Subject: Legislative Bulletin

     Volume VIII, Number 5  February 17, 2006






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:

  1. 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.

  2. Road Construction: $663 million per year, largest sustainable infusion of cash for construction since 1986.

  3. 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:

  1. 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.

  2. Auto Insurance Premium Tax: dedicates existing general fund revenue source to transportation.

  3. 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).

  4. 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. 

  5. 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. 

  6. 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.

  1. Vehicle Registration Fee: increases the annual vehicle registration fee by $10.

  1. 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.

  2. 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.






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.






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.


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 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.


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







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.






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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