Agency Disclosure legislation, Title 47, the cost of Growth -- these are all issues we need to stay on top of...
Mike Tabor, Chair
Governmental Affairs Committee
I am sure all of you are aware it’s a presidential election year and therefore much of the news we see and hear is about the candidates. However, there are many other things happening statewide and locally that will keep the Governmental Affairs Committee very busy monitoring this year.
The State
All 99 members of the house are up for election with 10 members facing term limits. Half of the Senate is also up for election with six members having the same problem. Four of the seven Supreme Court seats are up for election.
Secretary Kenneth Blackwell is leading an effort to repeal the temporary one-cent sales tax prior to its scheduled expiration of June 30, 2005. If successful, it is estimated that the State’s budget will be short by $800 million. The door could be reopened to sales taxes on real estate activities (commissions, appraisals, title searches, etc.) if passed.
School Funding is still unresolved. The deadline of December 2003 for the Governor’s Task Force has been extended to fall of 2004. Since much of the current funding comes from real estate taxes, their findings will be of particular interest.
Local
The City of Columbus is reviewing its annexation practices. There are those who feel that the city has expanded enough and needs to conserve. Others recognize the need to expand or risk the city’s decline. Continued growth is the lifeblood of any city.
To address the cost of growth, tagged “Pay As We Grow”, Mayor Coleman has suggested a number of items to consider including:
- TIFs (Tax Increment Funding) – additional revenue earned as a result of an increase in real property tax is dedicated to the cost of new infrastructure and development. Easton and Polaris have TIFs.
- Community Development Authority – A CDA is a voluntary agreement between the taxing authority and developers whereby the developers agree to financially assess themselves. The specific amount of money raised would be earmarked for schools, community center, streets, operating costs, etc.
- impact fees to developers - These costs would in turn be added to the price of the new home or commercial building. This program is in use in other cities. Of course the concern is the extra cost to the purchaser.
Title 47
The City of Columbus’ proposed Title 47 ordinance is an effort to deal with vacant and abandoned properties around the city. Under the proposed ordinance, a vacant property must be registered within 30 days once it is vacant and a permit would need to be purchased every 90 days it remains vacant. This could be a real impediment as well as a financial burden for owners attempting to renovate and/or market property. Most obvious is commercial property which can remain vacant of tenants or owners for years. However, this will affect many residential properties also. In March 2004, the average days on market for a residential home was 94. Under the original proposal, those properties, if vacant, would need to be registered and pay a fee every 90 days.
Currently Title 47 is being rewritten. Our position is that we would not support an ordinance that does not recognize the distinction between properties for sale, lease or under renovation versus properties which are a public nuisance or abandoned.
Other local issues include the building moratoriums for Darby Creek and Pickerington. Grandview’s planning commission and city council are considering code amendments that could make warehouses a conditional use in their M-1 Light Manufacturing Districts and could be re-classified as a non conforming use if vacant for 180 days.
And now for the good news
Pat Tiberi has introduced legislation that would eliminate down payment requirements for first time homebuyers. HUD has withdrawn their proposed changes to the Real Estate Settlement Procedures Act (RESPA). Columbus has a new program, The Smart Commute Program, which allow homebuyers to better qualify for a home purchased within a quarter mile of a bus route and who could use the bus for commuting.
SB 106 which will better clarify and simplify the agency disclosure process has passed the Senate and is now in the house. The Real Estate Division is filing a rule revision that will permit all 30 hours of required continuing education by means of distance education via the Internet.
Between the coming elections and the items above, it becomes increasingly important for CBR members involvement with CORPAC this year. As was pointed out at OAR’s Legislative Conference, our CORPAC contributions do not buy legislation. It does support legislators who are favorable to the views of our industry. CORPAC is counting on your support.
Ohio - SB 106 Agency Disclosure Process
Although there are a number of modifications to license law included in this bill, the major objective of SB 106 is to improve the agency disclosure process. The current process is cumbersome and the form is complicated and intimidating to many consumers. Elements of the bill will become effective 90 days after passage except the disclosure forms which will be effective January 1, 2005.
