The General Assembly came to a close in the early hours of Saturday, April 22nd. We’ve given you a recap of five bills below. However, please register for the Aim Legislative Session Recap Webinar on May 9th and watch for the Aim Statehouse Report due in late May for a complete rundown of the legislative session and the many bills impacting Indiana’s municipalities.
- The governor plans to sign the state’s $32 billion biennial budget bill this week.
- Half of the state funding in the budget is devoted to education including $10 million for a pre-kindergarten pilot program.
- Additionally, the budget calls for 0.5% to be retained from Local Income Tax (LIT) certified shares in 2018 to help fund the Indiana Department of Revenue’s new computer system.
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- HEA 1002 may be the most beneficial piece of legislation for local infrastructure in our states history. Local government will see a nearly 50% increase in MVH funds as well as many improvements to the INDOT Community Crossings Program.
- Not only were there largescale fiscal benefits in HEA 1002, federal and state infrastructure funds were made more accessible and easier to participate for all units of government.
- Legislators should be recognized for making some challenging decisions during this year’s General Assembly. They listened to their local officials and constituents to pass a plan that meets state and local needs for the foreseeable future. Local officials should stand by them as we begin the long process to repair our state and local infrastructure.
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Small Cell Tower Regulation
- SEA 213 passed with additional protections for property owners, however, local units must act by May 1, 2017 to implement the most critical protections.
- The final version of this bill will allow communication service providers to access sensitive areas like residential neighborhoods and downtown districts. A notification process was inserted into the bill that places an onerous burden on the local unit.
- Local officials must act quickly to ensure the provisions within the bill are implemented to protect sensitive areas. Limited protections were added to regulate appearance, height and collocation.
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Short Term Rentals
- HB 1133 was the “Airbnb bill” that set a statewide framework of regulation for short term rentals in Indiana. In addition to pre-empting locals’ ability to ban short term renting, it also would have greatly restricted local governments’ ability to use customary planning and zoning, even in areas zoned for residential use only.
- After failing by one vote on final passage, it was taken back to conference committee. It did not come back from conference and therefore died. Thank you to everyone who was in frequent contact with their legislators about this to the very end.
- We anticipate that similar legislation will be filed again next year, so Aim will work with stakeholders and examine the legislation passed in other states to try to find a better balance for local governments.
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Property Tax Matters
- HEA 1450 is the DLGF’s clean-up bill which contains many provisions, including an Aim initiative dealing with Transparency Portal contract upload requirements.
- During the 2016 session, legislation passed that required certain contracts to be uploaded. Aim appreciates the work of stakeholders to include language that clarifies only contracts entered into after July 1, 2016 that exceed $50,000 must be uploaded (so it no longer has retroactive applicability).
- There were many other provisions in HEA 1450 that impact local governments, so we encourage members to take a look at the bill and look for it in the coming 2017 Statehouse Report.
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Biennial Budget Bill to Be Signed by the Governor this Week
HEA 1001 State Biennial Budget (Brown, R-Crawfordsville)
This week, the Governor plans to sign HEA 1001, the state biennial budget bill. The bill presents a balanced budget with half of the state’s funds dedicated to education. In addition, the budget calls for increased funding for a pre-kindergarten pilot program and for state law enforcement officer salaries.
As always, the budget bill contains many additional provisions and there are a couple that affect municipalities. First, the bill calls for the state budget agency to retain 0.5% of the certified share portion of a Local Income Tax (LIT) in 2018 for purposes of transferring these funds to the Department of Revenue in 2019. These funds will be used to pay for the DOR’s new computer system that will hopefully be able to more accurately track and calculate local distributions. Second, the bill contains language affecting the Bloomington annexation. It prohibits an annexation meeting its specific criteria from going forward until after June 30, 2022.
General Assembly Passes Historic Infrastructure Plan
HEA 1002 Transportation Infrastructure (Soliday, R-Valparaiso; Brown, R-Crawfordsville; Steurewald, R-Avon; Sullivan, R-Evansville)
On the final day of the 2017 legislative session, the Indiana General Assembly strongly endorsed a compromise on House Bill 1002, the proposal to establish long-term road funding, after days of intense negotiations. The measure now goes to Governor Holcomb to be signed into law.
The plan restores much of the funding for local roads provided by the original House version by raising the gas, special fuel and motor carrier surcharge taxes each by 10 cents, and sustains those fees through indexing. Increases to the user fees take effect in July at the beginning of FY 2018. A key compromise between the House and the Senate was phasing-in a shift in sales tax revenue on gas from the state’s general fund to a dedicated infrastructure fund. The shift will occur over five years beginning in 2020. So by 2025, every penny paid at the pump will go directly toward roads. While an increase in the cigarette tax was originally contemplated, the final version does not increase the cigarette tax to compensate for the shift in sales tax. At last Thursday’s briefing, Bosma said the state can absorb the shift’s impact on the state’s general fund.
In FY 2019, local roads will receive a projected $264 million in additional dollars. That amount will ramp up to $340 million by FY 2024. Altogether, the bill will raise $1.2 billion a year in new dollars beginning in 2024. That breaks down to nearly $900 million a year in new funding for state infrastructure, with local governments receiving on average $300 million a year in new road funding.
The bill also will provide additional wheel tax authority for locals, but doesn’t require the adoption of a wheel tax to access new revenue generated by HEA 1002. The bill lowers the population threshold for municipalities to consider a wheel tax from 10,000 to 5,000. It also extends the deadline for a municipality to adopt the tax to September 1.
The bill will make an estimated $200 million available for the next generation of Community Crossings grants. For large cities and towns, with populations above 10,000, the match requirements will remain at 50/50. But for small cities and towns, with populations under 10,000, the match will become 75/25, with the state picking up the larger portion.
