1999 LEGISLATIVE UPDATE
Utah Association of REALTORSÒ
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"Anyone Get the License Number of that Truck?"
REALTORSÒ Meet "Quality Growth" Head-on
By J. Robert Latham, J.D., UAR Director of Government Affairs

Nineteen ninety-nine was a busy and remarkable year for legislation affecting the real estate industry in Utah—and next year will be more of the same. Utah joined the rest of the nation in tackling the growth issue. A bill to refine Utah’s Impact Fees Act generated a lot of behind-the-scenes controversy, but stalled late in the session. Despite passing both the House and Senate with little opposition, Governor Leavitt vetoed a bill designed to address abuses in mortgage lending. And legislation that would have severely curtailed the Anti-Discrimination Division’s administration of Utah’s Fair Housing Act was amended to gain the support of both landlord and tenant organizations.

In all, of the bills the Utah Association of REALTORSÒ Legislative Committee took a "support" or "oppose" position on, our record was 24 of 31, or 77% (20 of 26 bills we supported were signed into law, 4 of 5 bills we opposed were defeated).

Aside from the headline-grabbing issues, real estate professionals should take note of several other bills passed by the Utah Legislature addressing property tax law, the Division of Real Estate, and a state income tax deduction for health care insurance.

On January 18, 1999, Governor Leavitt’s State of the State Address contained the following remarks relevant to the real estate industry:

"In this new world nothing is as certain in this state as growth. Our population is expanding from within. It is our children and our grandchildren.

"But those choices are not without consequences as green fields become subdivisions and water supplies dwindle. This is a moment in time to shape this generation's obligation and opportunity. How will it be used? Will we continue to grow without plan or purpose or will our course be guided by wisdom and logic?

"Three-and-a-half years ago our state undertook a historic growth summit. The result was the Centennial Highway Fund, a $3.8 billion dollar, 10-year statement of optimism and investment in transportation and community.

"I-15 reconstruction has now hit the halfway point. It is on schedule and on budget. Other road projects are under way in nearly every county and city of the state.

"Selection of an acceptable route has delayed Legacy Parkway. But we must continue moving forward to plan the improvements that will sustain and outlast a generation. That means we must expand I-15 and widen it in each direction between Salt Lake and Farmington.

"Tonight I reference two additional steps that now follow. The first is a community effort known as Envision Utah, a private-public partnership created to paint alternative pictures of what we want our communities to look like in the year 2020.

"Tonight, I call on Utahns to participate, to view this as an obligation of citizenship. The future is ours to define, but we must start with a vision. A vision that represents the collective view of each and every Utahn.

"This process will not produce a consensus, nor will the debate always be harmonious, but the discussion is an essential one.

"Decisions must remain in the hands of local communities, city councils, county commissions and legislators. But the decisions will be dramatically better when driven by an informed electorate with an eye focused clearly on the future.

"The second step I've spoken of is the Quality Growth Act of 1999 a clear policy statement that we will preserve open space, reject sprawl and value housing for our families as a high priority.

"There is dramatic need for an effort on the part of cities and towns to assure that all kinds of housing will be found in every community. A good economy is a hollow victory if our children cannot afford to live in the town they grew up in. Local control, central coordination, is the guiding principle."

Twenty-five years ago, with the support of Governor Calvin Rampton and Senator Dixie Leavitt, the Utah Legislature passed Senate Bill 23. Also known as the Utah Land Use Act, the bill would have created a state land use commission to establish "a single land use planning process within the state." Although Utahns repealed that law in a REALTORÒ -backed referendum that year, twenty-five years later their state representatives and senators passed similar legislation in House Bill 119, also known as the Quality Growth Act of 1999.

While not as far-reaching as the Utah Land Use Act, the Quality Growth Act compares with the 1974 legislation as follows:

The UAR expressed concerns about several issues raised by the Quality Growth Act, for example: funding of the LeRay McAllister Critical Land Conservation Fund (CLC Fund) and its sources, the public/private balance of the Quality Growth Commission (QGC) and its composition, lack of neutrality between high-density and low-density development, the definition of "open land" and its impact on permissible uses of monies from the CLC Fund, ownership of property interests acquired with CLC Fund monies, potential use of eminent domain to acquire "open land" and "agricultural land" with CLC Fund monies, lack of a "sunset date," and the impact of quality growth areas on housing affordability.

