Government Affairs Update

November 2018

Barbara Koelzer, Regional Government Affairs Director









Boulder County
No Large Home Moratorium – For Now: On October 16 Councilmember Lisa Morzel explained that “there is a small group of aggressive developers and maybe REALTORS®” that buy smaller homes and demolish them in order to build bigger homes on lots large enough to support them. She said this is happening “all over north Boulder,” and referenced a lot at 21st and Orchard as an example of this practice. In tears, she sobbed that if something isn’t done, “We will have, and maybe already have, a community of the very much haves and the serfs who have no opportunity …. I want to stop scrapes.”

However, Morzel’s sense of urgency was not shared by the majority of the City Council, so the Council decided not to vote on moratorium on scrape and builds in the RE, RR and RL-1 zone districts now. According to staff data, about 12 homes are scraped and replaced with larger houses each year.

Other members of Council agreed that is important to move forward with a plan to encourage more density and smaller homes, however some argued that an emergency ordinance wouldn’t allow public engagement and had concerns about a possible backlash. Jill Grano said, “We need to use the land as best we can to serve the people without impacting property rights. We need incentives, too not just penalties or it would only affect middle income people.”

The Council has had this issue on its radar since September 25, when the Council discussed how to promote the construction of “humbler houses.” Staff was asked to explore the topic and bring back recommendations. The Council will likely revisit the issue in December, allowing more time for staff research and public input.

Council on Payment-in-Lieu Options: On September 25 the City Council focused its Inclusionary Housing discussion on the proposed payment-in-lieu option for developers who pay a cash fee rather than dedicating 12 percent of a project to the City’s inclusionary housing program. Staff had proposed a “replacement cost” approach in which a developer would have to pay all the cost for a home (land, materials, permits, etc.) that the City would incur if such a home were built by the City.

Developers suggested a different methodology, called the “gap approach.” The gap approach would calculate the developer’s fee based on the difference between the City’s average median home cost minus the affordable home price and would result in a lower fee than the replacement cost method. After discussion, the Council voted 6-1 to support the Gap Approach, with Polly Christensen opposed. She said the gap approach was too complicated and would lead to fewer affordable homes than the replacement methodology.

On another positive note, the Council also changed directions on the size of a development that would trigger inclusionary housing mandates.  They decided the inclusionary housing requirements would only apply to developments of five homes or more, because that was what the previous Inclusionary Housing program, that was repealed in 2011, had stipulated. In previous discussions they had said the program would be applied to any development, even a one-home project.

While the Inclusionary Housing program is becoming more and more complicated with every discussion, the good news is that the City Council is listening to the concerns of developers. It may be impossible to stop the Council from approving the program when it ready for a formal vote, but at least the financial burden will be less than what was originally proposed. The first reading of this ordinance is now scheduled for November 13.

CAR Positions on Ballot Issues: Polling has become less of an exact science in recent years, but some polls show voters may not favor CAR’s positions on the issues in November. As a reminder, here are CAR’s positions on real estate-related issues. If you need more information, feel free to contact me.

Amendment 73 – NO

Amendment 74 – NO

Amendment Y and Z – YES

Proposition 110 – YES

Proposition 112 –  NO

Committee Recommends Bill to Repeal Gallagher: A legislative interim committee has been studying the impacts of Colorado’s Gallagher Amendment, which froze the ratio of the value of residential and non-residential property. Residential property makes up about 80 percent of the actual market value of all property in the state. However, the Gallagher Amendment has fixed the ratio of non-residential and residential property values at their 1982 levels and limits the taxable value of all residential property to never constitute more than approximately 45 percent of the state’s total property valuation.

The committee, which is comprised of six state legislators is recommending three bills for consideration in the 2019 legislative session. One would repeal Gallagher completely, although it would require voter approval in November 2019. The 2nd bill would create regional assessment rates for residential property but only if the electorate approves Gallagher’s repeal.  The third bill would create a residential property tax revenue backfill for fire protection and library special districts that experience at least a five percent reduction in residential property taxes in 2019.

Rural Appraisal Waivers: Fannie Mae is currently offering appraisal waivers in exchange for a mandatory home property inspection, for properties in high-needs rural areas as determined under the Duty to Serve Underserved Markets rule. The appraisal waivers are intended to reduce cost for borrowers while ensuring properties meet certain safety standards. Fannie Mae expects the home inspections to help mitigate the risk of delinquency or default due to future repair costs. The waivers will become available in late 2018.

To be eligible for an appraisal waiver, the following requirements must be met:

  • Purchase transactions only
  • Desktop Underwriter® (DU®) loan casefile receives an Approve/Eligible recommendation
  • One-unit principal residence properties (excluding manufactured homes)
  • Borrowers with income equal to or less than 100 percent of the area median
  • LTV ratios up to 97 percent; and CLTV ratios up to 105 percent with a Community Seconds®

Water Infrastructure Bill Passes Congress: A NAR-supported, bi-partisan water infrastructure bill is headed to President Trump’s desk after the Senate voted to pass it 99-1 on October 10, 2018.S. 3021, “America’s Water Infrastructure Act,” would authorize numerous port revitalization, flood control, drinking water and water storage projects.

The bill was the result of weeks of negotiations after initial water infrastructure legislation stalled. Members of the Senate Environment and Public Works Committee, who shepherded the legislation through Congress, celebrated the overwhelming vote.

“America’s Water Infrastructure Act will cut Washington red tape, grow the nation’s economy, and help keep communities safe. It will create jobs, reduce the deficit, and give local stakeholders more control of projects,” committee Chairman John Barrasso (R-Wyo.) said in a statement.

Committee ranking member Tom Carper (D-Del.) said the bill “delivers for families in every state across our country and I’m proud that it’s on its way to be signed into law. “This legislation invests in the critical water infrastructure we don’t see every day, but that American families in every state rely on, such as drinking water systems, dams, reservoirs, levees, and ports,” he said.

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