As you know, tomorrow, November 2nd is election day (finally!). I am planning a separate update that I will send out later this week to cover all the real estate-related election news
This update covers some interesting policy decisions in Northern Colorado, as well as an update on a state-level short term rental proposal.
Regional Government Director
Potential Settlement on Gross Reservoir Expansion: On Friday, October 29 Boulder County announced the Board of County Commissioners will hold a public meeting on Tuesday, November 2 on whether to resolve a lawsuit related to Denver Water’s plan to expand Gross Reservoir. The proposed settlement would require Denver Water to pay more than $10 million to mitigate the impacts of the project in Boulder County. In exchange, Boulder County would not dispute Denver Water’s claim that the project is exempt from review.
The County’s news release states, “The settlement proposal includes $2.5 million to assist Boulder County residents directly impacted by the project, $5.1 million for open space funding to replace lands which will be inundated by the increased reservoir capacity, $1.5 million to address the greenhouse gas emissions from the project, and $1 million to restore a portion of the South Saint Vrain Creek which will provide important wildlife habitat. Denver Water will also agree to transfer 70 acres of land near Walker Ranch Open Space to Boulder County. These additional acres will be added to Walker Ranch Open Space.”
A draft of the settlement proposal is posted on the Gross Reservoir Dam Expansion webpage.
Building Code Updates Pass First Reading: The latest round of international building code updates was included on the Longmont City Council’s consent agenda on October 26. Tim Waters pulled the ordinances and asked Chief Building Official Blas Hernandez about the projected costs for the requirements to make new single-family homes electric vehicle (EV) and solar-ready.
Hernandez said the cost for the solar wiring on the roof is minimal ($50-$100). However, the cost to add a garage circuit for the EV requirement could be as much as $1,000. Waters said he would vote for the updates because it is the “right thing to do.” However, he suggested the City should try to offset those costs by expediting the time to process building permits. “Time is money to builders,” he said. Waters noted he would continue to press the City to find ways to improve its timeline for building approvals because the City has a responsibility to “do no harm,” a reference to Prosper Longmont (see below).
The Council then voted to approve both ordinances. Second reading is scheduled for November 30.
Peck Criticizes Prosper Longmont: CEO Jessica Erickson presented Longmont EDP’s third quarter report to the City Council on October 26. As part of her presentation, Erickson shared Prosper Longmont’s policy statements.
Councilor Joan Peck praised the report in general. Then, she criticized Prosper Longmont, a coalition created by residents, businesses and civic leaders, formed to tackle workforce housing. https://www.longmontleader.com/local-news/prosper-longmont-group-takes-aim-at-housing-reform-4512529
The policy that irritated Peck was, “Work with Longmont’s elected leaders to advocate for an approach to policy-making that does not have a negative impact on housing affordability, equitable access to home ownership opportunities, or the feasibility of creating attainable housing.” Peck said the LEDP and Prosper Longmont don’t make policy, which she argued is the sole purview of the City Council.
Outgoing Councilor Polly Christensen chimed in, saying groups like the Chamber and the Realtors® advocate against affordable housing by supporting metro districts. She said Prosper Longmont isn’t a good use of time or money. Erickson countered that LEDP has never opposed affordable housing.
Reversed Setbacks Approved for Plugged/Abandoned Wells: On October 28 the Broomfield City Council voted to approve an ordinance that requires a 250-foot reverse setback between plugged or abandoned wells and residential development. The measure for plugged and abandoned oil and gas wells includes exemptions for developers with projects already in process.
Tuesday’s vote came after a similar measure regulating reverse setbacks for pre-production oil and gas wells was passed in June. There are 111 total plugged and abandoned wells in Broomfield. Of those, 26 are not located exempt areas.
Many plugged/abandoned wells are surrounded by existing development (for example, Broadlands and Wildgrass), are located in areas with Vested Property Rights (for example, Anthem and Baseline), or are in areas where future residential lots would be exempted from the Ordinance (for example, Wilcox neighborhood). The staff said the proposed setbacks are not anticipated to have a notable financial effect as the areas with the greatest impact are limited.
