Budget Shortfalls Will Likely Affect Homebuilders
by Lori Lustig
"All politics is local ... " the familiar saying goes, but more important to you is the follow-up phrase that says, " ... and most of that is land-use!"
At the municipal level, a large part of local politics takes the form of zoning and permitting actions. However, those powers are granted to cities and towns and counties by the state legislature-the body of government that passes legislation enabling local governments to render those regulatory decisions that impact you, your families, your neighbors and your businesses. But once legislation is passed, there are efforts in each legislative session to "modify" the powers that have been granted-either to your benefit or not!
In January, the 49th Arizona State Legislature will be seated and will begin a new session. Issues expected to be part of their agenda will include development fees; green building; energy alternatives; transportation; schools and education; workplace regulations (from safety to employment practices); taxes and health care benefits.
Over the next several months, we will follow these key areas of legislation as they move through the state legislature and bring important developments to your attention. However, while all of these land-use and business related issues will be in the mix, the issue of overriding interest and importance will be our state budget.
With the impending budget shortfall-currently at the rate of $90 million each month-this will have a serious impact on local governments as they try to find additional sources of revenue. If they can't get it from sales taxes, if property values continue to fall as well as development and permitting fees, and if the slice of the shared state revenue pie shrinks further for local governments, they most likely will turn to businesses (like yours) to help make up the shortfall.
For example, the City of Tucson is already considering a "voluntary" fee to be agreed to by developers as a condition of re-zoning. Think of it as a kind of transfer tax that would be imposed on the future transfers or sales of the properties built pursuant to the development agreement. And it would circumvent the authority (or lack thereof) granted by the state legislature because it is "voluntary."
Such a fee, however, won't be "voluntary" on the part of the future home buyer, who will be bound by the stroke of the developer's pen. Rather, it is more like taxation without representation. The fee is supposed to fund the city's Housing Trust Fund. Admirable, except that in these economic times, the fee is not exactly going for an "essential service" such as funding police or fire departments.
Local politics is anything but boring. So fasten your seatbelts and get ready for a bumpy (but interesting) ride as we cover how actions of the Arizona State Legislature affect homebuilders in 2009.
Lori J. Lustig, RN JD, specializes in government relations and public affairs and serves as state lobbyist for the Northern Arizona Builders Association (NABA).
