After the holidays local governments are getting off to a slow start in terms of real estate-related legislation and policy. But that is a short-term “problem” that won’t last long. Today the General Assembly kicked off its 2022 session. This alone will provide me with lots to talk about as legislators get into gear.
Although short, this issue includes topics that should be of interest to any real estate professional — rebuilding after a disaster, occupancy and one of my personal favorites, involuntary historic designations. To learn more, keep reading.
Regional Government Director
Impact of the Marshall Fire: 2021 ended in tragedy with the Marshall Fire, in which 1,084 homes were lost in Louisville (550), Superior (378), and unincorporated Boulder County (156). Multiple organizations, including BOLO REALTORS® have pitched in to support the displaced families.
From a government affairs perspective, as shocking and difficult as this disaster has been to witness, the biggest issues are yet to come. How can families find places to live in an area that is already suffering from low inventory and supply constraints? Can governments reduce red tape to let residents begin the rebuilding process quickly? Will homeowners’ insurance cover the costs to replace their homes? (See https://tinyurl.com/2p8ua4ua)
Already the Town of Superior has announced all rebuilt homes will have to comply with current building and zoning codes, not what was in effect when the homes were originally constructed. In addition, staff is “evaluating adoptions [sic] of portions of the 2021 International Wildland Urban Interface Code.” How will these regulations affect the cost to rebuild?
There are many questions at this point, with few answers. It is unlikely the rebuilding process will commence soon but it is important to be watchful moving forward to advocate on behalf of the homeowners who lost so much.
Involuntary Historic Designation Denied: At the end of December the City Council voted 4-2 against an involuntary historic designation of a home on Mountain Avenue. It is not uncommon for local governments in Northern Colorado to have an involuntary designation clause in their historic preservation regulations. However, it is a power that is rarely utilized because it conflicts with property owners’ rights. An involuntary designation allows the designation of a property as historic over the objections of the property owner.
Several citizens pushed for the City to designate the home as historic because of the late-nineteenth century style of the home and the property’s association with Jessie Moore, an early Fort Collins educator. The Historic Preservation Commission agreed, passing a resolution finding the property eligible for designation.
Unfortunately, the property had also been affected by a modern problem, methamphetamine contamination. The new owners wanted to demolish the home, arguing the meth presented health risks for their family. If the historic designation had been approved, the house could not have been torn down. The City Council was therefore required to make the final decision on the fate of the property.
After a public hearing, voicing concerns related to the home’s structural issues, an unsafe electrical system and the meth contamination, as well as fears the involuntary designation could steer residents away from purchasing potentially historic homes, Mayor Arndt and Council members Pignataro, Francis and Peel voted against the involuntary designation. Councilors Ohlson and Gutowsky voted in favor of the designation.
Council Wants Temporary Suspension of U+2: The City Council asked staff to “evaluate barriers” to Fort Collins citizens’ desire to house Marshal fire victims. On January 12 staff provided a list of options that would suspend the City’s occupancy restrictions (U+2) to allow the temporary housing of displaced Boulder County residents.
Mayor Jeni Arndt was absent. Mayor Pro Tem Emily Francis and Councilors Tricia Canonico, Julie Pignataro, and Shirley Peel voiced support for a temporary suspension of the City’s U+2 regulations although staff said Boulder County has said the temporary needs are covered. Susan Gutowsky and Kelly Ohlson will likely oppose the concept when it comes to an official vote.
Gutowsky referenced constituent concerns. She argued against changing Fort Collins’ occupancy limits at all, although she said she didn’t want to appear callous. Ohlson said there is “next to zero need” and expressed apprehension this could be the “camel’s nose under the tent” when it comes to permanently relaxing the U+2 regulations.
Francis countered Fort Collins should “show our support for those communities and (that) we are here to help if they need it.” The Council will consider a resolution to temporarily suspend enforcement of U+2 on January 18. If the resolution passes, homeowners would not need a formal permit to host fire victims above legal single-family occupancy limits. Staff would continue with complaint-based enforcement.
For more information on U+2 see https://www.fcgov.com/neighborhoodservices/occupancy.
Legislative Goals for 2022 Session: The 2022 legislative session begins on January 12. The State’s economic health is good, thanks to better-than-expected revenues and $4 billion in federal stimulus money (American Rescue Plan Act or ARPA). Some of the goals expressed by legislative leaders relate to real estate.
Affordable housing is one legislative priority. The legislature has already allocated 10 percent of the ARPA for grants and low-interest loans to build or preserve affordable units. For example, legislators plan to draft incentives for developers and local governments to prioritize dense, multi-family housing to promote affordability. As Vice-chair State Senator Julie Gonzales of the legislative task force on affordable housing said, “For a number of reasons, everything from just the pure cost of land to tap fees to the inefficiency one house at a time gets you, building taller and denser makes more sense in terms of the math of trying to finance these projects and actually make them happen.” (Denver Post, Dec. 20, 2021).
The Chairs of the House and Senate Transportation Committees, Faith Winter (Senate) and Matt Gray (House) will introduce several bills according to the Colorado Sun, including a $28 million proposal to offer free public transportation during ozone alerts (this idea is supported by Governor Jared Polis).
A “clean commute” bill, which would create incentives for the business community to encourage their employees not to come to work in single-occupancy vehicles, increase carpooling, use transit and even work more from home. Changing the behavior of state employees will likely be central to the proposal. The details are still in flux.
The Sun also notes Governor Polis wants to spend $28 million to put off the implementation of the 2-cent-per-gallon gas fee from Senate Bill 260 for six months, until after the 2022 election, which could become “an interesting political fight.”
This is just a sampling of the legislative topics we can expect in 2022. As of January 12 at 2:34 pm, 40 bills had already been introduced.
Changes Recommended for Fannie Mae Condo Rules: NAR wrote to the Federal Housing Financing Agency’s (FHFA) Acting Director Sandra Thompson regarding recent changes made by Fannie Mae to its underwriting requirements for condominium projects.
NAR agrees with changes intended to ensure the safety of condominium projects. However, the lack of publicity and speed of implementation of these changes could undermine many purchases and refinances and may have a disproportionate effect on under-served communities.
NAR’s second concern is that this change follows on a change from last December where vague language around financing of short-term rentals inadvertently expanded the definition of this proscribed class to include many second home properties, often condos.
NAR Meets with Task Force on Appraisals: NAR’s Real Property Valuation Committee and leadership from NAR’s Fair Housing Policy Committee participated in a listening session with the Biden Administration’s Interagency Task Force on Property Appraisal and Valuation Equity (PAVE). The PAVE Task Force was created in June of 2021 to address discrimination in the appraisal and homebuying process and includes leadership and staff from 15 federal agencies.
NAR members heard from representatives of the Task Force and provided feedback on issues related to the appraisal reconsideration of value process, diversity in the appraisal industry, to include appraiser education and outreach, as well as appraisal policy, guidance, and regulations. The PAVE Task Force is expected to issue a report of its findings in February 2022. NAR staff stressed the value in continued engagement with REALTORS® and industry professionals, especially appraisers, as the Task Force moves forward in assessing and developing recommendations related to the current property valuation framework.