Government Affairs Update

August 2018

Barbara Koelzer, Regional Government Affairs Director
barbara@ires-net.com
303.886.5675

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LOCAL
Boulder County
Affordable Housing Plan Will Require $400 Million: It will take $400 million to fund Boulder County’s Regional Housing Partnership’s Regional (Affordable) Housing Strategy according to an article recently published in the Boulder Daily Camera. The money would fund the Regional Housing Partnership’s (RHP) goal of building 12,000 more homes by 2035. That is the number of additional homes needed to meet the objective of assuring 12 percent of the county’s housing inventory is permanently affordable.

Kristin Hyser, the manager of the RHP has suggested that the City of Boulder increase its 10 percent housing goal to match the RHP’s 12 percent benchmark. Longmont’s City Council recently agreed in principle to a 12 percent inclusionary housing mandate to align with the RHP’s goal.

The question remains as to how this funding would be created. It is likely the RHP will advocate for a new county-wide sales tax dedicated to affordable housing. While Boulder County and nine municipalities have passed resolutions supporting the RHP’s goals, it is unclear if these same governments would support placing a sales tax increase on the ballot.

Longmont
Forum Participants Comment on Development Process and Inclusionary Housing: Multiple speakers were critical of Longmont’s development process and inclusionary housing ordinance at the public forum last week. Residents who are buying into a new senior co-op housing project complained about the length of the development process, saying delays are costing them financially as mortgage interest rates rise. A representative of Richfield homes also asserted the City’s process is too slow. He noted it has taken his company 2.5 years to take a 54- unit subdivision through the planning process, and that Richfield has already spent more than three times the estimated cost in engineering fees. He was critical of the Inclusionary Housing ordinance, saying “it is not the answer.”

Partners in a new 9-unit condo project (the Crisman Condos) also spoke about the inclusionary housing ordinance and raised concerns about how it will affect their bottom line since the ordinance, which has not yet been introduced, is supposed to apply to all projects, whether one unit or 100. In addition, the developers argued the retroactive application of ordinance is unfair because they aren’t sure yet which projects must comply.

Mayor Brian Bagley said ex post facto “after the fact” legislation makes him nervous. In his opinion, the City can’t hold someone accountable for a law that isn’t in effect. The City Council asked City Attorney Eugene Mei to comment on the “retroactive” aspect of the ordinance, but Mr. Mei said his staff is still drafting the ordinance and it would be unfair to discuss it until the public hearing process, which is likely to occur in September. Mei said he is working towards a legally defensible ordinance, with the intent that it applies to as many projects as possible but refused to divulge more details.

Mayor Pro Tem Polly Christensen argued the inclusionary housing ordinance should not be cast as retroactive. She said the City used to have an inclusionary housing ordinance but that it was just “on hiatus” and that she has worked to restore it for four years. Since the development community knew the ordinance was coming, it should not be a surprise.

In response, the Crisman Condos developer explained it is impossible to secure financing with a moving target. Bankers, he said, don’t appreciate that. He said his margin is “razor thin” and said the project will go away if it can’t make the margin. He also argued that the Council should consider scalability. Having inclusionary requirements apply to a small development is more of a burden. Small infill sites, like his, are hard to develop and “we are not the enemies.”

Mayor Pro Tem Christensen seemed to be moved by his comments, saying she might want to reconsider the requirement to apply inclusionary housing mandates to any size project. However, she remained adamant that the retroactive requirement should apply to developments currently in the pipeline regardless of the fact that an ordinance has yet to be introduced.

Council Approves Capital Projects Bond Proposal: The City Council gave staff approval to move forward in drafting a ballot question for the November election to bond for 10 new capital projects. The exact wording will have to be approved by the Council next month. If approved, the bond will be issued in 2019 for approximately $32,615,000 with an estimated annual debt service over twenty years of $2.51 million. Principal and interest payments on the bonds would be made from revenues from a 2 percent portion of the city’s overall 3.35 percent sales and use tax and would not require a new tax or a higher tax rate. Projects on the list include the replacement of fire stations 2 and 6, Civic Center rehabilitation, Safety & Justice Center rehabilitation, Library rehabilitation, a Ute Creek maintenance facility, irrigation systems for Ute Creek Twin Peaks, Sunset golf courses, renovation of Centennial Pool and repairs for various City facilities.

