
effective date of June 2022. The current planned fee increase aligns fee revenue with the cost of licensing and
regulating this profession.
The Real Estate account will likely go into a temporary deficit in FY22, as the expenditures required to
implement this legislation will begin earlier in the fiscal year. Over the course of six fiscal years (from FY22
through FY27), both expenditures and additional revenue collected will balance.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the
method by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time
and ongoing functions.
In this bill, we estimate investigating approximately 340 additional commission dispute complaints annually. In
order to implement this bill, the following resources are needed:
Real estate firms & brokers 240-Department of Licensing
Form FN (Rev 1/00) 162,296.00 Request # 5050 SB-2
FNS063 Individual State Agency Fiscal Note 2 Bill # 5050 SB
Additional Staffing in the Business & Professions Division (BPD):
• In FY22: 1.0 project Management Analyst 3 (MA3) FTE: The MA3 is to provide initial startup support,
including fee increase rulemaking, development of business processes and implementation, and organization of
stakeholder communication to support Section 2. This organizational change management resource will provide
communication and outreach to 53,935 licensed real estate brokers, managing brokers, firms, and branches.
• In FY22 and on-going:
2.0 Investigator 2 FTEs to conduct investigation of assigned cases on assertions of commission dispute under
DOL’s jurisdiction. We assumed: 230 cases will be investigated annually, assuming it takes an Investigator 2 an
average of 18-26 investigative hours per case. Two Investigator 2s will be needed.
1.0 Investigator 3 FTE to conduct complex investigation of assigned cases (i.e. multiple complainants,
complex transaction and commission agreements, partnership with audit staff to reconcile commission claims).
We assumed: 110 complex cases will be investigated annually, assuming it takes an Investigator 3 an average of
18-26 investigative hours per case. One Investigator 3 will be needed.
1.0 Professional Licensing Manager 1 FTE to initiate, monitor, and process administrative and disciplinary
actions of commissions violations. The position will support management review efforts, process technical
assistance and disciplinary correspondence to complainants and respondents, draft statement of charges and
agreed orders, monitor timelines and sanctions, and work with investigative and legal team to close cases as
appropriate. It is assumed that 90% of the cases will be passed on for further administrative or disciplinary
action, total 310 cases will be managed by this FTE (345x90%=310) and five hours per case on an average.
Legal Services workload impact:
DOL estimates approximately 60 hours of Attorney General legal services support are needed annually when
investigating commission dispute complaints and determining violations. The total cost is about $10K per year.
Information Services:
DOL’s online business and professions licensing database (POLARIS) would need minor modifications to
support commission dispute violations. Objects within the Audit and Complaint records would need to be
modified to include violation types and findings.
Additionally, the five FTEs listed above would need POLARIS licenses.
The agency will use appropriated funds to hire contract programmers to accomplish this work or to support
current staff implementing this legislation within the required timeline. Appropriated funds may also be used to
hire agency temporary staff to support permanent staff assigned to this legislative effort.
Any change requires a process to ensure changes are correctly applied to the system. This involves Project
Managers that manage the team that completes the update, business analyst that documents and reviews the
system changes, architect services that analyzes how the update could have an effect on other systems or DOL
processes, developers who create the change, and testers and quality assurance teams that ensure the update is
working correctly.
Support Services:
Real estate firms & brokers 240-Department of Licensing
Form FN (Rev 1/00) 162,296.00 Request # 5050 SB-2
FNS063 Individual State Agency Fiscal Note 3 Bill # 5050 SB
Agency Administrative Overhead is included at a rate of 26 percent of the direct program costs. This funding
received covers agency-wide functions such as vendor payments, contract administration, financial management,
mail processing, equipment management, help desk support, and technical assistance to DOL employees.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2022 FY 2023 2021-23 2023-25 2025-27
026-1 Real Estate State 737,000 522,000 1,259,000 1,047,000 1,050,000
Commission Account
Total $ 737,000 522,000 1,259,000 1,047,000 1,050,000
III. B - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 6.3 4.9 5.6 4.9 4.9
A-Salaries and Wages 396,000 303,000 699,000 606,000 606,000
B-Employee Benefits 157,000 121,000 278,000 242,000 243,000
C-Professional Service Contracts
E-Goods and Other Services 137,000 93,000 230,000 189,000 191,000
G-Travel 5,000 5,000 10,000 10,000 10,000
J-Capital Outlays 42,000 42,000
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 737,000 522,000 1,259,000 1,047,000 1,050,000
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
Indirect ADM Fiscal Analyst 2 54,108 0.9 0.6 0.8 0.6 0.6
Indirect ISD IT Cust. Support - 83,892 0.4 0.3 0.4 0.3 0.3
Journey
Investigator 2 61,224 2.0 2.0 2.0 2.0 2.0
Investigator 3 74,604 1.0 1.0 1.0 1.0 1.0
Management Analyst 3 69,264 1.0 0.5
Professional Licensing Manager 1 51,432 1.0 1.0 1.0 1.0 1.0
Total FTEs 6.3 4.9 5.6 4.9 4.9
III. D - Expenditures By Program (optional)
Program FY 2022 FY 2023 2021-23 2023-25 2025-27
Mgmt & Support Services (100) 110,000 80,000 190,000 160,000 159,000
Information Services (200) 87,000 51,000 138,000 105,000 109,000
Business and Professions (700) 540,000 391,000 931,000 782,000 782,000
Total $ 737,000 522,000 1,259,000 1,047,000 1,050,000
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
Real estate firms & brokers 240-Department of Licensing
Form FN (Rev 1/00) 162,296.00 Request # 5050 SB-2
FNS063 Individual State Agency Fiscal Note 4 Bill # 5050 SB
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part IVB
NONE
None.
Part V: New Rule Making Required
Identify provisions of the measure that require the agency to adopt new administrative rules or repeal/revise existing rules.
Rulemaking will be required in order to increase fees to fund one time and on-going expenditures associated with the new
investigative workload required within Section 2.
Real estate firms & brokers 240-Department of Licensing
Form FN (Rev 1/00) 162,296.00 Request # 5050 SB-2
FNS063 Individual State Agency Fiscal Note 5 Bill # 5050 SB
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