To address future development in non-exempt areas, the Council amended the ordinance to allow construction to occur within 150 feet of a plugged well if certain additional safety precautions are taken. Councilwoman Kimberly Groom was the sole no-vote om the ordinance. She said the ordinance places undue burdens on developers.
Council Approves 1041 Ordinance: On October 19 the City Council approved an ordinance 6-1 with Shirley Peel opposed, to designate “certain activities” as matters of state interest and imposing a moratorium on them until the City Council adopts guidelines for their administration. 1041 powers were authorized by State statute in 1974 by House Bill 1041. The development of the City’s guidelines could take as long as a year.
The public hearing lasted for several hours, with a lot of comment from Northern Colorado municipalities and water districts whose representatives argued the ordinance would negatively impact their projects. Mayor Pro Tem Emily (Gorgol) Francis suggested a new option to narrow the scope of 1041 powers. Her option would only apply to projects on City-owned natural areas, parks, and open spaces, thus eliminating concerns from many of the speakers. However, the Francis option will affect the Northern Integration Supply Project. (In fact, to date it is the only project for which the moratorium is applicable.)
While it appeared that Francis’s idea was new, observers say this option was likely a strategy created behind closed doors following the first reading of the ordinance a month ago. Nonetheless, the concept received Council’s support with the Exception of Peel, who said, “I still don’t think we understand the unintended consequences of this, I feel like we’re rushing this through … without hearing from stakeholders.”
Councilmember Susan Gutowsky discounted the comments of many speakers, commenting “(I) didn’t see citizens calling for no moratorium (sic) … just service providers”…. The river is the gem of our community, why would we want it to die?” She added, “We need “control and protection against anything we perceive that would harm our community.”
Now, staff will begin drafting the Development Code language referenced in the ordinance. The Council’s approval of a $50,000 appropriation will allow them to hire consultants to help with that effort.
This will be followed by public engagement and then a Council work session prior to the public hearing process to adopt the 1041 powers guidelines. It is like the hearing process won’t occur until November 2022. In the meantime, if the US Army Corps of Engineers gives NISP the green light to proceed, Northern Water will not be able to begin working on any components of NISP that would occur on City-owned lands.
Note: It is difficult to know how Fort Collins’ 1041 regulations will financially impact NISP in the long run. However, this decision will damage the City’s relationship with the 15 water providers and communities that will benefit from the project. However, the Council doesn’t appear to be worried about that if Susan Gutowsky’s comments are representative of the Council as a whole. https://www.northernwater.org/what-we-do/plan-for-the-future/northern-integrated-supply-project
Rental Licensing & U+2: As part of the Housing Strategic Plan, staff presented a proposal to require rental licensing and possible changes to Fort Collins’ occupancy ordinance (U+2). There was general support for both concepts with a few exceptions. Councilor Shirley Peel voiced concern for over-regulation regarding rental licensing. Councilor Kelly Ohlson said he will fight changes to U+2 with “every political bone in my body.”
Councilor Susan Gutowsky said she is “looking for really heavy accountability for absentee landlords who run down their properties and collect the rent.” She added, “property management companies in this town aren’t worth a hoot.”
Mayor Jeni Arndt cautioned she is “worried the cost will drive up rent,” and added the City needs to “streamline the exemption process for U+2 permits.” “I’m confident we can come up with a good plan,” she said.
Councilor Kelly Ohlson disagreed strongly with the proposal to change U+2. He said, “I don’t agree at all with exploring your vision for occupancy … and family definitions”…. I don’t share your enthusiasm.” He offered to meet with Mayor Pro Tem Emily Francis to help her understand U+2, arguing relaxing U+2 is “nonsensical” and stated, “(It is a) remarkable myth that this will lead to more affordable housing.”
Ohlson added that U+2 has created “profound and positive” changes in his neighborhood since the city began enforcing it comprehensively in 2005. Before that Ohlson said, “Investors strip-mined my neighborhood.” Francis countered that it is “impossible to buy a starter home because investors are buying all the 3-bedroom homes because of U+2.”
