HB 1022 “Seller Financing of Real Property” sponsored by Rep. Ray Scott (Grand Junction) and Sen. John Morse (Colorado Springs) passed unanimously out of the House Committee on Economic and Business Development. The bill, which was initiated by CAR, and allows sellers to finance up to three transactions during a 12-month period. The LPC voted to oppose SB-32 “On-Bill Financing Program for Energy Savings, sponsored by Sen. Johnston (Denver) which would require the Public Utilities Commission to create rules to establish an on-bill clean energy improvement financing program for retail customers. A public utility would finance clean energy improvements by adding a temporary surcharge or increased rate to the customer’s utility bill. HB-1031 “Formation of Creative Districts” (Rep. Mikloski) would allow towns to form creative districts and allow related businesses to receive tax incentives. The LPC decided to monitor this bill, which is of much interest to cities such as Loveland (see related story above about the Creative Sector Development). “Energy Rating” Sen. Michael Johnston (Denver) has stated his intention to introduce legislation that would require both residential and commercial properties to obtain an energy rating before being sold or leased. CAR staff sat down with Sen. Johnston to express ongoing concerns with mandatory energy rating programs and reports that during the conversation, Sen. Johnston informed staff that he would no longer pursue a residential energy-rating program. CAR will continue to remain vigilant on behalf of our commercial members, and in the coming days ask our commercial members for their input about the possible impacts a commercial energy rating program may have on the industry.
The City Council gave final approval to the creation of a Creative Sector Development Advisory Commission, which will assist in the retention, creation and attraction of jobs in the creative sector. According to the City, the arts & culture sub-sector is an $8.9 million industry, generating $82 million in payroll dollars annually. The program is a joint venture of the City with Aims Community College. The concept for the program evolved from the 2005 Comprehensive Plan, which identified the creative sector industry as something unique in Loveland worthy of a cluster initiative.
Campaign Finance Discussion Gets Testy: A discussion on prohibiting Limited Liability Corporations (LLCs) from making political contributions revealed a deeper philosophical split among City Council members. The Council has been discussing possible revisions to the City’s campaign finance regulations, first passed by the voters in 2007, for about a year after it was discovered that LLCs were exempt from the corporate prohibition on campaign donations. Council member Joan Shaffer, ardent supporter of campaign finance restrictions, argued, “It’s a public perception issue. The public needs to be heard.” Kent Solt agreed, saying, “The people won’t take this sitting down.” Mayor Cecil Gutierrez argued that allowing LLCs to contribute “opens the door for abuse.” They inferred without naming names, that a mayoral candidate in the previous election had used the LLC loophole to finance his campaign.
Other Council members supported Hugh McKean, who said LLCs are generally small businesses that deserve a voice in politics. Those who support limiting donations from LLCs claimed the purpose is to curb influence from out of town or international corporations. Interestingly, Joan Shaffer, who raised the most money during her campaign, revealed that most of her donations came from out of town donors, but argued they were from friends and family. Kent Solt drew the ire of several Council members when he said “it was obvious that there was a five-person voting block against the ordinance, so there was no reason to continue the discussion. A motion to move the ordinance forward failed by a 5-4 vote, with Solt, Shaffer, McEwen and Gutierrez voting yes and McKean, Klassen, Rice, Heckle and Johnson voting no.
Town Administrator Mike Hart announced a tentative agreement between the town of Berthoud and the Little Thompson Water District (LTWD) to provide municipal water on a short-term basis (one – two years). If the deal goes through, it will give Berthoud time to find a solution to the Town’s water problems, which are thought to be caused by algae in the aging reservoir. During the hiatus Berthoud also intends to install technology to improve filtering capability at the Town’s water treatment plant.
Home and business owners in Boulder County can sign up to have an “energy adviser” evaluate their buildings and suggest ways to reduce energy use. The new program grew out of the EnergySmart initiative begun by the City of Boulder several years ago. Last April, Boulder County received a $12 million economic stimulus grant from the Department of Energy to increase energy-efficiency efforts locally, and City and County staff have worked to implement the energy consulting program known in Boulder as “Two Techs and a Truck” and implement it countywide.
The County’s goal is to reach 10,000 homes and 3,000 businesses. Participants will be eligible for a $250 rebate for completed upgrades. Small loans ($500 – $3,000) are also available. More information is available at http://www.energysmartyes.com/
The President did not specifically mention the mortgage interest deduction in his State of the Union speech. He did call for simplification of the tax code reform and the need to reduce the federal deficit but didn’t offer specifics on these goals could be accomplished. Changing MID to a 12 percent tax credit was proposed as part of his deficit reduction commission’s final report late last year, and while Obama in his speech said the commission’s work provided a starting point for deficit reduction, he made it clear he wouldn’t be incorporating all of its recommendations in his proposed budget, which he’s expected to release next month. “I don’t agree with all of their proposals,” he said.
What he did say, though, is that the government needs to tackle excessive spending—and that includes “spending through tax breaks and loopholes.” In one specific example, he said he would propose a five-year freeze on domestic discretionary spending for $400 billion in deficit reduction.
In other points, he wants to ramp up spending on infrastructure, make 80 percent of electricity come from clean energy sources by 2035, and streamline the federal bureaucracy—something that would likely include consolidating the housing function because, he said, “there are at least five different entities that deal with housing policy.”
False 3.8% Transfer Tax Rumors Persist: Misleading emails and other communications about the 3.8% Medicare tax in the health care reform law continue to circulate. The messages usually say that the 3.8% tax is imposed on unearned income that includes the sale of a principle residence.
