Government Affairs Update

May 2019

Barbara Koelzer, Regional Government Affairs Director
[email protected]








Boulder County
City Planning Stricter Energy Requirements: The City Council is preparing to consider new building code requirements this year and received an update from staff on April 23. The proposed building code will accelerate net-zero energy requirements Currently, new homes over 5,000 SF must be net zero. The Council agreed to support a staff proposal to require all homes over 3,000 SF to be net-zero, meaning the homes must produce as much energy as they use. During the staff presentation it was articulated that the new building code would help promote the City’s renewable energy utility agenda.

In addition, staff explained that the energy efficiency targets would support the City’s desire to preserve existing homes. By requiring net-zero energy requirements for homes larger than 3,000 SF, it will “incentivize the retention of existing homes.”

In other words, building homes – especially those that are 3,000 SF or larger – is about to become a lot more expensive in a town that is already very expensive. The building code requirements, which will require far more energy efficiency than the language in the model residential code, should be back in front of Council for adoption this fall.

Manufactured Homes Won’t Be Taxed: The Longmont City Council agreed in principle that it doesn’t want to require buyers of manufactured homes to pay sales tax. Because these homes are classified as “tangible personal property” and not “real property,” in theory buyers should pay city sales tax. Boulder County has not charged the sales tax but brought the situation to the City’s attention last year. After a brief discussion, Mayor Brian Bagley made a motion to direct staff to draft an ordinance exempting manufactured homes from sales tax. The motion passed unanimously.

Council Discusses County Affordable Housing Tax: Last week the City Council was asked to consider a proposal from the Boulder County Regional Housing Partnership to place a tax question on the ballot to fund affordable housing. The Council signed an Intergovernmental Agreement last year in which it supported the Partnership’s goal of having 12 percent of the County’s total housing stock permanently affordable by 2035.

This month the Partnership asked all participating jurisdictions to consider the concept of an affordable housing tax to meet the 12 percent goal. It has proposed a scenario in which the revenue generated by the tax would be split into two pots. 75 percent of the revenues would be distributed to communities based on population. The remaining 25 percent would be distributed in a competitive process. According to staff, it is estimated Longmont would receive $2 to $4 million from the first pot of money.

A poll earlier this year of County residents showed between 55 and 56 percent of respondents would support a property or sales tax*, which is below the magic 60 percent number that pollsters say is enough to move forward with a ballot measure. The Partnership plans to conduct another poll in May with more exact language to try and determine if a ballot measure should move forward. In the meantime, the Partnership wanted feedback from participating jurisdictions as to their tax preference and if the proposal should be put on the 2019 or 2020 ballot.

Longmont faces a dilemma because the Council is considering several ballot measures of its own for 2019. One question would ask voters to approve the continuation of the City’s .75 transportation sales tax, another question would ask for approval to bond for an aquatic center and an ice rink and the third question would establish a tax-supported library district. For this reason, the Council expressed reservations about adding the affordable housing tax question to the ballot this year.

Bonnie Finley was the sole Council member to articulate her opposition to the affordable housing tax. She suggested a poll of Longmont residents to ascertain the level of the support for the proposal before making any decision. This motion passed, with Mayor Pro Tem Polly Christensen opposed.

* A 1.25 mils property tax or a .185 or .365 percent sales tax.

Council Supports Continuing Participation in HOME: The City Council supported a resolution approving continuing participation in the HOME Consortium. The City of Longmont joined this regional consortium to enable the City and the region to receive a direct allocation of HOME funds from the US Department of Housing and Urban Development (HUD). The agreement allows the City of Boulder to continue to serve as the Lead Agency for the Consortium through 2021.

HOME funding supports the Council’s goal of providing a “full spectrum of attainable housing.” For example, Longmont recently used HOME funding to support the new construction of 60 rental homes affordable to Longmont’s senior population through the funding of Fall River Apartments. 30 of the homes are affordable at or below 40 percent AMI and 30 affordable between 41 to 50 percent of the AMI. These homes are under construction now and will be completed and leasing in late summer, 2019.

HOME funds have also been used to acquire existing rental properties as well as vacant land, support new construction of affordable homes, rehabilitate existing affordable rental homes, and provide tenant-based rental assistance for persons experiencing homelessness. Agencies receiving assistance include Habitat for Humanity, Imagine!, Inn Between, Longmont Christian Housing, Longmont Housing Authority and Thistle. HOME funds in Longmont created or preserved 261 new homes and provided 37 vouchers for persons experiencing homelessness.

