From homebuilders to Realtors, representatives of the recession-ravaged construction and real estate industries are doggedly pursuing dual legislative goals.

They’re determined to block legislation that they say would further sink their struggling businesses while supporting measures that might give them a financial boost. Several bills are under consideration that would make it easier to sell homes.

Also active in the uncertainties of passing new laws is the Arizona Department of Real Estate, whose primary goal is to ensure that consumers’ interests are being protected.

Bills getting the attention of real estate and construction players include tightening regulations for creating subdivisions, clarifying the imposition of development fees and blocking a possible move by unions to expand their influence in building energy-related projects. A measure requiring more meaningful continuing education courses for new real estate people hit a snag.

There is also the usual array of homeowner association measures that deal with such disparate topics as firearms and solar screens, plus a requirement that fees for preparation of documents be limited to a specific amount instead of allowing HOAs to charge what is only defined as a “reasonable” fee.

Foreclosure volatility

A new report from the W. P. Carey School of Business at Arizona State University reveals that the number of foreclosures in the Phoenix area jumped back up in January, putting a damper on hopes for a quick recovery this year.

During the last few months of 2010, foreclosures represented about 30 percent of the transactions in the resale of single-family homes, but the rate jumped to 43 percent in January when more than 3,600 single-family homes were foreclosed, up from fewer than 2,500 in December.

“The main question for the coming months is whether the January surge in foreclosure activity is a temporary response in unclogging the pipeline after foreclosure moratoriums ended or a continuation of a market being dominated by foreclosures,” says Associate Professor of Real Estate Jay Butler, who wrote the report.

Single-family home prices are staying relatively low in the Phoenix area. The median price for home resales, excluding new foreclosures, was $125,000 in January, the same as December. This was a substantial drop from the January 2010 median of $136,500.

Finding feasible fees

Until the housing market turns around, the Home Builders Association of Central Arizona is targeting regulations that put a crimp in the bottom line.

Spencer Kamps, vice president of legislative affairs for the homebuilders, says, “We hope to reduce regulatory costs when reasonable, especially duplicative regulations. In a down-pricing market, our goal in attracting buyers is to be as competitive as possible.”

With a recent increase in governmental fee-for-services programs, Kamps says homebuilders are looking for “protections and a process for fees to be appropriately set for license and permit issues.” The homebuilders are banking on SB1525, which would establish a commission to study the development fee issue and determine the appropriate way for agencies to assess fees. The bill, sponsored by Senate President Russell Pearce, would require that development fees be based on the need for infrastructure improvements. The Senate approved the measure and sent it to the House on Feb. 28.

“Growth must pay for its proportionate share of services in a local community, making sure that services are not degraded, but (developers should) not pay more than their fair share,” Kamps says. “We have been attempting to pass a number of reforms to development-fee statutes for the last five years. The Legislature allowed local development fees about 30 years ago, and it worked well for 10 years. Statutes need to be updated. In our opinion, cities have abused development fees.”

Because fees vary from city to city, Kamps says, problems arise. “The development and homebuilding community lack certainty,” he says, “not knowing what fee you might have to pay. Clearly defining what we should and should not pay would be a good thing.”

The homebuilders association also supports SB1284, which establishes an arbitration process for complaints involving repairs costing $5,000 or less after the Registrar of Contractors has made a finding. Arbitration thus avoids a potentially lengthy process with the Office of Administrative Hearings, Kamps says. The change would speed up the process because an arbitration hearing would be required to begin within 60 days. Complaints taken to the Office of Administrative Hearings generally take much longer to schedule and resolve, he says.

“Arbitration in our view is a benefit to both sides because the issue gets resolved quicker,” Kamps says.

Of course, either side has the option of taking the complaint to Superior Court if dissatisfied with the ruling of the arbitrator and/or the hearing officer.

