LEGISLATIVE UPDATE
Utah Association of REALTORS®
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Stellar UAR Legislative Committee Runs Into Gridlock on Big Issues
By J. Robert Latham, J.D., UAR Director of Government Affairs

Although the results of the 1998 General Session of the Utah Legislature were mostly favorable to the real estate industry, several noteworthy issues—like impact fees and property taxes--remained unresolved as the election season approaches.

When compared to the legislation, the highlight of the past session was the quality of input and participation from the UAR’s Legislative Committee, chaired by Margaret Malherbe. The breadth of experience and industry perspectives offered by the committee members made for a thoroughly satisfying examination of the issues presented by legislators in the form of proposed bills.

The conclusion of the 1998 General Session yielded more legislative vacancies than in recent memory. Although the UAR enjoys almost an embarrassment of riches in the REALTOR®-friendly legislators, the results of the upcoming election could determine whether the UAR acquires the political clout to take a more proactive role on legislation affecting the real estate industry rather than a primarily reactive role.

State senators who are retiring are Robert Steiner (D-Salt Lake), Blaze Wharton (D-Salt Lake), George Mantes (D-Salt Lake, Tooele), LeRay McAllister (R-Utah), John Holmgren (R-Box Elder, Cache), and Alarik Myrin (R-Carbon, Daggett, Duchesne, Summit, Uintah, Wasatch). Thus, 6 of the 16 state senate seats are open.

State representatives who are retiring or decided not to seek re-election are John Arrington (D-Weber), Patricia Larson (D-Weber), Daniel Tuttle (D-Salt Lake), Steve Barth (D-Salt Lake), Orville Carnahan (R-Salt Lake), Robert Killpack (R-Salt Lake), Christine Fox-Finlinson (R-Utah), and Swen Nielsen (R-Utah).

Also, some state representatives are leaving their seats to seek election to the state senate. The people are Rep. Peter Knudson (R-Box Elder), who has filed for the seat which will be vacated by Sen. Holmgren; Rep. Beverly Evans (R-Duchesne, Wasatch), who has filed for the seat which will be vacated by Sen. Myrin; and Rep. Gene Davis (D-Salt Lake), who has filed for the seat which will be vacated by Sen. Wharton. Thus, 11 of the 75 state representative seats are open.

Legislation

Against a backdrop of newspaper articles and editorials concerning impact fees, the UAR Legislative Committee geared up to address the issue this year. Although the UAR worked with the Utah Home Builders Association and indirectly with the League of Cities and Towns to insert predictability and fairness into Utah’s Impact Fee Law, legislation addressing impact fees didn’t materialize until the end of the legislative session. The State Senate voted to refer the matter for interim study. Expect more discussion of impact fees over the coming months and a bill next year.

Major reforms to the way Utah collects real property taxes were also put forward by legislators. One proposal to remove language from the Utah Constitution regarding property taxes was proposed, but was defeated in the Senate. Another proposal to create an "acquisition-based" property valuation tax system was proposed, but referred to interim study. Thus, in addition to impact fees, legislators will study Utah’s property tax structure over the coming months.

Governor Leavitt prefaced his annual address to a joint session of the Utah Legislature by making the following comments on issues relevant to the real estate industry:

"While we’re building next-generation highways, we also need to build future neighborhoods and next-generation housing.

"Do we wall off the Wasatch Front and tell our children this is not the place? No. We plan now and start building the 17,500 new houses and apartments that will be needed yearly to house them.

"A roof over one’s head is a basic human requirement. Owning one’s home is a quest that should be advanced by any society.

"But some local governments have begun to use their planning and zoning authority to exclude everything but big lots, double garages and expensive brick homes. Nice, if your earnings allow it. But what if they don’t?

"Two of my most passionate beliefs are in play here: the importance of local control and the power of the free market. But it is unfair for any community to make income the price of admission. . . .

"If we’re smart and forward-looking, we can find the right mix of density and design."

Passed bills

Having been signed or passed without veto by the Governor, the following bills affecting the real estate industry will become law. The UAR’s position, if any, is indicated in parentheses.