Council Supports Rent Control Bill: On April 23 the City Council voted 4-2 to support SB-225, “Authorize Local Governments to Stabilize Rent.” Mayor Brian Bagley and Councilmember Bonnie Finley voted in opposition.

The bill is supported by the Colorado Municipal League, the State’s association of local city governments, which argues SB-225 “ is an opportunity to get full clarification that municipalities have the authority not only to partner with private entities for affordable housing, but perhaps even go as far as to dictate when developers must provide a number of affordable units in order to develop projects.” The bill was the subject of a CAR Call for Action last week. REALTORS® oppose the bill, which is co-sponsored by legislators Jonathan Singer (Longmont) and Mike Foote (Boulder County).

Mayor Pro Tem Polly Christensen made the motion to support SB-225. She said, “This isn’t about rent control, it’s about rent stabilization.” She also went on a rant about builders, REALTORS® and others who “want absolute control over all our housing.” Some Councilmembers argued they were voting in favor of the bill because they support the principle of local control (Waters, Rodriguez) and feel it’s important to be consistent. They emphasized that they are not advocating for rent control in Longmont. Mayor Bagley argued the bill would simply result in less housing if Colorado towns implement rent control. Bonnie Finley said a better solution would be a property tax rebate to incentivize landlords to keep rent prices down. She said it’s not a good solution and she would not support it.

Legislative Update:
HB-1322 “Expand Supply Affordable Housing” CAR Position: SUPPORT
The bill appropriates a portion of the unused funds in Colorado’s Unclaimed Property Trust Fund while protecting the 20-year claims reserve. The bill ensures all claims will always be paid and there would always be an excess reserve cushion. $40 million per year or one-half of the excess balance in the fund would be appropriated to the Division of Housing for a wide range of housing needs. HB19-1322 reflects discussions of a broad group of stakeholders from urban and rural areas convened by Democrats and Republicans in the House and Senate that identified the needs in their communities, including CAR. This is an alternative funding bill for affordable housing that we could agree to that prevented the focus on document fees and transfer taxes.

HB-1317 “Income Tax Credit And Senior Property Tax Exemption “CAR Position: MONITOR
This bill would authorize a tax credit for senior citizens instead of property tax exemption. The maximum credit amount is $700. It would require recipients to file a tax return. It applies to renters as well as property owners. The bill would encourage seniors to downsize and create a better market effect because there is no 10-year residency requirement. A motion to support the bill failed because the majority of LPC members weren’t sure this would be a “positive change.” CAR’s Vice President of Public Policy, Liz Peetz, says the legislature might not have the budget for this.  It would go into effect in 2020.

SB-225 “Authorize Local Governments to Stabilize Rent” CAR Position: OPPOSE
The rent control bill was the target of a CAR Call to Action in April. It stalled in the Senate after being approved in committee.

CAR’s Rapid Response team moved to support two TABOR bills because Speaker Becker presented the concepts on Realtor Day and those present were supportive. Voters will have final decision, anyway because if approved the voters would have to approve them this fall.

HB-1257 “Voter Approval To Retain Revenue For Education & Transportation” and
HB-1258 “Allocate Voter-Approved Revenue for Education and Transportation”
Beginning with the 2018-19 fiscal year, the State is authorized to annually retain and spend all state revenues in excess of the constitutional (TABOR) limitation on state fiscal year spending that the state would otherwise be required to refund. The bill is a referendum that will be submitted to the voters at the statewide election held on November 5, 2019, and approval of the ballot title at the election constitutes a voter-approved revenue change to the constitutional limitation on state fiscal year spending.

If approved, an amount of money equal to the state revenues retained under this measure is designated as part of the general fund exempt account. The General Assembly is required to appropriate or the state treasurer is required to transfer this money to provide funding for: public schools, higher education and roads, bridges and transit.

HB-1264 “Conservation Easement Tax Credit Modifications” CAR Position: Support
A conservation easement is an agreement in which a property owner agrees to limit the use of his or her land in perpetuity in order to protect one or more specified conservation purposes. The conservation easement is held by a third party, which monitors the use of the land and ensures that the terms of the agreement are upheld.

The statutes establishing the conservation easement oversight commission and the program to certify conservation easement holders in the division of conservation are currently set to repeal on July 1, 2019. The bill extends the repeal dates for each to July 1, 2026.

