ATTENTION PROPERTY RIGHTS LOVERS--HEARING IN ARIZONA HOUSE JUDICIARY COMMITTEE at 9:30 a.m. today Two important property rights protection measures are being championed by Rep. David Livingston. Both bills concern the public policy served by Proposition 207. As you know, in November 2006, Arizonans reacted to the rampant abuse of private property rights by state and local government by overwhelmingly approving the comprehensive protections of Proposition 207. The ballot measure promised to compensate property owners for “regulatory takings.” A regulatory taking occurs when government reduces the fair market value of property by restricting the rightful use of that property. The victim of a regulatory taking still owns title to the property, but it may not be worth much after its uses are restricted. HB2091 is almost a technical fix. It would ensure that garbled legal interpretations of when and how a Proposition 207 claim may be brought do not prejudice the rights of any Arizonan. HB2331 is more substantive. HB2331 borrows the existing legal structure of Proposition 207 and allows property owners to claim a tax credit for regulatory takings. This tax credit would put the burden on the government to challenge the legitimacy of the citizen’s claim for just compensation, rather than place the burden on the victim of regulatory overreach to challenge the legitimacy of the government’s action. And this reversal of the burden—from the citizen to the government—would dramatically increase a government’s incentive to avoid excessive regulation. Essentially, to maintain or increase tax collections, the government would have little choice but to minimize or eliminate excessive regulation. The problem is that Proposition 207 has not been working as effectively as it should. To obtain just compensation for a regulatory taking, Proposition 207 requires citizens and businesses to chase the government through years of litigation. Not many people can outlast the government in that chase. As a result, too many governments are ignoring Proposition 207, and imposing new and even more onerous land use restrictions. • Tucson, Mesa, and Flagstaff have adopted or are contemplating “historic overlays,” which impose various restrictions on the renovation and use of properties deemed to fall within a historic neighborhood. Advocates of historic overlays declare that these restrictions somehow increase property values and thus do not violate Proposition 207. • The City of Sedona recently made it a crime to rent residential property for fewer than 30 days, and the city defines “rent” very broadly. This means property owners are subject to punishments of up to 6 months in jail and/or a $2,500 fine for engaging in a wide range of activities, including purchasing a time share, contracting for home improvements, and even hiring a babysitter! • Jerome’s former Zoning Administrator recently declared that vacation rental businesses are not allowed in the R1-5 residential zone districts; although this declaration was later reversed, it unsettled business expectations. • As a condition of processing zoning and permitting applications, Pima County and others often require property owners to relinquish their protections under Proposition 207, both for themselves and all future owners of their property. It is clear that a new and additional comprehensive reform is needed to deter excessive regulation and to compensate its victims. Citizens and businesses should have more options than pursuing governments for just compensation that will only come, if at all, after years of litigation. In addition, property owners, individuals, and businesses should have the option of seeking tax credits for the same loss of fair market value. HB2331 would do just that. By passing HB2331, we will finally give governments the financial incentive they need to respect and protect private property rights. With your help, the spirit and intent behind the supermajority of Arizonans who approved Proposition 207 will finally be vindicated. HB2331 is an example of the “regulatory tax credit” concept that was developed by Dr. Byron Schlomach and I a few years ago here: goldwaterinstitute.org/article/missing-reform-regulatory-tax-credits.
Posted on: Thu, 30 Jan 2014 14:05:40 +0000
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