Transportation, eminent domain amendments upheld

As expected, the General Assembly upheld Gov. Tim Kaine's amendments to bills dealing with transportation funding and eminent domain when it reconvened in Richmond on Wednesday.

Passage of the amendments to HB 3202 (Speaker Howell) by the General Assembly marked the end of more than two years of often-partisan debate over how to pay for a substantial, long-term investment in Virginia's overburdened transportation network. (See details below.)

Passage of the amendments to the eminent domain legislation only slightly improved the effects of the bills on local government redevelopment efforts. (See details below.)

Here is a brief listing of how other bills of interest to local governments fared. Most will take effect July 1.

Vetoes upheld

The legislature failed to override vetoes to three bills.

These bills do not become law:

Billboards. HB 2128 (Hugo), which would have allowed billboards to be relocated if the land under the billboard was acquired for road widening or construction.

Annexation moratorium extension. HB 1979 (Lohr), which would have extended the current moratorium on city-initiated annexation to 2020 from 2010. The governor said that there was no rush on this extension, and that the legislature should study the impact of the annexation moratorium on cities. The moratorium applies only to a limited number of cities. Many cities are barred from annexation by either geography or by other laws allowing counties to obtain complete or partial immunity from annexation.

Fire prevention inspections of church and other religious schools. HB 2048 (McQuigg), which would have prohibited charging a fee for inspecting religious schools (those run by religious institutions). The governor questioned the constitutionality of the bill.

Amendments rejected

The legislature rejected amendments to five bills of interest to local governments. The bills will be returned to the governor in the form as passed originally by the General Assembly. The governor has 30 days to sign or to veto the bills. If the governor takes no action, the bill(s) would become law without the governor's signature.

The five bills are:

SB 1063 (Rerras), which requires local governments to give 30 days notice of the public hearing on the setting of the real estate tax rate (instead of the current seven days notice). The governor's amendment, which recognized the tight schedule local governments face in the budget adoption process, would have required a 14-day notice.

HB 2707 (Hugo) and SB 840 (Devolites Davis), which prohibit the purchase of direct recording voting machines (touch screens) after July 1, 2007. The governor's amendment would have changed that date to July 1, 2008, thereby giving local governments an additional year to prepare for the change.

HB 2261 (Rust), which provides for enhanced fines for any conviction resulting from a violation of provisions related to overcrowding of residential dwellings. The governor's substitute would have increased the maximum penalty for all zoning ordinance violations.

SB 1301 (Newman), which provides for funding for combined sewer overflow in Richmond and Lynchburg through the Water Quality Improvement Fund. The governor's substitute codifies the establishment of a non-reverting reserve fund within the WQIF. It provides that deposits to the CSO Matching Fund will be $50 million. It clarifies that the governor or General Assembly may provide additional money to the WQIF beyond the mandatory deposit for non-point source pollution reduction.

Amendments accepted

The legislature accepted the governor's amendments to a number of other bills.

These bills, as amended, become law:

Photo-red. SB 829 (Davis) allows local governments to use automated cameras to catch motorists running red lights. The amendment allows each locality in Planning District 8 (Northern Virginia) to install photo-monitoring systems at no more than 10 intersections, or at no more than one intersection per 10,000 residents. Each Northern Virginia locality may choose which option to follow. For the remainder of the state, a locality can have a photo monitoring system at one intersection per 10,000 residents.

Re-regulation of electricity. HB 3068 (Hogan) and SB 1416 (Norment) are the bills re-regulating electricity. The amendments do not affect local governments, which retain the authority to join together to negotiate favorable rates for their facilities and operations.

Biosolids storage. SB 1300 (Newman) allows local governments to adopt ordinances requiring special use permits for the storage of sewage sludge. The amendment added an emergency clause, which means the legislation took effect at midnight, April 4.

Bay bonds. SB 771 (Chichester) and HB 1710 (Callahan) provide for the issuance of up to $250 million in bonds by the Virginia Public Building Authority to help clean up the Chesapeake Bay. Proceeds from the bond sales will be used to provide grants for installation of nutrient removal technologies at specified public treatment works and non-significant discharge sites to implement the Chesapeake Bay Tributary Strategies. The amendments call for a legislative review of future funding needs and appropriate mechanisms for such funding.

Local vehicle license fee and tax exemptions for firefighters and emergency medical technicians. HB 2362 (Scott) allows local governments to exempt deputy sheriffs, police officers, and officers of the State Police from the local tax and license fees for one owned or leased vehicle. The governor's amendments added firefighters and emergency medical technicians to the list of people eligible for the exemption.

