A Look at NAR’s Land Use Initiative

The Land Use Initiative (LUI) is a program designed to assist state and local REALTOR® Associations in their public policy advocacy of land use issues by providing recommendations to requesting REALTOR® associations desiring to improve/support/oppose proposed state or local land use measures. Upon request, NAR will provide expert analysis of the legal, planning, economic and environmental issues surrounding legislative and regulatory land use proposals. NAR, through its consultant Robinson & Cole, has provided guidance and expert opinion on more than 1,000 different legislative and regulatory proposals that affect the interest of REALTORS®.

What are some common commercial real estate issued reviewed for REALTOR® associations?

1. Vacant Property Ordinances. Earlier this year, two jurisdictions proposed vacant property type ordinances (Oakland, California and Cleveland Heights, Ohio). The City of Oakland proposed a vacant property tax on property that is not in active use for at least 50 days per year. The tax rates ranged from $3,000 to $6,000 depending on property type. The taxes collected would be deposited in a vacant property tax fund to provide services and programs to homeless people and support affordable housing. The LUI program provided arguments that the tax would unfairly place financial burdens of solving societal problems on the owners of vacant properties and would disproportionately impact owners of smaller parcels. Meanwhile, the properties that are being actively marketed for sale or for rent should be exempt from the vacant property tax. The other city, Cleveland Heights, proposed a measure that would require a cash bond of at least $15,000 when the property is in foreclosure. The purpose of the bond is to secure continued maintenance of the property during its vacancy. The LUI recommended that the REALTOR® association discuss the ramifications of the bond requirement for the borrower and how financial institutions recover costs and fees from property foreclosures. Furthermore, the LUI noted that the bond requirement would unnecessarily place additional financial burdens on property owners.

2. Formula Business Ordinance (FBO). FBOs have been proposed in a number of communities such as Munster, Indiana, Malibu, California, Holmes Beach, Florida. In Holmes Beach, the REALTOR® Association of Sarasota and Manatee requested LUI assistance when the city proposed broad FBO regulations. FBOs come up as an effort to protect the unique character of a community and local small to medium business owners. FBOs generally seek to prohibit franchises or chain stores from dominating the market. The Holmes Beach FBO proposal is notable for two reasons: (i) narrowed the FBO to a specific commercial zone rather than a broad FBO applicable to all zoning districts and (ii) identified an unintended consequence that would have banned real estate companies with more than 11 offices in the world, such as Keller Williams. The Sarasota REALTORS® were able to amend the adopted ordinance to specifically exclude real estate franchises from the FBO. The amendments were considered a huge win for the association and members. Read about the success story in Munster, Indiana.