29 Aug May Report – From the TAR Government Affairs Department
May Article| 2019
|Telluride Ponders Incentives for Turning Short Term Rentals Into Long Term
At Tuesday’s town council meeting morning work session, Council members heard a proposal from Telluride Housing Department Director Melanie Wasserman that could potentially open up more long-term rental housing by incentivizing short-term rental property owners to make the switch to long-term renting.
The idea Wasserman floated would offer incentives to short-term rental owners and is based on the Housing Works program, which is part of Summit County’s Family Intercultural Resource Center (FIRC). The program, she explained, would leverage already-existing properties so it would not require the costs of new construction. Incentives could include screening of potential tenants, providing free property management and providing a rent guarantee should a tenant cease paying rent.
Renters would have to qualify by being employed full-time within the Telluride School District boundaries and, drawing from FIRC guidelines, be approved “based on rent to income ratio (RTI). For an applicant to be approved, he/she must demonstrate an RTI below 45 percent. For example, an applicant seeking a two-bedroom apartment at $1800 a month must have an income of $4000 a month or greater (45 percent of monthly income is going to rent).”
FIRC’s program also ensured one-year leases, though Wasserman suggested a local program could be more flexible given the seasonal nature of much of the work available in Telluride such as visiting ski patrollers and construction-based workers.
Possible partners in the program, Wasserman said, could include the three area governments, Trust for Public Housing and other regional housing players. Just who would run the program would be an issue as there is the potential for, she said, “too many cooks in the kitchen.”
State News – Colorado General Assembly Adjourns Sine Die
|On Friday, May 3rd the final gavel came down on the first regular session of the 72nd General Assembly. In total, 653 bills were introduced in the 2019 legislative session. The Colorado Association of RELATORS® (CAR) tracked 89 bills this year that would affect our industry and the Legislative Policy Committee (LPC) took a position on 55 of them. With Democrats taking complete control over the state Senate, state House and Governor’s Office after historic elections, the new majorities made 2019 a difficult session for the business community to navigate. However, CAR worked hard to educate new policymakers on how potential legislation could affect Colorado homeowners, property rights and the housing industry.
CAR is always on the frontlines fighting for Colorado REALTORS®, and here are some of the top issues that CAR worked on in 2019, straight from the Capitol:
1.) Rent Control Off the Table for 2019
A lack of housing inventory is the main catalyst that drives home prices up. In the last six years, home prices have increased 44% while housing inventory has decreased by 13%. NAR research suggests that for every two new jobs, one single-family permit is issued, but right now we are seeing fewer single-family permits being issued across the entire Front Range. If we take the right steps to improve affordability, we give Coloradans a better future rather than a temporary solution that only builds a wall around a few haves at the expense of all the rest of the have-nots.
2.) Meaningful Affordable Housing Solutions
HB-1228 – Expansion of Low-Income Housing Tax Credit (LIHTC):
Sponsored by Rep. Shannon Bird (D-Westminster), Rep. Brianna Titone (D-Arvada), Sen. Jack Tate (R-Centennial) and Sen. Rachel Zenzinger (D-Aurora), raises the cap of total allowed state tax credits for the program from the current $5M to $10M. And raises private sector equity to support the development and preservation of affordable housing.
HB-1245 – Affordable Housing Funding From Vendor Fee Changes:
HB-1319 – Flexible Funding Opportunities and Incentives for Developers:
HB-1322 – Expand the Supply of Affordable Housing:
3.) Championed Long-Standing Deed Reform
CAR is proud to be a part the solution. Upon adoption of this change, the industry can expect reduced confusion, lessened disputes arising from the current contract form to transfer real property, and a clear public record of the real estate transaction.
4.) Funding for Wildfire Mitigation
This is an important step to enable homeowners and communities together to tackle forest management and fuels reduction projects and lessen the devastating impact of wildfires and equip our communities with the tools and resources necessary to give residents more adequate risk mitigation funding to protect private property and the lives of our Colorado families and hardworking firefighters and emergency personnel.
5.) Protect Tenants and Property Owners and Preserve Affordable Housing
HB-1118, sponsored by Representative Dominique Jackson (D-Aurora), Representative Rochelle Galindo (D-Greeley) and Senator Angela Williams (D-Denver), changes existing law to require a landlord or property manager to provide a tenant 10-day notice to cure a violation for unpaid rent or vacate the property as a result of any violation against the lease agreement before the landlord terminates the lease and initiates an eviction proceeding. Under existing law, a landlord was required to provide a tenant three days to remedy a violation.