Distributions from the motor vehicle highway account will eventually shift to 60 percent for the state and 40 percent for locals. The distributions will increase each year because revenues will be increasing.
The bill also makes changes to MVH allowable uses. Local governments must utilize 50 percent of all MVH funds for construction, reconstruction and maintenance. The funds can no longer be used for law enforcement purposes and for painting structures unless they are part of the roadway surface.
Lastly, the federal funds exchange language submitted by Aim was included in the final passed version of the bill. The Indiana Department of Transportation may exchange 100 percent of funds with approval of the budget director. That guarantees 25 percent of federal funds to locals with a 20 percent local match. This modification will save local units of government millions of dollars, expedite much needed projects and cut Federal red tape.
House Speaker Brian Bosma said, “This comprehensive road funding plan marks the strongest infrastructure investment in state history. We met our long term goal of creating a comprehensive, responsible and sustainable plan that funds our roads for the next generation.”
Governor Eric Holcomb thanked legislators for preparing a plan that “provides the tools necessary to maintain what we have, finish what we started and invest in the future.”
Small Cell Structure Bill Passes with Additional Protections, MUST ACT NOW!!!
SEA 213 Support Structures for Wireless Facilities (Hershman, R-Buck Creek)
SEA 213 was one of the final bills to pass during the 2017 General Assembly as lawmakers struggled to identify additional protections for property owners who would be impacted by the legislation. A pressing deadline of May 1, 2017, has been placed on local units to provide additional protections for sensitive areas by designating them as an underground or buried utility area. This process may be completed by a resolution from the Board of Works to protect areas such as residential neighborhoods or downtown districts. These are locations where property owners have made investments to improve aesthetic standards by guaranteeing utilities are placed underground. This new process requires the local unit to offer a waiver for communication service providers to install structures in the designated area, allow providers to collocate small cell facilities and allow providers to replace existing structures.
The final language also includes an onerous burden on local units of government for notifying a homeowners association of a pending small cell application. First, if the local unit maintains a website, the bill requires a local unit to post a notice of a submitted application on their website. Second, the local unit must allow a homeowners association to register with the local unit for notification by mail of a new facility or structure permit located within the jurisdiction of the homeowners association. The third protection applies to areas designated as historic preservation districts or areas.
An additional protection from the original version of the bill is a height restriction for new small cell structures. A small cell structure may not exceed the greater of 50 feet or 10 feet taller than a utility pole that was in place on July 1, 2017 and located within 500 feet of the new cell structure.
Language was also included that allows a local unit to request an alternative location for a small cell facility to be collocated if the requested location is within 50 feet of a utility pole or structure.
Compromises were made on the permit application fees as well as the pole attachment fees. A fee of $100 will apply to all small cell facilities included on the application. The pole attachment fee was increased to an annual maximum of $50.
While small cell structures are in a limited number of communities at this time, professionals anticipate thousands of these structures will be placed in Indiana in the coming years. Due to the limited time frame of protections in the bill we encourage every community to examine these options carefully and take preventative action.
Legislation to Restrict Local Control Over Short Term Rentals Does Not Pass
HB 1133 Preemption of Local Bans on Short Term Rentals (Lehman, R-Berne)
HB 1133 addressed the practice of home-sharing in Indiana through online platforms like Airbnb, VRBO, HomeAway, etc. In addition to pre-empting locals’ ability to ban short term renting, it also would have established a statewide framework that would significantly restrict the ability of local governments to respond to this practice through planning and zoning.
After failing by one vote on final passage, HB 1133 was taken back to conference committee in the final days of session in a last-minute effort to work something out. Although Aim actively lobbied for amendments that would have provided a better balance for local governments throughout the process, none were accepted, so we remained opposed to the bill until the end.
When Airbnb operators are renting out homes to a different set of renters every few days, that’s not just a home anymore, it’s an unregulated hotel. When homebuyers purchase homes in areas zoned for residential use only, they expect that their local government has the ability to enforce that use. But under this legislation, local governments would have had no ability to enforce customary residential zoning uses in neighborhoods.
Thank you to every member who contacted their legislators about this in the final hours of session. We are pleased to report the bill was not brought back again for another vote. We anticipate this bill will be coming back next year, so we will work with stakeholders over the summer to craft a model that appropriately recognizes locals’ stake in the issue.
Contract Upload Requirement Passed in 2016 Modified in HEA 1450
HEA 1450 Property Tax Matters (Leonard, R-Huntington)
HEA 1450 is the Department of Local Government Finance’s clean-up bill that contains several tax-related and local government provisions. One important provision that passed was an Aim legislative initiative that clarifies that contracts over $50,000 only have to be uploaded to the Transparency Portal on a going-forward basis.
During the 2016 session, SEA 327 required local government units to upload a copy of all contracts which exceeded the lesser of 10% of the political subdivision’s property tax levy or $50,000. After session, the DLGF issued a memo that interpreted this legislation to have retroactive applicability for all contracts that exceeded the threshold, and not just those signed after July 1, 2016, as stakeholders initially believed.
HEA 1450 clarifies that only contracts entered into after July 1, 2016 must be uploaded. It also removed the language about the 10% threshold so it simply applies to contracts that exceed $50,000. It also adds language that says political subdivisions are not required to upload employment contracts.
Other notable provisions of HEA 1450:
- Provides that the DLGF shall release DLGF’s annual determination of the statewide agricultural land base rate value on or before March 1 of each year.
- Allows a county treasurer and the county auditor to implement a policy to waive, negotiate, or settle penalties that have accrued on delinquent property taxes, if the fiscal body of the county approves the policy.
- Provides that a redevelopment commission’s annual report to the unit that created the RDC must include both a list of parcels of real property and the depreciable personal property of designated taxpayers in the redevelopment area.