In This Issue:
Overview of Land Development and Construction Legislation:
- Extension of Certain Wetlands Permits
- Mandatory Adoption of the International Energy Conservation Code
- Prescriptive Tree Planting, Replacement, and Preservation Ordinances
- Gas Pipelines in Residential Subdivisions
HBAV’s 2021 Legislative Agenda:
- Addressing the Volatility in the Wetland and Stream Mitigation Credit Market
- Creating a Virginia Housing Opportunity Tax Credit Program
- Constitutional Amendment for New Construction Affordable Housing
Overview of the 2021 Session
The 2021 Session of the Virginia General Assembly began on January 13th, with the House of Delegates meeting virtually, the State Senate convening at the Science Museum of Virginia, and all subcommittee and committee hearings being conducted virtually.
As you can imagine, the COVID 19 pandemic has made the logistics of legislating, and advocating, more complicated. Despite that, the House and Senate have continued to meet, deliberate, and vote on bills – including many bills that have a direct or indirect impact on the residential land development and construction industry.
We will send out a comprehensive list of the bills that we are tracking next week, but we wanted to highlight some of the significant pieces of legislation that have been discussed over the last 17 days – as well as information about HBAV’s 2021 Legislative Agenda. If you would like to learn more about other bills before the General Assembly this year, please visit Virginia LIS.
If you have any questions or comments about bills being considered by the General Assembly, please contact HBAV’s Vice President of Government Affairs, Andrew Clark, at AClark@HBAV.com.
Overview of Land Development and Construction Legislation
Extension of Certain Wetlands Permits
SB 1143 states that any permit renewal required pursuant to § 28.2-1205 or 28.2-1306 of the Code of Virginia for a permit that was set to expire between March 1, 2020, and July 1, 2021, shall retroactively be considered valid and effective until January 1, 2022.
Mandatory Adoption of the International Energy Conservation Code
HB 2227 and SB 1224 would require Virginia to adopt the full International Energy Conservation Code (IECC) within one year of adoption by the International Code Council and eliminate the ability for Virginia stakeholders to evaluate the merits of the proposals included in the IECC prior to their adoption in Virginia. These bills would set a precedent that the General Assembly is willing to “legislate the building code”, which the vast majority of states have delegated to a regulatory process comprised of technical experts.
HBAV is opposing both bills and has asked for amendments to remove any provisions that would diminish Virginia’s nationally recognized code development process.
SB 1224 was “passed by for the week” in Senate General Laws yesterday and HB 2227 is in the process of being amended.
Prescriptive Tree Planting, Replacement, and Preservation Ordinances
SB 1393 and HB 2042 would grant localities broad authority to enact tree replacement, planting, and conservation ordinances for any development project located in a Chesapeake Bay Preservation Area, formerly “redlined” areas, and to ensure conformity with the locality’s comprehensive plan.
HBAV opposed both bills, as introduced, but have worked to amend SB 1393 to direct the Secretary of Natural Resources and Secretary of Agriculture and Forestry to convene a stakeholder workgroup for the purpose of evaluating Virginia’s existing tree statutes and identifying consensus proposals for consideration during the 2022 Session. SB 1393 was also amended to include a “re-enactment clause”, which means that the bill not become law unless approved by the General Assembly during the 2022 Session.
HB 2042 passed the House of Delegates without any amendments – HBAV will be asking that the bill be amended to conform with the provisions of SB 1393.
Gas Pipelines in Residential Subdivisions
HB 1934 would prohibit a public service corporation or other utility from constructing or installing a gas pipeline greater than 12 inches in diameter under any public road or state highway within a residential subdivision including under the median or any sidewalk running parallel to any such public road or state highway without prior written application and approval by the board of supervisors or other governing body of the locality in which such public road or state highway is located.
One of HBAVs most significant concerns with this legislation was that it contained provisions that would grant third parties the right to contest the approval of a residential site plan or subdivision. The Code of Virginia currently does not grant third parties the authority to challenge the approval of a plat.
HB 1934 was defeated by a vote of 5 to 4 in a House Labor and Commerce subcommittee.
Heat Illness Legislation
During the 2020 Session, HBAV opposed several bills that would have required the Safety and Health Codes Board to adopt prescriptive regulations designed to protect employees from heat illness, including requiring employers to provide water, shade or a climate-controlled environment, rest periods of 15 to 45 minutes per hour, training, and emergency response procedures. The standards would have also required employers in certain industries to implement high heat procedures when the temperature is 90 degrees Fahrenheit or warmer.
Similar – but less prescriptive – legislation was introduced this year. SB 1358 and HB 1785 would have required the Safety and Health Codes Board to adopt regulations establishing standards designed to protect employees from heat illness, defined in the bill. The measure authorizes an employee to bring an action based on a violation of such standards in which injunctive relief and monetary damages may be sought.
Both bills have been stricken at the request of the patrons.
Proffered Conditions Prohibiting Persons Under the Age of 23
HB 1863 was introduced at the request of the Town of Blacksburg and would have authorized the Town Council to accept, as part of residential re-zonings, voluntary proffered conditions that would limit or prohibit occupancy by undergraduate students or persons under the age of 23, unless such persons are part of a family. For such proffered conditions to be accepted, the Town of Blacksburg would be required to designate areas in its comprehensive plan where student housing is encouraged, as well as areas intended for housing of long-term residents where such proffered conditions could be accepted.
