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Volume
VIII, Number 5 |
February
17, 2006 |
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"STATE SENATE RELEASES
PLAN"
Tuesday of this week was "large" for the 2006
Session of the Virginia General Assembly. First, it was the
traditional "Crossover Day", which is the deadline in the
annual legislative process for bills to crossover from their
house of origin to the opposite body of the state legislature.
In other words, House bills must advance to the State Senate
by that date and Senate bills must advance to the House by the
deadline. It is the final nail in the coffin of much
legislation introduced to each annual session of the Virginia
General Assembly.
Second, on Tuesday afternoon, the 15-member
Senate Finance Committee unanimously released their
"Transportation Funding" bill for this session of the state
legislature. It was crafted in a form to attract the support
of a minimum of 26 to 27 votes from the upper chamber of the
state legislature. Political strategists suggest that such a
margin of support from the State Senate will be necessary for
the House of Delegates to even consider budging from their
current stand of "no new tax increases" for transportation or
any other purpose, while the state is experiencing nearly a $1
billion surplus in collected revenues over forecast
expenditures.
The new Senate Plan SB
708 would generate approximately $1 billion a year in
new revenue for the state's transportation system and, the
sellers of real estate in the Commonwealth have found their
way into the transportation funding solution for the first
time. In an immediate reaction to the proposed "tripling" of
the "grantors tax", paid by the sellers of real estate,
including new and existing housing, the Virginia Association
of Realtors (VAR) sponsored an "anti-housing tax increase"
rally on Wednesday of this week. Nearly 400 real estate
brokers and agents stormed the General Assembly Building (GAB)
to express their opposition to the increase in that tax in the
Senate Transportation Plan .
Senate Bill
708 would also refocus
transportation spending on the following three areas through
FY 2010:
- Mass Transit: guarantees 95
percent of the match for federal transit capital dollars.
Over $114 million a year, with $50 million off the top for
rail.
- Road Construction: $663 million
per year, largest sustainable infusion of cash for
construction since 1986.
- Local Support: $210 million per
year for local and regional transportation needs, plus local
option to add $105 million a year. Funds raised in the
locality would stay in the locality and must be used for
transportation. They cannot be used for existing
obligations, and the locality would determine their
transportation needs and uses of the new resources.
The new Senate Plan
would be funded as follows:
- Motor Vehicle Sales and Use Tax:
increases the rate from 3.0 to 3.75 percent by FY
2009. Increases are at 1/4 percent a year for 3
years.
- Auto Insurance Premium Tax:
dedicates existing general fund revenue source to
transportation.
- Abusive Driver Fees: imposes
fees on Virginia and out-of-state drivers who are convicted
of serious traffic infractions (drivers with eight or more
demerit points on driving records).
- Retail Sales Tax at the
Rack: removes the sales tax exemption beginning FY
2007. Five percent (or about 7 ½ percent tax) computed
every six months, i.e., 1/1/07 - 6/30/07, before the state
sales tax on gasoline.
- 2006 Motor Fuels Sales Tax
Refund: VA motorists could receive mail-in rebate from
DMV. Out-of-state travelers would pay about
one-third. Refunds would be for personal vehicles
only, not business vehicles.
- Equalize Diesel and Gasoline
Excise Taxes: increases the excise tax on diesel fuel from
16 cents per gallon to 17.5 cents per gallon beginning in FY
2007, equalizing the diesel and gasoline excise taxes.
- Vehicle Registration Fee:
increases the annual vehicle registration fee by $10.
- Heavy Trucks: increases the
weight-based registration fees on trucks weighing more than
10,000 pounds and increases the penalty fees for liquidated
damages caused by overweight heavy trucks.
- Local Grantor Tax: for the first
time in over 50 years, increases the grantor tax paid by the
seller of property, from 10 cents per $100 value to 30 cents
per $100 value. This entire increase remains in the locality
for transportation purposes. In addition, city councils and
boards of supervisors may increase the rate by another 10
cents by local ordinance.
While HBAV has been a
vocal advocate for a broad-based, long term solution to the
state transportation crisis, and has repeatedly indicated our
industry's willingness to pay our "fair share" toward a
long-term solution, it is clear that the Senate Transportation
Plan places too much burden on the housing industry,
especially since the housing industry experienced a 40%
increase in the recordation tax, paid by buyers, in the 2004
tax increase package that was passed by both houses of the
General Assembly and signed into law by then Governor
Warner.