New Development Plan Passes First Reading: The long-anticipated new development code passed first reading on July 24 without amendments. The ordinance is scheduled for a public hearing on August 14. The new code aligns with Envision Longmont, the comprehensive plan adopted last year. The City’s zoning districts were substantially revised to match the land use categories in the comp plan, with more emphasis on mixed use zoning than the “old” code.

Staff feels the new language provides more flexibility for innovative development but still protects existing stable neighborhoods. One of the more controversial aspects is the inclusion of new “transition” zones between commercial and residential areas, especially near the downtown core. In these transition zones, new building heights will be limited to 35 feet at the recommendation of Councilmember Aren Rodriguez, who came up with a proposal to measure residential buildings adjacent to transition areas and limit commercial building heights based on the height of those nearby homes.

REGION
Transportation Commission Approves Priority List: Colorado’s Transportation Commission recently finalized its list of “Tier One” projects. This list lays out CDOT’s priority projects when -and if – funding becomes available. This is important in light of a potential transportation initiative voters could see on the November ballot. The language for “Let’s Go, Colorado” (Initiative 153) does not include a specific list of projects but refers to the Tier One list. In comparison, Fix Our Damn Roads (Initiative 167), includes a list of projects to be funded if the measure makes the ballot and passes in the actual ballot language.

So, it was a victory for North I-25 advocates when the commission included funding for I-25 between Highway 66 and Highway 14 on the Tier One list. In addition, funding for bus-rapid transit (BRT) was included on Highway 119 between Boulder and Longmont. Highway 34 widening is also on the Tier One list. If Initiative 153 makes the ballot and is approved by voters, these projects would receive funding from the bond and sales tax revenue it would generate.

As reported in the Longmont Times-Call, Boulder County elected officials were disappointed that FasTrack’s northwest commuter rail was not added to the Tier One list. Senator (and Boulder County Commissioner candidate) Matt Jones was particularly upset, saying “CDOT could have kick-started the Northwest commuter rail today by listing it on their state multimodal list, but they didn’t.”

STATE
Initiative Would Increase Income Taxes for Higher Incomes: The deadline for supporters of Initiative 93 to turn in 98,492 valid Colorado voter signatures is today, July 11. Supporters of the initiative, “Great Schools, Thriving Communities” say the measure “builds on the successes of Colorado’s public schools by expanding educational opportunities for our students to prepare them for success in college, career and life.”

This initiative would fund P-12 education through higher income taxes on income earned above $150,000 and on corporations. Supporters Initiative 93 argue it “stabilizes the volatile local share of education funding by first lowering property tax rates and then freezing the rates, which are third lowest in the nation.”

According to some sources, supporters turned in enough signatures, including a few thousand extras, yesterday. But it will take time for the Secretary of State’s Office to review the signatures and confirm their validity. If the measure makes the ballot and is approved by voters in November, it would generate an estimated $1.1 billion of new revenue for education in FY 2019-2020 according to the non-partisan Colorado Legislative Council.

The so-called education tax is supported by almost all school superintendents in the State. Here is more information on the measure, provided by the Northern Colorado Legislative Alliance’s lobbyist, Sandra Solin of Capital Solutions:

If Initiative 93 should pass, the average taxpayer earning more than $150,000 would pay an additional $519 a year. The average corporate taxpayer would pay an additional $11,085 a year. Based on the average statewide school levy, many property owners would pay $28 more on each $100,000 of actual value, and commercial property owners would see a decrease. Total property tax revenue collected by school districts would go down statewide.

Pros –

Generates $1.6B annually for Colorado’s Education System.

92 percent of Coloradoans won’t pay the income tax increase.