At the end of the discussion Meaghan Overton, the City’s Housing Manager, described the conversation as “rich.” She said staff will work on ideas to shorten the timeline for implementing rental licensing.
The initial proposal was to create a pilot rental licensing program and “explore options” for adjusting the occupancy code in the first year of the program, implement a mandatory rental licensing program in the second year and ensure all rental units are inspected by year 5. The staff will return at a future work session to share the results of the public engagement campaign (in early 2022), and details for the first year of the program.
City Wants Transportation Ideas: The City of Greeley has launched a new planning effort known as “Greeley on the Go” to link various forms of transportation and create a 20-year measurable blueprint for improving the City’s transportation system. As part of the program, staff is asking for public input.
Visit https://www.greeleyonthego.com to provide input.
Interim Committee Nixes Short-Term Rental Proposal: Last week the Legislative Oversight Committee Concerning Tax Policy was set to consider Senator Chris Hansen’s draft legislation to create a hybrid property classification for short-term rentals, which for tax purposes would be classified in part as residential property and in part as a lodging property.
According to Colorado Politics, Hansen said, “We’re simply saying that if you have (a short-term rental) and you rent it out, that you need to incorporate the same level of taxes as the bed and breakfast or the hotel that you might be right next door to.” He described a hotel in Steamboat Springs that has been converted to short-term rentals to reduce the property’s tax burden. Aspects of the bill received fierce pushback from four of the community members who testified before the committee, including Realtors and owners of short-term rental properties.
Colorado Politics reported that some of the harshest criticism came from Keith Erffmeyer, Denver County’s assessor who spoke on behalf of the Colorado Assessors Association and said his organization was “unequivocally opposed” to the provision splitting property classifications. “The administrative efforts for assessors to do any of that is absolutely overwhelming,” he said. “This would be impossible for us to accomplish with current staffing levels in Denver, I’d probably have to hire five, maybe 10 more people just to be able to do that.”
None of the panel’s three other Democrats or two Republican members supported Hansen’s proposal. It was suggested that he introduce his draft as a bill during the next legislative session. Other proposals to regulate short-term rentals are also being drafted for presentation during the 2022 legislative session.
New Flood Insurance Pricing: On October 1, 2021, FEMA began phasing in a new flood insurance pricing system called Risk Rating 2.0: Equity in Action. These changes apply to new flood insurance policies. Most existing policies are not going to be affected until after April 1, 2022. Existing policy holders can take advantage of any premium decreases at the time of their renewal beginning October 1, 2021.
NAR policy supports Risk Rating 2.0: Equity in Action, which prices flood insurance for each home individually rather than by flood zone. FEMA had not updated its rating system in 50 years. By adopting modern insurance industry technologies, standards and practices, FEMA is able to rate more precisely and accurately by using more flood risk factors and property-specific characteristics, including each building’s unique elevation, distance to water and cost to rebuild. The new rating system only affects NFIP risk-based rates and does not change flood mapping or insurance requirements. Buyers may assume seller policies, and any increases cannot exceed 18 percent per year by law.
More information is available here: https://tinyurl.com/riskrating
NAR GSE Equity Suggestions: NAR submitted its response to the FHFA’s request for input on the Enterprises Equitable Housing Finance plans. The FHFA has directed Fannie Mae and Freddie Mac to develop long-term plans that will help to flesh out their goals and action plans for improving equity in the conventional market for housing finance. These plans would be annually reviewed.
Improving equity helps to improve access and affordability of mortgage credit for all credit worthy borrowers. To this end, NAR supports the FHFA’s efforts and outlined a number of NAR’s policies that support more equitable financing in both the opportunity to purchase a home and the ability to stay in a home.
NAR’s suggestions include:
- Introducing homeownership counseling
- Expanding down payment assistance
- Solutions to support homebuyers with student debt
- Resuming pilot programs to develop new products and services
- Sticking to sustainable mortgages
- Right-sizing capital rules and appropriate pricing
- Reducing LLPAs and g-fees that reflect the GSEs’ actual risk
- Enforcing fairness in appraisal
- Making reforms to account for flood risk
- Improved credit scoring
- Aiding the expansion of housing supply