Legislative/Regulatory Affairs by Larry Korkmas

All real estate is affected by city, county, state and federal government actions. It is critical to know what governmental entities are contemplating, and why, as an essential part of ongoing due diligence for properties already owned. Perhaps more important, we must know what consequences new laws and regulations will have on property contemplated for acquisition. Our governmental representatives must be informed of our opinions regarding their intended actions in order that values are not diminished along with the tax base. Politicians are often unaware of the unintended consequences of their "good intentions."

There are many topics worthy of discussion: Revised ADA rules, building codes, environmental standards, fire protection requirements, financing and taxation, the Trans Texas Corridor and banks wanting to enter the brokerage/property management business.

To start this informational blog, the legislative actions, or inactions, of the State of Texas are worthy of discussion. There presently exists an imbalanced reliance on residential ad valorem tax revenue for financing of the public school system. The school finance issue is also intricately interwoven with the problem of school district accountability and performance. Two years of negotiations have been unsuccessful in resolving this issue. Failure to find a solution is likely to result in the Texas Supreme Court, sometime in September, directing the legislature to take action. Perhaps worse, the court may dictate a solution if the legislature does not act in a timely manner.

It is important to understand who are some of the affected parties and their interests.

• The oil companies want to finance schools with an employment tax because they have to pay an enormous amount of ad valorem property taxes on their holdings.
• Residential property owners want ad valorem tax relief because, at current rates of increase, their taxes double every 7.2 years. Many who have children in public schools also want better classroom and testing performance along with accountability from the school districts.
• School districts want a continuous 10% or greater annual increase of funding for the indefinite future. The districts generally reject controls and accountability asserting that they should be the sole arbiters of performance and accountability.
• State legislators are caught between their constituents, the school districts, the large corporations, teacher unions and the municipal organizations. While only the public can vote the legislators out of office, the other affected parties are the ones who pay for their elections or support their opponents.

Please let your state representative and senator know your thoughts on this matter. The bills proposed by the house and senate can be viewed at: www.capitol.state.tx.us. At this writing, the bill sent to the house by the senate is SB 8.

Since this is a blog for real estate and related professionals, please send in your comments, insights and new information on the above topic, and any others, so that we might all be knowledgeable providers of quality information and service.

This blog is for education and information purposes for real estate owners, professionals and related service industries. Please use this platform to post information and concerns and not for any political posturing not related to real estate.

Thanks, Larry Korkmas