Virginia Headlines
For the second straight year, Virginia ranks at the top of the Pollina Corporate Top 10 list for Pro-business states. The rankings are based on 31 factors controlled by state government including: taxes, human resources, education, right-to-work legislation, energy costs, infrastructure spending, workers compensation laws, economic incentive programs, and state economic development efforts.
Maryland and the District of Columbia were not ranked.
Loudoun County has launched an initiative to encourage business to adopt more environmentally sound practices and to recognize businesses for their efforts to conserve energy and reduce their environmental impact. The Green Business Challenge will designate participating businesses as certified, silver, gold or platinum based on a system of points awarded along 40 different criteria. Businesses participants will be accepted through Sept. 30. Click here for more information or to sign up to participate in a webinar information session.
Voters in Arlington County will have the opportunity this November to again consider whether or not to create an independent housing authority. The Arlington County Green Party has again submitted petitions to place the issue on the ballot for 2009. By doing so, advocates beat the July 1 deadline after which the state has adopted a five-year moratorium on the creation of such entities. The Arlington referendum was opposed last year by both the Republican and Democratic parties and was defeated by a margin of 66 to 33.
Prince William County has seen residential property value reductions of nearly 30 percent on average, placing a significant strain on local tax collections. Meanwhile, assessed value of commercial properties has held relatively constant and apartment communities have seen increases of about 17 percent, on average. So, homeowners are largely held harmless by the property tax rate increases the County is considering, but AOBA members stand to bear the brunt. County Supervisors looked at relieving the burden on businesses by raising the threshold having to pay Business, Professional and Occupancy License (BPOL) taxes, but that would only help very small and start-up businesses, while creating pressure to raise the property tax in order to offset the lost BPOL tax revenues. The Supervisors, with AOBA’s support, took a straw vote recently and rejected the proposal, but will hold a work session to explore other avenues for providing tax relief to businesses.
For the first time in several years, the Virginia General Assembly adjourned "sine die" (for good) on the scheduled adjournment date. The 2009 session came to a close on Feb. 28 as the Democratic-controlled Senate and the Republican-controlled House of Delegates were able to reach accord on a budget plan to close a projected deficit of approximately $4 billion. The state was lent an assist by the federal government, however. The first round of federal stimulus money – about $1.2 billion – was received by the state and used to plug holes in education, public safety and health care. The General Assembly will reconvene in April for its annual veto session -- to consider legislation rejected or amended by the Governor. It is anticipated that the receipt and allocation of additional federal stimulus funding will be on the table during the veto session as well.
Republican party activist John Cook declared victory over School Board Member Ilryong Moon in a special election contest to replace newly elected County Chairman Sharon Bulova as Braddock District Supervisor. Cook won by a razor-thin 89-vote margin. Cook's victory narrows the Democrats' margin of control over the Fairfax Board to 7-3.
AOBA’s top priorities for the 2009 VA General Assembly Session were passage of legislation to 1) lower the allowable cap on Virginia’s commercial real estate tax surcharge for transportation, and 2) make clear that local governments must put the revenues from this surcharge to uses directly related to new transportation infrastructure, and not merely to replace the sources of transportation funding they had previously utilized. We are pleased that AOBA’s strenuous lobbying efforts were successful on both counts. Two industry-supported bills have passed the General Assembly and are now awaiting action by Gov. Tim Kaine. However: AOBA needs members to contact the Governor and urge him to pass both bills, without alteration. The first bill is H.B. 2479 -- it reduces the allowable cap on the commercial real estate tax—taking it down from the 25 cents per $100 assessed value, to 12.5 cents per $100 assessed value. The second bill is H.B. 2480 – it places, in law, language that protects against the diversion of revenues from the commercial real estate tax surcharge away from their intended purpose, i.e. capital expenses associated with new transportation infrastructure. Please click here to contact the Governor’s office immediately.
AOBA President John Ritz (William C. Smith Companies) and President-Elect Katya Naman (Lowe Enterprises) joined staff for meetings with the VA Congressional delegation March 24 in conjunction with BOMA’s National Issues Conference. Ritz, Naman, and other AOBA representatives met with newly elected Congressman Gerry Connolly (D) as well as the offices of both Senators Mark Warner (D) and Jim Webb (D). Among the issues discussed were the contributions of commercial real estate to the overall economy, availability of capital for reinvestment in commercial properties and the “Employee Free Choice Act,” which would open the door to enhanced employee participation in unions by way of eliminating secret ballots. The AOBA delegation also weighed in on important proposed changes to federal tax law, including measures that would treat carried interest as regular income and extend the depreciation schedule for leasehold improvements from 15 years to 39.