Key features include:
- Replace existing agency disclosure form with more user-friendly, brochure-type piece
- Clarify role and status of office managers in dual agency situations
- Authorize the Superintendent of Real Estate to impose a citation as a sanction for certain technical “agency’ violations (thereby avoiding the lengthy hearing process)
- Provide the Division statutory authority to conduct criminal records checks on license applicants
- Create a mediation process
Position: As OAR initiated this process, both CBR and OAR are very much in favor of this legislation
Status: SB 106 passed the Senate (unanimously) on 2/4/04 and was voted out of the House Commerce and Labor Committee on 4/20/04 (also unanimous). The bill now goes to the House.
National - HR 3755 Zero Downpayment Act of 2004
Hearings were held on HR 3755 which would eliminate down payment requirements for first-time homebuyers seeking FHA mortgages.
Families who qualify for zero down payment mortgages will be charged a modestly higher insurance premium on their home loan. For example, on a $100,000 mortgage, a zero down payment borrower will pay approximately $50 a month more than a regular FHA borrower. The higher premium will completely cover the costs of the program, meaning there is no additional cost to the taxpayer.
Congressional Representatives from Ohio sponsoring the bill include Pat Tiberi (who introduced this bill), Financial Services Committee Chairman Mike Oxley, Housing Subcommittee Chairman Bob Ney, Mike Turner and Deborah Pryce.
CBR’s Jerome Witcher provided testimony on Zero Down Payment programs before the Housing Subcommittee in Washington D.C. The testimony provided by Jerome and other real estate/housing professionals provided the subcommittee with information on how the Zero Down Payment Act affects REALTORS® and the families who would benefit if the Zero Down Payment legislation is approved.
REALTORS® Not subject to USA Patriot Act
The USA PATRIOT Act was signed into law on Oct. 26, 2001 as an anti-terrorism measure after the Sept. 11, 2001, terrorist attacks in New York and Washington, D.C. Most of the law’s provisions enhance law enforcement powers and provide funding for various anti-terrorism programs, but do not directly affect the real estate industry. However, the anti-money laundering provisions modify laws relating to “financial institutions,” which specifically include “persons involved in real estate closings and settlements.”
In response to questions from members about why financial institutions are asking clients for additional personal information, and in response to concerns raised by commercial property owners on their responsibilities under the USA Patriot Act, NAR reviewed existing regulations and found that:
- Real estate professionals engaged in brokerage or property management and their real estate companies are not financial institutions and do not need to implement anti-money laundering programs;
- Financial institutions, as a matter of course, must implement a customer identification program and may ask members’ clients for personal information to complete a financial transaction; and
- commercial property managers do not need to implement a customer identification program but should periodically check that current and prospective tenants are not on the Treasury Department’s list of Specially Designated Nationals and Blocked Persons.
Task force looking at Equal Prominence requirement
The advertising requirement in Ohio’s license law for the salesperson name to be “no more prominent” than the broker name has always caused confusion. The Ohio Division views this ssue more a matter for the industry to decide as no consumer protection considerations exist. They recommend either abolishing the sentence or leaving it as is. (The exception is team advertising and one broker advertising the listings of another broker, in which case the existing regulation should be preserved.) The OAR Task Force is seeking your input. e-Mail your comments to info@ohiorealtors.org or mail to OAR, 200 E. Town St., Columbus, OH 43215.
Indiana passes Commercial License Portability legislation
The Indiana state legislature has passed a bill (H.B. 1005) that includes provisions to allow out-of-state commercial practitioners to conduct business in the state. Under the new bill, out-of-state practitioners must sign an agreement with a broker or agent licensed in Indiana in order to share commissions. Previously, out-of-state practitioners were only allowed to refer business to an Indiana broker and receive a referral fee. The law—expected to be signed by Governor Joseph Kernan in the next several weeks—would take effect July 1. “This is a good law that allows out-of-state brokers to do deals here in Indiana,” says Karl Berron, vice president of government affairs at the Indiana Association of REALTORS®.
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