Government Affairs Update
Broadband Feasibility Study Kicks Off This Summer: In November 2016 voters passed an exemption to Senate Bill 05-152 which prohibited Larimer County from engaging in the provision of telecommunication services such as broadband internet access. Now the County has begun exploring options for broadband in its rural areas. The first step is a feasibility study of current conditions, which will be followed by an evaluation of viable options, and a recommendation on how to proceed. A consultant has been selected, and contract negotiations are underway. It is anticipated work will begin this summer.
Funding for the broadband feasibility study is projected to be a combination of County general fund dollars and grant resources, with grants seeking efforts actively underway. Funding needs for longer-term broadband projects will largely depend on recommendations from the study. Meanwhile, the County is researching opportunities for a range of possibilities, including infrastructure project planning, implementation and use.
City Moves Forward with Broadband: It appears that Fort Collins will ask voters to approve a ballot measure this November to create a broadband utility. The question is, will Fort Collins offer high-speed internet as a utility like Longmont does, or will it partner with a third party to reduce the risk? City Manager Darin Atteberry said, broadband is “one of the most significant initiatives the City is facing.”
Staff estimates the cost to build a fiber network is between $130 to $150 million. The project would likely be financed through bonding, hence the need for voter approval. The Council acknowledged the risk involved in competing with billion dollar businesses like Comcast, but determined it wants to proceed. Between now and August, staff will finalize ballot language for Council approval. The design and planning phase would occur in 2018 and the network would take another three to four years to construct. The goal is to provide high speed 1 Gbps service to residents for about $70 a month. Businesses would pay “hundreds” for commercial service.
Council Agrees to Extend Deadlines for Short-Term Rental Licenses: The City originally implemented a short-term rental (STR) licensing program in March 2017. The regulations were put into effect following a two-year process involving public engagement, six Council work sessions, and two Council hearings. Following the adoption of the licensing program, the City contracted with Host Compliance, a vendor capable of scrubbing and analyzing over 20 on-line websites. Host Compliance captures listing details including listing location and owner information on approximately 75 percent of all listings.
The licensing ordinance contains a grandfathering provision that allows STRs that were operational prior to March 31 and that had City sales and lodging tax licenses to apply for a STR license. Soon after the first notification mailing staff and Council began to hear from numerous STR hosts who were unaware of the regulations and/or the sales and lodging tax requirement.
As of early July, the City has issued 89 STR licenses and 104 are pending. Staff estimates another 100 to 125 STRs could come into compliance with the deadline extension. On July 11, the Council agreed to extend the deadline to September, which will allow currently operating STRs to operate legally if they receive sales and lodging tax licenses.
Council Discusses Metro District Policy: Metropolitan and Special Districts are authorized by Article-1 of Title-32 of the Colorado state statutes. Such districts are defined as units of local government. A special district provides public improvements and services to its property owners and residents. A metropolitan district one type of special district that provides two or more types of improvements and services, for example parks and recreation, sewer, street improvements, water or fire protection.
At a study session on July 11 the City Council heard from a panel of speakers, including, LBAR’s Chair, David Powell. The Council intends to create its own municipal metro district policy to help it review future development proposals. Originally intended to provide urban-like services to developments outside municipal limits, they have evolved to be a preferred technique to provide financing for public improvements inside city limits. Developers in Loveland began using metro districts in the early 2000s. Currently there are 20 metro districts in the City, including eight in Centerra alone. The Foundry, Loveland’s newest metro district, was established in September 2016.
Larimer County has 106 metro districts and Weld County has 231, according to the State’s Department of Local Affairs (DOLA). As David Powell told the Council, LBAR’s primary concern is the need for disclosure. Buyers must be educated about the role, function and regulatory powers of metro districts. Metro districts finance improvements and services by issuing municipal bonds, which are redeemed by special property taxes. The additional property tax varies district to district, but the implications to a homeowner can be substantial. For example, property owners in Thompson Crossing (Johnstown) pay an additional 81 mills in property tax.
Colorado statute does not require a specific disclosure for metro districts. REALTORS® need to be able to determine if a property is in a metro district (and the property tax implications) early on so potential buyers aren’t blindsided at the closing table. LBAR would like to see the creation of a recorded document for metro district properties that would be easily discoverable during a title search. IRES listings are not uniform. Not all brokers indicate that a property is included in a metro district but that information is available in public records.
