Government Affairs Update

January 2019

Barbara Koelzer, Regional Government Affairs Director
[email protected]









Boulder County
No Moratorium on Large Homes: The Boulder City Council decided not to enact a moratorium on the construction of large homes in certain residential zones because it would be too disruptive. However, the City will enact additional regulations to control the problem. The staff drafted a new “why” statement to describe the rationale:
The City’s residential neighborhoods are experiencing a dramatic demographic

and economic shift with the replacement of modest more-affordable homes with

larger more-expensive homes. These large homes are often inconsistent with the

existing character of the neighborhoods, and are an inefficient use of land that has

exacerbated the City’s housing / jobs imbalance and the high-cost of housing. In

addition, large homes do not align with the city’s energy-conservation goals and

policies as they consume greater amounts of energy, both in operation and

construction, than do modest-sized homes.

Several Councilors – Lisa Morzel and Mary Young – expressed concerns about “aggressive spec developers” in voicing their desire to move forward with additional regulations as soon as possible. Now the staff will begin working on a community feedback phase with a public meeting planned for late January. The Council was told that the project, with code changes, should be complete by the end of 2019.

Some of the ideas that could be implemented to discourage the demolition of small homes on larger lots include additional regulations to limit home size, bulk and massing, the acceleration of net-zero energy requirements and creative infill ideas to incentivize the construction of smaller homes.

Inclusionary Housing Mandate Approved: The City Council approved Ordinance 2018-51 on December 11 by a six to one vote, with Bonnie Finley opposed. The ordinance has been in process since the City Council election of November 2017, which saw the election of Marcia Martin, Tim Waters and Aren Rodriguez, which gave Mayor Pro Tem Polly Christensen enough votes to revive Longmont’s inclusionary housing program.

The Council only made one additional change Tuesday night, adding an incentive for multi-family rental projects with a density of 20 units per acre or more. Inclusionary housing requirements will not apply to units above that threshold. In addition, the Council ratified other changes made during the November 27 public hearing, including a separate fee-in-lieu (FIL) for rental apartments of $1.90 per square foot and exempting accessory dwelling units from the ordinance.

The public hearing was poorly attended. Only three members of the public spoke, including the Longmont Association of REALTORS® (LAR) Chair-Elect, Natasha Hubbard. Hubbard voiced LAR’s concerns with inclusionary housing, saying, “It is apparent many questions remain and unforeseen consequences may arise from this attempt to manipulate the real estate market.

Therefore, we ask the City will keep a close eye on this ordinance — and its impact — and adjust the program’s requirements as needed if there are negative impacts.”

Mayor Brian Bagley said he would support the ordinance, voicing “cautious optimism.” Bonnie Finley spoke about the unintended consequences of the program, saying it would only increase home prices. Tim Waters and Marcia Martin quickly rebutted Finley’s arguments. Waters argued housing affordability is a top concern in the community and added, “We know there is a need and we know there are builders who can turn a profit and are committed to the community.” Martin agreed, saying “Nobody said it wouldn’t make housing prices go up for some people.” Polly Christensen scoffed at LAR’s position on the ordinance, “We’ve been told again and again by LAR this is a tax. This is inviting the builders to participate in this community. The taxpayers have built this city. We all have to pay our share,” she said.

City Manager Harold Dominguez told the Council that the City is working with a local economist who will conduct “robust analysis of the impacts” of the program. The Council asked for reports every six months so it can monitor building activity related to the ordinance.

For a summary of the program’s requirements, read this article in the Times-Call:

Larimer County
CDOT Proposes Freight Plan: CDOT’s Regional Director, Johnny Olson, has suggested a novel approach to moving trucks out of Larimer County’s urban centers. His idea is to reroute freight traffic off US 287 and onto I-25. In exchange, CDOT would give control of US 287 (from Colo. 119 to Colo. 14) to the local governments. This would give the locals more decision-making power, but they would also have to pay for its maintenance. Olson says a six-month feasibility study will consider the idea, during which public input will be taken.

North I-25 Receives Grant: Colorado Senators Cory Gardner and Michael Bennet announced that the North Front Range Transportation & Air Quality Council has been awarded a $20 million Better Utilizing Investments to Leverage Development (BUILD) grant from the Department of Transportation (DOT) for its North I-25 Segment 6 improvement project.

“Thanks to the tireless efforts of Northern Colorado communities, this $20 million for North I-25 will build on past TIGER grants to decrease congestion in one of the state’s busiest corridors,” said Senator Bennet. The $20 million BUILD grant will help with widening a segment of North I-25 between SH 402 and SH 56/Little Thompson Bridge through the addition of an express tolled lane in each direction. CDOT has estimated that in 2040, the I-25 Corridor will see a 60 percent increase in daily vehicle traffic.

CAR Chief Lobbyist Predicts a Rough Session: Liz Peetz, CAR’s Vice President for Public Policy, says “real estate is at risk” given the new makeup of the Colorado General Assembly. CAR will be proactive during the 2019 session, which begins on January 4.