It’s too early to say whether the UAR was justified in its concern that private property-friendly, free market alternatives to growth management were not considered by the legislative sponsors of the Quality Growth Act. However, the list of discussion items for the QGC leaves room for those alternatives to be considered.

As a result of concerns expressed by the UAR and others, legislators:

• added language requiring county and city appointees to the QGC to be elected,
• added language requiring that the representative of the real estate industry be obtained by a list of nominees from the Utah Association of REALTORSÒ ,
• added language expanding the definition of "open land,"
• added language providing legislative oversight of appropriations to the CLC Fund and expenditures by the QGC,
• added language precluding the use or threat of eminent domain by the QGC or in connection with the purchase of property interests with CLC Fund monies,
• added language requiring property interests obtained with CLC Fund monies to be held and administered by the state or a local entity,
• removed language directing the QGC to look for more state resources to be diverted to the CLC Fund, and
• removed language asking the QGC to consider "the degree to which the rights of private property owners should be protected."

We did err in recommending that representatives of state government on the QGC consist of two legislators. As the Supreme Court of Utah opined recently in In re Young, placing legislators on an executive body that administers funds would violate the Separation of Powers provision of the Utah Constitution. However, due in large part to lobbying by the Governor’s Office of Planning and Budget, which will provide staff support to the QGC, and the Utah League of Cities and Towns, legislators resisted making changes to the composition of the QGC.

The introduction of HB 119 prompted the UAR to take advantage of the NATIONAL ASSOCIATION OF REALTORSÒ ’ new Land-Use Initiative, which allowed the UAR to have a nationally known land use and real estate development law firm review and make recommendations on the legislation.

The UAR can take temporary solace in the fact that HB 119 is not a direct assault on private property rights, insofar as courts continue to uphold the view that planning and zoning are constitutional exercises of a state or local government’s police power. Nonetheless, the QGC’s ability to compete in the real estate marketplace for developable land creates cause for concern.

In addition, as more than one legislator has observed, "the camel’s nose is in the tent" and that HB 119 is "a first step." The Oregon Association of REALTORSÒ wishes that it had been more involved sooner when similar "new urbanist" policies began to be discussed and implemented in its state. Utah REALTORSÒ would be wise to monitor the next step this camel takes, and take appropriate action if necessary.

Other passed bills (UAR position, if any, indicated in parentheses)

Income Tax Deduction for Health Care Insurance – HB 25 phases in full state income tax deductibility for health care insurance for taxable years beginning on or after January 1, 2000 . . . four years before full deductibility phases in for the federal income tax. (Support)

Statute of Limitations – Real Property Improvements – HB 161 amends the statutes of limitation and repose to five years regarding boundary surveys and six years regarding actions related to improvements to real property.

Mapping and Documentation of R.S. 2477 Rights-of-Way and Other Structures – HB 334 appropriates $450,000 to document and inventory R.S. 2477 rights-of-way. (Support)

The UAR’s Legislative Committee voted to support several bills consistent with the Statement on Open Space approved by the UAR’s Board of Directors. The bills that outlined specific projects with specific appropriations that passed were:

Bonneville Shoreline Trail Program – HB 108 creates the Bonneville Shoreline Trail Program and appropriates $200,000 from the General Fund to the Division of Parks and Recreation for the development of the Bonneville Shoreline Trail. (Support)

Open Space Near State Prison – SB 43 identifies critical land near the State Prison and requires the critical land to be preserved as "open land," as defined by the Quality Growth Act. (Support)

Real Estate Appraiser Amendments – HB 149, sponsored by Rep. Gerry Adair (R-Roy), phases out state-registered appraisers and creates a state-licensed appraiser classification. State-registered appraisers have the same authority as state-licensed appraisers until May 3, 2001, after which they must meet the requirements for licensure or certification. (Support)

Real Estate Law Amendments – SB 120, sponsored by Sen. Al Mansell (R-Sandy), changes the date on which an order of the Division of Real Estate becomes effective from the expiration of the time to appeal to 30 days after the order is served unless otherwise provided in the order. (Support)

Uniform Building Standards Amendments – HB 71creates the Factory Built Housing Dealer Board and revises the registration requirements for dealers of factory built housing, but does not impose additional requirements for real estate licensees.

