Prepared by Meredith R. Weisel, Esq. and Ed Krauze, Esq.

Maryland Legislative Update

MAR Legislative Committee

To review all of the bills that MAR reviewed during the 2006 legislative session please visit www.mdrealtor.org go to Government Affairs and under the pull down menu go to 2006 Bill Preview and Bill Tracker.

ICC Wins Final Approval from Federal Government

On May 30, 2006, the Federal Highway Administration issued the "Record of Decision," which was the final step for the Federal Environmental Impact Statement review process of the ICC. This means that the project is on its way to construction, which is expected to begin this Fall and be completed around 2010 and 2011. GWCAR has always been on record supporting the ICC, which has been in the Montgomery and Prince George's Counties master plans for over 40 years and will provide a critical East-West highway link between the I-270 and I-95 corridors and substantially reduce congestion and traffic accidents. Reducing traffic congestion will improve the quality of life for all homeowners and future homebuyers not just in Montgomery County and the State of Maryland, but also throughout the entire metropolitan area region.

Montgomery County Legislative Update

Council Approves Ad Hoc Committee to Examine Outstanding Agricultural Reserve Issues

On April 4, 2006, the Montgomery County Council unanimously approved the formation of an Ad Hoc Agricultural Policy Working Group, which would provide the Council with comprehensive advice on proposals dealing with the County's 93,000-acre Agricultural Reserve. If you are interested in being appointed to the working group please read the press release below. www.montgomerycountymd.gov/Apps/Council/PressRelease/PR_details.asp?PrID=38

Councilmembers Perez and Praisner Move to Make Wheaton a Smart Growth Zone

Wheaton is being called the new Silver Spring. Several councilmembers are looking to start revitalization in the Wheaton area. Therefore, Councilmembers Perez and Praisner have proposed legislation that would transform downtown Wheaton into a smart growth zone. According to Councilmembers Perez and Praisner, their proposal has the following elements:

1. It allows taller buildings- potentially up to 125 feet, or about 11 floors- to be constructed in the overlay zone near the metro. In order to be eligible to build a taller structure, a developer must agree to set aside a certain percentage of the retail space for small businesses, and must also agree to set aside a certain percentage of land for green space. We are trading building height for green space, and we are taking steps to ensure that the retail businesses that emerge in the new buildings are small businesses.

2. We are providing additional flexibility for small businesses in Wheaton that are seeking to expand by eliminating red tape. We currently have a one size fits all system of rules for all businesses seeking to expand. So when the owner of the Hollywood East wants to give a modest face lift to her restaurant, she must go through the onerous site plan review process. It is very expensive, time consuming, and frustrating. Our proposal streamlines the process for businesses seeking to do small expansions by eliminating the requirement that they go through site plan review. Let's eliminate the red tape for small businesses seeking to expand, and let's stop making every expansion proposal a full employment act for lawyers.

For more information please read the press release below.
http://www.montgomerycountymd.gov/Apps/Council/PressRelease/PR_details.asp?PrID=37

District of Columbia Legislative Update

Recordation and Transfer Taxes Increase to 1.45% Likely to Start October 1

The DC Council passed by unanimous consent (13-0) the 2007 budget that includes increases in deed recordation and transfer taxes for both commercial and residential properties. The increase from 1.1% to 1.45% in essence increases taxes from 2.2% to 2.9%, a 24% increase when transferring property in the District. The budget is still subject to Congressional approval, but is likely to take effect October 1, 2006.

GCAAR President-elect Brenda Small testified against the increase. Public Policy members met with elected officials and the membership flooded the council with e-mail and faxes. We vigorously argued the flaws of raising these taxes and showed the Council real world examples of how increasing the recordation tax and transfer tax actually makes homes more unaffordable and home buying more challenging. Even the District's Chief Financial Officer, Natwar Gandhi, released future budget estimates showing decreased revenue from the recordation and transfer taxes. All of this effort was to no avail - the DC City Council was determined to raise recordation and transfer taxes.

Believe it or not, it could have been worse. Ward 8 Councilmember Marion Barry proposed an amendment to increase recordation and transfer taxes to 1.5%. It was only after some feverish last minute lobbying that the Barry amendment was defeated 11-2, with Councilmembers Barry and Jim Graham voting for the larger increase.

This increase in recordation and transfer taxes creates $88 million in new revenue for the District. The bulk of the revenue will pay for rental assistance programs ($30.2 million), homeless and mental health programs ($15.7 million), District 911 phone services ($15 million), and other Councilmember projects not related to affordable housing ($22 million).

The few bright spots of the budget are that homes purchased for less than $400,000 are exempt from the increased recordation tax (keeping it at 1.1%) and $5 million is earmarked for workforce housing initiatives. Also, enough money has now been set aside for school modernization issues, so that the earlier contingent increases in the commercial recordation and transfer taxes will "sunset" and not be necessary.

We are working hard to roll back this onerous tax. Look for more information in the coming months as we gear up for September elections and next year's budget battle.

The Fight is Not Over!