However, the tax that is being referenced is far narrower and only has the potential to impact a small sliver of high-income households who receive investment income. The $250,000-$500,000 capital gains exclusion remains in place. NAR has created a brochure with more information on who is impacted and it is available on REALTOR.org: http://bit.ly/bhS8H6
Staff and Task Force at Odds Over FasTracks Tax Increase Proposal: The Denver Post reported that RTD’s staff recommended a 0.2 percent sales-tax increase in November (2011) to complete up to 90 percent of the FasTracks program by 2022. RTD is short at least $2 billion to complete FasTracks with its current funding sources, which include a 0.4 percent sales tax approved by metro Denver voters in 2004.
RTD officials said if the additional 0.2 tax was approved by the voters, it would stretch out completion of FasTracks into the next decade, and the cost of the entire project will grow to $7.2 billion from the current estimate of $6.7 billion. RTD’s director said he expects the Federal Transit Administration will announce a $1.03 billion grant to RTD for the FasTracks public-private partnership this spring that will build a train line to Denver International Airport and the light-rail Gold Line to Arvada/ Wheat Ridge. The final rail line to be finished under this scenario would be the rail line to Boulder/Longmont, which would not be finished until 2027.
Later, the FasTracks task force of the Metro Mayors Caucus rejected the staff’s recommendation and suggested a sales-tax increase of between 0.3 and 0.4. The Post reported that Broomfield Mayor Pat Quinn said he and some other local government leaders along the corridor of the proposed Northwest commuter train to Boulder and Longmont would have difficulty supporting the 0.2 percent tax option because it was not enough to expedite the completion of the Northwest line. RTD’s Board of Directors will decide Feb. 22 whether to seek a tax increase and if so, in what amount.
- On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853) extending the Bush-era tax rates and a host of other expired and expiring provisions. The legislation is not “paid for,” so there are no revenue raisers taken from real estate or other industry groups. The package provides temporary extensions of its numerous provisions. Some are retroactive, as well, so that the rules that had been in place previously will operate as if they had never expired.
Included in the bill are provisions that affect real estate investment and operations—such as energy-efficiency tax credits, capital gains, and more. A few key provisions of interest to REALTORS® include: 1) Retention of Bush-era tax brackets through the 2011 and 2012 tax years; 2) Retention of the capital gains tax rate of 15 percent for assets sold or disposed of during 2011 and 2012; 3) Extension of numerous energy efficiency credits through December 31, 2011, including: the Energy Efficient New Homes, Energy Efficient Existing Homes, and Energy Efficient Buildings credits. For more information, read the summary prepared by NAR staff: http://www.realtor.org/government_affairs/bush_tax_cut_extension.
- California Rep. Gary Miller has introduced House Resolution 25. The resolution expresses the “sense of the Congress that the current Federal income tax deduction for interest paid on debt secured by a first or second home should not be further restricted.” Representative Miller has sent a “Dear Colleague” letter asking other Members of Congress to co-sponsor the resolution. NAR will be working with Congressman Miller’s office to seek additional co-sponsors by visiting every office in the House of Representatives to present the letter as well as a letter from NAR requesting additional co-sponsors.
- Gov. John Hickenlooper announced that Barbara Kelley would remain Executive Director of the Department of Regulatory Agencies. Gov. Bill Ritter appointed Kelley to the position in November 2009.
“Barbara Kelley knows how to support business and protect consumers,” Hickenlooper said. “She is a leader who understands the complexities of our state’s rules and regulations and the importance of strong customer service. We are fortunate to have her on our team.” Kelley has practiced law for more than 35 years and has extensive experience working with municipalities and counties throughout Colorado on matters related to zoning, land use and entitlements, annexation, variances, licensing and eminent domain.
- Legislators introduced 95 bills on the first day of Colorado’s 2011 legislative session, of which four relate to our industry. “Seller Financing Of Real Property” HB-1022, sponsored by Rep. Ray Scott, (Grand Junction) & Sen. John Morse (Colorado Springs). This bill, which was initiated by CAR, would allow a mortgage loan originator to engage in three seller-financed transactions a year without going through the licensure process. “Continue Foreclosure Deferment Program” HB-1023, sponsored by Rep. Mark Ferrandino (Denver). The bill would extend the existing foreclosure deferment program until 2016. The program was implemented in 2009 (HB-1276) and requires the Colorado Division of Housing to provide educational materials for homeowners. “Class Of Residential Land When Residential Improvements Removed” HB-1042, sponsored by Rep. Claire Levy (Boulder) and Sen. Jeanne Nicholson (Granby). The impetus for this bill was the Four-Mile Canon fire in Boulder County. It would retain the residential land classification on a property in place for two years if improvements were destroyed, to allow the owner to avoid paying higher vacant land property taxes. “Including Commercial Property in New Energy Improvement Districts” HB-1047, sponsored by Rep. Matt Jones, (Louisville) and Sen. Gail Schwartz (Snowmass Village). Expands the scope of the “New Energy Jobs Creation Act of 2010″ to include commercial buildings and those used by nonprofits. This would make it easier for building owners to obtain financing for renewable energy improvements. Note: It is likely that foreclosure will be a popular topic for new legislation. For example, Sen. Kevin Lundberg (Berthoud) says he will introduce a bill to “correct some inequities in the foreclosure sale process, creating a more competitive situation for foreclosure sales and hopefully creating higher foreclosure sales prices.”