Real Estate Politics at the State Level

Sept. 7, 2006
BOMA Intl. discusses the political issues affecting commercial real estate over the past year

Political issues affecting commercial real estate have taken center stage in state capitals across the country. BOMA Intl.’s state advocacy program is designed to assist its local associations in addressing legislative, regulatory, and code initiatives; create an information clearinghouse; and encourage the formation of state coalitions to effectively identify and impact state issues before they become law. BOMA’s federated structure, which combines 90 local U.S. associations with BOMA Intl., is uniquely qualified to address state and local issues facing the commercial real estate industry.

As the fall election season quickly approaches, state officials have set their sights on re-election. Gubernatorial races will be held in 39 states, while 84 percent of the nation’s 7,382 legislative seats will be up for grabs. Republicans and Democrats are currently locked in political parity; however, a shift of only a few seats could tip the balance. According to the National Conference of State Legislatures, highly competitive legislative races are expected in Colorado, Delaware, Iowa, Maine, Michigan, Montana, Nevada, Oregon, and Texas. Here is a look at some of the state and local issues that have been debated over the past year ...

Eminent Domain
In June 2005, the U.S. Supreme Court found that the Fifth Amendment allows a locality to condemn property for economic development in the case of Kelo v. New London. The decision also left the door open for states to pass more restrictive laws and to define public use for themselves. In the last half of 2005, four states -

Alabama, Delaware, Ohio, and Texas - enacted legislation immediately following Kelo. Michigan passed a constitutional amendment that will go on the ballot in November for voter approval.

In 2006, 43 of the 44 states that have gone into session are considering legislation in response to the decision. To date, 27 state legislatures have passed bills. Alabama passed its second eminent domain bill, while new eminent domain statutes were enacted in Colorado, Florida, Georgia, Idaho, Indiana, Kansas, Kentucky, Maine, Minnesota, Nebraska, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wisconsin. In Alaska, Illinois, and Missouri, bills have passed the legislature and are awaiting action by the governor. Louisiana, New Hampshire, and South Carolina passed constitutional amendments that will go on the November ballot for voter approval (as have Florida and Georgia, in addition to their statutes). The governors of Arizona, Iowa, and New Mexico vetoed legislation.

The legislation under consideration generally falls into seven categories: 1) prohibiting eminent domain for economic-development purposes, 2) defining public use, 3) restricting eminent domain to blighted areas, 4) requiring greater public notice, 5) requiring compensation greater than fair-market value where property condemned is the principal residence, 6) placing a moratorium on eminent domain for economic development, and 7) establishing legislative study committees or stakeholder task forces.

Disaster Preparedness/Avian Flu
Last year’s hurricane season wreaked havoc on the Gulf region and forced state and local officials to re-examine disaster-preparedness plans. Key among these discussions was improving the role of communication at all levels of government to ensure that first responders can act quickly in times of crisis.

Policy-makers have applied the lessons learned from the government’s response to Hurricane Katrina to a potential pandemic flu outbreak. State and local governments are the first line of defense against such an outbreak and have developed plans to ensure the seamless function of essential services. These plans also stress the importance of the private sector in effective response plans. This is especially true for the commercial real estate industry, which represents an integral part in any plan to safeguard lives if such an emergency were to arise.

Representing a stunning victory for the commercial real estate industry and private-property rights advocates, BOMA Arizona was successful in its efforts to pass favorable access legislation when Governor Janet Napolitano signed the bill into law on March 29. The new law prohibits the state from mandating telecommunications access to commercial buildings.

However, real estate suffered a loss with the passage of mandatory-access legislation in Indiana. The new law prohibits property owners from entering into preferred-provider contracts with communications service providers. It does, however, allow an owner to place reasonable limitations on the hours during which a provider can access the premises, as well as place conditions on a service provider’s building access in order to safeguard the security of the property. The statute leaves some doubt as to what constitutes reasonable compensation. Indiana’s Utility and Regulatory Commission will eventually have to answer this question.

In Florida, Governor Jeb Bush signed into law Senate Bill 142, dealing with Carriers of Last Resort (COLRs). The new law relieves a COLR from its obligation to serve a community, building, or development where the COLR and developer cannot reach an accord on an access agreement. It further frees a COLR from access obligations and provides it with an advantageous position in access negotiations. The real estate community opposes any expansion of COLR relief, as the telecommunications marketplace is clearly working. BOMA Florida mounted a concerted effort to defeat the bill and has now turned its attention to the state’s Public Service Commission to seek remedy.

For more information on these and other issues, call BOMA Intl. at (202) 408-2662 or visit (

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