Home Sustainable Land Development Today March 2005

Changes to the Status Quo

Written by Greg Yoko

Sunday, 02 January 2005

Summary of new laws impacting land development around the country. Regulations and legal issues continue to be a major concern to virtually every participant in the land development process. These topics will be reviewed on a regular basis within the pages of this magazine. This month we will provide information on various land development legislation, ordinances, and initiatives that will become law in various parts of the United States as a result of the November 2004 elections. Whether you are focused on environmental regulations such as NPDES (see page 10), asset management, Smart Growth, LEED compliance, sustainability, land conservancies, annexation, eminent domain, or one of a myriad of other items, Land Development Today will provide insight and clarity to assist land development professionals. One of the more interesting results occurred in the state of Oregon where voters overwhelmingly approved by a 61-39 margin a measure requiring compensation to land owners if the government limits use of their land. As specified in the measure, the owner of private real property is entitled to receive just compensation when a land use regulation is enacted after the owner or a family member became the owner of the property if the regulation restricts the use of the property and reduces its fair market value. In these cases, the state will have a choice to:     • pay the owner of the property an amount equal to the reduction in the value, or     • modify, change or not apply the regulation to the owner´s property. The measure does not apply to commonly and historically recognized public nuisances, public health and safety regulations, regulations required to comply with federal law, or regulations restricting or prohibiting the use of a property for the purpose of selling pornography or performing nude dancing. Opponents believe Measure 37 includes several provisions that are inherently unfair and toxic to the democratic process. Measure 37 is an unfunded mandate with one clear objective: to rollback Oregon’s land use protections. The measure makes the false promise of payments to property owners, but local and state governments simply do not have the money for such payments. It is inherently unfair to authorize governments to issue waivers arbitrarily for select property owners. In the absence of adequate funding, the effect of Measure 37 is to force governments to issue such waivers. Furthermore, Measure 37 eliminates all normal notice and public hearing requirements so that affected neighbors and Oregon taxpayers remain in the dark and vulnerable to backroom deal making. Business Management In California, voters turned away (49-51) Proposition 72 that would have required certain employers with 20 or more employees to provide health coverage for their employees and, in some cases, dependents. California Governor Arnold Schwarzenegger and every major newspaper in the state urged defeat of Prop 72. The vote, which was defeated by over 202,000 statewide votes, repeals Senate Bill 2, an ill-considered and poorly reviewed measure approved in the final hours of the 2003 legislative session and then signed into law by Gray Davis just days before his recall. Construction liability was on the ballot in Colorado. Amendment 34, which failed by a huge 23-77 count, would have removed limitations on the amount of money a property owner can collect in damages, except for punitive damages and lawsuits against governments. The proposal would have eliminated the current requirement that a property owner and construction professional try to resolve the problem before bringing a lawsuit. In addition to these changes to current law, the proposal restricted the types of laws the legislature could pass in the future concerning construction liability. Energy Colorado also had a Renewable Energy Requirement on the ballot as Amendment 37. The proposal required Colorado utilities with 40,000 or more customers to generate or purchase a percentage of their electricity from renewable sources according to the following schedule:     • 3 percent from 2007 through 2010;     • 6 percent from 2011 through 2014; and,     • 10 percent by 2015 and thereafter. Of the electricity generated each year from renewable sources, at least 4 percent must come from solar technologies. Initially, nine Colorado utilities serving over 80 percent of the state’s electric customers will be required to comply with this proposal. The measure was passed by Colorado voters, 54-46. Land Use / Property / Property Taxes In Alabama, Amendment 1 and Amendment 3 passed by an average of nine percentage points. By passing, the first amendment permits city and county governments in 18 counties to buy and develop industrial sites and lease, sell, or give them to businesses. Amendment 3 broadened the scope and gives all city and county governments the power to buy land and buildings to develop industrial sites, and then lease, sell or give those sites to companies willing to do business on the sites. The proposals also let local governments borrow money for economic development and give money to companies to promote economic development. A public land proposition in Arizona, however, failed—for the sixth time. This time by a 48-52 vote. Proposition 100 proposed the exchange of Arizona state trust land for