By Markee & Associates, Inc.
We are now into the month of April which marks around the half-way point of the legislative session. It is also significant because some of the first bill deadlines occur where bills need to be moved out of committee or are for most part not going to be making it through the process. Many of the big ticket priorities are still in flux. Legislators and members of the House and Senate Revenue committees are still working out the details on a tax package that is targeting about an additional $2B per biennium. Cap and Trade (HB 2020) is also still being worked out, and will likely be an on-going conversation for many weeks to come. Not surprisingly both issues have the potential to create a lot of tension in the building as there are members who feel very differently about each respective policy. As we mentioned in our last report, some type of rent control was a high priority for legislative leadership this session and SB 608 was passed though both chambers and is now law. Below are a handful of bills and issues we wanted to keep you all apprised on beginning with a reminder of SB 608.
Eliminates no-cause eviction standard after the first year of occupancy with 30-day notice and limits annual rent increases by no more than 7% CPI in a 12-month period. The bill was a priority of legislative leadership and has already passed both chamber on party line votes. There are a few exceptions on:
• New Construction: A landlord may increase the rent above 7% +CPI in a 12-month period if the certificate of occupancy was issued less than 15 years ago.
• New Tenancy: If the previous tenant vacated the unit voluntarily or their tenancy was otherwise terminated in compliance with other applicable law, the landlord may reset the rent on the new tenancy without limitation.
The Governor signed this bill on February 28th and due to an emergency clause in the bill it is now effective.
Mortgage Interest Deduction (HB 3349)-
This bill had several hearings and was voted out of the first committee on March 25th and sent to the House Revenue Committee on and 5-3 party line vote. As a reminder, HB 3349 would do away with the allowable deduction for a non-principal residence and phase out the allowable deduction for interest for a principal residence based upon income. The revenue generated from this bill would be split up into the Homeownership Assistance Account, General Housing and Emergency Housing Accounts with priority given to children who are homeless or at risk of being homeless. The amendments to the bill were only to deal with the distribution of the increased money to the state by reducing this deduction and did not change the underlying part dealing with the mortgage interest deduction. There has not been another date set yet for the Revenue Committee to take up the issue, but there will likely be more information as to future discussions soon. We, along with others continue working against the bill. On April 2nd, the Oregon Association of Realtors had a lobby day and had nearly 800 realtors come to the Capitol and lobbied their respective legislators on this issue.
This bill deals with prohibiting the sale of the right of redemption. The bill had a hearing on March 26th and then was moved out of committee on the 3rd of April. In the end the committee amended SB 11 to require the purchaser to provide the seller with a warning notice on possible rights that may be lost by selling the interest, and also requires some sort of notice or affidavit at or before the time of recording the deed transfer to a debtor or prospective bidder to be included on the sheriff’s website prior to sheriffs sale. The next step is for this bill to be voted on by the full senate. There may need to be more clarifying amendments in the House to further fix the bill. It is now in better shape than how it was introduced.
This measure would authorize a county to allow a property owner in a rural residential zone to construct an ADU. This bill had a hearing back on January 31st and then got moved to the Joint Ways and Means committee on April 2nd. It was amended to prohibit an ADU from being larger than 900 SQFT, requires an advanced notice to a county if the property will be used as a single family dwelling and ADU at the same time, and adds a provision that allows a county to impose additional restrictions related to garages, outbuildings, etc.
This bill sets up a process for a person (property owner, lien holder, trustee, etc.) to request and receive information on the amount of a lien is attached to a piece of property. The bill came up for a hearing on the 12th February and was amended and voted out of committee on April 4th on an 11-0 vote. The amendment specifies that a person or agent of someone who holds a lien on a property may request an itemized statement from another lien holder and what must be included (pay off information, interest, etc.). The bill came from Debtor Creditor Section of the State Bar and was drafted with many unintentional consequences. We worked with the Bar to eliminate our concerns with the amended version.
This would authorize a local official to decide whether a property in default is abandoned if notice is provided by interested parties. The bill had a hearing on April 3rd and will be heard again the week of April 8th. The amendments add some permissible actions by an interest holder and makes some changes as to response time of someone who has been provided notice of the abandonment determination of 30 days. All lenders still have issues with the legislation
There are really two options that seem most likely for new revenue this session. One of which is a Business Activity Tax (BAT) and the other is a gross receipts tax. At this point, the path is smoother for BAT or some combination thereof. There are two such proposals being discussed:
Business Activity Tax of up to 0.96% which would raise roughly $1B in 2020 and $1.05B in 2021 ($2.05B 19-21 biennium) Would exempt petroleum, and include financial and insurance companies and would reduce personal income tax rates to 4.75, 6.75, 8.75, and 9.9% respectively.
A combination of a Business Activity Tax and a Corporate Income Tax Rate exempting petroleum, and financial and insurance companies would be exempt from the BAT, but would pay a higher corporate rate with the same personal income tax reductions. As mentioned in the opening paragraph, the goal here is to raise about $2B additional dollars per biennium.
All of these discussions and potential tax percentages change on a daily basis.
Markee & Associates, Inc.
5605 Inland Shores Way N #110
Keizer, Oregon 97303