As the legislature wrapped up its work in late April, Arizona found itself on the national stage. The capitol was filled with national news reporters, protestors, police and hostility. Those final days reflect the sentiment of one of the most contentious legislative sessions in Arizona history.

The state’s fiscal crisis has taken center stage over the last two legislative sessions, as the elected leaders cut approximately $1.5 billion from the state budget and referred a one-cent sales tax to the ballot. Voters spoke overwhelmingly in May as they supported a temporary one-cent sales tax to help save education, public safety and healthcare. Many believe this still doesn’t solve Arizona’s budget shortfalls, and that more cuts will come.

For Arizona’s real estate industry and the 42,000 members of the state association, January may have signaled a new calendar year, but it was only continuing a period of political and policy uncertainty.

The 2010 session began on the heels of a particular challenge for AAR as Arizona’s banking industry tried to repeal state statutes providing 30 years of anti-deficiency protection for first and second homeowners. In the summer and autumn of 2009, AAR worked diligently to restore and maintain the statutory language that was approved in the early 1970s.

The threat of the state losing its anti-deficiency laws was resolved, but other policy threats to the industry and private property ownership quickly took its place. Fresh out of the gates, AAR was addressing the perennial policy suggestion to establish a state services tax, which would have impacted all real estate licensees and brokers as service providers but also affect every aspect of a real estate transaction—appraisals, home inspections, structural pest management, surveyors, title and escrow companies and so on.

Each session, the state association, represented by its lobbyists and statewide volunteers on the Legislative Committee, track roughly 150-200 bills with potential impact on the real estate industry. Issues are prioritized like a sports match between offense and defense, and each side of the game is crucially important. As the annual onslaught of some 1,200 bills is modified by another 800 amendments, there is a great potential for mischief or misunderstanding, depending upon your view of the lawmaking process.

The AAR Legislative Committee divides itself into subpanels by broad subject areas for further analysis of new legislation by members who have a particular expertise or interest in a policy area: land use, water, industry practices, etc. These members assist staff by providing years of specific industry experience and regional application. This staff-REALTOR® team provides the industry’s first line of defense in the annual season of lawmaking and stakeholder competition. Some members of the Legislative Committee have volunteered their time and talent to the full membership for more than 20 years.

This year, with simultaneous special sessions running along with the work of the regular session, there were fewer bills advancing toward approval. The continued focus on the state budget deficit and the painful and divisive process of finding bipartisan votes for program funding reductions and, in some cases, outright cuts, was occasionally paralyzing for the process and the elected officials.

Here is a brief summary of the major policy issues that AAR was involved with during the 2010 session(s):

HB 2345 – HOA; Condos, For Sale Signs: If this issue were a movie, this third legislative installment would make it a series. Following initial statutory changes proposed and adopted by the legislature in 2007, AAR continued its lobbying efforts to provide private parcel access to ‘For Sale’ signs within HOA communities. This year’s legislation specifically prohibits HOAs from regulating or requiring a particular ‘For Sale’ sign. The bill also allows the right to display a ‘For Lease’ sign, unless rental of units is specifically prohibited by the community. The bill prohibits homeowners’ and condo associations from banning the display of temporary open house signs except in common areas and from restricting open house hours after 8:00 a.m. or before 6:00 p.m. And property owner signs that conform to industry standards cannot be prohibited or required to be substituted with a particular community sign.

HB 2450 – Water/Wastewater Fees & Charges: One of the common things we heard during the REALTOR® Caucus in September was how municipalities throughout the state were requiring property managers and REALTORS® to pay previous owner’s/tenant’s unpaid water bills before they would turn service on to sell a property or for the new owner or tenant. With the passage of HB 2450, municipalities are now prohibited from refusing or requiring payment for unpaid water and wastewater services from anyone other than the person who contracted with the municipality.

HB 2768 – Real Property Transfer Fee Covenants: Arizona is one of only four states this year that, at the specific request of the National Association of REALTORS®, secured legislative passage of a new law that prohibits the use of transfer fees to be paid to developers or third-party companies on the sale of real property. Arizona voters had already overwhelmingly approved a REALTOR®-proposed state constitutional amendment banning transfer taxes at the state, county and local levels.

HB 2766 – Tenant Notice; Foreclosures: It was clear this legislative cycle that many elected officials were concerned about the number of rental properties that were in foreclosure and what that meant for the tenants renting the properties. We worked closely with the sponsor of HB 2766 to ensure that any measure adopted could be implemented in practice and did not conflict with federal law. HB 2766 says that if a landlord of a residential property rents out a unit that is under foreclosure, the landlord must provide each tenant with written notice of possible foreclosure. If a landlord fails to comply with the notice requirement, the tenant may deliver a notice of breach of agreement and recover damages and obtain injunctive relief.

SB 1219 – Real Estate Licensee: AAR worked hand in hand with Commissioner Judy Lowe and the Department of Real Estate to help eliminate duplication in the department and provide needed clarification and assistance with funding levels. SB 1219 conforms the time a real estate license is valid to the time period for completing education requirements—that is, two years. It allows a licensee to cancel his/her licensee, defines business broker and requires a valid fingerprint clearance card before applying for a license.

To review any bill discussed above, visit www.azleg.gov. Insert the bill number at the top, right-hand corner of the screen, then click “Show Versions.” If you have questions about AAR’s legislative efforts, you can reach me at MeghaenDuger@aaronline.com.

ACC Line Extension Issue

AAR wasn’t only supporting or defending against policies at the Arizona State Legislature. We have also been actively engaged at the Arizona Corporation Commission (ACC). In 2007, the ACC voted to do away with allowing utilities to offer up to 1,000 feet of provided line extension footage in order to access electricity, a policy that had been in place since the 1950s. Since 2007, customers are being charged an astronomical cost for extensions without the ability to appeal the cost or go to another vendor for the line extension. This policy change has diminished land value and, in some cases, priced owners out of building their homes or being able to run electricity to homes already under construction.

AAR has been able to get the ACC to take another look at this policy. They are currently holding workshops in the state to get input from landowners, REALTORS®, homebuilders, community leaders, business groups and the like to assess the effects this policy has had on their community and lives. If you have been negatively affected by this policy, we encourage you to contact AAR for information on meetings being held near you (TomAugherton@aaronline.com) or write Commissioner Gary Pierce at Pierce-web@azcc.gov.