C.A.R. 2013-2015 Strategic Planning

Presented by Joel Singer

September 2012

CAR’s Strategic Planning Approach

Zero-basedObjective-FocusedActual Resource Allocation

CALMLS

RERS100%

REBT, Inc.100%

CREIEC

REBS

C.A.R.

CREPAC IMPACCREPACFederal

ScholarshipFoundation

HousingAffordability

Fund

EducationFoundation

zipLogix64.4%

REBOS50%

NHDXX REBT, LLCSARECX X REMT100%X X

Organizational Chart

Merged with REBS in 2011

X

CREIEC

REBS

C.A.R.

CREPAC IMPACCREPACFederal

ScholarshipFoundation

HousingAffordability

Fund

EducationFoundation

REBT, Inc100%

zipLogix, LLC64.4%

California Holding Co. Inc

Current Organizational Chart

2012 Projections and Long- Range History

Membership 158,000

Dues Revenue $ 17.5 million

Non Dues Revenue* $ 8.4 million

Net Deficit $ (1.6) million

2012 Revised Projection

* Investment income included.* No REBS transfer

1996 2006 2010 2011 2012P 2013B

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000RERS,LLC 100% zipLogix REBT, Inc REBS C.A.R.

37

$ Millions

14

4941

36

C.A.R. & SubsidiariesCombined Revenue

36

REBS.Revenue $3.8million

Net Surplus $243,700

REBT, Inc.Revenue $354,200

Net Surplus $307,200Before Transfer

zipLogix (64.4%)Revenue $6.3 million

Net Surplus $1.5 million

2012 Projection for Profit Entities

Combined Revenue

0

2

4

6

8

10

12

1996 2000 2010 2011 2012 P

REBS REBT, Inc zipLogix 64.4% RERS (100%)

REBS & Subsidiaries$ Millions

5.5

10.9 11.110.5

10.1

REBS & Subsidiaries Combined Net Income

-2

-1

-1

0

1

1

2

2

3

RERS (100%)

zipLogix 64.4%

REBT

REBS

20001996

$ Thousands

2010 2012 P2011

1,5231,541

(351)

1,587

489

1,045

(1,081)

360(177)

244

54

0

1

2

3

4

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P

2013B

.7

1.0 1.1

1.51.7

1.9 2.0

1.4

2.0

1.0 1.0

1.8

1.5

3.5

REBS Transfer to C.A.R.($ Million)

2.0

0.0

3.5

1.5

Total Dividend Transfer to CAR 1996 to 2011- $27.6 Million. No REBS transfer in 2012

REBS, Inc. 1.8$ REBT, Inc. 0.7$ zipLogix (64.4%) 3.9$ Total 6.4$

Million

REBS Inc. and SubsidiariesProjected Cash Balance – December 31, 2012

Initial investment $398,000Total dividend $ 8.5 million excluding tax distribution since inceptionTotal dividend and tax distributed to REBS $14.6 million since inceptionCurrent equity 10 million

(C.A.R. Portion $6.5 million)

zipLogix

2013 Budget Analysis

RevenueExpendituresMembership

Description 2013 Budget 2013 Budget 2012 Projection

Core ProgramIncludes New

Programs (Note)*

Operating Revenue 3,666,600$ 3,753,500$ 3,552,900$

Administrative Fee 2,337,800 2,428,000 2,506,800

Total Revenue 6,004,400 6,181,500 6,059,700

Operating Expenses Before 23,862,100 26,283,700 24,767,600

REALTOR® Advertising 2,007,500 2,007,500 2,026,700

Depreciation & Amortization 652,000 652,000 729,300

Total Operating Expense 26,521,600 28,943,200 27,523,600

Dues 16,731,000 16,731,000 17,500,000 New Member/Late Fee 741,000 741,000 756,500 REBS Transfer 1,500,000 1,500,000 - Investment Income 1,700,000 1,700,000 1,600,000 Net 154,800$ (2,089,700)$ (1,607,400)$

