Commercial Broker Quarterly: Q1 2009 - GWCAR - Greater Washington Commercial Association of REALTORS

CBQ >> Commercial Broker Quarterly: Q1 2009

Virginia Legislation

Delegates and Senators passed an amended $77 billion state budget using federal stimulus cash to preserve services that had faced cuts. In so doing, the Commonwealth's legislators made Virginia the first state to pass a budget containing federal stimulus funds.

Slightly more than $1.5 billion in federal cash was used to offset a $3.7 billion shortfall and restore many state health care, educational and public safety cuts that Gov. Tim Kaine had proposed in December.

As expected, Senators, who won't face re-election until 2011, remained consistently civil, while Delegates, who are up for re-election 8 months from yesterday, saw heated debate and rhetoric on both sides of the aisle.

Even with the number and complexity of issues legislators encountered this year, VAR scored another impressive set of victories....

6 of the 7 bills introduced on behalf of REALTORS^® passed

Worked behind the scenes to kill more than 20 bills opposed by REALTORS^®. Below are some of the pieces of legislation with relevance to the commercial industry.

Virginia Association of REALTORS^® Legislation

Senate Bill 1031 - Commercial real estate referrals (Hanger):

This legislation will allow Virginia real estate agents to pay commissions to other states' licensees who bring buyers or tenants into Virginia for commercial transactions. The goal is to encourage and facilitate cross-border transactions in the commercial field.

STATUS: This bill passed the House and Senate and now awaits the Governor's signature.

House Bill 2541 - Mandatory background checks for real estate license applicants (Amundson):

STATUS: VAR hammered out the details of a mandatory background check bill with the Virginia State Police and the Department of Professional and Occupational Regulation. The legislation awaits the Governor's signature.

Senate Bill 1157 / House Bill 2135 Recordation tax / grantor tax assessments - stated consideration (Saslaw / Jackson Miller):

In the 2008 General Assembly, VAR introduced legislation requiring that the calculation of grantor taxes owed at closing be determined using the "stated consideration of the property" - the sales price - instead of the assessed value.

STATUS: On counsel from the patron, Senate Richard Saslaw (D-Fairfax and Senate Majority Leader) VAR agreed to have the Department of Taxation study this policy implications of this bill during the interim between the 2009 and 2010 General Assembly sessions.

Other Commercial Property Tax Legislation for Northern Virginia

VAR did not take part in this legislative debate, because it was a regional issue, but as many of you recall in 2007, after years of trying unsuccessfully, the General Assembly passed a landmark statewide and regional transportation funding package (HB 3202). However, the Virginia Supreme Court gutted this transportation package by ruling that the General Assembly violated the state constitution.

Unfortunately, one of the two remaining funding mechanisms from 2007 that survived the Supreme Court's ruling are local jurisdictions new found authority to increase commercial property tax rates up to 25 cents (for each $100 of assessed value) for transportation needs in their area. Arlington and Fairfax were the only counties to use this authority and actually increase the commercial property tax rate in their counties. (Arlington increased their commercial property tax rate by 12.5 cents and are considering increasing it to the full 25 cents; while Fairfax increase their commercial property tax rate last year by 10 cents).

Without a state-wide transportation solution, concerns are mounting local jurisdictions will turn to this new found revenue authority to raise (or continue to raise) commercial property taxes and use these revenues to move money around to fill budget shortfall and not use it for its intended purpose of new transportation construction.

To address these concerns Delegate Tim Hugo introduced two pieces of legislation (below). HB 2479 reduces the commercial property tax rate cap from 25 cents to 12.5 cents. HB 2480 sets out more specific language for the use of the transportation funds so that additional monies brought in by the commercial property tax rate are spent on new construction, not existing transportation projects or maintenance.

House Bill 2479 - Reducing Commercial Property Tax Rate (Hugo)

This legislation reduces the rate of the additional property tax that may be imposed on commercial property by localities embraced by the Northern Virginia Transportation Authority from $0.25 per 100 to $0.125 per $100.

STATUS: This bill passed the House and Senate and now awaits the Governor's signature.

House Bill 2480 - Commercial Tax Rate Increase for New Construction Only (Hugo)

Requires localities to use the revenue from the special real property tax on commercial property in localities embraced by the Northern Virginia Transportation Authority or the Hampton Roads Transportation Authority solely for new road construction and new public transit construction. Under current law, the localities must use the revenue for transportation purposes that benefit the special regional transportation tax district to which the locality belongs.

STATUS: This bill passed the House and Senate and now awaits the Governor's signature.