Among other things, the bill would: eliminate a requirement that the board of real estate appraisers establish education and experience requirements for conservation easement appraisers; allow the division of conservation to use an alternative method acceptable to the division and the conservation easement oversight commission to value a conservation easement; and increase the percentage of the value of a conservation easement that may be claimed as an income tax credit and the total amount that may be claimed for the easement, while limiting the amount of credits that may be issued per year.

HB-1260 “Building Energy Codes” CAR Position: Neutral
The LPC expressed concerns regarding remodels and rehabilitation costs. In addition, CAR hopes to add a provision to exempt existing homes.

The bill requires local jurisdictions to adopt one of the three most recent versions of the international energy conservation code at a minimum, upon updating any other building code, and encourages local jurisdictions to update the Colorado energy office on any changes to the jurisdictions’ building and energy codes.

Legislature Funds Transportation: The Colorado General’s leadership agreed to put $300 million in one-time money in next year’s budget toward transportation needs.

House Democratic leaders announced the deal last week during a day-long hearing on the $30.5 billion budget proposal for the fiscal year that begins on July 1.

House Democratic leaders announced that they have tasked the six-member Joint Budget Committee (JBC) with finding $70 million to cut from other departments in the proposed budget, leaving transportation with an even $300 million next year, likely for shovel-ready projects like I-25 North.

Fix Colorado Roads, a business advocacy group organized by the Northern Colorado Business Alliance (NCLA), lobbied hard for the transportation funding. Legislators agreed that this lobbying effort played a key role in pressuring the legislators to approve the deal.

Support for WOTUS Rule: last year, the EPA and Department of the Army signed a proposed rule revising the definition of “waters of the United States” (WOTUS) to clarify federal authority under the Clean Water Act in a clear and understandable way. The agencies’ proposal is the second step in a two-step process to review and revise the definition of “waters of the United States” consistent with the February 2017 Presidential Executive Order entitled “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ Rule.” The proposed definition would replace the approach in the 2015 Rule and the pre-2015 regulations.

NAR submitted a comment letter in support of this rule.  NAR believes this proposed WOTUS replacement rule will bring certainty and consistency to the permitting and development process, while protecting water quality and property rights.

Opportunity Zone Information: NAR’s 2019 Commercial Liaison, Bob Turner from Memphis, TN, represented NAR at a White House event on the Qualified Opportunity Zone (“QOZ”) program on Wednesday, April 17.  The QOZ program was created in the 2017 Tax Cuts and Jobs Act to revitalize underserved communities by providing tax incentives for certain investments into them, to promote development and create jobs.  In connection with the event, the Treasury Department released the much-anticipated second round of proposed rules for the program, which provide more specific detail on how investors can participate in the program and receive the full tax benefits it offers.

The keynote speaker of the White House event was the President, who emphasized the administration’s commitment to the success of the program, to drive economic growth through long-term investments in underserved areas, designated as “Opportunity Zones.”  Under the program, taxpayers who reinvest capital gains from a previous sale into a fund for investing into a QOZ are eligible to defer paying taxes on those gains and can potentially reduce their tax liability by 10 – 15 percent (based on the amount of time they hold the investment).  Additionally, if the investment is held for at least ten years, any appreciation on it is tax-free.  Housing and Urban Development Secretary Ben Carson and Treasury Secretary Steven Mnuchin also spoke at the event.

NAR will be analyzing the proposed rules and providing updated information on them in the coming days.  For more information on this topic, visit the Qualified Opportunity Zones page.

Colorado’s Office of Economic Development and International Trade (OEDIT) conducted an inclusive and rigorous process to nominate census tracts for Opportunity Zone status. OEDIT produced metrics for evaluation, took public input, and collaborated with regional economic development partners who brought extensive human intelligence to the table to select census tracts with need and opportunity characteristics that present a good case for private capital investment. Colorado’s Opportunity Zones present a portfolio of investment opportunities from urban to rural, and business starts to infrastructure. A majority of the census tracts are outside of the Front Range and touch much of the state with the goal of raising up our rural economies. The census tracts nominated have been approved. Colorado’s OZs are now set for the duration of the program (through 2026).

In Northern Colorado, the entire Estes Park area as well as pockets in Loveland and Fort Collins have been designated. In Boulder County, Boulder 28th Street /Arapahoe) and Longmont (SW around 3rd Ave) are included. Colorado OEDIT provides an interactive map of Colorado Opportunity Zones.

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