The city of Alexandria recently shared a draft policy on sustainable development with members of its Sustainable Development Working Group, in which AOBA participates. The draft policy is not intended to take the form of an ordinance, which would involve a more rigid application process. The flexible approach was taken by city staff in response to feedback provided by AOBA and other stakeholders. The draft policy makes clear the city’s priorities for new construction and development design including energy efficiency, water conservation and a building’s overall carbon footprint. AOBA still maintains concerns, however, that insufficient incentives have been included in the draft policy.
The Virginia Commission on Climate Change, established by Gov. Tim Kaine in December of 2007, was charged with preparing a proposed action plan for the Commonwealth to reduce greenhouse gas emissions, following the release of the Virginia Energy Plan, which set a goal for the state to reduce greenhouse gas emissions by 30% by 2025. The Commission recently adopted its final report, including over 100 specific recommendations. Included are several ideas for improving energy efficiency and promoting greater reliance on renewable energy sources. Also included: a surprise recommendation that all new commercial buildings should meet Leadership in Energy and Environmental Design (LEED) or equivalent energy standards. The Governor’s office has pledged action on the Commission’s report. It is not yet clear, however, which recommendations will be drafted into legislation for the 2009 session.
Hampton Senator Mamie Locke (D) was elected by her peers as Chairman of the Virginia Housing Commission to replace retiring Delegate Terrie Suit (R). Senator Locke previously served as Vice Chairman of the Commission and presently serves as Chairman of the Senate Committee on General Laws & Technology, which oversees legislation of importance to AOBA members. Delegate John Cosgrove (R-Chesapeake) will fill the Vice Chair position vacated by Senator Locke. AOBA maintains a strong working relationship with both members of this leadership team and will continue to work with them on issues that have been referred for review by the General Assembly.
Terry McAuliffe, former DNC Chairman and national chairman of Sen. Hillary Clinton’s presidential campaign, recently took steps towards an official campaign for Governor of Virginia in 2009. McAuliffe opened an exploratory committee and kicked off a tour of the Commonwealth, and all indications are that he will indeed join the fray. The nascent campaign has already added three high-profile advisors to its staff: Mike Henry who recently served as manager of Mark Warner’s campaign for Senate; Jenny Nadicksbernd, Mark Warner’s Finance Director; and Mo Elleithee, a former advisor to Senator Clinton’s presidential campaign. McAuliffe enters a crowded field of candidates for the Democratic nomination including Alexandria Delegate Brian Moran and Charlottesville Senator Creigh Deeds.
AOBA has joined with several other Northern Virginia real estate organizations in litigation challenging the validity of a rental inspection ordinance recently adopted by the Fairfax City Council. In 2005, the city’s rental inspection ordinance was allowed to expire, after legislation supported by AOBA required that jurisdictions adopt rental inspection districts confined to areas where inspections are necessary to maintain safe, decent and sanitary living conditions. Not only did the city fail to provide data justifying the districts, but the districts drawn by the ordinance cover the entire city. Clearly, it would be quite a stretch to suggest that Fairfax is in a blighted or uninhabitable condition. Nevertheless, the City Council chose to proceed with the staff proposal to divide the city into two districts which comprise the entire jurisdiction.
The Loudoun County Board of Supervisors voted 5 to 4 against a proposed increase in business license fees for several categories of businesses, including leasing of residential and commercial property. The increase was proposed as part of the County’s fiscal year 2009 plan adopted in April. Chairman York voted, along with Supervisors Eugene Delgaudio (R-Sterling), Susan Klimek Buckley (D-Sugarland Run), Lori Waters (R-Broad Run) and Kelly Burk (D-Leesburg), to oppose the scheduled rate increase. The group cited changes in the economic climate as reason for the shift in policy.
AOBA’s Virginia PAC and Legislative and Regulatory Issues Committee will meet jointly Wed., Nov. 19 from 2:30 to 4:30pm at the offices of CRC Commercial at 1650 Tysons Boulevard, Suite 820 in Tysons Corner. The Committees will convene to review AOBA’s legislative agenda for the 2009 General Assembly session and to conduct candidate interviews for the race to replace outgoing Fairfax County Board Chairman Gerry Connolly, who was elected to succeed Congressman Tom Davis. All are welcome to attend and participate. Please RSVP to Brian Gordon at (202) 296-3390 or by email at bgordon@aoba-metro.org.
