Government Affairs Update

June 2018

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

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Boulder County
Boulder
Building Accessory Units Could Get Easier: Boulder’s City Council on Tuesday advanced an ordinance that would make it easier to build an accessory dwelling unit (ADU). A 7-2 vote sent the proposed revisions to a June 5 second reading and public hearing.

The ordinance includes 12 changes to the land use code designed to relax the City’s current ADU requirements. Currently the biggest hurdle for property owners is the parking requirement, because homeowners must meet the current parking requirements of the zone and then provide the additional space(s) required by the accessory unit. The new ordinance would remove that requirement.

The so-called “saturation” level is another major limit on the construction of ADUs. Under current rules, no more than 10 percent of properties within a 300-foot radius of the applicant’s property may have an ADU in Residential – Low and Public zoning districts. In Residential – Estate, Residential – Rural, and Agricultural zoning districts this provision applies to properties within a 600-foot radius of the applicant’s property.

In addition, legal nonconforming structures are included in calculating the 10 percent limitation factor. These are typically duplexes, but sometime include apartments. The intent of these provisions was to prevent an overabundance of non-single-family units in predominantly single-family neighborhoods. Staff noted this provision is unique among accessory unit regulations across the nation. Under the new ordinance, the number could double to 20 percent.

If the ordinance passes on 2nd reading in its current form, which is doubtful given the Council’s tendency to tweak legislation, it could result in an additional 381 ADUs, increasing the percent of ADUs to 1.3 percent of all residences in Boulder.

Expect neighborhood activists to show up on June 5 to complain about parking and density issues. Some Council members, such as Nagle, Carlisle and Young could be swayed by their opposition since they’ve already voiced concerns with staff’s proposal.

Note:  Boulder’s 2017 Boulder ADU Survey shows that 20 percent of ADU owners noticed a significant increase in property taxes, 80 percent either noticed a small increase, no increase or don’t remember. In addition, most lending institutions do not allow appraisals to factor in the expected rental income from an accessory unit to estimate market value of a residential property. Because of this and other factors, homes with accessory units were found in one study to be undervalued by up to 9.8 percent.

Longmont
Council Discusses Residential Compatibility Standards: On May 1 the City Council got its first look at proposed residential compatibility standards, intended to regulate transitional areas between commercial and residential areas. Brien Schumacher of Development Services explained that the current development code does not include any requirements for transitional developments. Staff proposed a maximum height of 35 feet within 75 feet of residential units and a maximum of 45 feet between 75 and 125 feet of residences.

While the transition requirements were proposed for all areas of the city where residential and commercial uses meet, it was clear that the downtown core was the focus of concern. Members of Historic Eastside Neighborhood Association (HENA) spoke frequently during public comment and argued all buildings adjacent to residences should be capped at 35 feet, particularly on the east side of Kimbark Street. The Downtown Development Authority, Historic Preservation Commission and Planning & Zoning Commission had supported staff’s proposal, which was considered a compromise.

Bonnie Finley said “sometimes change is hard and HENA doesn’t like change. I think this compromise (staff’s proposal) makes sense.” But she was the only Councilor to articulate support for staff’s proposal. The Mayor said he would rather “split the baby” and come up something that wouldn’t harm a property owner’s rights and yet keep neighbors happy.

However, as the conversation continued, it became clear that the majority of City Council would not support staff’s proposal, regardless of the fact that it represented a compromise agreed upon by almost all interested parties except HENA. Aren Rodriguez suggested an alternative concept that he argued would be simple and clear, with calculations based on the average height of homes in the residential block adjacent to commercial units. He said he supports density and height but not close to residential areas.

Ultimately, the Council decided it would not be able to craft its own alternative from the dais. It was decided this discussion would be continued at the City Council retreat (May 19 and 19), where, as the Mayor put it, the Council could discuss the issue at a “venue without microphones.”

Council Approves Gas and Oil Agreement: Longmont’s City Council members voted 6-1 with Joan Peck dissenting, to give final approval to the city’s $3 million agreement with TOP Operating and Cub Creek Energy. The Council says the agreement will end oil and gas drilling from the surfaces of properties within the city, as well as city-owned properties east of Longmont.

