The expected “blue wave” of Democrat wins didn’t materialize in gubernatorial and state legislative elections held Nov. 3, replaced instead by a “red ripple.”
There were 11 governor’s races on the ballot, and Republicans picked up one seat, in Montana, where Rep. Greg Gianforte defeated sitting Lt. Gov. Mike Cooney. Incumbent Democrat governors in Delaware, North Carolina and Washington were re-elected, as were Republican governors in Indiana, Missouri, North Dakota, New Hampshire, Vermont, and West Virginia. Utah Gov. Robert Herbert retired, and his seat was filled by Republican Lt. Gov. Spencer Cox. Republicans will hold 27 governorships, while the Democrats will hold 23.
The same “red ripple” ran through state legislative elections, where races were held for 86 of the 99 state legislative chambers. This year saw the fewest changes in party control of state legislative chambers since 1944. Prior to Nov. 3, Republicans controlled 60 state legislative chambers, and now they will control 62. The only significant change to the party makeup was in New Hampshire, where Republicans took control of both the Senate and the House.
Leading up to the elections, Republicans had full legislative control (upper and lower chamber) in 30 states, while Democrats had full control in 19. Control was split in Minnesota, with Democrats controlling the House and Republicans controlling the Senate. Republicans fully controlled state governments (governor, upper and lower chambers) in 22 states, Democrats controlled 15 states and 13 were divided.
Moving into 2021, Republicans will fully control state legislatures in 31 states, Democrats will control 18 and Minnesota remains split. Republicans won a state government “trifecta” (governor and full legislative control) in New Hampshire and Montana.
Importantly, at least 10 real estate appraisers were re-elected to seats in their respective state legislatures.
Forty-four states had measures on the ballot this November, and of the total 129 measures, seven directly related to real property and are of importance to real estate appraisers:
California Proposition 15 failed. It would have amended the state constitution to require most commercial and industrial properties to be taxed on their market value as opposed to their purchase price, which is how they are currently taxed — and will remain taxed. The legislation had provisions to limit tax amounts and annual adjustments.
California Proposition 21 failed. It would have amended state law to allow local governments to establish rent control on residential properties more than 15 years old.
Colorado Amendment B passed. It amends the state constitution by repealing the Gallagher Amendment that was used to set tax assessment rates for both residential and non-residential properties.
Florida Amendment 5 passed. It extends from two years to three years the time in which a person may transfer certain property tax saving benefits, known as “Save Our Homes" benefits, to a new homestead property.
Louisiana Amendment 5 failed. It would have authorized an exemption from ad valorem property taxes for certain properties when an owner enters into a cooperative endeavor agreement with a taxing authority to make payments to that authority instead of paying property taxes.
Louisiana Amendment 6 passed. It takes effect in 2026 and will increase from $50,000 to $100,000 the income threshold required to qualify for the special assessment level for residential property receiving the homestead exemption.
Nebraska Amendment 2 passed. It increases the repayment period for tax-increment financing from 15 years to 20 years for areas where more than one-half of properties are designated as extremely blighted.
New administrative rules
took effect Dec. 14 in South Dakota regarding when and how an appraiser licensed in the state may perform an evaluation for a federally regulated financial institution, and what items must be included in every evaluation.
The rules state that an appraiser may only perform an evaluation for a federally regulated financial institution for real estate-related financial transactions that fall below the federally established thresholds requiring an appraisal. An appraiser performing an evaluation must comply with the Interagency Appraisal and Evaluation Guidelines, as well as the Ethics, Competency and Recordkeeping Rules of the Uniform Standards of Professional Appraisal Practice.
On Nov. 19, Texas Attorney General Ken Paxton issued an opinion (Opinion No. KP-0342
) regarding the authority of the Texas Appraiser Licensing and Certification Board to exempt licensed or certified appraisers from the statutory requirement to comply with the Uniform Standards of Professional Appraisal Practice when performing a property “evaluation” that’s allowed under the federal Interagency Appraisal and Evaluation Guidelines.
Paxton found that:
“Section 1103.405 of the Occupations Code governing real estate appraisals requires a person who is certified, licensed or registered under chapter 1103 to follow the Uniform Standards of Professional Appraisal Practice. Under Texas law, an administrative agency rule must be consistent with its statutory authority. A rule exempting an appraiser licensed under chapter 1103 from complying with the Uniform Standards when performing an evaluation as allowed under the federal Interagency Appraisal and Evaluation Guidelines would conflict with section 1103.405, insofar as an evaluation constitutes an appraisal under that chapter. A court would likely conclude the Texas Appraiser Licensing and Certification Board may not adopt such a rule.”
However, Paxton’s opinion failed to address whether an evaluation is an appraisal pursuant to Texas law. The opinion states, “Whether a person conducts an ‘evaluation’ or ‘appraisal’ for purposes of chapter 1103 requires consideration of fact issues outside the scope of an attorney general opinion.”
It is likely the state legislature will take up this topic during its 2021 session.