A recent study conducted by Housing Opportunities Made Equal (HOME), an advocacy organization for low-income and affordable housing in Virginia, is generating some significant buzz around the Commonwealth. The organization’s recent Investigative Audit of Housing in Hampton Roads revealed significant incidences of racial discrimination and failures to comply with the Americans with Disabilities Act. In addition to significant press coverage, the audit gained the attention of Delegate John Cosgrove (R-Chesapeake), who chairs the Affordability Workgroup of the Virginia Housing Commission. Delegate Cosgrove has publicly declared his intention to explore legislative remedies during the 2009 session.
Speaker of the Virginia House of Delegates Bill Howell appointed Delegate Chris Jones (R-Suffolk) as Chairman of the House Committee on General Laws. The appointment fills the vacancy left by Virginia Beach Delegate Terrie Suit, who announced her retirement effective this month. The Committee maintains jurisdiction over numerous issues of importance to AOBA, including the Virginia Residential/Landlord Tenant Act. Prior to his appointment as Chairman, Delegate Jones was a senior member of the committee.
A legislative proposal pushed by fire services associations has sought to mandate the retrofit of automatic sprinkler systems in all high-rise residential buildings in the Commonwealth of Virginia. Last year, AOBA succeeded in defeating the controversial measure, which could cost affected properties between $8,000 and $20,000 per unit. After a last ditch effort to revive the bill, patron Senator John Watkins’ request for the bill to be referred to the Virginia Housing Commission was granted. This week, a Housing Commission work group chaired by Senator Watkins met to consider and discuss the legislation with the charge of making a recommendation to the General Assembly for action. Preceding the meeting, AOBA assembled a strong coalition of allies including the Virginia Apartment and Management Association, the Virginia Chamber of Commerce, the Homebuilders Association of Virginia, and condominium owners. In the end, the strong opposition of allies and exorbitant costs associated with the proposal persuaded the work group to not recommend further action on the measure during the 2009 legislative session. It is still anticipated, however, that the issue will be considered as part of the 2009 building code update cycle. AOBA maintains a seat at the table for those discussions as well and will continue to urge the consideration of alternative, more economical methods of improving fire and life safety in high-rise residential buildings.
As anticipated, Gov. Tim Kaine announced significant budget cuts last week, responding to a projected $2.5 billion deficit that could grow to a whopping $3 billion by the end of 2007. Tax revenues for the current fiscal year have fallen four percent short of estimated levels -- a reflection of the economic slowdown. The Governor’s mid-course budget adjustments trimmed approximately $324 million across nearly all agencies and program areas. The size of state government was also scaled – 570 state employees were laid off and 870 additional positions will go unfilled. A planned two percent pay raise for state employees was also postponed. Yet, the administration claims that a $400 million withdrawal from the state’s “rainy day” fund will still be necessary to protect K-12 education and mental health programs from immediate cuts. General Assembly members responded with a reserved acceptance and voiced a spirit of cooperation, promising to work together with the Governor to balance the state’s biennial spending plan. All programs and spending areas are expected to face the chopping block next year when the legislature returns to session. House leadership was quick, however, to take tax increases off the table during the economic downturn. For the time-being, Governor Kaine has expressed agreement with that philosophy. The budget shortfall promises to be the defining issue of the 2009 General Assembly session. Special interest groups and state agencies are bracing to defend against their respective oxes being gored and what little hope existed previously for long-overdue investment in the Commonwealth’s transportation infrastructure has been further depleted.
A new legislative body in Richmond will focus its attention on solutions to urban sprawl and growth pressures. The two-year study committee, created during the 2008 session, will conduct a comprehensive evaluation of existing land use planning tools and infrastructure financing options available to local governments, and develop recommendations for legislation to the General Assembly.
The joint subcommittee recently elected Delegate Clay Athey (R-Fauquier) and Senator Jill Holtzman-Vogel (R-Winchester) as Chair and Vice-Chair, respectively. The group will meet four times prior to the 2009 session. AOBA has been selected to serve on a work group that will review and make recommendations regarding local infrastructure funding through impact fees versus the existing proffer system.
State legislators continue to assert that closing the state’s budget deficit will be the defining issue of the 2009 session, since news regarding revenue collections has gone from bad to worse. The latest projections show that the biennial budget may be faced with a shortfall of up to $3 billion. The Governor is authorized to make line item cuts of up to 15% without General Assembly approval. Accordingly, Gov. Kaine has instructed state agencies to prepare revised budget proposals reflecting cuts of up to 15% . The Governor indicated that education funding would not be cut before the 2009 session, however, all areas will face scrutiny by the General Assembly when they return to Richmond in January. Expected decreases in state aid for programs and lower-than-anticipated residential property values will create a difficult budget climate at the local level. Already, Northern Virginia localities have begun examining potential cuts in programs and increases in real estate tax rates.