The agreement stipulates that TOP Operating will plug and abandon active wells, relinquish future drilling sites, abandon potential well permits, amend their lease holdings to include a no-surface disturb provision, and refrain from drilling within Longmont’s city limits.

Longmont will pay $3 million to TOP and lease 516 acres of city-owned mineral rights to Cub Creek Energy. Cub Creek also will immediately cease all attempts to “force pool” the city’s oil and gas mineral rights under city-owned open space east of Union Reservoir and will, alternatively, lease them directly from Longmont. The payments due to TOP will come from Longmont’s receipt of these future mineral royalties from Cub Creek.

According to the City, there are only 8 active wells in the City and all of them are east of County Line Road. The Longmont Association of REALTORS® opposed the fracking ban which was approved by voters in 2012 and which was found unconstitutional by the courts. By coming to agreement with TOP and Cub Creek the City will compensate the companies for the mineral rights, and appease gas and oil opponents at the same time.

For more information and a map of gas and oil wells visit: https://www.longmontcolorado.gov/departments/departments-n-z/public-information/oil-and-gas-information/oil-and-gas-regulations-in-longmont

COLORADO ASSOCIATION OF REALTORS®
Legislative Update: The 2018 legislative session ended on Wednesday, May 9. This year the legislature’s big issues were transportation and creating financial solvency for the Public Employees Retirement Account (PERA). While there were bills related to real estate, our industry was not front and center this session, which is always a good thing. As always CAR’s Legislative Policy Committee took positions on a number of bills and here is the end result for some of the most important bills for CAR this session.

SB-01 – Transportation Infrastructure Funding CAR Position: Support (see below for more information). Transportation is a REALTOR® issue!

SB-109 Authorize Audio-video Communication Notarial Acts CAR Position: Oppose Status: This bill was passed by the Senate but died in the House. It was a big win for CAR, which opposed it because it didn’t adequately protect consumer data.

HB-1227 “Real Estate Commission Flexibility in License Periods” CAR Position: Support. Signed by Governor Hickenlooper on April 23. This was a clean-up bill related to last year’s reauthorization of the real estate licensing statute last year.

SB-07 “Affordable Housing Tax Credit” CAR Position: Support. This bill passed on April 27 and will be sent to the Governor. REALTORS® support affordable housing funding mechanisms that provide credits for developers, versus mandates that increase housing prices for everyone.

Bills opposed by CAR that were postponed indefinitely, i.e., killed, earlier in the session include: SB-20 “Time Period for Tenant to Cure Unpaid Rent,” SB-06” Recording Fee to Fund Attainable Housing,” HB-1054 “Affordable Housing Plastic Shopping Bag Tax” and HB-1127 “Residential Landlord Rental Application.” These bills would either add more cost to the price of housing or negatively affect private property rights. It is always good when bills we oppose can be defeated in committee, as these bills were.

STATE
No Growth Initiative Update: Initiative 66 has created a lot of concern for home builders, Realtors® and legislators because of the proposal’s potential impact on Colorado’s economy and home affordability. Fortunately, its proponents have not hired professional signature gatherers to get the required signatures needed to get this initiative on the November ballot. The cost to get signatures for a state-level initiative is approximately $1 million.

State Voters May Consider Two Competing Transportation Initiatives: The Denver Metro Chamber of Commerce (DMCC) and a statewide coalition will push to get a .62 percent, 20-year sales tax increase on this fall’s ballot, asking voters to fund billions of dollars worth of transportation infrastructure projects.

If successful, 45 percent of the revenue raised by the tax increase would back up to $6 billion in Colorado Department of Transportation bonds for state highways. Another 40 percent of the new tax revenue would be split between counties and municipalities around the state for transportation projects, and the remaining 15 percent dedicated to transit and multi-modal projects.

At the same time, Libertarian Jon Caldara of the Independence Institute says he is ready to gather signatures for a competing ballot measure, called Fix Our Damn Roads. It proposes increasing state transportation funding without a tax increase by asking voters to authorize $3.5 billion in state bond debt and requiring the state legislature to repay those bonds with $350 million annually from the state’s general fund.

