Governor Calls Special Session on Transportation
Governor Tim Kaine unveiled a plan this week to restore funding for construction of critical transportation infrastructure in Northern Virginia and Hampton Roads and to close the funding gap for maintenance of road and transit systems statewide. He further called the General Assembly to convene for a special session to address the issue June 23.
House Republican leadership issued an immediate response, criticizing the Governor's plan and questioning the need to address maintenance at this time. The caucus leadership has remained steadfast in its no-new-statewide-taxes position, signaling its preference for simply restoring the regional funding measures struck down by the State Supreme Court earlier this year. Meanwhile, the Governor and Senate leadership have indicated that they will not support any new legislation providing for investment in new transportation that does not also address the maintenance deficit-meaning the House Republican preference for just fixing the Supreme Court's problems with HB 3202 will not fly.
Why are Governor Kaine and Senate Majority Leader Dick Saslaw (D-Springfield) dug in? The growing deficit in funding for maintenance continues to siphon away dollars allotted for new projects, because the Commonwealth is required by law to sustain the operation of existing infrastructure prior to construction of new roads and transit. In 2009, it is estimated that $388 million in construction funding will be diverted to the upkeep of existing facilities statewide. If not addressed, this sum will grow to more than $575 million in the next five years, all at the expense of new construction.
Despite the Week 1 posturing-- both sides have already pronounced the other's proposals DOA-there is plenty of effort underway to avoid an impasse next month. AOBA attended a first-ever joint meeting of the Northern Virginia and Hampton Roads General Assembly delegations held last week, which offered a ray of hope that the two sides will find common ground before the special session. Republicans and Democrats from both chambers attended the meeting and agreed on a set of shared principles that should be the foundation for any transportation package. There was clear consensus on the seriousness of the problem and the need for immediate attention. Attendees also generally concurred that both regional and statewide needs must be addressed, with simple, sustainable, and broad-based sources of revenue, and they agreed to reconvene in June to try and assemble a legislative proposal of their own. However, any such proposal will face the same obstacles as the Governor's plan, in that it will have to win the approval of key individuals who were conspicuously absent from the discussion: Saslaw and House Speaker Bill Howell (R-Fredericksburg).
The Governor's plan would address the maintenance funding deficit using a statewide increase of one percent in the sales tax on motor vehicles, and a $10 fee for annual vehicle registrations. Kaine would also restore funding for new construction in the Northern Virginia and Hampton Roads regions by way of a one percent hike in the retail sales and use tax in those areas-imposed and collected by the state, but to be returned to the regions of origin. Finally, he would institute an increase of 25 cents on the grantor's tax, to be distributed state-wide for rail and transit capital and operating expenses.
As members recall, the Supreme Court's decision left unaffected the new authority of local governments to institute an additional commercial real property tax of up to 25 cents per $100 assessed value. This has meant commercial real estate, as the only source of skin in the game left standing, is a more tempting target for local governments as long as no other funding sources for regional transportation needs are in place. Consequently, AOBA is vociferously pressing state legislators to work out their differences and take action in June.
For more details regarding the Governor's proposal, click here.
The Virginia Housing Commission convened April 22 for its first meeting subsequent to the 2008 Virginia General Assembly session. Thirty-one bills were referred to the Commission this year for deliberation and study. Members will assemble throughout the legislative interim to evaluate and make recommendations on these bills, as well as to craft new legislation for introduction in the 2009 session.
At the meeting, the Commission established five work groups focused on identified policy areas of interest. Delegate John Cosgrove (R-Chesapeake) will chair a work group to address housing affordability, general real estate law and housing subsidies. The group will focus on the growing gap between housing costs and incomes and the need for direct and indirect housing subsidies, as well as on regulatory mandates and incentives for privately generated housing subsidies.
A second work group, chaired once again by Senator John Watkins (R-Midlothian), will focus on housing and environmental standards. Two bills referred to this work group are of particular interest to AOBA members: Delegate Jennifer McClellan's (D-Richmond) H.B. 333 and S.B. 363, patroned by Senator Watkins. These two bills sought to require that all buildings over 75 feet high or more than six stories high, or which are being used to house individuals or to provide guest rooms for occupancy, be equipped with an automatic sprinkler system by December 31, 2017. If approved, the Board of Housing and Community Development would have been required to promulgate regulations establishing standards for the required systems. AOBA lobbied extensively in opposition to this bill in the 2008 session, citing a lack of sufficient information regarding the number and type of affected buildings as well as the lack of justification for the extreme expense based on available fire incidence data. Consequently, neither the House or Senate bills were passed, but were sent to the Housing Commission for additional study. The House sponsor has indicated her intent to revise the legislation and reintroduce the bill next year focusing only on senior housing. However, Senator Watkins has indicated that he intends to push for approval of identical legislation next year. AOBA will be working with the Housing Commission this summer to oppose any such efforts.