Certified Tax Rate Notice Amendment – HB 181 provides additional information to and clarifies the notice issued when a taxing entity proposes an increase in the certified tax rate. (Support)

Truth in Taxation – Judgment Levy – HB 268 requires taxing entities to advertise their intent to impose a judgment levy and hold a public hearing before a minimum judgment levy may be imposed. (Support)

Condominium Ownership Act – SB 220 provides the manner by which timeshare interests are to be valued for property tax purposes based upon current practice in Summit County.

Property Tax Exemption for Disabled Veterans – HB 275 expands the property tax exemption for disabled veterans and their dependents.

Impact Fee Arbitration – SB 65 creates an arbitration process for challenging an impact fee. (Support)

Limit on Plan Check Fee – SB 110 limits the amount a municipality may collect to review or approve plans for a residential or commercial building to the lesser of the actual cost of performing the plan review, or 65% of the amount the municipality charges for a building permit fee for that building. (Support)

Election Law and Elected Officer Substantive Amendments – Originally not a real estate-related bill, HB 129 was amended late in the session to increase petitioning requirements for a local initiatives affecting "land use law," which include a land use development code, an annexation ordinance, and comprehensive zoning ordinances.

Municipal Notice Provisions – HB 68 requires that a city or county provide notice of "predevelopment activity" to the planning commission of neighboring cities and counties within a one-mile radius.

Notice Requirements for County Zoning Ordinances – HB 271 modifies notice requirements for county ordinances.

Agriculture Protection Areas Amendments – HB 169 requires all property owners within an agricultural protection area to consent to annexation affecting such property, and removes a condition to the process of creating an agricultural protection area. (Support)

Eviction for Illegal Activities – SB 40 adds "on-premises" weapons violations under Title 76, Chapter 10, Part 5 (e.g., threatening with or using a dangerous weapon in a fight or quarrel, illegal discharge of a firearm, possession of a handgun by a minor, carrying a dangerous weapon while under the influence of alcohol or drugs) as grounds for abating a nuisance by eviction. (Support)

Fair Housing Amendments – SB 212 moves subpeona power from the Division of Antidiscrimination to the Labor Commission, requires the Commission to concur with certain actions of the Division, allows respondents to complaints by the Division to obtain an independent review by the Commission, and authorizes the Division to implement programs to increase the awareness of landlords, real estate agents, and other citizens of their rights and responsibilities under the Utah Fair Housing Act. (Support)

Fair Housing Amendments – SB 92 clarifies the procedure for reviewing housing complaints and provides the Division of Antidiscrimination with more autonomy to determine the merits of a complaint.

Private Property Ombudsman Amendment – HB 186 allows for the tolling of a civil action so that the Office of the Private Property Ombudsman may arbitrate matters regarding "constitutional takings" without jeopardizing the rights of the private property owner. The UAR would like to see the Private Property Ombudsman’s role expanded in the future to include the protection of other private property rights, such as due process and equal protection. (Support)

Funding Department of Natural Resources Private Property Ombudsman – HB 212 appropriates $40,000 to hire personnel to assist the Private Property Ombudsman and to pay per diem to and reimburse the expenses of arbitrators. (Support)

Wrongful Lien Amendments – HB 158 provides a cause of action for property owners alleging that a wrongful lien was filed against their property before the original wrongful lien statute was enacted in 1997.

Judgment Lien Amendments – SB 142 increases the marketability of real property subject to a judgment lien by allowing the termination of that lien upon the filing of adequate security, such as a bond. (Support)

Statewide Highway Criteria – Originally not a real-estate related bill, SB 66 was amended to require governmental entities to pay for the relocation of billboards or compensate the owners for the removal of billboards.

Individual and Corporate Income Credits for Low Income Housing – HB 309 provides a state income tax credit to individuals and corporations holding qualifying low-income housing tax credit certificates. The intent is the bill is to attract out-of-state capital for low-income housing development in Utah.

