2010 Legislative Session Wrap Up

 

Private Roads (H.498)

 

After much discussion in both the Vermont House and Senate lawmakers where unable to decide on language suitable to pass the private roads bill (H.498).  Instead legislators agreed to form a committee to work on a better draft for review for next session.  The committee working on the new draft is made up of the VT Bankers Association, The VT League of Cities and Towns, and the Commissioner of BISHCA.  It is highly likely the end result of the group’s collaboration will be the bill and ultimately the legislation that should pass next year.

 

H.498 dictated that all property owners who use a private road to access their property, in the absence of a written maintenance agreement, the maintenance costs shall be divided equally according to use among the owners of the property.

 

Essentially, bill (H.498) was putting a default agreement in place for how private roads will be maintained, in situations where no agreement has yet to be formalized.  The bill did not limit the ability of land owners to reach such agreements on their own, or prohibit them from making changes to agreements already in existence.  Rather, this bill provides a default position for when agreements don’t exist or cannot be reached. 

 

The impetus behind bill (H.498) was the secondary loan market; both Fannie and Freddie are requiring proof of a maintenance agreement for properties located on private roads before buying those mortgages.  Not having an agreement can hold up potential transactions as well as making refinancing considerably more challenging.

 

We will have to work again next year to pass this needed legislation.

 

 

REALTOR® TAKEAWAYS

 

 

Property with private roads are under increased scrutiny by the secondary loan market.

 

Properties with no formal written maintenance agreement will be harder to find financing for both transactions and refinancing.

 

Legislators in Montpelier did not act this session, but did form a workgroup to address the situation.

 

It is likely that the resulting workgroups work will be passed during the next legislative biennium.

 

 

UNIFORM COMMON INTEREST

 

The State of Vermont this year adopted some new laws which condo associations must follow. This is intended, in part, to keep both the state of Vermont and Vermont’s condos business practices in line with other states, so that we are all operating using similar sets of guidelines and regulations.

 

Common interest laws are the guidelines a condo association must follow when writing their own bylaws.  The changes proposed are the result of work done on at national level, and many of the changes proposed in (H.698) are happening nationwide. 

 

The bill aims to level the playing field and attempts to balance the rights of all members who have a common interest, bringing better transparency, record keeping and increases owner access to records.  The bill deals with voting rights, appeals, how notice is delivered, how associations borrow, and many other technical changes.  H.689 has passed the House already so after a final vote in the Senate it will be messaged to Governor Douglas.

 

REALTOR® TAKEAWAYS

 

The Guidelines Condo associations must follow are changing.

 

Bill (H.698) aims to level the playing field when it comes to condo association voting privileges.

 

The Bill addresses things like how notice must be delivered how appeals should be handled, and association borrowing.

 

The Bill (H.698) should be reviewed by condo association boards and their council in order to make the best and most educated updates to their condo documents.

 

 

 

Appraisal Management CO.  (AMC’s)

 

Appraisal management companies doing business in Vermont are about to be regulated.  Bill (H.562) is a bill originally proposed by the Office of Professional Regulation in order to create rules and standards AMC’s wishing to do business in Vermont must adhere to.  Bill (H.562) has passed both bodies and has the endorsement of the Governor.

 

The proposed regulations contained in bill (H.562) are the result of collaborative workgroups efforts over this past year, including input from Office of Professional Regulation, representatives from AMC’s, appraisers, the Vermont Association of REALTORS®, mortgage brokers and bankers.

 

REALTOR®zs TAKE AWAYS

 

AMC’s will now be a regulated industry in Vermont.

 

Bill (H.562) addresses many of the concerns appraisers have expressed about AMC’s

 

Bill (H.562) is the result of effort and work done by a collaboration of interests.

 

 

Buffers ((H.763)

 

The Buffers Bill (H.763) saw many incarnations over the past biennium, many included a mandated statewide buffer, however in the end, the resulting bill does not have a mandated buffer.  The bill instead puts in place a voluntary program municipalities can use to help in their municipal planning.

 

What bill (H.763) does is creates grants, and incentives towns could utilize in order to aid them in the process of improving the water quality of their municipalities.  Also upon request ANR would provide towns with maps delineating streams, rivers and floodplains.  ANR would also be responsible for tracking and reporting back to the legislature the effectiveness of the new programs and incentives.  A town’s participation in this process would be discretionary.

 

REALTOR TAKE AWAYS

 

No Statewide mandatory buffer was passed.

 

A new programs was established to aid towns in helping to plan for buffer zone management

 

The new program is voluntary no town will be forced to utilize the program.

 

ANR will aid towns in there attempt to do zoning and planning around streams and river corridors.

 

Growth Centers (S.64)

 

There was a bill that passed this year dealing with Growth Centers and the Growth Center designation process. 

 

Bill (S.64) changes both the process and the criteria a municipality must follow to earn a Growth Center designation.  This new proposal came from collaboration between the administration and other interested parties.