Burden placed entirely on wealthy citizens and businesses.

Cons –

Burden placed entirely on wealthy citizens and businesses.

Could dissuade economic development attraction of high paying primary jobs.

Inequitable tax increase.

Includes a mandated state general fund increase legislators couldn’t change.

Places income tax rate in constitution.

NATION
House Passes Flood Insurance Extension: On July 25 The House passed a bill to extend the National Flood Insurance Program through November 30, 366 to 52.  The bill now moves to the Senate; with the actual vote date and time to be determined.

None of our associations have met the 20 percent Call For Action participation rate. Please respond to the CFA and ask your Realtor colleagues to do the same! The 2013 floods are just the latest example of why flood insurance is important to home ownership. Here’s the link: https://bit.ly/2v5IrnX.

Endangered Species Act Reforms: Members of the Congressional Western Caucus in the House of Representatives unveiled an Endangered Species Act (ESA) modernization package that will provide important reforms to some of the problematic components of the Act.

The ESA needs to be modernized in order to better protect species, and to treat property owners, states, and localities as partners rather than obstacles in species rehabilitation. These modernization goals are practical, attainable, and will improve the ESA’s ability to preserve our nation’s plants and animals.

The ESA falls short of achieving its intended goal, with less than 3 percent of species being recovered and removed from the list in its nearly 45-year history. These problems are compounded by attacks on property rights through federal restrictions on land use, and the ESA’s one-size-fits-all approach to species protection. These bills are a targeted approach to fixing some of these problems and encourage greater accountability, transparency and stakeholder participation in the program.

USDA Proposes Tech Fee for Lenders: On July 13, 2018, the US Department of Agriculture (USDA) Rural Housing Service (RHS) put out a notice for comment on a proposed guarantee underwriting user fee to be charged to lenders for use of the RHS automated guaranteed loan system. The fee would be used to improve USDA and RHS technology for the loan program. The USDA Secretary is permitted to assess and collect this fee under the Housing Opportunity

 Uncertainty Ahead for CFPB? The U.S. District Court for the Southern District of New York has ruled that the Bureau of Consumer Financial Protection lacked the authority to bring an enforcement action against a New Jersey company “because its composition violates the Constitution’s separation of powers,” and as a result, terminated the Bureau as a party to the litigation. The case concerned allegations of violations of the Consumer Financial Protection Act (CFPA), in which a company that offers cash advances to consumers awaiting payouts from settlement agreements or judgements, was charged with engagement of deceptive and abusive acts or practices.

The Bureau claims the defendants were scamming retired NFL players suffering from brain injuries and September 11 First Responders anticipating large settlements by enrolling them in high-interest loans. The defendants argued that the Bureau is unconstitutionally structured and therefore lacks the authority to bring claims under the CFPA. The court agreed with the defendants’ argument and further held that the Dodd-Frank provision creating the Bureau should be eliminated.

This case followed in part with the dissents in PHH Corp. v. CFPB, citing that the Bureau is “unconstitutionally structured because it is an independent agency that exercises substantial executive power and is headed by a single Director.” Recall in this case, the U.S. Court of Appeals for the D.C. Circuit held that the unilateral authority of the Bureau vested in a single person who is not subject to dismissal in the discretion of the President was not unconstitutional and the provision in the 2010 Dodd-Frank law, which limited removal of the director only “for cause,” was held as consistent with the President’s constitutional authority.

With the split in circuit court decisions on the constitutionality of the Bureau, it is likely the Supreme Court could weigh in and determine the future of the Bureau structure. In the meantime, Kathy Kraninger, associate director at the Office of Management and Budget has been nominated as the permanent Director of the Bureau. Acting Director Mick Mulvaney has been leading the Bureau since former Director Richard Cordray left and fighting claims for the position by Cordray’s appointed acting director, Leandra English, since that time. The litigation on that issue is still pending before the U.S. Court of Appeals for the D.C. Circuit after oral arguments where held in April. Kraninger must be confirmed by the full Senate, which may not occur until at least the fall.

 

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