You can still help fight this tax! During this election season, candidates for Mayor, Council Chair, and various Council seats may knock on your door, come to your supermarket, or debate at your local school or community center. Take the time to tell them:

1. Recordation and transfer taxes in the District are the highest in the region and among the highest in the country.

2. Recordation and transfer taxes discourage homeownership and affordable housing by driving up the cost of buying a home.

3. Roll back the recordation and transfer taxes!

District of Columbia Issues

The DC Fair and Equal House Voting Rights Act

The DC Fair and Equal House Voting Rights Act, which would grant the District a full vote in the House of Representatives and is sponsored by Congressman Tom Davis, has moved out of Committee on Government Reform with the full endorsement of Delegate Norton. This is the furthest any such legislation has moved in Congress.

Virginia Legislative Update

Fiscal Year 2007 Virginia State Budget

After months of meeting in a special session, the 2007 Virginia State Budget was finally passed just weeks before new fiscal year was to begin. The House of Delegates efforts to not raise taxes, and in particular the grantor's tax, carried the day and no new taxes for transportation projects were passed. A second additional special session is being scheduled later this summer to discuss transportation issues again. It appears likely tax increases, and the grantor tax, will remain part of the transportation debate. The Virginia Senate, as was the case in the regular session and in the first special session, continued to advocate for these taxes to address Virginia's transportation problems.

The latest rumblings from state legislators appear to be a consensus that the best way to solve transportation problems is through a regional approach. Whether that means allowing local jurisdictions, in areas like Northern Virginia, the opportunity to increase local option taxes is unclear. What is clear is the need to address transportation issues. The question continues to be how to pay for these improvements.

As you may know, VAR coordinated a statewide media buy and placed ads in every major daily newspaper in the Commonwealth to fight grantor tax proposals. VAR also drafted and helped produce a radio ad that ran for two consecutive weeks in the Richmond, Hampton Roads and Roanoke markets in an effort to help sway public opinion. These efforts in addition to the over 10,000 e-mail from REALTORS^® to legislators helped keep the grantor tax a at bay … for now. VAR and GWCAR will continue to re-affirm the REALTORS^® position to increasing the grantor tax, or other related real estate taxes, and closely monitor any new developments in the transportation debate.

Eminent Domain Legislation

Since the U.S. Supreme Court's decision in the Kelo case last summer, most Virginia legislators came to Richmond looking for a "solution" to eminent domain. The Virginia Housing Commission prepared and presented a measure that addressed several concerns that surfaced during fall 2005 deliberations.

As the General Assembly approached, VAR prepared to fight for a "measured" response to the Kelo decision. Then VAR, as part of a coalition representing major business interests, led the efforts to pass such a bill (House Bill 94 introduced by Delegate Terrie Suit). However, many who in principle view almost any use of eminent domain as wrong opposed VAR's efforts. IN fact, rural legislators, pressured by organization such as the Virginia Farm Bureau and the Virginia Property Rights Coalition, felt HB94 did not go far enough to limit the power of eminent domain in Virginia.

After many hours of negotiations, it became clear to everyone involved a compromise would not be possible. Consequently, legislators deemed no action preferable to any action. This issue is likely to return next session.

New Virginia Laws Effective July 1, 2006

REAL ESTATE LICENSING:

Pre-licensing Requirements: HB 211 (Cox) requires a high school diploma or its equivalent as a condition of licensure as a real estate salesperson or broker. The provisions do not apply to any person holding a valid license before July 1, 2006.

Prosecution of DPOR Violations: HB 553 (Saxman) extends the statute of limitations for the Department of Professional and Occupational Regulations (DPOR) investigations. Prosecutions must commence within one year of the discovery of the offense, but no later than five years from the occurrence.

PROPERTY RIGHTS:

Offers to Repurchase: HB 241 (Suit) prevents owners from waiving their right to repurchase unused land that has been seized by eminent domain. Any contractual provision or agreement waiving such right is void and unenforceable.

Damage to Non-Conforming Property: HB 78 (Suit) provides that if a non-conforming building is damaged or destroyed by a natural disaster, the zoning ordinance may require that such building be repaired, rebuilt or replaced to eliminate or reduce the nonconforming features to the extent possible. If such building cannot be repaired, rebuilt or replaced except to restore it to its original nonconforming condition, the owner shall have the right to do so.

Surplus Government Property: HB 1488 (Shannon) Adds online public auctions as a permissible means by which the Commonwealth and localities may dispose of surplus materials. Such sales are subject to the same provisions applicable to state agencies, departments, divisions, and institutions that dispose of surplus materials by public sale or auction.

AFFORDABLE HOUSING:

Arlington Affordable Dwelling Unit (ADU) Program: SB 273 (Whipple) authorizes the county to establish affordable housing contributions from developers as a condition of a special exception application for residential, commercial, or mixed-use projects above certain densities. Under the bill, the provisions of the ordinance would allow the developer to provide on-site Affordable Dwelling Units, off-site Affordable Dwelling Units, or a cash contribution to the county's affordable housing fund in lieu of providing the units.

For full text of the aforementioned bills, visit the Virginia General Assembly Web page at legis.state.va.us/.