Defeated bills (UAR position, if any, indicated in parentheses)

Impact Fees Amendments – HB 114 would have modified the requirements for local taxing entities to impose impact fees. The Utah League of Cities and Towns strongly opposed this bill, which would have closed some of the loopholes in Utah’s Impact Fee Law, which allows local taxing entities to impose impact fees without adequately articulating the basis for those fees.

The bill would also have established a procedural framework that would have allowed the public to become a better watchdog over a local taxing entity’s enactment of an impact fee ordinance. Furthermore, HB 114 would have allowed a greater number of people to challenge an impact fee in the courts.

Perhaps the most controversial issue in HB 114 was whether existing and new development should pay a similar percentage of their building costs for infrastructure, in light of the fact that the federal government does not pay for local infrastructure as it did in the past.

The bill narrowly passed out of its House Committee, but then became bottled up in the Rules Committee. By the time it returned to the House floor, it was too late in the session and the House referred the bill to interim study. The sponsor, Rep. Gerry Adair (R-Roy) has indicated that he will re-introduce this bill next year.

Regulation of Mortgage Lenders – HB 294, sponsored by Rep. Gerry Adair (R-Roy), would have prohibited "double contracting" or knowingly procuring residential loans on a dwelling that exceed the fair market value of that dwelling. According to the sponsor, this bill was designed as a first step toward creating a regulatory framework for mortgage lenders. Coincidentally, REALTORÒ Day at the Legislature fell on the same day Rep. Adair presented the bill in a House committee. REALTORSÒ packed the committee room. The Utah Mortgage Lenders Association expressed opposition to the bill on the grounds that the mortgage-lending industry could regulate itself. (Support)

Although HB 294 had scant opposition in the House and Senate, Governor Leavitt vetoed the bill because, in his words

(Source: Letter, Governor Michael O. Leavitt to Hon. Martin R. Stephens and Hon. Lane Beattie, March 23, 1999.)

County Option Sales and Use Tax for Conservation Easements – HB 125 would have authorized counties, upon voter approval, to impose a 1/8% sales and use tax to purchase conservation easements on agricultural land and "open land." The bill received opposition from many quarters: local governments squabbled over the distribution formula, taxpayer groups opposed the grant of additional taxing authority to counties, and retailers opposed the authorization of an additional sales tax.

The UAR’s opposition stemmed primarily from its position that such preservation efforts would compete with other needs for land, such as affordable housing. Furthermore, although this funding method would have been consistent with the UAR’s Statement on Open Space, the UAR’s Legislative Committee expressed its preference that public land preservation efforts should be funded through property taxes and bonding, similar to Park City’s 1998 bond initiative.

HB 125 passed out of the House late in the session, but was not considered by the Senate. (Oppose)

Asset Forfeiture Amendments – HB 127 would have reformed current Utah law as it relates to law enforcement confiscation of personal and real property with an alleged connection to criminal acts, also known as "civil asset forfeiture."

According to testimony given to a House committee, Utah officials don’t know the value of assets being seized by law enforcement agencies because of poor recordkeeping.

In addition to making several substantive procedural changes in the way property is seized, HB 127 would have required law enforcement officers to make a report to the Division of Finance regarding the seizure. Furthermore, property forfeited to a seizing agency would have to be appropriated by that agency’s legislative body under HB 127, rather than remain to fund the functions of that seizing agency.

The law enforcement community strongly opposed this bill, which was introduced late in the session by its sponsor. A House committee referred HB 127 to interim study.

The NATIONAL ASSOCIATION OF REALTORSÒ has made the reform of federal civil asset forfeiture laws among its top priorities in recent years out of concern that private property is being taken without adequate due process. (Support)

Special Election Notice to Registered Voters – HB 89 would have required bonding authorities to mail an informational postcard notifying registered voters of the property tax impact for special elections when the maximum amount of bonds to be issued is $1,000,000 or more and the election is not held on a primary or general election. The bill received little opposition in the House, but passed over substantial opposition in the Senate.

