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Spring 2019 Government Affairs Newsletter

  • by Cami Morrill
  • Jun 5, 2019, 15:50 PM

Federal Legislative Update

May 13th through May 17th, the National Association of REALTORS® (NAR) hosted their annual REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. A small group of representatives from Snohomish County-Camano Association of REALTORS® (SCCAR) traveled to D.C. to meet with our federal legislators and talk to them about our legislative priorities.

Authority for the National Flood Insurance Program (NFIP) was set to expire on May 31st, 2019, but NAR was able to get a temporary extension until June 14th, while they continue to work towards a permanent extension.

We urged our legislators to pursue infrastructure policies which reflect our areas needs. We continued to advocate for a level playing field for both highway and public transit funding, to enhance property values and create desirable communities.

The Tax Cuts and Jobs Act included many changes which affect homeownership and the real estate industry. As we close the first tax season under the new rules, REALTORS® are working to protect or support the following policies: extending expired Mortgage Debt Cancellation Tax Relief; fixing the marriage penalty on the state and local tax (SALT) deduction cap; and indexing to inflation the $750,000 cap on mortgage interest deduction, and capital gains exclusion on the sale of a principal residence.

Fair housing is integral to our ability to buy, purchase, lease, and occupy real estate in America, having protected our nation's essential right to property for more than half a century. Earlier this spring, NAR was pleased to support H.R. 5, the Equality Act, which adds fair housing protections based on sexual orientation and gender identity.

State Legislative Update

The 2019 session adjourned for the year on Sunday, April 28th. Washington REALTORS® was able to work with both parties to protect the real estate industry and also proactively address our state’s affordable housing crisis. We ended a successful 2019 session by (1) protecting our members, (2) protecting real estate transactions, (3) providing opportunities to increase both commercial and residential real estate transactions, and (4) protecting our clients.

We accomplished this by making housing the #1 priority in the session with our “Unlock the Door for Affordable Homeownership” campaign. With the support of our members, our coalition partners, and the most influential PAC in the state, REALTORS® took the first steps toward increasing housing supply and making housing more affordable in every price range.

We protected our members by getting them excluded from a 20% B&O tax increase.Although the legislature passed a 20% B&O tax increase that hit most service businesses, REALTORS® were not included. We reminded the legislature that the B&O Small Business Tax Credit does not apply to REALTORS® because commissions are pooled, and they agreed that exempting REALTORS® was both fair and a reasonable policy decision.

Very early in the session, a bill was introduced to require all parties in an “in-house” transaction to have an attorney sign off at every step in the transaction. Obviously, this bill would make real estate more expensive for consumers and greatly impede transactions. Washington REALTORS® jumped in and made sure this proposal did not even make it out of committee. We protected your transactions.

We were able to increase transactions by getting the condominium law reform bill passed unanimously out of the House & the Senate.Washington REALTORS® was able to help pass condominium liability reform that continues to protect the consumer, but adds a fairer standard which should encourage developers to start building condominiums again.

From the first days of the State legislative session, we knew that the legislature was committed to increasing the real estate excise tax (REET). Although we did not support this proposal, the legislature listened to us when we spoke and made significant changes, which resulted in approximately 90% of transactions paying the same, or less, REET. All transactions up to $500,000 will get approximately a 15% cut in REET. In fact, due to the marginal nature of the new tiered tax (a REALTOR® suggestion) all transactions up to about $1.75M should not be impacted. While this tax impacts commercial real estate and multifamily, it is hoped that the marginal nature of the tax structure will limit the impact. These new rates will not take effect until January 1, 2020. We were able to protect our clients from what could have been a significant REET increase

 

Snohomish County Update

Snohomish County is currently in the midst of doing a planning study on the southwest area of the county ("Southwest Urban Growth Area Boundary Planning Study"). Your association was invited to participate in a stakeholder work group which will provide input on the study. SCCAR staff has attended several meetings to represent REALTORS'® interests. 

Your association was also asked to participate in the Snohomish County Housing Task Force. The task force will be looking at a full range of permanent housing options: middle-income and affordable housing, special needs and subsidized housing, alternative housing models, and land use and redevelopment. The mission of the task force will be to collaboratively develop a five year action plan that identifies priorities for county, city, and tribal governments to accelerate their collective ability to meet the affordable housing needs of all Snohomish County residents, and set a foundation for continued success through 2050. SCCAR staff has been attending these meetings as representation for REALTORS®.

Local Municipalities Update

Earlier this year, the City of Lynnwood announced they will be updating their sign code in accordance with the U.S. Supreme Court’s ruling in Reed v. Town of Gilbert. As you may know, sign code can be a problematic issue for REALTORS®. SCCAR staff has been placed on a consulting stakeholders’ group. The city plans to prepare a draft ordinance to be reviewed by this group of stakeholders. The group plans to start meeting in either later summer or early fall, at the direction of the City of Lynnwood.

The City of Everett has also reviewed its sign codes to come into compliance with the Reed v. Town of Gilbert as well. SCCAR staff monitored the issue and attended the Everett Planning Commission public hearing. The City of Everett's new sign codes do not prohibit REALTORS® from advertising their clients' homes in any way.

A REALTOR® selling a home in Edmonds ran into a problem when the bank declined to finance the sale of an older condominium because it was not built to the new city code standards. The bank claimed there was risk involved if the building were severely damaged. If disaster struck and one of these buildings lost 75 percent or more of its replacement cost at the time of destruction, it would have to be rebuilt to conform to the new code with fewer units and a height limit of 30 feet. There were about 24 units in Edmonds which fell into this category. However, SCCAR staff attended the public hearings of the Planning Board and the Edmonds City Council. SCCAR staff testified in support of a new city code amendment which essentially grandfathered these units into the current city code. SCCAR supported the draft code language which would allow the nonconforming buildings to be restored to the same density, height, setbacks, and coverage as existing before the destruction or damage occurred, ensuring protection for the property owners as well as maintaining the property's value.

The City of Monroe updated their zoning chapter and were considering excluding duplex developments from the new city code. However, SCCAR staff stepped in and recommend the city keep duplexes in their city zoning code. Part of what makes homeownership affordable is the building of town-homes, condominiums, and duplexes. These types of developments are attractive to first-time buyers as well as “empty-nesters." If these were built in sufficient numbers and at an affordable price, "empty-nesters" can downsize and then subsequently more single-family homes become available. Duplexes, and similar builds, also contribute to more sustainable development, especially around transit hubs, easing the burden on traffic and parking, and providing opportunities for walkable neighborhoods. Thanks to the feedback from SCCAR staff, the City of Monroe did decide to keep duplex developments in their updated zoning code.