 

Some of the criteria towns must meet to earn a designation have been changed.  The overall acreage a growth center can be is slightly reduced and should represent approximately 20 years of growth.  Towns must also allow for higher densities of residential development within a growth center, with a minimum of 4 units per acre zoning.

 

The bill establishes a new board to administer the growth center program and review applications.  The board would consist mostly of governor appointees.  Decisions made by the growth center board would have the ability to be challenged.  If a finding by the board is challenged the finding will be reconsidered.  Only a party involved in the process who submitted comments written or verbal could ask the board to reconsider particular decisions they have made.  The board would then have 90 days to render a new decision.

 

REALTOR® TAKEAWAYS

 

 

The designation process for a town to get a growth center has changed.

 

Future growth center applications will likely be more complete and thorough.

 

The board make up is changing/ expanding/and decisions made by the panel are no reviewable.

 

Local planning and government affects you the most, get involved in your towns decision making.

 

 

School Consolidations (H.66)

 

The Vermont Legislature did come to some agreement that some Vermont school districts should consolidate.  Bill (H.66) proposes to create a voluntary school district merger incentive program that would aid neighboring school districts wanting to merge into unified supervisory districts.  The intent of the bill is to help school districts realize efficiencies and cost saving at the same time trying to ensure that any change to the governance structure of educational systems will create better opportunities for students, and to preserve a sense of community. 

 

Bill (H.66) offers consolidating districts financial incentives, it also increases superintendent’s responsibilities, and calls for studies on things like class sizes and student teacher ratios.

 

The goal of consolidation is to help control education spending by spreading costs more broadly and lessening administrative bureaucracy.

 

REALTOR TAKEAWAYS

 

Agreement was reached amongst lawmakers that school consolidations are needed.

 

Incentives for towns to consolidate will be helping to push those decisions.

 

Consolidating districts is still a voluntary action in VT, however some towns have over just this past year voted for consolidation.

 

This is likely an ongoing conversation, which will continue to be fueled by escalating property taxes and rising education costs.

 

Budget and Taxes

 

For most of the 2010 session the main focus for legislative leaders was budget issues and problems, namely a $150 million shortfall that grew with every fiscal update.  Finding the revenue to plug the shortfall and to maintain programs was the challenge. 

 

The revenue closing the gap came from several places; $40 million from the Dept. of Human Services, $17 million came from changes to state employee and teacher retirement programs.  The government streamlining initiative “challenges for change” resulted in about $30 million in savings.  Many smaller programs with slight budget surpluses were also taken and used to fill the remaining gaps in the budget.

 

At the onset of the session the state wide education property tax rate was due to increase by 2 cents, however lawmakers made adjustments to whom are eligible for income sensitivity payments and raised taxes on some tobacco products to keep from having to increase the property tax rate.  People who earn more the $10,000 in income from interest and dividends on stock will need to add that income when factoring eligibility for income sensitivity.  Also, Property valued over $500,000 will see a reduced benefit. 

 

Two taxes that were increased last year, the estate tax and capital gains tax, were partially rolled back.  For the estate tax the exclusion amount was increased from $2 million to 2.75 million.  Changes to the capital gains tax is as follows, you will have the choice to exempt either the first $5,000 in capital gains income, or 40% of the sale of business assets, so long as the assets have been held 3 years or longer.  The Sale of real estate is not eligible for the 40% exclusion.

 

REALTOR® TAKEAWAYS

 

$150 million budget gap was plugged for the most part by cutting programs and streamlining government bureaucracies.

 

A 2 cent increase to the statewide education property tax rate was avoided by changes to who is eligible for income sensitivity.

 

Taxpayers who earn more then $10,000 from interest and dividends, as well as holders of property valued in excess of $500,000 will receive less in income sensitivity payments this year.

 

The amount of assets excluded from the estate tax increased from $2 million to $2.75 million.

 

Capital gains from the sale of business assets held longer then 3 years will receive a 40% exclusion on the taxes paid. 

 

Real estate will not receive the preferential capital gains treatment.

 

H.485 Current Use

 

Governor Douglas Vetoed bill (H.485) dealing with the current use property tax system. H.485 would have increased the penalties imposed on property owners selling property out of the program.  It is unlikely legislators will hold a special session to attempt to override the veto, so it appears the Governor’s decision will stand, at least for this year.

 

The legislature was trying to find 1.6 million in savings from the program, and did so by imposing a one time fee and increasing the penalties for pulling parcels out of the program.  The budget gap now created by the veto will be addressed this January in the supplemental budget. 

 

REALTOR TAKEAWAYS

 

Bill (H.485) would have increased the cost to take land out of the current use program.

 

The bill would have generated 1.5 million in new tax revenue.

 

Governor Douglas vetoed bill (H.485)

 

It is not likely bill (H.485) will be overridden, so if changes are made to the program they will be next year.