CNN Week 4 – Property Tax Caps, Online Auction of Land Bank Properties, and More

CNN Week 4 – Property Tax Caps, Online Auction of Land Bank Properties, and More

Four weeks of session has gone by in a blur. The 2024 legislative session is now over one third complete, with 12 of 30 days done. Last week, the legislature used three legislative days and delved into big ticket items including liability protection for IVF, school choice, a bill defining man and woman, a bill to increase the penalty from a class C to a class B felony for discharging a firearm into an occupied building like a home, and a bill banning vaping for those under 21. Read on for legislative highlights affecting private property and REALTORS®.


Property Tax Caps – REALTOR® Priority Bill Has Public Hearing

State Rep. Phillip Pettus (R-Killen) introduced House Bill 73 to cap annual property tax assessment increases at 3% for homes and agricultural land, and 5% for commercial and non-utility owned property. As discussed last week in CNN, the bill would be a great benefit to property owners, especially those with a fixed income, and provide certainty to first-time homebuyers that taxes will not increase unexpectedly and exponentially. 

The bill was discussed at last week’s House Ways and Means General Fund meeting in a public hearing. AAR’s Public Policy Team spoke in support of the bill along with representatives from the Alabama Farmers’ Federation, the Alabama Forestry Association, Alabama Federation of Independent Businesses, and Alabama Policy Institute.

Opposition to the bill, came from several groups, including the League of Municipalities, Association of County Commissions, and the Alabama Association of School Boards. The Alabama Education Association is also opposing the bill but did not speak at the public hearing. 

Several legislators shared positive comments about the proposed legislation and described frustration from their constituents in receiving large property tax increases the past few years. Rep. Brett Easterbrook (R-Fruitdale), Rep. Laura Hall (D-Huntsville), Rep. Arnold Mooney (R-Pelham), Rep. Paul Lee (R- Dothan) all made favorable comments about the concept.


Online Auction Passes House Committee with REALTOR® Requested Amendment

For years, properties sit idle with property taxes uncollected in the State Land Bank. One bill passed out of House Committee that seeks to address the issue. HB 196, sponsored by Rep. Reed Ingram (R-Montgomery), would allow the state to hire an auctioneer and sell the properties in an online auction. The state will only be selling its limited interest in the property (i.e. not clear title), but the auction will be a huge step in returning the properties to the tax rolls and in stopping the practice of the state purchasing properties left unsold at a tax sale. REALTORS® have supported this legislation for several years. 

Due to the state’s limited ownership interest in the properties and prior efforts to sell land bank properties, a REALTOR®-requested amendment was added in the committee to protect the auctioneer from lawsuits related to the auction of the properties. 

The bill now goes for consideration by the entire House. 


Reducing Costs of HVAC Work – Passes Senate

The Alabama Senate approved legislation on Tuesday that is sponsored by Sen. Keith Kelley (R-Anniston) and allows HVAC contractors to perform basic wiring for HVAC systems rather than going to the added expense of hiring an electrician.

Senate Bill 101, which reduces the time and costs of HVAC installations and upgrades for homeowners, builders, and stakeholders, has been referred to the House Boards, Agencies, and Commissions Committee, where it awaits action.

A similar measure has been proposed for plumbers and gas fitters.


Lake Martin Boating Bill Passes First Committee

A bill adding Lake Martin to a law providing protection to property owners and swimmers from boats passed its first hurdle after receiving a favorable report in House committee last week. Rep. Ed Oliver sponsored HB 209, which will limit how close someone can wake board or wake surf near the shoreline or dock. When the boats used for wake boarding and wake surfing are in use, they cast off massive wakes, increasing erosion issues, damaging property like docks and even seawalls over time, and creating safety issues for swimmers, especially children near the shore. 

A 2023 act limited how close wake board and wake surf boats could get to shore while being used for wake boarding or surfing but only applied to Smith Lake, Lake Wedowee, and Shoal Creek. HB 209 adds Lake Martin to the list and, for these water bodies, also limits to 100 feet from shore or a dock the distance any boat can operate above idle speed. 

The bill can now be considered on the House floor. 


Bill on Tax Sales and Liens Filed

Rep. Chris Sells (R-Greenville), filed a bill, HB 270,  to address several laws that are likely unconstitutional. In 2023, a United States Supreme Court opinion cast constitutional concerns on state laws across that nation dealing with tax sales and tax liens. As a refresher, counties collect property taxes, and if property taxes are not paid, the county either sells the state’s interest in the property to the highest bidder, called a tax sale, or sells a lien on the property for the amount of the taxes, called a tax lien. Excess funds are the moneys the county obtains from a purchaser above and beyond the taxes and other fees owed by the property owner. The Tyler decision found unconstitutional a state law allowing Minnesota to keep all excess funds from a tax sale. By implication, this impacts both processes under Alabama’s current laws. For tax sales, the law does not allow a property owner to claim the excess unless the property owner redeems the property, and for tax liens, the law does not require an auction of the property, which would give an opportunity for the property to be purchased above the amount owed and restore some of the property owner’s equity in the property if equity exists. 

HB 270 seeks to clear up these unconstitutional concerns. Specifically, it would allow property owners to obtain any excess funds from a tax sale without also requiring redemption, and, for tax liens, would require an auction of the property, giving the property owner a chance to recover some of the lost equity. 


AREC Sunset

Legislation sponsored by Sen. Keith Kelly that renews the “sunset provision” for the Alabama Real Estate Commission for an additional four years was approved by the State Senate on Thursday and now goes to the House for consideration.

Each year, the Alabama Legislature reviews "sunset bills" to extend or, possibly, deny the continuing operation of various state agencies and licensing boards or commissions. Bodies falling under the sunset provision must be reauthorized by the legislature every four years to continue operating.


Looking Ahead

The legislature reconvened today and continues with several big ticket items, including IVF services protection in both chambers, a diversity, equity, and inclusion (DEI) bill in the House, and the gambling package in the Senate. Next week, the legislature will take a week off for in district work.