On the sale of a
$100,000 home, the current grantors tax is $100. A tripling of
the tax would increase the seller's tax to $300 on a $100,000
real estate sale. While not appearing to be onerous on its
own, when combined with the every increasing road impact fees
and transportation proffers being imposed on the builders and
sellers of new homes, such a tax increase crosses through the
"fair share" threshold established by HBAV.
*******
*
The House
Transportation Funding Plan that was announced late last
Friday includes $161 million in new annual revenue in 2007,
and increasing to $257 million by 2010.
Most of it would come
from abuser fees for bad drivers (HB 527 Rust/Albo), with the
remaining coming from General Fund money (about $77
million). The House is rumored to have one more piece of
the revenue puzzle to add to the equation, possibly boosting
the plan to close to one billion. If so, that will likely come
as budgets are released this Sunday afternoon by both the
House of Delegates and Senate.
The focus
of the House plan is Northern VA (NOVA) and Hampton Roads. The
House's use of General Fund revenue is from recordation fees
($40 million) and debt service on Federal Reimbursement
Anticipation Notes ($37 million). Major transportation
projects in Northern VA (NOVA) and Hampton Roads, like
transit, rail, and highways, will be leveraged with the $40
million and their part of abuser fees.
*******
As forecasted
in the first HBAV Bulletin of 2006, a solution to the state
transportation crisis would be the dominant issue of this
session of the state legislature. With Governor Kaine's plan,
the State Senate Plan and the House Plan now on the table,
Virginians will learn shortly whether any progress will be
made on the crisis in 2006, and how much it will cost each
family household. |
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As expected, the
House Courts of Justice Committee reported House Bill 94, the
HBAV-backed eminent domain bill, last Friday afternoon. In a
surprise move on Monday, however, the full House of Delegates
passed a dramatically different version of the bill on a 51 to
45 vote. On the House floor, a significant floor amendment,
sponsored by Delegate Joannou, was adopted by a 2-vote margin.
The controversial floor amendment provides that public
benefits such as economic development, increase in tax base,
tax revenues, employment or general economic health and
welfare should not be considered in determining whether a use
constitutes a "public use" to justify the taking of private
property by eminent domain. Additionally, the amendment
stripped nine pre-existing authorizations under which a
governmental entity could transfer the condemned property to a
nongovernmental entity. One of those stripped provisions
related to the construction of sanitary sewer, water and storm
water facilities often necessary to obtain land use approval.
HBAV and the
coalition of supporters for the version of House Bill 94,
passed by the Courts Committee opposed the Joannou floor
amendment. The coalition fears the House-passed version of the
bill (with the Joannou amendment), would significantly
restrict the uses of eminent domain to the point that the
future economic growth of the state could be impacted.
Fortunately, the
Senate Courts of Justice amended Senate Bill 394 to conform to
the original version of House Bill 94 and the full Senate
passed the bill 38-0. At some point these bills will end up in
a conference committee. HBAV will be meeting today with
representatives of other groups who have supported HB 94 from
the start to develop a strategy to lobby those House members
who voted for the Joannau amendment to the bill.
Those supporters include the Realtors, the
Virginia Association of Commercial Real Estate, the Apartment
and Office Building Association, Housing and Community
Development Officials, Virginia Municipal League, Virginia
Association of Counties, Dominion Virginia Power, gas
utilities, Verizon, railroads, the Virginia Manufacturers
Association, the Virginia Chamber of Commerce and others.
Because the House vote was so close, HBAV is cautiously
optimistic that the Senate version will survive, but it is too
close to call at this time. |
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Listed below are those measures the HBAV
Legislative Committee crafted and approved as legislative
priorities for this session of the state legislature. Each is
followed with their status in the legislative
process.
HOUSE BILL 558, by
Delegate Glenn Oder -
CONDOMINIUM NOTICE AND RIGHT TO CURE
Would provide that no
cause of action for breach of warranty shall be commenced on
or after January 1, 2007, unless a written statement by the
claimant or his agent, attorney or representative, of the
nature of the alleged defect has been sent to the declarant,
by registered or certified mail, at his last known address, as
reflected in the records of the Real Estate Board, more than
six months prior to the commencement of the action giving the
declarant an opportunity to cure the alleged defect within a
reasonable time. The bill provides that sending the required
notice shall toll the statute of limitations for commencing a
breach of warranty action for a period not to exceed six
months. Passed the House of Delegates and the Senate General
Laws Committee and is awaiting final action by the State
Senate.