And with important amendments, single family homes owned by a property owner with five or few rental homes receive more leniency under the new law, which allows our vulnerable military and elderly families the ability to protect their savings and investments on their fixed incomes or sudden mobility change in circumstances as they serve our nation honorably.
HB-1170, sponsored by Rep. Dominique Jackson (D-Aurora), Rep. Mike Weissman (D-Aurora), Sen. Angela Williams (D-Denver) and Sen. Jeff Bridges (D-Greenwood Village), modifies the implied warranty of habitability laws dealing with a residential lease between landlords and tenants. Current law presumes that every rental agreement between a landlord and a tenant carries an implicit guarantee that a residential property is fit for human habitation. This bill modifies the conditions that trigger a breach of the warranty of habitability, establishes a process for the tenant and landlord to deal with any potential safety problems with the premises, and creates time limits for the landlord to address defective conditions within a reasonable time frame.
CAR worked with the bill sponsors to find common ground on defining the types of conditions that would trigger property owner responsibilities to mitigate any safety concerns for the resident and help define a time period that allows the property owner to properly address these concerns with any potential work that must be completed to improve the habitability for a resident.
National News – NAR Attends White House Opportunity Zone Event; New Rules Out
NAR’s 2019 Commercial Liaison, Bob Turner from Memphis, TN, represented NAR at a White House event on the Qualified Opportunity Zone (“QOZ”) program on Wednesday, April 17. The QOZ program was created in the 2017 Tax Cuts and Jobs Act to revitalize underserved communities by providing tax incentives for certain investments into them, to promote development and create jobs. In connection with the event, the Treasury department released the much-anticipated second round of proposed rules for the program, which provide more specific detail on how investors can participate in the program and receive the full tax benefits it offers.
The keynote speaker of the White House event was the President, who emphasized the administration’s commitment to the success of the program, to drive economic growth through long-term investments in underserved areas, designated as “Opportunity Zones.” Under the program, taxpayers who reinvest capital gains from a previous sale into a fund for investing into a QOZ are eligible to defer paying taxes on those gains and can potentially reduce their tax liability by 10 – 15% (based on the amount of time they hold the investment). Additionally, if the investment is held for at least ten years, any appreciation on it is tax-free. Housing and Urban Development Secretary Ben Carson and Treasury Secretary Steven Mnuchin also spoke at the event.
This second round of rulemaking builds off previous proposed rules released in October 2018, fleshing out and clarifying many aspects of the program. They include:
- Guidance on how to define the “original use” of a property in a QOZ, including vacant properties;
- How to count inventory of a QOZ business (which may not be physically in the QOZ, or may be sold to customers outside of it) when determining QOZ business property;
- The treatment of leased property within a QOZ for purposes of satisfying the program’s requirements;
- How to meet the requirement that QOZ businesses derive 50% of their gross income from business activity in a QOZ;
- Treatment of a QOZ business that straddles a QOZ; and
- Clarity on and examples of events that cause inclusion of a deferred gain (a triggering event to pay capital gains taxes on reinvested gains) and the flexibility funds have to reinvest interim gains.
NAR will be analyzing the proposed rules and providing updated information on them in the coming days. For more information on this topic, visit the Qualified Opportunity Zones page.
New FHFA Director Sworn In
On Monday, April 15, NAR staff attended the swearing in ceremony of Dr. Mark Calabria to be the next Director of the Federal Housing Finance Agency (FHFA). Dr. Calabria has decades of experience in housing and finance policy, including time spent at NAR. NAR supported Dr. Calabria’s nomination, which included most recently, spearheading a coalition letter(link is external) to the full Senate that lead to his confirmation on April 4 to a five-year term. At the ceremony, NAR joined a wide array of industry participants in supporting Director Calabria’s new role where he will be responsible for ensuring a reliable, stable, and liquid housing finance system that provides access to affordable mortgage credit for all creditworthy Americans.
This monthly government affairs/public policy report is prepared for information purposes for the members of the Telluride Association of REALTORS® (TAR). It is a snap shot of issues important to the real estate industry at the local, state, and national levels. Any position taken on local issues is done at the direction of the TAR Board of Directors and is done with considerable debate and discussion by TAR leadership. Positions taken by CAR or NAR on issues at the state and national level will be reflected in the article when applicable.