A third work group, chaired by Senator Mary Margaret Whipple (D-Arlington), will oversee the implementation of legislation adopted last year creating a state entity to regulate the practices of common interest communities. Senator Mamie Locke (D-Hampton) will chair a fourth work group that will evaluate the problem of vacant derelict structures and what tools local governments need to effectively combat them. The work group will look at solutions employed by other states, and comparing effective and ineffective policies as possible solutions in Virginia.
A fifth and final work group, chaired by Delegate Danny Marshall (R-Danville), will look at mortgage finance regulatory issues. This work group will examine perceived causes of the ongoing mortgage crisis (e.g., unwise borrowing choices resulting from limited financial literacy and/or deceptive, predatory lending practices), and will also look at Virginia's supply and geographic distribution of housing to meet the needs of its population and to sustain long-term economic growth.
AOBA has served on Housing Commission work groups in the past, and has asked to do so again this year. We will keep members posted throughout the summer and fall regarding the Commission's discussions and progress.
AOBA Recognizes Building Safety Week with Commerce and Trade Secretary
On Monday, May 5, AOBA participated with Secretary of Commerce and Trade Patrick Gottschalk in a presentation marking the beginning of Building Safety Week in Virginia. The Secretary presented the Department of Housing and Community Development, AOBA, and other participating organizations with a proclamation from Governor Kaine recognizing the safety and fire prevention experts who ensure building security. Building safety and fire prevention codes address all aspects of construction in Virginia, such as structural soundness of buildings, reliability of fire prevention and suppression systems, plumbing and mechanical systems, and energy efficiency and sustainability. AOBA has served for several years as a member and stakeholder participant in work groups convened by the Department of Housing and Community Development to review proposed changes to the building and maintenance codes.
AOBA members with interests in Virginia properties can expect to see significant increases in their real estate tax bills in 2009. Left scrambling for revenues in the wake of sharply declining residential property assessments, some local governments in Northern Virginia were forced to adopt steep increases in the real estate tax rate. Though other jurisdictions were able to maintain a relatively stable tax rate going into fiscal year 2009, they were able to do so only on the strength of escalating assessments in commercial property values, which can also drive up tax bills for comparable properties.
On May 5, the City of Alexandria adopted a tax rate of 84.5 cents per $100 assessed value, a 1.5 cent increase over FY 2008. While the city boasts that its tax rate is among the lowest in the region and that the average homeowner will see a slight decrease in their tax bills, businesses will still be hard hit by the increase. Nonresidential property assessments increased by an average of 12.1 percent from 2008 to 2009, compounding the effect of the rate hike. Despite uncertainties about whether regional funds for transportation projects would be restored, the City Council resisted the urge to use its new authority to tax commercial property for transportation purposes.
At AOBA's insistence, the City created a committee to evaluate the impact and advisability of the local option tax before turning to it. That committee concluded that the potential consequences for businesses operating in the current market environment were too great to proceed at this time. Council members also noted that the lower tax rate would give Alexandria a competitive advantage over neighboring jurisdictions, whose total commercial property tax rates will now be 15 to 22 percent higher than Alexandria's.
Neighboring Arlington County took a very different approach. On April 19, the County Board adopted a general real estate tax rate increase of two cents, as well as an additional 12.5 cent increase for commercial property to support transportation projects. The combined rate increase of 14.5 cents (an approximately 18 percent hike) is again compounded in its effect by escalating commercial property values, which have risen some 12-13 percent since last year. The average business can thus expect to pay about one-third more in real estate taxes in FY 2009 than in the previous year.
Likewise, in Fairfax County, the Board also used the new authority, adopting a commercial real estate levy of 11 cents, on top of a three cent increase in the general property tax rate. Members will recall that the Fairfax County Executive had proposed to use most of the new funds for simply maintaining the County government's prior transportation efforts. AOBA promptly swung into action and got the General Assembly to adopt a policy directive stating that the new authority "shall not be used to supplant local general fund dollars budgeted for transportation but shall only be used to supplement it."
The outer suburbs of Loudoun and Prince William Counties were harder hit by declining residential real estate values. In Loudoun County, the Board of Supervisors approved an increase of 18 cents, up to $1.14 per $100 assessed value, an approximately 20 percent hike over 2008. The Prince William Board of County Supervisors adopted a general real estate tax rate of 97 cents per $100 assessed value. This is an increase of roughly 19 cents over 2008, or an average increase of 28.6 percent in commercial property tax bills.
|