Governor Signs Affordable Housing Tax Credit Law: This week Governor Hickenlooper signed a bill that will extend Colorado’s Affordable Housing Tax Credit (AHTC) program through 2024. Senate Bill 18-07 gives tax credits to developers for building affordable housing units. CAR supported the bill.

According to the Colorado Housing and Finance Authority (CHFA), this program has leveraged over $465 million in private sector investment into Colorado and has helped support the development and preservation of over 4,000 affordable apartments. The program is based on the federal Affordable Rental Housing Tax Credit that was created under President Reagan in 1986.

NATION
NAR Commemorates 50th Anniversary of Fair Housing Act: As you know, NAR has been celebrating the 50th anniversary of the Fair Housing Act all year. We cannot change the past, but we can learn from it. This video, shown at the Legislative Meetings, is sad, powerful and definitely worth watching.

https://www.youtube.com/watch?v=EmtGT5vU_TM&feature=youtu.be&t=10m51s

Bill Would Require Bipartisan Commission to Lead CFPB: NAR signed onto a joint trades letter in support of H.R. 5266, the “Product Safety Commission Act of 2018,” a bill that would transition the leadership structure at the Consumer Finance Protection Bureau (CFPB) from a sole director to a bipartisan commission.

Due to its critical mission of consumer protection related to financial products and services, the CFPB’s authority is too important and vast to be controlled by a single individual. With every new presidential administration, rules, guidance, and other decisions made by a sole director at the CFPB may be unendingly overturned by each new director. This creates enormous regulatory uncertainty for financial services and real estate industries, which ultimately harms consumers, small businesses, and the overall economy.

A bipartisan commission at the CFPB would strengthen the governance of the CFPB, prevent it from becoming a political football, allow for a diverse set of voices regardless of who sits in the White House, and ensure its longevity.

NAR Supports Seller Financing Bill: On April 24, 2018, NAR sent a letter to Representatives Pearce and Heck for introducing H.R. 5287, the “Preserving Access to Rural Installment Transactions for Years (PARITY) Act of 2018.”

The legislation amends the Truth in Lending Act to exempt from the definition of loan originator a seller providing financing for the sale of five or fewer properties in a 12-month period, of which the property is owned by the seller and used as security for the loan. Qualifying sellers include persons as well as entities, such as corporations, partnerships, proprietorships, associations, cooperatives, estates, and trusts.

By raising the number of seller financing transactions from 3 to 5 that an individual can participate in without having to register as a mortgage loan originator, H.R. 5287 would increase housing opportunities to moderate and low-income families, as well as first time homebuyers, without removing any safeguards that protect consumers against abusive lending practices.

Changes to Transportation Grants Announced: The U.S. Department of Transportation (USDOT) published a Notice of discretionary grant funding through the Better Utilizing Investments to Leverage Development (BUILD) program. The BUILD program will replace a well-known program among state and local governments as Transportation Investment Generating Economic Recovery (TIGER) grants. BUILD grants are available to state or local public entities such as counties, port authorities, tribal governments, Metropolitan Planning Organizations (MPOs), state Departments of Transportation, and/or transit agencies.

BUILD grants will carry on the legacy of TIGER grants, to fund the best projects that have significant local or regional impact. BUILD will continue to use federal dollars to leverage additional funding for transportation infrastructure. Traditionally hundreds of applications are received each year, which makes the grants highly competitive.

One significant requirement within the application for eligible projects will be the identification of new non-federal revenue for the infrastructure project. This requirement has received criticism as many state or local jurisdictions have already implemented new revenue streams for infrastructure funding, such as a sales or gas tax increase. Real estate developers may see some proposed tax-increment financing opportunities as a source of future revenue streams.

Congress appropriated $1.5 billion for TIGER (now BUILD) grants in March 2018. These funds will be available to public entities through September 30, 2020. There will be different rounds of grant recipient notices. It is important to note that the Administration will devote at least 30 percent of funds to rural communities. Note: These grants are an important funding component in Colorado.

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