The Prince William County Towing Ordinance Advisory Board is set to consider changes to the County’s unique towing ordinance. Among the changes proposed would be the elimination of the jurisdiction’s second signature requirement, which mandates that a property owner or their agent must be present to authorize the removal of a vehicle that is unlawfully parked or abandoned in a private parking lot, regardless of the violation or time of day. The 30 minute rule, which allows a trespassing vehicle to park in an unauthorized space for up to 30 minutes before being towed, is also under review. AOBA will work with members of the Towing Ordinance Advisory Board as well as the Board of County Supervisors to support these changes.
A new legislative body in Richmond will focus its attention on solutions to urban sprawl and growth pressures. The two-year study committee, created during the 2008 session, will conduct a comprehensive evaluation of existing land use planning tools and infrastructure financing options available to local governments, and develop recommendations for legislation to the General Assembly.
The joint subcommittee recently elected Delegate Clay Athey (R-Fauquier) and Senator Jill Holtzman-Vogel (R-Winchester) as Chair and Vice-Chair, respectively. The group will meet four times prior to the 2009 session. AOBA will continue to monitor the subcommittee’s actions and participate in work groups established to make policy recommendations on specific issues.
The bad news continues to roll in regarding Virginia’s biennial budget. Fiscal year 2009 sales tax collections have lagged behind projections by more than four percent. At the same time, income tax withholding is nearly five percent behind budget forecasts. This means more targeted budget cuts are on the way. The Governor is authorized to make line item cuts of up to 15 percent without the approval of the General Assembly. Accordingly, Governor Kaine has instructed state agencies to prepare revised budget proposals reflecting cuts of 5 percent, 10 percent and 15 percent to be reviewed by the administration. Revised revenue projections are due in October and will dictate the scope of impending budget cuts.
AOBA provided comments to the Alexandria City Council last month regarding a draft environmental charter, intended to help define the city’s commitment to sustainability and provide direction for a set of “essential” sustainability principles linked with the City’s 2015 Strategic Plan. The draft charter outlines proposed guiding principles for City Council action related to land use and open space, water quality, air quality, transportation, energy, green building, solid waste, environmental health and emerging environmental threats.
With the Virginia General Assembly’s adjournment on July 9 with no significant legislation to raise funds for transportation, commercial real estate owners are vulnerable to higher real estate taxes in Northern Virginia . One of the few components of the 2007 transportation funding package upheld by the State Supreme Court was the authority for local governments in Northern Virginia to institute an additional tax of up to 25 cents per $100 assessed value on commercial real estate. With no other options on the table, local governments will increasingly look to the commercial real estate tax to bear the burden of funding new local transportation infrastructure costs. To date, only Arlington and Fairfax have adopted additional levies on commercial real estate, but it is also under consideration in Loudoun County .
To fund new transportation projects, Loudoun County is currently considering an increase in the real estate tax applied to commercial properties. The State Supreme Court recently upheld locally imposed elements of the comprehensive transportation legislation which allowed local governments to assess an additional levy of up to 25 cents per $100 assessed value on commercial property. Apartment buildings were specifically exempted from the legislation.
The Housing Affordability Work Group of the Virginia Housing Commission met in late August in Richmond. Among the issues considered was legislation from the 2008 session designed to allow smaller communities to adopt jurisdiction-wide rental inspection districts, exempting them from the requirement to justify the districts based on health, welfare and safety of tenants. AOBA argued against this relaxation of terms, citing that local governments possessed sufficient authority to conduct spot blight abatements for properties that might fall outside of an established district. The legislation was not recommended by the Work Group for further consideration next year.
Workgroups of the Virginia Housing Commission met this week in conjunction with the special session of the General Assembly. They received background information regarding issues of concern, but did not begin significant discussion of policy issues. Workgroups are expected to consider two proposals advanced by advocacy groups that are of particular concern to AOBA members: mandatory retrofitting of automatic sprinkler systems in high rise properties, and adding “source of income” to the list of prohibited considerations under fair housing law.
The State Corporation Commission (SCC) is expected to approve a proposed Dominion Virginia Power fuel rate increase that will raise AOBA members' utility bills between 30 and 40 percent. At a public hearing June 24, SCC judges expressed concern for the impact of the steep rate hike, but noted that legislation passed in 2007 essentially allows the utility to recover 100 percent of fuel costs. AOBA did secure a concession from Virginia Power that it will not seek interest or carrying charges for deferred increases. AOBA members Akridge and Cafritz Company submitted testimony urging the SCC to seek legislation restoring its authority to conduct a holistic review of the company's rates.