Peetz said CAR is considering running several bills, including a bill to revise the first-time homebuyer saving account legislation it ran previously. The idea is to expand it to include employers, who could offer it as a benefit or match. In addition, a bill to revise the Homestead Exemption for seniors could allow them to use those savings to downsize, which would free up properties which would have a positive market effect.

CAR is also working on bills to ensure title companies have liability related to deed forms, rather than REALTORS. Peetz added the remote notary issue will be back in 2019. She is working with legislators and the new Attorney General and Secretary of State. She added that the National Association of REALTORS® wants every state to pass remote notary legislation and explained that CAR was able to add a motion at the NAR Board of Directors meeting in November to ensure such legislation protects private consumer data.

Peetz to Serve on LIFT Board: CAR’s Vice President for Public Policy, Liz Peetz, has joined the Board of Directors for LIFT (Leaders Innovating For Tomorrow). LIFT was created by Senator Cheri Jahn, who received a grant from Vital for Colorado to start the organization. Its goal is to identify business people to run for office at the local and state level, beginning with municipal elections in November 2019. LIFT will provide training and support for candidates and will also ensure business leaders have a connection to local elected officials.

In an article published in the Denver Business Journal on December 5, Jahn said, “I want to talk about issues. I want people in there who run businesses and understand what it’s like to operate businesses.” “I really don’t care what party they’re in. I want moderate people who understand businesses.” Note: LIFT could provide valuable service to local REALTOR® associations, who will hopefully be involved in efforts to find and groom candidates for the 2019 municipal elections.

Flood Insurance Passes: On December 6 the House and Senate passed a two-week extension of the National Flood Insurance Program (NFIP) narrowly avoiding a lapse in coverage. The NFIP is being extended as part of the Continuing Resolution (CR) to avoid a partial shutdown of the federal government. This CR will move the funding deadline for the seven remaining fiscal 2019 spending bills to Dec. 21. Now that NFIP has been re-connected to the budget, a longer extension is likely to be a part of a long-term funding agreement potentially through September of next year.

 BCFP Hosts Industry on QM Rule: The Bureau of Consumer Financial Protection (BCFP) hosted the first of several industry meetings this week examining the Ability-to-Repay/Qualified Mortgage Rule (ATR/QM) in anticipation of their five-year assessment of the rule, due in early 2019. The discussion largely focused on how to address the QM patch, set to sunset when the conservatorship ends and no later than January 10, 2021, and flexibility with Appendix Q standards, debt-to-income ratio calculations, and points and fees calculations. There was general consensus around the importance of such issue standards, but with reasonable considerations to adjust for varying factors.

A great part of the discussion also highlighted the need for flexibility for creditors when it comes to self-employed income, which includes a large majority of NAR’s members and is increasing due to the rise in gig economy workers. Such flexibility, such as through residual income testing, would ensure that Appendix Q underwriting guidelines are not inadvertently leaving these borrowers with fewer options than salaried employees. NAR will continue to advocate for and support changes to the rule that ensure broad mortgage liquidity and availability.

Proposed Increase to Residential Appraisal Threshold: Recently the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively “the Agencies”) released a proposed rule that would increase the current threshold for residential real estate transactions requiring an appraisal to $400,000. The current threshold is $250,000. In lieu of an appraisal, an evaluation would be required that is consistent with safe and sound banking practices. This rule would only affect Federally Related Transactions overseen by the Agencies. Residential real estate transactions covered by the Fair Housing Administration, the U.S. Department of Veterans Affairs, the U.S. Department of Agriculture, Fannie Mae, and Freddie Mac would still be subject to those entities’ appraisal requirements.

Housing Finance Reform: On November 14, 2018, NAR legislative staff met with House Financial Services Committee Chairman Jeb Hensarling (R-TX) to discuss his recent housing finance reform discussion draft called the “Bipartisan Housing Finance Reform Act of 2018,” which is cosponsored by Rep. John Delaney (D-MD).

The proposal directs Ginnie Mae to guarantee mortgage-backed securities (MBS) that are backed by loans with various credit enhancements. In addition to borrowers having more skin in the game, additional credit enhancements must come from Federal Housing Finance Agency (FHFA)-approved private credit enhancers (PCEs). Once appropriate credit enhancements have been made, Ginnie Mae-approved issuers will then be allowed to issue government-backed securities through its platform.

NAR supports many components of the legislation such as an explicit government guarantee, flexibility given to regulators to set standards in the new mortgage finance system, and the use of a Common Securitization Platform (CSP) as the issuance platform for mortgage-backed securities. These provisions will help build a new housing finance system structure that will be more transparent, while providing a countercyclical mechanism to help ensure mortgage credit is available during periods of economic distress.

While these components are a good foundation for a future housing finance market, NAR provided suggestions to the Chairman that would improve the proposal. Among other things, NAR suggested to include language that would require Ginnie Mae to have a dual mandate to safeguard the secondary mortgage market, but also to ensure for a deep, liquid, affordable, and national mortgage market. Finally, NAR committed to continue to work with the Chairman to create a mortgage market that provides access to affordable mortgage credit for all creditworthy Americans, while ensuring taxpayers are properly protected.

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