California and Washington State. The CCIM's first roots began in 1954, with the establishment of the Certified Property Exchanger designation, awarded by the California Real Estate
Association, which is now the California Realtors Association, was itself part of the National Association of Real Estate Boards renamed the National Association of Realtors.
The CPE arose through the growth of a two-year certificate program called Investment Property Exchange and Taxation, established in 1952 at the University of California at Los Angeles and sponsored by the California Fund for Real Estate Education.
The first faculty member was James McMichael, a commercial real estate broker and former IRS agent. McMichael's course did not teach the Internal Revenue Code itself; rather it was designed to teach real estate tax law and exchanging in a way that helped people see application opportunities in real estate exchanges and investments that would maximize tax savings and return on investment.
McMichael simplified the exchange process for his students, focusing on three main areas:
- what properties qualified for exchanges;
- the tax implications of the exchange on the third area; and
- how the exchange-investor benefited.
McMichael also taught his students how to project before-tax and after-tax cash flows.
Within two years, the certificate program captured the interest of an increasing number of California real estate practitioners. Among these were Jay Levine of Hollywood, Calif., Frank Curry of San Diego, and Fred Becker of Burbank, Calif. Their interest, knowledge of the field, and grasp of the material was such that McMichael, unable to teach class one evening, enlisted Levine to substitute.
The next semester, Levine was admitted to the faculty when another class section was added to accommodate increased interest. Fred Becker began substituting occasionally for both McMichael and Levine. Frank Curry started an extension class in the San Diego area.
Later in the 1950s, as more students attended the seminar and completed the certificate program, McMichael, Levine, and Curry perceived the demand for a more advanced course in exchanges and taxation. They developed an advanced, case study based seminar with a five-day format. After the first presentation, a group of participant graduates of the certificate program proposed establishing an organization for themselves as specialists in exchanging.
Nearly 50 students attended the organizational meeting, held at a local restaurant. The Certified Property Exchangor designation was born.
The group's stated purpose was to meet monthly to discuss property exchanges, for example clients' "haves" and "wants,” develop business contacts, work to make the courses more widely available, and to have a designation that would distinguish them in the investment and exchange field of real estate.
The requirements for the CPE were completion of the two-course certificate program and passing an oral interview conducted by a review board of members. During the late 1950s, the CPEs' ranks grew to more than 500, and the certificate program began to attract students from other states in the West and Pacific Northwest.
The original class was taught six to ten times a year, in two- and-one-half hour segments once a week for 18 weeks. Because of the increasing demand for the course and considerations for out-of-town students, the faculty investigated alternate formats, finally reorganizing the first course into a five-day format. The two courses in the program became known simply as Investment Property Exchange and Taxation I and II, or IPET 1 and IPET 11.
In the 1960s, McMichael, Levine, Curry, and Becker began working with the California Association of Realtors through their Exchange Division and Education Committee, to adopt the IPET courses into the CAR curriculum and to accept the CPE designation and membership into the CAR Exchange Division. This was accomplished in 1962, and the CPE program became part of the mainstream of organized real estate.
In the early sixties, a Washington state real estate broker named Jim Davenport attended the certificate program. Davenport and other students from Washington state persuaded McMichael and Levine to hold a one-day overview of the certificate program in Washington. Among the other attendees were Victor Lyon, James Baker, and Palmer Berge, all of whom became strong influences and leaders in the CCIM program as it evolved.
Victor Lyon was involved in Washington's real estate education program, and was so impressed with the one-day IPET program that he prevailed upon the state association's education committee to sponsor an offering of the five-day program in Washington state.
Lyon was enthusiastic about the course because, as an appraiser, he had always analyzed property from a before-tax point of view. The IPET course enabled him to see the after-tax implications of a transaction and in an appraisal, to calculate a stabilized income stream that could be analyzed to determine a value.
The IPET program was well received in Washington state; Victor Lyon, Jim Davenport, and Palmer Berge were recruited and trained as additional faculty members to help the California faculty meet the demand there. Students who completed the IPET courses and passed the oral interview were granted the CPE designation in California.
With the evolution of a two-course program with regular offerings in two states, other improvements in the curriculum were made. For example, a more detailed course outline was developed and more sophisticated visual aids were added. An analysis form, developed by Fred Becker, was expanded by McMichael into a number of standardized forms for analyzing properties, cash flows, and tax consequences.
Previously, many of the course materials had reflected individual instructors' own preferences, with last- minute changes and additions being more the norm than the exception. These improvements, plus the addition of staff support from the state association, did much to strengthen the program's capabilities and credibility during its formative years.
Washington state's involvement in the CPE program grew to the point where California granted the Washington association the right to offer the IPET courses and grant the CPE designation in Washington state, provided the quality of the courses and instruction continued to meet California's standards.
The Washington course offerings drew students from Oregon, Idaho, Montana, and Alaska. Students who completed the curriculum and passed the interview could be awarded the CPE in Washington. Also, the Washington Association of Realtors made its Hawaii counterpart aware of the courses and the CPE program. As a result, Hawaii began sponsoring course offerings from California. By the early 1960s, the CPE, formally or informally, had active participants in at least six states.
Chapter 2: Introduction
Chapter 4: A National Connection