“It’s an excellent opportunity to see if there is another process out there that can provide quicker resolution to complaints,” Kamps says. “If not, it may have to be tweaked. But we definitely need an arbitrator with construction  experience. We don’t want a health-care arbitrator hearing a complaint on a kitchen sink.”

AGC: Level the PLA-ing field

The primary focus of the Arizona Chapter of the Associated General Contractors is on HB2538 and SB1403, says David Martin, executive director of contractors’ group. Both measures ban requiring the use of so-called project labor agreements, known as PLAs, on projects that need the approval of the Arizona Corporation Commission’s Power Plant and Transmission Line Siting Committee.

“The unions have figured out that on solar projects they could place a condition on a certificate of environmental compatibility that requires a contractor to negotiate with them,” Martin says. “We caught wind of that. It’s important because the bill doesn’t allow any government entity to exclude contractors. When you mandate a project labor agreement, you’re giving the unions the power to negotiate a contract. We didn’t agree with that. That’s why the bills are being pushed. They level the playing field.”

PLAs require non-union contractors to be bound to union wages and work practices, Martin says, and they pre-empt previously negotiated private contracts.

On Feb. 16, SB1403 received unanimous bipartisan support from the Senate Commerce and Energy Committee. A day earlier, the companion measure, HB2538, was approved by the House Environment Committee, with Republicans voting for it and Democrats opposed.

Martin says the 7-0 vote by members of the Senate panel, including Democrats, was surprising. He says public comments by Democrats on the committee indicated they would have appreciated it if a representative from the AFL-CIO had showed up to testify against the bill. SB1403 was passed by the full Senate on Feb. 28.

Recognizing that Republicans hold super-majorities in the House and Senate, Martin says, “A pro-free market environment is pervasive at the Legislature, and PLAs are not part of that equation.”

A California group called CURE (California Unions for Reliable Energy) has been encouraging local cities and towns to adopt rules requiring PLAs on certain energy-related projects, Martin says. He figures it’s easier to get a state law passed banning PLAs than to meet with local officials throughout Arizona. Bills similar to the Arizona measures have been introduced in Alaska, Idaho, Indiana, Ohio, Connecticut, Kentucky, Maryland, New Jersey, West Virginia, Missouri, Pennsylvania, and Tennessee, according to Martin.

Still in the embryonic stage, which means it’s not ready for legislative consideration, is what Martin calls “the elephant in the room — trying to figure out some sort of revenue source for infrastructure.”

He explains: “You now have a contraction of revenue and the (construction) industry takes a hit. As go taxes, so go projects. A misconception is that you can cut construction even more. We’ve already taken a hit. How do we provide the facilities that the general public needs? The only answer is to find a revenue source that will sustain it. We don’t have that revenue source.”

Putting a plan together is perhaps a year and a half away, Martin says. “We believe that when policymakers and the public see the horrible deficit that we’re in as far as needs, if we ask them to pay for it, they will,” Martin says. “Generally speaking, if you give them a plan and they know what they’re receiving, they’re pretty receptive.”

Without specifically using the words “tax increase,” Martin indicates that a new source of revenue would be needed. “We can leap into a campaign that will enable us to ask members of the public if they believe the investment is worthwhile,” he says.

Martin applauds the recently signed tax incentives bill (HB2001) that creates a public-private Arizona Commerce Authority. “We believe that we can never move on to recovery until we create a more friendly business environment that encourages investment,” he says.

Realtors: Put brakes on loss of homeowners’ tax breaks

But the Arizona Association of Realtors is expressing concern about a provision in HB2001 that means vacation homes would lose an automatic tax break and that owners of other homes would face a new hurdle to get the rebate.

The new law tightens eligibility for the current annual homeowners’ rebate of up to $600. It also would require that homeowners submit an affidavit every two years to get the rebate by swearing that the homes are qualified for the money because they are primary residences.

Tom Farley, chief executive officer of the Realtors association, says members of his group suspect many homeowners will fail to mail the newly required affidavit and then face having to file an appeal to get the rebate.