Governor Leavitt vetoed this bill because

(Source: Letter, Governor Michael O. Leavitt to Hon. Martin R. Stephens and Hon. Lane Beattie, March 23, 1999.)

Residential Exemption on Property Tax – HB 28 would have limited the 45% residential exemption on property tax to the first $250,000 of the property’s fair market value. The UAR opposed this bill because it would have moved Utah further away from the uniform taxation of real property. After the UAR talked with the sponsor, the House Revenue and Taxation Committee tabled the bill and referred it for interim study. (Oppose)

Plumbing Code Provisions – SB 118 was similar to a bill defeated last year which would have overturned the Uniform Building Code Commission’s adoption of the International Plumbing Code in favor of the more labor-intensive Uniform Plumbing Code. Lobbying by the trade unions moved the bill out of the Senate, but it stalled in the House.

Appropriation for Centennial Trails Program – HB 198 would have appropriated $400,000 to the Centennial Nonmotorized Paths and Trails Crossings Program. An example of the kind of projects being funded through this program is currently under construction at the mouth of Parley’s Canyon in Salt Lake County. After narrowly passing the House, a Senate committee, and one vote on the Senate floor, the bill was not considered further and died in the Senate. (Support)

Subdivision Law Amendments – HB 90 would have added short, but confusing, language which exempted "the undeveloped and otherwise unsubdivided parcel of land that remains after separating it from a smaller parcel for the purpose of developing the smaller parcel" from city and county subdivision requirements. Although the bill passed out of a House committee, it did not advance to the Senate for lack of further action by the House. (Oppose)

Property Tax – Exemption from Rollback Tax and In Lieu Fees – HB 98 would have exempted local governments from paying rollback taxes or in lieu fees on certain acquisitions of property. This bill passed its House committee, but did not receive any further action by the House. (Support)

Property Tax Law Amendment – SB 155 would have reinstated voter approval requirements under Utah’s Truth-in-Taxation Law for taxing entities seeking to impose a property tax rate that exceeds the certified tax rate. This bill was introduced late in the session and failed to advance out of a Senate committee. (Support)

After the General Session concludes, legislators meet once each month to discuss issues and proposed legislation for the following year’s General Session. House Joint Resolution 9 – Master Study Resolution indicates that several items of concern to the real estate industry will be taken up by legislators in their interim study.

Some of those issues are:

• options for state and local governments to finance affordable housing development and preservation,
• the effect of placing a cap on amounts that can be recovered from the Lien Recovery Fund and the payment of attorney’s fees from the fund,
• the relationships between mobile home owners and mobile home park owners,
• the regulation of mortgage lenders,
• strategic lawsuits against public participation (a.k.a., "SLAPP" suits),
• the formation of an ad hoc committee to study and make recommendations regarding the Office of Private Property Ombudsman and ways to insure fairness,
• whether to modify the requirements for imposing impact fees,
• whether to allow counties to defer property taxes, and mechanisms for offsetting county revenue losses as a result of property tax deferrals, including an authorization for counties to borrow monies or issue bonds,
• the granting of local property tax exemptions to owners that do not receive services for the tax and are receiving services from a different government entity to prevent double taxation,
• expanding the residential lot size for applying the residential property tax exemption,
• the residential property tax exemption, and
• valuing homes on their date of acquisition rather than at their present market value and to examine the constitutional and statutory changes needed to put in to effect an acquisition date system.

Although the media reported that the 1999 General Session of the Utah Legislature was uncontroversial and unproductive in comparison to past sessions, it was clearly a watershed year for the real estate industry. Of the past four legislative sessions I have worked with the UAR on, 1999 was the busiest and most contentious. Moreover, I expect more of the same next year.

In that light, the UAR membership owes a deep debt of gratitude to its volunteer members who served on the Legislative Committee this year—they went above and beyond the call of duty. I also thank the RPAC contributors who make it possible for the UAR to assist those legislators who support REALTORSÒ , support private property rights, and protect the public. Finally, my thanks goes out to the more than 7400 Utah REALTORSÒ --your calls to your legislators, your attendance to REALTORÒ Day at the Legislature, and your feedback help make the UAR one of the most respected and influential organizations in Utah.

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