2012 Legislative Session Recap – Laws that will affect the building industry

Recently during the Home Builders Association of Kentucky Summer Board Meeting, the Governmental Affairs staff shared about the laws passed during this year’s session that will may affect our industry. The HBAK staff commented that this year’s session brought about many issues – ranging from environmental impacts to seller finance and employee misclassification issues – on which they were proactive. Our HBAK staff, who serve as our lobbyists, worked diligently and can proudly report that the legislation they endorsed that passed will result in significant savings to the home building industry and in turn, to the home buying public.

The following is a list of legislation most effecting the building industry:

Seller Finance – S.A.F.E. Act Fix: HB 409, introduced by Rep. Joni Jenkins, and amended by Rep. Tommy Thompson, addresses the unintended consequence of the SAFE Act model legislation adopted by the Commonwealth in 2009. Within the 2009 adoption were negative provisions, virtually eliminating loans via owner/seller financing, commonly referred to as land contracts or contracts for deeds. To correct this unintended consequence, Governor Beshear issued an Executive order in January of 2012, which would allow “natural persons” to make up to four (4) loans each calendar year. HB 409 puts this in statute, and goes further, allowing “entities,” such as LLC’s, to do the same.

Uniform Form – Local Occupational License Tax Forms: HB 277, sponsored by Rep. Jody Richards, makes Kentucky a little more business friendly. This legislation creates a standardized form to be used by all local tax districts for the filing of net profits, gross receipts and occupational license taxes. Currently there are over 200 local taxing districts, each with its own filing form. This legislation is a step in the right direction for a more business friendly environment.

Building Materials Sales Tax Exemption: HB 255, originally sponsored by Rep. Rocky Adkins, this legislation is in response to the disastrous tornadoes that ravaged the Commonwealth in March 2012. The bill exempts state tax on building materials used to repair or construct a new building in a disaster area, up to $6,000 per building. This tax credit will apply retroactively for February 29, 2012 through March 3, 2012.

PVA Standards: HB 398, sponsored by Rep. Tommy Thompson, simply codifies the property valuation standards of conduct, allowing flexibility to assess for tax purposes by using one of the four methods: 1) Cost Approach; 2) Income Approach; 3) Sales Comparison Approach; 4) Subdivision development approach.

Copper Theft:  HB 390, sponsored by Rep. Tanya Pulin, will decrease the rash of copper and non-ferrous metal thefts occurring around the state by ensuring that only registered scrap metal recyclers can process the metal and requires purchasers to issue checks or electronic checks after a specified waiting period, as a means of payment.

Stormchasers/Roofer Bill: HB 421, sponsored by Rep. Steve Riggs, was promoted by the insurance industry as consumer protection legislation. This legislation allows homeowners to cancel any contract up to five (5) days after finding that roof damage will not be covered by insurance. HBAK worked with legislators and other interest groups to safeguard reputable contractors within this legislation.

Brownfields: HB 465, sponsored by Rep. Fred Nesler, encourages redevelopment of property on which a spill has occurred or other environmental issues have arisen, releasing property owners from liability for environmental damage that took place before they purchased the property. Under its provisions, new owners are required to meet certain conditions, including certification  that any future use of the property would not increase the impact of the release. The measure also clarifies that the owner of a piece of property who does not also own an underground petroleum storage tank located on the property is not responsible for any release from the tank.

Employer Contributions to Unemployment Insurance: HB 495, sponsored by Rep. Larry Clark, is an extremely important piece of legislation that addresses the interest the Commonwealth owes on the federal loan obtained to pay for unemployment insurance benefits and prevents the current federal $63 per employee from increasing to $420 per employee. This legislation includes no new taxes this year or next. In 2014, the bill requires the Governor to apply for a freeze to the federal tax assessment that will offset an assessment to repay the interest. Also included is additional tax relief in the future to help defray the added costs to businesses in Kentucky.