HOUSE BILL 919, by
Delegate Glenn Oder - EASEMENT TIMING
Would modify
the timing for transfer of easements from a developer to a
franchised cable television operator. Existing language that
refers to conveyance by reference on the final plat is amended
to require conveyance within 30 days after a written request
by the cable operator. Passed House of Delegates and been
assigned to the Senate Committee on Local
Government.
HOUSE BILL 684,
by Delegate Tom Rust - ADEQUATE OUTFALL LEGISLATION
House Bill 684
unanimously passed the Senate Agriculture, Conservation and
Natural Resources on Monday of this week and the full
40-member State Senate on Thursday afternoon. The Department
of Conservation and Recreation requested a technical amendment
that was part of the bill passed by the Senate.
This HBAV-initiated
bill will provide developers an additional option for
compliance with Virginia's storm water regulations where
technical compliance is not possible. HBAV represented this
bill throughout the legislative process as a rare bill that is
truly good for the environment and economic development
because it will not only protect and improve streams that are
already distressed but allow for development in urban and
urbanizing areas, thus relieving the pressure to develop in
suburban and rural areas...that is sprawl.
House Bill 684 has
been approved by the House of Delegates and State Senate and
is awaiting action by the Governor.
HOUSE BILL 1375, by
Delegate Bob Hull -
TEN-DAY SUBDIVISION PLAN REFERRAL REQUIREMENT
Requires certain
preliminary plats to be forwarded to the appropriate state
agency for review within ten days of receipt by the
locality.
House Bill 1375 has been approved
by the 100-member House of Delegates and has been assigned to
the Senate Local Government
Committee
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On Tuesday
afternoon of this week, by the narrow margin of 8 to 7, the
Senate Committee on Local Government approved authority for
the City of Suffolk to place a new "Road Impact Tax" on new
housing to be constructed in the city. HBAV vigorously opposed
the measure before the Senate Committee. HBAV opposes the
leapfrogging of that new housing "Tax" outside of Northern
Virginia.
Virginia has a
transportation crisis, and the members of HBAV have been and
will continue to be a leading business advocate for
broad-based funding solutions to the crisis. However, we
strongly believe that you should not attempt to solve the
transportation crisis on the backs of new homebuyers alone.
There is not enough money in new housing alone to finance the
road improvements needed in the City of Suffolk or any other
part of the Commonwealth. Affordable housing is also at near
crisis stage in Suffolk and many parts of the state and this
bill only make it more difficult for the cities police
officers, firefighters and school teachers to acquire the
"American Dream" of homeownership.
"IMPACT TAXES" ARE
NOT FAIR. In most communities, only about 20% of the home
sales are new homes and survey after survey concludes that 60%
of those buyers were already residents of the locality. Why
should a family of four with two teenage drivers from out-of
state be allowed to move into an "existing" home in Suffolk
and pay no "Impact Taxes", while a longtime resident of the
city that might be moving to a "new" smaller house for their
retirement years have to pay a $5,000 to $10,000 "tax" on that
purchase. "IMPACT TAXES" ARE NOT FAIR!
Furthermore, in
testimony before the Senate Local Government Committee,
Suffolk representatives acknowledged that their Comprehensive
Plan and Capital Improvement Program (CIP) anticipated housing
growth of approximately 800 new housing units a year.
Consequently, there is no need for this new "TAX" to be
imposed on new homebuyers because new home closings only
totaled 603 in 2004 and 703 in 2005.
This "unfair",
"unneeded" and "piecemeal" approach to solving the
transportation crisis should be rejected in favor of a
broad-based and sustainable revenue source. |
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Among the major
rules adopted by each General Assembly is a schedule of dates
that manages the flow of legislation. Following are the dates
of the important deadlines for consideration of legislation
during the 2006 session of the General
Assembly:
March 6,
2006
Deadline for Committee Action on
Legislation
March 11,
2006
Adjournment
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