Religious freedom protection amendment. HB 3082 (Lingamfelter) is the state's version of the federal Religious Land Use and Institutionalized Persons Act. It reiterates an individual's freedom of religion, and prohibits a government entity from burdening this right. The governor's amendments excluded local and regional correctional facilities, as well as some specified state facilities, from the act. The amendments also make it clear that the bill is not to be used to prevent any governmental institution or facility from maintaining public health, safety, security or discipline.

Eminent domain legislation

The amendments agreed to by the General Assembly affecting eminent domain legislation improved slightly the effects of the bills on local government redevelopment efforts.

The governor offered identical amendments to three identical bills: HB 2954 (Bell), SB 781 (Cuccinelli) and SB 1296 (Norment).

These bills rewrite the eminent domain rules for all entities with the power to condemn land. The bills severely limited the ability of local governments to use eminent domain to clear blight.

The governor's amendments slightly reduced some of the significant limitations placed on local governments to deal with blight.

The adopted amendments are as follows:

• Eminent domain may be used on property in a redevelopment or conservation area, if all owners of the property agree to the acquisition. This helps in cases where the owner is willing to sell, but asks to have the property condemned for tax purposes.
  
• The definition of blighted property was improved slightly. The amendments provide that land is blighted if it endangers health or safety.
  
• Provides that in order to meet the definition of "blight," the property must either constitute a public nuisance or, if a building is on the land, the building must be unfit for occupancy or use.
  

Budget amendments

The following budget amendments were adopted by the legislature:

Enhanced retirement benefits for sheriffs

Item 143. Deleted language in the introduced budged that set the multiplier for State Police at 1.85 percent, but that retained the 1.70 percent multiplier for sheriffs. The language in the introduced budget was in conflict with language in SB 1166 (Stolle), which the governor signed. The change clarified that the retirement multiplier for sheriffs will increase to 1.85 percent, as required in SB 1166.

Highway maintenance funding to localities hosting port facilities

Item 454. This amendment clarified the formula to be used to disburse additional road maintenance money provided to localities with Virginia Port Authority facilities. The road maintenance money is to be transferred to the localities by the Commonwealth Transportation Board based on the amount of cargo being shipped through each facility.

Highlights of transportation legislation

Here is a summary of some of the most important aspects HB 3202, the transportation funding bill patroned by Speaker Bill Howell. The governor's amendments to the bill were adopted by the legislature during the reconvened session on Wednesday. The bill now becomes law.

HB 3202:

• Authorizes $3 billion in new 25-year debt for highway construction, and dedicates one-third of insurance premiums to existing and new debt payments to support the debt. This effectively frees up the construction funding that is now going to pay existing debt.
  
• Dedicates 3 cents of existing recordation taxes to transportation (approximately $65 million annually). Of this, 2 cents is dedicated to transit funding and 1 cent to highway maintenance.
  
• Increases the tax on diesel fuel by 1.5 cents per gallon, from the current 16 cents per gallon to 17.5 cents per gallon. The tax on gasoline is 17.5 cents per gallon, so now these fuels will be taxed the same amount. This will yield approximately $22 million year.
  
• Uses two-thirds of any annual non-recurring general fund surplus. The General Assembly originally had designated using one-half of the surplus to pay for transportation costs.
  
• Allocates 20 percent of the bond proceeds to transit capital, and allows the bond proceeds to be used for primary, urban and secondary roads. The governor's amendments increased the percent of bond proceeds to 20 percent from 15.7 percent. The original legislation also had restricted use of the bonds to primary roads only, but the governor's amendment removed the prohibition on using bond proceeds for urban and secondary roads.
  
• Includes a $10 car registration fee, abusive driver fees and increased penalties for overweight trucks.
  
• Includes three main land use components: urban development areas, impact fees and urban transportation service districts (explained below).
  
• Creates a Northern Virginia regional package (explained below).
  
• Creates a Hampton Roads regional package (explained below).
  
  

Land use provisions:

Urban development areas (UDA). Any county, city or town with zoning that has either: (1) a population of at least 20,000 with a growth rate of 5 percent or (2) a growth rate of 15 percent or more must establish at least one UDA. Any other locality may create UDAs. The UDA provisions require these localities to establish higher density areas in their comprehensive plans to accommodate growth for a period from 10 to 20 years. The UDA must provide a minimum density of four residential units per acre.

Any locality that determines that it has already complied with the purpose of the UDA provisions may so certify. In that case, no further action is required. A town and county may cooperate to create the a UDA in the town to serve the town and county.