Nicole LaSlavic, government affairs director for the Realtors, says her group didn’t oppose HB2001, but is concerned about the homeowners’ rebate provision.

Currently the rebate up to $600 is automatically part of a homeowner’s tax return, LaSlavic says, and provides for a rebate on both a primary residence and a second home. The new law limits the rebate only to the primary residence. If an adult child, perhaps a student at Northern Arizona University, is living in a family’s second home in Flagstaff, that home no longer will qualify for a rebate, LaSlavic says.

“We have a concern with the affidavit now having to be sent back from the homeowner,” she says. “Most aren’t even aware that they receive a rebate. We’re afraid that when they receive (a notice for an affidavit) it will be tossed aside and overlooked. If they don’t send in an affidavit, is it going to be too late? What is the process for appeals?”

Defining ‘reasonable’ fees

A big issue for the Realtors involves document transfer fees that homeowner associations charge in connection with the sale of a condominium or home. Documents could include covenants, conditions and restrictions (CC&Rs) and any litigation pending against an HOA. Current law allows an HOA to charge a “reasonable” fee.

“We are seeing that the definition of ‘reasonable’ has become skewed,” LaSlavic says. “Some are charging astronomical fees, up to $500 or $550 for document transfer fees.”

An amendment limits the fee to 10 cents per page for documents that cannot be transmitted electronically. The Realtors would like to see a maximum fee of $250. “We’re still working with stakeholders to address all concerns,” LaSlavic says. “The way the market is right now, we would like to see some relief for sellers and buyers. We want to make sure fees associated with selling or purchasing a home are appropriate.”

Language was stripped from SB1292 that would have required more pertinent continuing education courses two years after new real estate agents receive their licenses. “We hope to get that language restored,” LaSlavic says.

The bill still extends to 10 days from five days the time a broker has to review materials related to a sale or purchase. With an overload of short sales and foreclosures, brokers had requested the additional time.

ADRE: Home buyers deserve to see public reports

At the Arizona Department of Real Estate, Commissioner Judy Lowe is keeping a watchful eye on HB2005, which strengthens subdivision statutes. The measure, which passed the House on

Feb. 17, it applies to situations in which a person or a group attempts to avoid the provisions of the state’s subdivision laws by acting in concert to divide a parcel of land or sell subdivision lots.

 “The definition of acting in concert to avoid a public report is expanded,” Lowe says, adding that under current law the ultimate buyer has a better chance of being deprived of obtaining a public report. Basically a public report, containing material information, such as flooding potential or how adjacent land is to be used, is required to be given to buyers by developers in a new home subdivision. The public report is prepared by the seller/builder, and real estate officials caution that it could be inaccurate and should be verified.

According to (A.R.S. § 32-2101 and 32-2181), acting in concerted means evidence of collaborating to pursue a concerte plan. The legislative research staff explains: “In other words, it is unlawful for a person or group of persons to attempt to avoid the provisions of the subdivision laws by acting in concert to divide a parcel of land or sell subdivision lots by using a series of owners or conveyances that results in the division of the lands into a subdivision or the sale of subdivided land. Unlawful acting in concert requires proof that the real estate licensee or other licensed professional knew or should have known that property which the licensee listed or for which the licensee acted in any capacity as agent was subdivided land subject to law.”

HB2638, sponsored by Rep. Steve Urie, R-Gilbert, a longtime real estate broker and licensee, was held in the House Employment and Regulatory Affairs Committee on Feb. 15. It would modify the appeals process regarding alleged violations of a real estate licensee. Instead of a complaint going through the Real Estate Department’s administrative hearing process, the target of the complaint could take the case directly to Superior Court.

In opposing the bill, Lowe expresses her concern about the possibility of real estate licensees bypassing the Real Estate Department: “The waiting period would be longer, the cost would be higher and it diminishes protection for the public.”