A fractured General Assembly convened June 23 for a special session to address transportation infrastructure financing. Numerous approaches have already been debated and fallen victim to partisan dissent, including the Governor Tim Kaine's own proposal. The Senate passed legislation which addresses regional needs in Hampton Roads and Northern Virginia, and also includes a statewide maintenance component, but it contains a gas tax increase which is expected to make it DOA in the Republican-controlled House. The House, if it acts at all, may opt to adopt a “regional needs only” fix. The House and Senate are expected to recess and then reconvene July 9, hopefully to take some kind of final action.
AOBA is calling for a holistic, transparent review of Virginia Dominion Power's rates, in light of the company's historic fuel rate increase, effective July 1, 2008. In addition to intervening in the State Corporation Commission's investigation, AOBA contributed the following article, which appeared in The Washington Post on June 22:
On Tuesday, June 10, Democratic voters selected Fairfax County Board of Supervisors Chairman Gerry Connolly as the party’s nominee to succeed retiring Congressman Tom Davis; they rejected former Congresswoman Leslie Byrne, who lost the seat to Davis in 1994. Connolly was supported by AOBA’s federal PAC, based on his comparatively strong pro-business record in five years as Board Chairman. At a convention of Virginia Republicans, meanwhile, former Governor Jim Gilmore defeated Del. Bob Marshall of Manassas for the right to square off against former Governor Mark Warner in the race to succeed retiring Sen. John Warner. However, Marshall’s strong base of conservative supporters and the near-upset they almost delivered, along with conservative Del. Jeff Frederick’s upset victory over former Lieutenant Governor John Hager as Republican Party Chairman, may indicate a return to conservative principles for the Party.
When the Virginia General Assembly adjourned for the 2008 regular session, a total of thirty-one bills had been referred to the Housing Commission for additional study and recommendations. At the Commission’s first meeting in the legislative interim, AOBA was appointed to three work groups, including the critical Housing and Environmental Standards Workgroup. AOBA sought this position in order to represent the industry’s concerns with regard to legislative proposals to mandate retrofitting of automatic sprinkler systems in all high-rise residential buildings across the Commonwealth by December 31, 2017.
With only a short time before the June 23 special session, consensus has yet to emerge on a solution to transportation infrastructure financing. Governor Tim Kaine has unveiled a proposed revenue package to restore funding for the construction of critical transportation infrastructure and to close the funding gap for the maintenance of road and transit systems statewide. But his plan has met with immediate criticism from both sides of the aisle, and the public discord between all camps illuminates once again how the transportation issue continues to divide legislators. AOBA has joined with 16 other business organizations from across Northern Virginia in signing onto a policy resolution that urges legislators to adopt a statewide funding package that will generate a minimum of $400 million annually for new construction needs in Northern Virginia and $1 billion annually to sustain statewide maintenance and construction programs.
Governor Kaine will call for the General Assembly to convene in special session, likely on June 23, to address transportation infrastructure financing. Northern Virginia continues to lose close to $1 million in new transportation funding each day that the General Assembly fails to address the Virginia Supreme Court decision striking down the regional funding mechanisms authorized last year. In advance of the special session, the Governor plans to reveal his own plans to shore up funding for maintenance of existing transportation infrastructure and to restore funds for new projects. While he has not yet revealed his plan, Kaine has publicly floated the idea of regional and statewide increases in gasoline and sales and use taxes.
The 2008 Virginia General Assembly Session came to an official close last month, capped off by an uneventful veto session held April 23. AOBA recorded numerous successes during the 2008 session, helping defeat scores of harmful bills that, if passed, would have meant millions of dollars in new costs for members and their tenants. One of the highlights was AOBA's success in defeating a proposed homestead exemption, which would have allowed local governments to shift the burden for up to 20 percent of residential real estate taxes to commercial properties-- upwards of $1 billion annually in additional real estate taxes. A complete AOBA report on the 2008 Session will be sent to members separately and posted on the web site later this month.
The Prince William Board of County Supervisors has voted to set its real property tax rate at 97 cents per $100 assessed value for FY 2009, up from the current 78.7 cents. AOBA had voiced strong opposition to the proposed rate of $1.00, noting the double-whammy effect that would occur due to sharp increases in commercial and multifamily assessed values. As importantly, Prince William will not use the newly created authority this year to adopt a surtax on commercial property to pay for local transportation projects.Likewise, in Alexandria, the City Council adopted only a modest increase in the property tax rate, to 84.5 cents from the current 83 cents. It, too, declined to impose a transportation surtax on commercial properties.