Affordable Housing Amendments – HB 210 imposes an annual review and reporting requirement related to moderate income housing planning on cities with a population greater than 10,000 and counties with a population greater than 25,000. (Support)

Real Estate Recovery Fund Amendments – SB 32 removes the Real Estate Recovery Fund from the sunset act. Both the Division of Real Estate and the Utah Association of Realtors agree that the recovery fund has been administered well and requires no continuing oversight by the Utah Legislature at the present. (Support)

Appraiser Registration and Certification – SB 173 revises the temporary permit process of appraisers by the Division of Real Estate and clarifies the disciplinary process for appraisers. (Support)

Title Insurance Amendments – HB 265 authorizes the insurance commissioner to assess each title insurer to fund the administration, investigation, and enforcement related to the marketing of title insurance. The UAR opposed this bill because it believes the assessment on title insurers will be passed along to the real estate consumer. (Oppose)

Private Property Ombudsman/Eminent Domain Valuation – HB 388 and SB 49 assist the owners of private property that is the subject of eminent domain proceedings.

HB 388 authorizes the Private Property Ombudsman, who is employed by the Division of Natural Resources, to advise owners of private property of their rights, and to mediate or arbitrate their disputes with government agencies. HB 388 gives the Private Property Ombudsman the power to bring the government agency to the table—which should alleviate past practices of ignoring efforts by the Private Property Ombudsman to resolve disputes. (Support)

SB 49, which resembles a bill the Governor vetoed last year, adds relocation costs to the list of expenses that the owner of property which is the subject of eminent domain may obtain from the condemning agency. The bill also requires condemning agencies to assist property owners in finding replacement property, and adds a mediation/arbitration option. The bill also requires the condemning agency to pay for one additional appraisal at the property owner’s request. (Support)

Tax Increment Financing for Affordable Housing – HB 287 adds affordable housing to the list of projects redevelopment agencies may allocate a percentage of tax increment financing funds for. (Support)

Amendments to Olene Walker Housing Trust Fund – HB 279 codifies an existing practice of using a portion of the fund to restore or preserve historic properties or acquire conservation easements to create low-income housing. (Support)

LeRay McAllister Conservation Grant and Revolving Loan Fund – SB 51 appropriates $100,000 and creates a Critical Land Conservation Committee to make grants or loans to local entities or nonprofit organizations to preserve open space in Utah. (Support)

Property Tax Restriction – SB 52 restores voter approval requirements in certain instances before a taxing entity—most particularly special districts--may increase taxes. (Support)

Telemarketing Requirements – HB 44 requires telephone solicitors to disclose who they are, who they work for, and the purpose of the phone call. The bill also requires telephone solicitors to hang up upon receiving a negative response from the person being solicited, and prohibits caller ID blocking. (Support)

Local Government Subdivision Ordinances – HB 95 is intended to remedy an interpretation by some cities and counties that a "subdivision" occurs upon the joining of a subdivided parcel of property to another parcel of property. The bill clarifies that such joinings of parcels do not constitute subdivisions. (Support)

Mobile Home and Manufactured Home Amendments – HB 171 redefined "mobile home" and "manufactured home" to bring Utah law in line with federal law. The bill also clarified whether a mobile home or manufactured home is permanently affixed and qualifies as an improvement to real property. (Support)

Property Tax-Circuit Breaker – The Governor has signed HB 201, which expands circuit breaker eligibility by allowing people owing delinquent property taxes to qualify for a homeowner’s credit, but places limits on the extent to which the credit may be applied to the delinquency. (Support)

Eco-terrorism Prohibition and Penalties – Planning on engaging in some "monkey-wrenching"? The Governor signed HB 206, which enhances the criminal penalties for acts defined as "eco-terrorism." (Support)

Residence Lien Recovery Fund Amendments – The Governor has also signed HB 219, a bill that requires those who place liens on owner-occupied residences to include with the notice of lien a statement describing the steps the owner may take to require the lien claimant to remove the lien. (Support)