2013 Budget vs. 2012 Projection

*Note: 2012 projection includes the proposed augmentations and no REBS transfer

2013 Core Program Budget Expenditures vs. 2012 Projected Expenditures by percentage

Legal22%

Communication21%Governance

14%

Member Info13%

zipForm®12%

GovernmentalAffairs

10%

Operations5% Digital Ink

2% ZipVault1%

2012 Projected Expenditures

2013 Core Program Budget Expenditures

zipVault1%

Digital Ink2%

Member Information11% zipForm®

13%

Governance14%

Communication19%

Legal23%

GovernmentalAffairsl

11%

Operations6%

Program Description RANK 2013

2013 Budget RANK 2012

2012 Projection

Member Legal Services 1 3,026,700$ 1 2,952,700$

zipForm® 2 2,681,400 2 2,696,100

Realtor® Advertising 3 2,007,500 3 2,026,700

Governmental Relations 4 1,766,500 4 1,823,700

Corporate Legal Services 5 1,341,200 6 1,259,000

Board of Directors 6 1,277,000 5 1,283,500

Research and Economics 7 906,200 7 954,100

Communications 8 725,700 8 653,300

Membership Development 9 643,200 10 588,000

CRE Magazine 10 617,600 9 648,600

10 Largest Core Program Expenditures in 2013 & 2012

Number of Budgeted Staff Positions

121

122.5

128.5

127.5

120

114

116

118

120

122

124

126

128

130

2009 2010 2011 2012 P 2013 B

Number of Staff

In 2012 added four Field Representatives, one Membership and one Sales Rep. In 2013 eliminated one Field Representative, one Political Analyst and one Contact Center; two new staff added for new programs

Member-to-Staff Ratio

1,100

1,230 1,216

1,663

1,406

1,314

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2005 2010 2011 2012 P 2013 B

Dues Per Member & Total Dues Collected

-

2

4

6

8

10

12

14

16

18

20

22

24

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P

2013B

Total Dues Collected

Dues/Member

California Association of REALTORS ®

115

90

115 115 115 115 115 115 115115

$ Millions

115115115

$70$64

$89

$115 $115 $115 $115 $115

$70

$55

$68$77

$69 $67 $65 $64

0

20

40

60

80

100

120

140

1990 1995 2000 2005 2010 2011 2012 P 2013 B

Current Dollars Inflation-Adjusted Dollars

Dues Per Member(Current Dollars vs. Inflation-Adjusted Dollars)

(Base Year = 1990)1995 IAF + $102000 PAF + $102011 RAA + $49

In 2013 the member benefit provided per member is $187 vs $115 actual dues

Membership Dues Reduction in 1995

The Membership Dues was reduced in 1995 from $77 to $64Same year the Issue Action Fund (IAF) $10 was implemented

Political Assessment included in Membership Dues

In 1995 Issues Action Fund (IAF) $10In 2000 Political Action Fund ( PAF) $10In 2011 Realtor Action Assessment (RAA) $49

3736

40

46

24

1418

3657%

45%

44%

46%48%

46%

34%

42%

5

10

15

20

25

30

35

40

45

50

55

1990 1995 2000 2005 2010 2011 2012 P 2013 B

20%

30%

40%

50%

60%

70%

80%Total Revenue ($ millions)

Dues as % of Total Revenues

Revenue Percentage

Dues Revenue as Share of C.A.R. & Subsidiaries Total Revenue

Member Benefit Dollars Provided

In 2013 the member benefit provided per member is $187 vs. $115 actual membership dues

New Member Services Added Last 10 years

Forms Advisor/TutorZipForms ® Digital InkZipVaultePUBSC.A.R. Online Redesign Consumer Advertising CampaignCustomer Contact Center

Field ProgramHousing AffordabilityLegal Hotline ExpansionStrategic DefenseCommunication Video ContentStatewide OmbudsmanYoung Professionals Network Local Candidate and Campaign

FieldC.A.R. Electoral Services

REALTOR® Advertising

Media:• Radio• Television• Online • Video• Social Media

Core Program Cost $2,007,500

90,500

155,000158,000

211,254

146,025

102,655

148,346

58,749

-

40,000

80,000

120,000

160,000

200,000

240,000

1971 1980 1983 1990 1997 2006 2012 P 2013ForecastCycle 1: 1980 148,346 (peak) to 1983 102,655 (trough). -30.8%

Cycle 2: 1990 146,025 (peak) to 1997 90,500 (trough). -38.0%Cycle 3: 2006 211,254 (peak) to

