October 2017 Government Affairs Update
By: Barbara Koelzer, Regional Government Affairs Director
Commissioners Add Ballot Questions: The Board of County Commissioners voted to put two questions on the November ballot. First, they decided to ask voters to extend the existing sales tax for The Ranch to pay for expansions and improvements. In addition, they agreed to a residents’ request to remove term limits for sheriff, clerk, surveyor, assessor and treasurer. The Commissions agreed that these “skill” positions require professional expertise and are not political seats per se.
Council Says No to Water’s Edge Metro District: Recently, the City Council voted 5-2 to postpone indefinitely the Water’s Edge Metropolitan District service plan, effectively stopping the development of the project, targeted for adults with 848 dwelling units (patio homes, condos, townhomes and single-family units) and up to 70,000 square feet of commercial development. By issuing bonds, the developer hoped to build, finance and maintain the project, including a non-potable water system, parks, open space and recreation amenities. Water’s Edge is located between Douglas Road and Richards Lake Road on Turnberry Road.
Ross Cunniff made the motion, saying the proposed service plan wasn’t the best option for the project. He said it could be developed with fewer mills of additional property tax. The service plan called for a mill levy cap of 100 mills, 50 mills of debt and 50 mills for operating costs. Cunniff said 41 mills for debt would be “better.”
The City’s current metro district policy focuses on commercial development and Cunniff argued the City should re-examine its policy before approving any new districts. Mayor Troxell, who said it was a “good project” and Councilman Ray Martinez, voted against Cunniff’s motion. Staff had recommended approval of the service plan although it did not comply with the City’s current metro district policy because of its community amenities, all of which would be open to the public.
Raw Water Policy Approved: On September 5, the City Council unanimously approved a new raw water ordinance which will now become law on January 1, 2018. The ordinance increases the cash-in-lieu rate to $16,700 per acre foot and decreases the raw water requirement to reflect data on ten years of water consumption by existing customers.
The ordinance is part of the City’s plan to move towards a cash-focused system and ensure “that adequate water supply and associated infrastructure are available to serve the water needs of development.” Bob Overbeck argued that offering “discounted water” to development at the expense of current rate payers is unfair, but staff explained the fees are based on the cost of the water and by law the City can’t charge more. Overbeck based his argument on the fact that Wellington and Timnath charge much less for a four-bedroom home than Fort Collins. For example, Wellington charges $9,000 for a home on a 6,000-foot lot and Timnath charges $25,000 while the City will charge $9,000 under the new ordinance.
Short Term Rental Regulations Revised: The City Council unanimously passed amendments to the City’s Short Term Rental (STR) program with little discussion on September 21. STR regulations went into effect in March 2017 to allow the rental of properties for less than 30 days in certain parts of town. After the City began the program it became clear some STRs were still operating without sales and lodging licenses. After research, staff brought back revisions to the original ordinances designed to bring these properties into compliance.
Staff had proposed three changes to the regulations but two of those revisions were removed on first reading — allowing a property in an allowable primary STR zone to operate a primary STR on an abutting property and a grandfathering provision for tenants who were operating a STR prior with the property owner’s permission. The sole revision approved will grandfather STRs in existence prior to March 31, 2017, provided the property owners obtain the required sales and lodging tax licenses by October 31, 2017 and pay all back taxes.
NISP Plan Approved by Parks and Wildlife Commission: The Northern Integrated Supply Project (NISP) cleared another obstacle last week when its fish and wildlife mitigation plan was approved by the Colorado Parks and Wildlife Commission. The project also requires approval by Colorado Water Conservation Board and must be signed by the governor.
NISP would store water from the Poudre River in the proposed Glade Reservoir, which would be built at U.S. Highway 287 near Colorado Highway 14, and the proposed Galeton Reservoir near Greeley for 15 front range water systems, including the Fort Collins-Loveland Water District, Dacono, Erie, Eaton, Windsor and the Left Hand Water District. Water would be taken from the Poudre year-round depending on conditions, but the largest draw would be during the spring peak flow period. A decision from the U.S. Army Corps of Engineers is expected in 2018.
Business Coalition Pushing Transportation Tax: On September 5 Denver Metro Chamber of Commerce President/CEO Kelly Brough announced a coalition will push a 2018 ballot initiative for a state transportation sales tax. The measure will probably be similar to the failed House Bill 1242, which sought a roughly half-cent sales-tax hike over 20 years to fund major statewide highway expansions, transit, bike lanes and local transportation projects during the 2017 legislative session.
The coalition includes the Chamber, the Colorado Contractors Association and the Colorado Association of Commerce and Industry. The coalition will use the Chamber’s standing campaign committee, Coloradans for Coloradans, to campaign for the measure.
The Denver Business Journal says the ballot initiative will probably face opposition from the Republican Party and conservative organizations like the Independence Institute, who argue the State can come up with a new stream of revenue for transportation from its existing revenues if it just re-prioritizes its spending and cuts quickly growing programs like Medicaid.