Property Valuations for the Poor – HB 425 expands the residential exemption on property taxes available to low-income claimants. (Support)

Transfer of Agricultural Land – SB 16 exempts from subdivision requirements "a bona fide division or partition of agricultural land for agricultural purposes." (Support)

Property Taxes-Uniform Fees and Certified Tax Rate – SB 50 revised the collection scheme of taxes on personal property. Although the fiscal note states that the bill will be revenue neutral, the UAR opposed this bill over concerns that it would create a tax shift to taxes collected on real property. (Oppose)

Lien on Real Property – SB 70 requires information about judgment creditors and debtors to be attached to any judgment that is recorded in the Registry of Judgments after September 1, 1998. The UAR supported this bill because it will make easier the process of removing clouds on title. (Support)

Defeated bills

Real Estate Conveyance and Subdivision Amendments – HB 288 intended to remedy the problem that arises when a buyer purchases a lot that does not comply with county subdivision requirements. The bill would have required the seller to indicate on the conveyance that the lot may require subdivision approval. The bill would have also placed civil liability to each subsequent owner on the original seller who created an unapproved subdivision. The sponsor worked with the UAR to resolve differences over the bill, but in the end we agreed to disagree.

The UAR viewed this bill as a shift from the "buyer beware" philosophy which has been the traditional underpinning of real estate conveyances. This bill would also have given buyers with "cold feet" leverage to back out of a sale in certain instances by threatening litigation with the cause of action this bill would have created. Standing alone against powerful supporters, the UAR succeeded in defeating this bill. (Oppose)

Planning Coordination – SB 189 would have authorized the creation of a County Development Coordination Committee. The UAR supported this bill because it would have encouraged planning coordination and uniformity among cities and counties. (Support)

Property Tax Appeal Process – HB 118 would have shifted the burden of proof from the taxpayer to the county assessor in an appeal before a board of equalization regarding the valuation or equalization of real property. The bill would also have required the county assessor to mail valuation information to the taxpayer/appellant upon request. (Support)

Removing Barriers to Affordable Manufactured Housing – HB 269 would have pre-empted municipalities and counties from imposing stricter requirements on manufactured housing. (Support)

Landlord Inspection Rights – The sponsor of HB 289 introduced the bill to address certain instances where landlords wrongfully withhold renter deposits. The UAR opposed this bill because it would have required the landlord to inspect the rental unit in the physical presence of the renter before deducting monies from a deposit for cleaning. (Oppose)

Annexation Amendments – HB 355 would have prohibited the annexation of peninsulas by municipalities. The UAR opposed this bill because a "peninsula" was defined in such a way as to unduly restrict annexations. (Oppose)

Licensing the Sale of Factory Built Housing – HB 411 would have, among other things, required real estate agents selling new factory built housing to be licensed through the Division of Professional Licensing. The UAR opposed this bill because it would have resulted in double licensing for real estate agents. The UAR worked out a compromise with the sponsor to preserve the current exemption for real estate agents, but time ran out on the bill as the legislative session concluded. According to DOPL, many real estate agents have not been collecting and remitting the $75 fee required by Utah law for the sale of each factory built home to DOPL. Better compliance by real estate agents engaged in the sale of factory built housing may prevent this bill from returning next year. (Oppose)

Plumbing Code Amendments – The UAR joined the Utah Home Builders Association in opposing this bill, which would have overturned the adoption of the International Plumbing Code by the Plumbing Code Commission, and retained the more labor-intensive Uniform Plumbing Code. (Oppose)

Water Conservancy Districts Bonding Authority – SB 152 would have placed restrictions on the bonding authority of water districts. The UAR supported this bill because it would have helped keep property taxes low. (Support)

I express my gratitude to the many REALTORS® who are participating on the Legislative Committee this year, as well as the REALTORS® who contacted us on certain bills during the legislative session and attended REALTOR® Day on the Hill. Your input was very valuable in promoting REALTOR® interests and protecting private property rights.