9 Ye

ars

3 years

7 years7 years

9 ye

ars

6 years

Membership Comparison

Liquid Reserves

5.21

40.3 40.5 38.937.1

5.57

4.4 4.7

20.120.2

17.8 15.6

0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2011 2012 P 2013 B

Reserves ($ Millions) Months of Reserves

Net from Core Operation $ (20,517,200)

Dues (155,000 members at $115 per member) 16,731,000

New Member Fee (18,700 members) $30 561,000

Late Renewal Fee (6,000 members) $30 180,000

Investment Income 1,700,000

Net from Operation before REBS transfer (1,345,200)

REBS Transfer 1,500,000$ Net Proposed Budget 154,800$

2013 Proposed Core Budget Summary

Revenue ($)

Cost ($) Net ($)

Total Augmentation-One-time 64,500 518,700 (454,200)

Total Augmentation-Ongoing 112,700 1,903,100 (1,790,400)

Total Proposed Augmentation 177,200 2,421,800 (2,244,600)

2013 New Programs SummaryApproved by SPF Committee

Revenue ($)

Cost ($) Net ($)

Total Augmentation-One-time 1,000,000 (1,000,000)

Total Augmentation-Ongoing 50,000 98,800 (48,800)

Total Proposed Augmentation 50,000 1,098,800 (1,048,800)

2013 New Programs SummaryNot Approved by SPF Committee

2013 New Programs (One-time Impact)

Homeownership Matters/IDA ProgramReal Estate Research SymposiumTrends Database UpgradeREALTOR® S.W.A.T. Market Opportunity ConferencesStrategies for Thought Leadership ConferenceEnhanced Local Association Services

2013 New Programs (Ongoing Impact)

MLS-ConnectCE CreditThought Leadership InitiativeEnhanced Survey Research InitiativeLender Ombudsman Financing Resource for REALTORS®Industry & Broker Relations ProgramProperty Management & Investment SectionStatewide Ombudsman ProgramLocal Association Mobile AppChampion of Home HeroesREALTOR® Rating 360 (Peer-to-Peer) Pilot ProgramMicrotargeting StrategiesLocal AOR Incentive Program

REALTOR® Action Fund: Fundraising Program $524,500CREPAC Local Candidate Field Program $375,300REALTOR ® Receptions $197,100C.A.R. Electoral Services $39,500Federal Governmental Relations $25,100 for Officers travel to lobbying tripCommunications $20,000 for design of membership value campaign

materials

Total Funded by RAA - $1,181,500

Programs Funded by REALTOR® Action Assessment (RAA)

Worst Case Dues Adequacy Scenario$ (Thousand)

2012 2013 2014 2015 2016

Membership 158,000 155,000 140,000 142,000 144,000Operation Revenue $6,060 $6,004 $6,004 $6,004 $6,004Total operation cost (Note A) 27,524 26,522 27,185 27,865 28,561

Net before dues & intercompany (21,464) (20,518) (21,181) (21,861) (22,557)

Dues and Member Fees 18,257 17,472 15,443 16,210 16,280Inter-company transfer (Note B) 0 1,500 1,500 1,300 1,100Investment Income 1,600 1,700 1,600 1,550 1,500

Net-surplus(deficit) (1,607) 154 (2,638) (2,801) (3,677)

Reserve before augmentation $39,000 $39,154 $34,272 $29,636 $24,078

Augmentation-One-time (454) Augmentation-Ongoing (1,790) (1,835) (1,881) (1,928) Reserve after augmentation $39,000 36,910 32,437 27,755 22,150

Note A: Inflation 2.5% Note B: No intercompany transfer in 2012

Worst-Case ScenarioReserves

2012 2013 2014 2015 2016$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Reserves after Ongoing Augmt Current Reserves Trajectory

$ In Thousands

CREPAC

IMPAC CREIEC

CREPAC Federal

Political Action Committees

Membership Dues$184

$115 (62.5%)

Support Programs

$69 (37.5%)

Support Political Activities

Membership Dues and Assessments

Percentage of MembersMaking RAF Contributions

28.3%

33.0%36.0%

33.0%

29.0%26.4%

21.8%20.0%20.0%

12.0%11.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

C.A.R. Membership Dues

Housing Affordability Fund(HAF)

$10 and up

VoluntaryContribution

Voluntary Contribution

Membership Dues Assessments & Voluntary Contributions

REALTOR® Action Fund(RAF)