Metro districts are required to file various documents with DOLA, including a service plan, annual audits and an annual budget. For more information concerning what a prospective buyer should know about metro districts, DOLA published Special Districts: A Brief Guide for Prospective Homeowners in 2009. Access the guide here:
No Broadband Vote This Fall: Unlike Fort Collins, Loveland voters will not have a high-speed internet ballot question to consider in November. The Broadband Task Force was ready to move forward but most the City Council was not. Staff, consultants and the Task Force will continue working on the project and when the Council feels it has all the information it requires, will call a special election next year.
CFPB Final Rule Clear on Ability to Share Closing Disclosures: On July 7, the Consumer Financial Protection Bureau (CFPB) released the final rule amending the “Know Before You Owe” (KBYO or TRID) mortgage disclosure rule. As advocated for by NAR, the final rule clarifies the ability to share the Closing Disclosure (CD) with third parties – a victory for real estate professionals nationwide.
As outlined in the 2016 proposed rule, the final rule highlights an existing exception within the Gramm-Leach-Bliley Act (GLBA) and implementing Regulation P that allows lenders to share the CD with third parties (sections 502(e)(1) and 509(7)(A)). The CFPB recognizes the CD as a “record of the transaction,” which is “informative to real estate agents and others representing both the consumer credit and real estate portions of residential real estate sales transactions.” The CFPB notes that CD sharing is permissible to the extent it is consistent with GLBA and Regulation P and is not barred by applicable State law. The final rule will be effective 60 days from publication in the Federal Register. Stay tuned for further analysis on the final rule.
NAR Submits Statement on Housing Finance Reform: On June 29, the U.S. Senate Committee on Banking, Housing & Urban Affairs held its first of several hearings of the year on housing finance reform. The hearing, entitled “Principles of Housing Finance Reform” consisted of three witness panelists from the Mortgage Bankers Association, Housing Policy Counsel of the Financial Services Roundtable, and Center for Responsible Lending.
NAR submitted a statement highlighting that any new housing finance system must ensure that in all markets mortgage capital will always remain available for creditworthy Americans. Second, NAR stated that taxpayer dollars should be protected.
Furthermore, to shield taxpayers and ensure a steady flow of capital into the mortgage market in both good times and bad, NAR urged lawmakers to convert the Enterprises into government-chartered, non-shareholder owned authorities that are subject to tighter regulations on products, profitability, and minimal retained portfolio practices in a way that ensures the protection of taxpayer monies.
NAR Comments on GSE Capital Reserves: On June 27, 2017, NAR submitted letters to the U.S. Federal Housing Finance Agency (FHFA) Director, U.S. Treasury Secretary, members of the U.S. Senate Committee on Banking, Housing & Urban Affairs and U.S. House Committee on Financial Services, expressing concern related to the scheduled elimination of capital reserves held by Fannie Mae and Freddie Mac (Enterprises).
Specifically, NAR letters state to Congress and the banking agencies that in the absence of comprehensive housing finance reform, policymakers need to address the declining capital reserves at the Enterprises. One way to address this issue would be to create a Mortgage Market Liquidity Fund (MMLF) through legislation or under existing regulatory authority. A portion of the Enterprises’ profits could be deposited into the fund, controlled by the FHFA Director, which would cover future losses due to market fluctuation as described above. The FHFA Director could release funds from this account to buffer against further U.S. Treasury involvement. As a result, some capital will be in place to avoid significant market disruptions and to continue to ensure that Americans have access to affordable mortgages. Under the terms of their agreements with the U.S. Treasury, the Enterprises’ capital reserves will decline to zero by January 1, 2018.
NAR Joins Coalition to Preserve Net Neutrality: NAR has joined a coalition of businesses and public interest groups working to preserve Open Internet rules—also known as network neutrality. NAR together with tech companies like Facebook, Microsoft and Amazon and main street companies like Walmart have joined together to advocate for preserving net neutrality. The coalition will work at the Federal Communications Commission (FCC), in the courts and on Capitol Hill to ensure that internet remains an open and level playing field, an issue critical to our business success.
Net neutrality is shorthand for the concept that Internet users should be in control of what content they view and what applications they use on the Internet. More specifically, net neutrality requires that broadband networks be free of restrictions on content, sites, or platforms. Networks should not restrict the equipment that may be attached to them, nor the modes of communication allowed on them. Finally, networks should ensure that communication is not unreasonably degraded by other communication streams.
Net neutrality is important to small, main street businesses like REALTORS® who depend on open internet access every day to run their businesses and serve their customers. NAR supports net neutrality and urges Congress to oppose legislation that would threaten the current FCC Open Internet Rule and rollback the important protections put in place by the FCC in 2015.