other parcels of public land as long as the swap made good economic sense and resulted in the protection of land for conservation or to protect a military base. According to an article in the Arizona Republic, backers of the land-swap measure say it would help the state protect valuable open space, create buffers for military bases and add money for public schools, which earn income from state trust land auctions. Critics, mostly environmental groups, say the proposal doesn’t guarantee protected open space and could help developers grab sensitive land in unregulated swaps later. Those critics also say the federal government routinely undervalues public land involved in exchanges and overvalues private parcels, leaving taxpayers on the short end of the deal. Economic development was also in the hands of Arkansas voters last November. Amendment 2 allowed for the general assembly to approve the issuance of general obligation bonds for major development projects. The measure, which passed by a wide 63-37 margin, is for development projects that intend to invest more than $500 million in capital expenditures and hire at least 500 employees. Proposition 60A passed by a wide margin (73-27) in California. This initiative gives voters the chance to reduce the cost of the bonds they overwhelmingly approved in March as part of Governor Schwarzenegger’s plan to help ease the state’s budget crisis. Experts estimate California has more than $1,000,000,000 worth of surplus property. By requiring that proceeds from the sale of all such surplus property be used to help pay off the bonds early, it could save taxpayers millions by paying off principal and interest earlier. Opponents, if you want to call them that, did not oppose the idea, they just wanted the proposal to include further statements actually forcing the sale of the hundreds of millions of dollars worth of surplus property the state owns. Voters in Indiana agreed with Public Question #1 on their ballot that allows the General Assembly to make certain properties exempt from property taxes, including inventory; tangible personal property used in the production of income; and tangible real property used as a primary residence by the owner, an individual buying the property on contract, or an individual having a beneficial interest in the owner. It was overwhelmingly approved 71-29. The proposed amendment has been agreed to by one General Assembly. This proposed amendment must be agreed to by a second General Assembly and ratified by a majority of the state’s voters voting on the question to be effective. Louisiana voters elected to update their homestead tax exemption qualifications to provide for the homestead exemption for homesteads owned for fields in which there is timber; to provide for the application of the exemption to the surviving spouse, testamentary or irrevocable trusts, usufructuaries, and to property occupied by a buyer under a bond for deed contract under certain conditions; to prohibit more than one exemption for any person. In Maine, voters faced this question on the November ballot: “Do you want to limit property taxes to 1 percent of the assessed value of the property?” The answer was a resounding “No” as the question failed 37-63. Opinions in the Maine media indicate that the proposal was too drastic but that other tax relief measures are on the horizon. A constitutional amendment to authorize exemption of certain improvements to historically significant real property from property taxation occurred in Nebraska. A 58-42 vote for this proposal authorized the Legislature to exempt from taxation, in whole or in part, the increased value of real property resulting from the renovation, rehabilitation, or preservation of historically significant real property. New Mexico and Oklahoma residents voted to expand eligibility for exemption from the property tax to all honorably discharged veterans of the armed forces of the United States. Eligibility for the exemption is limited to honorably discharged veterans who served in times of armed conflict. New Mexico voters also approved almost $120 million worth of bonds for a variety of facilities, including senior citizens, higher education, and libraries. Oklahomans also authorized changes for determining the fair cash value of the homestead to heads of household who are at least 65 years old with a gross household income below specific income level requirements. Rhode Island residents also approved numerous bond questions. Over $225 million of the nearly $240 million was approved for use on highways, technical schools, water pollution control, state university facility improvements, and local water systems. The South Carolina constitution currently allows a 4 percent property tax assessment ratio for agricultural land owned by a corporation with ten or fewer shareholders. The ‘no’ vote claimed a 61-39 advantage to keep the current limit of ten or fewer shareholders. In Wyoming, voters approved by a 66-34 margin the adoption of a provision authorizing the Legislature to enact laws for local governments to use local sources of revenue for economic or industrial development subject to approval of the voters. For purposes of this issue, “funds from local sources of revenue” means funds raised from general taxes levied by the county or municipality and shall not include any funds received by the county or municipality that are derived from federal sources. SLDT