$1 to $5,000

C.A.R. MemberDues $184

IAF$10

RAA$49

C.A.R. Dues$115

PAF$10

Political Activities FundPolitical Activities

Fund(PAF)$10

IMPAC-LocalMatching

10% of RAF

IMPAC- StateMatching

5% of RAF

RemainingBalance

Political ActivitiesFund support

Issues Action Fund(IAF)$10

Issues Action Fund

IMPAC/CREPAC/LCRCProgram Cost

Remaining Balance

Allocate 30% toLocal IMPAC

Allocate 70% toState IMPAC

REALTOR® Action Assessment

REALTOR® ActionAssessment

(RAA)$49

Program funded byRAA

CREPAC45%

LCRC30%

CREIEC25%

REALTOR® Action Fund(RAF)

$1 to $5,000

Personal Contribution

REALTOR® Action Fund

LCRC30%

$1 to $200

PersonalCREPAC Federal

70%$1 to $200

RAF $1 to $200

RAF Personal$201 to $5,000

to CREPAC/FED

REALTOR® Action Fund(RAF)

$1 to $5,000

Corporate Contribution

REALTOR® Action Fund

LCRC30%

$1 to $200

CorporateCREIEC

70%$1 to $200

RAF $1 to $200

RAF Corporate$201 to $5,000

to CREIEC

RAA ($49)$7,358,000

CREPAC State$2,687,979

CREIEC$1,493,322

RAF Receptions $175,000

Fed Gov’t Relations (Officer’s

Lobbying Trip) $25,100

Campaign School

$50,000

RAF Fundraising/RPC

$663,500

Program Costs$1,384,713

2012 REALTOR® ACTION Assessment Allocation

LCRC$985,592

IMPAC Local$806,394

PAF Field Program

$4,313

47

70% of RAA after program costs 30% of RAA after program costs

C.A.R. Electoral Services$39,700

Member Mob Phone App

$35,000

CommunicationsMembership

Value Campaign materials$20,000

CREPAC Local Candidate Field

Program$372,100

Based on 2012 Budget

RAA ($49)$7,202,400

CREPAC State$2,709,405

CREIEC$1,505,225

Fed Gov’t Relations (Officer’s Lobbying Trip)

$25,100

Program Costs$1,181,500

2013 REALTOR® ACTION Assessment Allocation

LCRC$812,822

IMPAC Local$993,449

48

*70% of RAA after program costs *30% of RAA after program costs

Based on 2013 Proposed Budget

CREPAC Local Candidate Field Program

$375,300

C.A.R. Electoral Services$39,500

CommunicationsMembership Value Campaign materials

$20,000

RAF Receptions $197,100

RAF Fundraising/RPC$524,500

Political Fundraising

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012August

RAA

IAF

PAF

RAF

3.84.6

5.8

$ Millions

6.6

California Association of REALTORS ®

7.4 7.4

5.85.1 5.0

11.812.2

FUNDS 2013 B 2012 P 2011 Actual 2010 Actual

RAF 1,500,000 1,550,000 1,561,700 2,782,700

RAA 7,202,400 7,358,000 7,581,200 -

IAF 1,469,900 1,481,300 1,548,000 1,621,200

PAF 1,469,900 1,481,300 1,548,000 1,621,200

TOTAL 11,642,200 11,870,600 12,238,900 6,025,100

Political ContributionRevenues

Political Action Committee- Fund Balance As of August 31, 2012

CREPAC 7.0$

IMPAC 8.8$

CREPAC/Federal 0.6$

CREIEC 2.3$

Total 18.7$

California Association of REALTORS ®

Million

FOUNDATIONS

ScholarshipEndowment$1.2 million

EducationEndowment

$96,929

Housing Affordability Funds Funds Available $2.9 million

FoundationsAs of July 31, 2012

$4.2 million

2.0

2.8

2.4

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3.0

C.A.R. Contribution Direct Contribution Contribution through Dues

$ Millions

Housing Affordability FundSince Inception, as of July 31, 2012

-

0.3

0.6

0.9

1.2

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 JulyYTD

NAR ContributionC.A.R. ContributionContribution DirectContribution-Dues

$ Millions

158

500

500

500500

500

420

240208

317286

300

415 189

189209

265305

280

216

178

Housing Affordability Fund

162

194

116

155

Questions?