TRID Rule Published: 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 was published in the Federal Register on August 11, making it effective on October 10, 2017. Mandatory compliance is required by October 1, 2018.
National Flood Insurance Program (NFIP) Extended: After the House and Senate approved a three-month extension of the National Flood Insurance Program, President Donald Trumped signed it into law on September 8 as part of a legislative package releasing more than $15 billion in assistance for storm-ravaged areas in the country. The program was set to expire on Sept. 30, but it will now remain in effect until Dec. 8. The NFIP provides flood insurance to 5 million homeowners nationwide. Lenders require flood insurance to close on mortgage financing if the home is in a flood zone.
NAR is continuing to work with lawmakers on reforms and a long-term extension to make the program better. The association supports the 21st Century Flood Reform Act, H.R. 2874, which passed the House Financial Services Committee a few weeks ago. The bill would reauthorize the program for five years, encourage private insurers to enter the market, cap annual insurance premiums at $10,000, and grandfather existing rates for certain homes that are already covered and in compliance with building standards. It would also make money available for owners to elevate their homes or take other flooding precautions and enable communities to use flood mapping techniques that are more accurate than the government’s.
The bill would make other reforms, including improvements to the processes for owners who file a claim or want to submit an appeal. “With a short extension on their side, leaders in the House and Senate should continue work on the 21st Century Flood Reform Act,” Brown said. “It’s in everyone’s interest to strengthen the NFIP and ensure the long-term certainty that current and future homeowners demand.”
NAR Comments on GSE Appraisal Waivers: On September 12, 2017, NAR sent a letter to the Federal Housing Finance Agency (FHFA), as well as to Fannie Mae and Freddie Mac (collectively the GSEs), commenting on the recent decision by Fannie Mae and Freddie Mac to allow for data-based valuations rather than traditional in-person appraisals in certain purchase transactions. Given recent complaints of long appraisal wait times and a lack of appraisers in certain areas of the country, NAR is supportive of innovations in the appraisal field that would help alleviate some of these issues and help the real estate market function efficiently.
However, NAR does have some concerns with the appraisal waiver programs implemented by the GSEs. Given the recent housing crisis and its role in the Great Recession, NAR firmly believes that creating mechanisms to provide safety and soundness to the real estate market is necessary, and traditional in-person appraisals are a very important element of ensuring a home loan is supported by sufficient collateral. Entities using automated valuation methods must demonstrate that those methods will not put undue risk into the housing market. While NAR is pleased with the GSEs requirement of 80 percent loan to value and limitation on the types of properties that can be financed without a traditional appraisal, there are still questions on the full applicability of the program and borrower requirements. NAR asks FHFA and the GSEs to provide more information on their programs for better transparency and assurances to the public, as well make it clear to borrowers that the transaction did not include a traditional appraisal.
House Committee Approves ADA Reform Bill: On Thursday, Sept. 7, the House Judiciary Committee held a markup of H.R. 620, the ADA Education and Reform Act of 2017, sponsored by Rep. Ted Poe (R-TX). The Judiciary Committee, led by Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI) considered the legislation, which adds a “notice-and-cure” provision to the Americans with Disabilities Act (ADA), giving businesses an opportunity to fix alleged violations before a suit can be filed against them. It also creates an education program between the Department of Justice, states/local governments, and businesses to raise awareness of ADA compliance issues.
The Committee approved the bill by a vote of 15-9 along party lines. It now awaits passage by the full House.
NAR sent a letter of support for H.R. 620 at the markup, and joined an industry coalition letter as well. In recent years, the practice of “drive-by-ADA suits,” in which attorneys hit many businesses with demand letters for small, easily curable infractions of the ADA (sometimes multiple times), has risen. This disproportionately impacts small businesses and commercial properties, and they often end up spending time and resources settling the issue instead of on actually fixing the violation. H.R. 620 provides businesses with the time and incentives to quickly resolve ADA violations, furthering the purpose of the ADA: to ensure access for all individuals to public spaces.
HUD Extends Temporary Condo Guidance: On Aug. 30, 2017, the Department of Housing and Urban Development (HUD) released Mortgagee Letter 2017-13, Extension of Temporary Approval Provisions for the Federal Housing Administration (FHA) Condominium Project Approval Process, which extends the current temporary guidelines on condominium projects until HUD publishes and implements the Final Rule of Condominium Project Approval. The Final Rule will be incorporated into the Condominium Project Approval Section of HUD Handbook 4000.1.
In response to the extension of the temporary condominium guidelines, NAR sent a letter to HUD urging the release of the Final Rule. NAR reiterated the need for greater flexibility in allowable commercial space and owner-occupancy requirements, as well as a more streamlined re-certification process and the return of spot loan approval. NAR also offered its services in working with HUD staff to help implement the Final Rule as soon as possible.