Urban transportation service districts (UTSD). Any county with a population of more than 90,000 in 2000 that does not maintain its roads may establish one or more UTSDs. The counties that meet the criteria are Chesterfield, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford. The county must take over road maintenance in any districts it creates. The county will then receive the urban maintenance payments for all roads in the district. Earlier versions of the bill established higher amounts, but these were removed by the governor's amendments.

These counties may impose an additional real estate tax within the UTSD to pay for road maintenance and construction. They also may impose a general impact fee as explained below.

There is no new funding for UTSD maintenance funding, so the funding will likely come from the pot of money currently shared by cities, towns, and Arlington and Henrico counties.

Impact fees

The legislation includes two separate kinds of impact fees: 1) road impact fees, which are a substantially improved version of the existing road impact fee provisions in Title 15.2; and 2) a general impact fee authority for the six counties that are authorized to create urban transportation service districts.

Road impact fees. Any locality that has the population and/or growth rates described above for UDAs may create impact fee service areas for road improvements that benefit new developments in the service areas. The impact fees are limited to roads, but include all roads that benefit the service areas, not just those that are "necessitated by and attributable to" new developments (the limit in current law). The bill requires any money not committed to a project within 7 years of collection to be refunded. However, a locality may spend impact fee receipts on other roads that benefit the impact fee area if the 7-year requirement hasn't been met. Significant administrative work will be required to adopt the road impact fee provision.

General impact fees. Any locality that creates an urban transportation service district by Dec. 31, 2008, may impose general impact fees for a wide variety of public infrastructure, including roads, transit, schools, parks and others. The impact fees may only be imposed in agricultural zoning districts on by-right residential developments. The agricultural district limitation and the December 2008 deadline severely limit the usefulness of the general impact fees provision.

Environmental impact studies for local road projects

The final version requires locally funded highway projects that will cost over $100,000 to go through the State Environmental Review Process. Currently, the process is required only for projects that use federal or state funding. The review process includes soliciting comment from approximately 12 state agencies. The locality then sends the comments to the Department of Environmental Quality, which has 15 days to respond. The purpose of the review is to avoid and mitigate environmental issues during design and construction.

Northern Virginia regional package

Cities and counties in Planning District 8 (Counties of Arlington, Fairfax, Loudoun, and Prince William; Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park) are authorized to increase real estate taxes on commercial property by up to 25 cents per $100 of assessed value. These local governments also can levy a local $10 motor vehicle registration fee. These local option fees and taxes combined are expected to produce about $100 million annually. They can be spent locally or dedicated to the regional transportation authority. The localities also are authorized to levy a commercial/residential impact fee. In addition, the Northern Virginia regional transportation authority will be able to impose taxes and fees expected to yield more than $300 million annually, including the following:

• 2 percent motor vehicle rental tax
  
• 2 percent lodging tax
  
• $10 vehicle safety inspection fee
  
• 1 percent initial vehicle registration fee
  
• 5 percent sales tax on labor or services on motor vehicle repairs
  
• $10 regional registration fee
  
• 40-cents grantor's tax (which is levied on home sales).
  

Hampton Roads regional package

This applies to Hampton Roads localities: the counties of Isle of Wight, James City and York, and the cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg. (In addition, if the Chesapeake Bay Bridge-Tunnel facilities become subject to the control of the new Hampton Roads Transportation Authority, Accomack and Northampton counties are added to the list of Hampton Roads localities.) The Hampton Roads localities may levy an additional real estate tax on commercial property of up to 10 cents per $100 of assessed value. They may also levy a $10 local vehicle registration fee. These local option fees and taxes, estimated to produce about $40 million annually, could be spent locally, or dedicated to the regional authority. The localities also are authorized to levy a commercial/residential impact fee -- with details to be determined. A new regional transportation authority is created, and is authorized to collect taxes and fees totaling about $175 million annually, including the following:

• 2 percent sales tax on gasoline
  
• 2 percent motor vehicle rental fee
  
• $10 vehicle safety inspection fee
  
• 1 percent initial vehicle registration fee
  
• 5 percent sales tax on labor and services for motor vehicle repairs
  
• $10 regional registration fee
  
• 40-cents grantor's tax (which is levied on home sales).
  

What's new | Marketplace | VML Insurance Programs | About the League | Calendar | Sustaining membership
Legislative activities | Publications | Conferences | Affiliate organizations | Links

©2007 Virginia Municipal League. Comments and questions about this page or the data provided may be addressed to Manuel Timbreza.
Special thanks to the Virginia Institute of Government for hosting this site.