Although this legislation was limited to the Town of Blacksburg, HBAV was concerned about the precedent it would set for other localities. HBAV and the New River Valley HBA committed to working with the patron and the Town after Session to address the issues that prompted this legislation.
HBAV’s 2021 Legislative Agenda
Addressing the Volatility in the Wetland and Stream Mitigation Credit Market
Over the last several years, the volatility in the wetland and stream mitigation credit market has deterred, delayed, or increased the cost of residential, commercial, and infrastructure projects in various regions of the Commonwealth. To address this issue, HBAV and the Virginia Association for Commercial Real-Estate worked with several stakeholders and Delegate David Bulova to introduce HB 1983 – click here to download HBAV’s executive summary of the bill.
Public and private entities seeking approval for a development project are often required to offset their impact on local aquatic features by purchasing wetland and stream credits from a mitigation bank. However, the Code of Virginia restricts the purchase of credits to mitigation banks located in a limited geographic region. In areas of the Commonwealth where numerous public and private entities are competing for a limited pool of credits, this restriction has resulted in periods of extreme volatility in credit pricing, as well as credit supply shortages.
HB 1983 seeks to stabilize credit pricing and supply by allowing an applicant to purchase mitigation credits from an expanded geographic area (the “secondary service area”) within the same river watershed when it can be demonstrated that no credits are available in the primary service area or when credit pricing reaches double the cost of the in-lieu fund for the area.
In exchange for the flexibility to purchase mitigation credits from the secondary service area, the applicant would be required to purchase additional credits and submit a tree planting, preservation, or replacement plan to the Department of Environmental Quality to demonstrate that the development site is projected to meet enhanced tree canopy requirements 20 years after development.
HB 1983 would not require an applicant to purchase credits from the secondary service area; applicants would still be permitted to purchase credits under existing law.
HB 1983 has passed the House of Delegates by a vote of 84-15 and will now head to the State Senate’s Committee on Agriculture, Conservation, and Natural Resources.
Creating a Virginia Housing Opportunity Tax Credit Program
During the 2020 Session, HBAV worked with Delegate Jeff Bourne (D – Richmond) to pass HB 810, which established a stakeholder advisory group to evaluate how Virginia could structure a state housing tax credit as a way to incentive private equity investments into affordable housing developments. The stakeholder advisory group’s report and recommendations can be found here.
The Federal Low-Income Housing Tax Credit (LIHTC) program gives investors a dollar-for-dollar reduction in their federal tax liability in exchange for providing financing to develop affordable rental housing. Since 1987, the program has attracted enough private equity to finance over 100,000 affordable units in Virginia – in the last five years alone, Virginia has allocated approximately $200 million in credits which has leveraged nearly $2.9 billion in private equity.
Despite the effectiveness of the program, the supply of affordable housing continues to lag surging demand and it has become increasingly more difficult to finance affordable housing developments through traditional mechanisms.
During the 2020 Session, HBAV worked with Delegate Jeff Bourne (D – Richmond) to pass HB 810, which established a stakeholder advisory group to evaluate how Virginia could structure and implement a housing tax credit for the Commonwealth. The stakeholder advisory group’s report and recommendations can be found here.
HB 2050 (Jeff Bourne – Richmond) and SB 1197 (Mamie Locke – Hampton) would establish the Virginia Housing Opportunity Tax Credit, based on the recommendations provided by the stakeholder advisory group. It is projected that this program will initially yield an annual increase of 762 affordable housing units, support 3,948 jobs and $227.5 million in earnings, increase state and local tax revenue by $18.9 million, and contribute nearly $344.6 million to state gross domestic product.
Despite overwhelming support for the innovative and effective approach to addressing the affordable housing crisis, a House Finance Subcommittee defeated the bill due to the fiscal impact, especially during a time when the legislature is trying to address the economic impact of the COVID-19 pandemic. However, members of the Committee did emphasize the fact that they would like to see this legislation introduced again during the 2022 Session. HBAV will continue advocating for this legislation in advance of the 2022 Session.
This legislation was included on the Virginia Legislative Black Caucus’s 2021 Legislative Agenda and has received broad support from members of the Democratic caucus in both the House and the Senate. The Senate companion legislation has not been docketed for a hearing at this time.
Constitutional Amendment for New Construction Affordable Housing
HJ 616 (Bourne – Richmond) begins the process of amending the Constitution of Virginia to grant the General Assembly the authority the enact tax abatement programs for new construction affordable housing.
Currently, the General Assembly is able to enact statutes which grant localities the ability to create partial tax exemption ordinances for properties which have undergone substantial renovation or rehabilitation.
These “tax abatement” programs lower the financial barrier to entry for rehabilitation and renovation projects by offsetting the rising costs of land, labor, materials, and other cost drivers which often make these types of projects financially infeasible for both private sector and non-profit developers. Localities around the Commonwealth have utilized these programs to incentivize non-profit and private sector investment into vacant and dilapidated structures, which has transformed these structures into new commercial and residential spaces, new restaurants, and office space.
HJ 616 seeks to expand the concepts that currently apply for rehabilitated structures to new construction affordable housing: providing a local tax incentive to help offset the rising cost of land, labor, and materials.
This legislation has been referred to the House Privileges and Elections Committee and will be heard next week.
