ARDA’s State Government Affairs Legislative Roundup (Fall 2015)

The past year has been a busy one in terms of legislative activity for the ARDA State Government Affairs team. And while there are still a few months left in the 2015 calendar year, planning for 2016 has already been in full force for several months now.

You see, the summer months are when the legislative sessions around the country tend to wind down. That means planning time for the team. But before we get ahead of ourselves, let’s take a look at the activities that took place this past legislative season.

California
A bill allowing for the electronic delivery of disclosure documents and reinstating an exemption from a real estate broker disclosure for projects that must provide public offering statements (AB 905) passed the legislature with strong support, and was signed into law by the Governor in July. The legislation eliminates unnecessary and duplicative disclosure requirements when a state-approved public report is already provided to the purchaser at the time of sale. Additionally, it permits disclosure documents to be delivered to purchasers electronically at the purchaser’s request—which new buyers increasingly prefer.

Another bill, AB 634, to tighten the rules protecting the privacy of timeshare owners’ personal information from becoming available to third parties for commercial purposes or fraudulent activity, passed the Assembly, and has been referred to the Judiciary Committee. Meetings with Senators and staff are ongoing and no hearing has been scheduled at this time.

Colorado
Legislation to exempt timeshare managers from a new licensure regime scheduled to go into effect in July (SB 209) received final passage in the Colorado House on May 1 by a unanimous vote and was signed by the Governor on June 5. The regulatory scheme was designed for the needs of whole ownership communities that did not require any timeshare-specific education or experiences, so this legislation alleviates a time consuming and costly licensing and collections process for timeshare association managers.

Florida
Updates to Florida’s timeshare act (HB 453), to account for new developments in product structures (trusts) and establish a procedure for owner objections to proposed substitution of inventory in a multi-site timeshare plan passed the legislature and was signed into law by the Governor in June. The legislation provides benefits for the timeshare industry and its owners by clarifying current law to include the operations of timeshare plans organized as real estate trusts, which were not previously addressed in the statute. The bill also provides additional detail and transparency to current disclosures, provide a means for owners in older associations to either extend or end their timeshare plan when the plan contains no provisions to do so, and provides new tools for homeowners’ associations. For more details on this bill, visit ARDA-ROC.org.

Hawaii
The Hawaii State Legislature may have adjourned May 7, but the ARDA-Hawaii committee isn’t taking any breaks. That’s due in part to the fact that ARDA and ARDA-ROC supported bills SB 754 and HB 271 did not pass during the 2015 session, as no agreement was able to be reached with the Department of Commerce and Consumer Affairs (DCCA) on the regulation of short term products as well as how to provide for alternative escrow bond financing of developments.

The good news is, DCCA has expressed a willingness to work on the bill through the interim to determine if we are able to resolve the differences. So the ARDA-Hawaii committee will be meeting in the coming weeks to discuss the best strategy moving forward in order to deliver a positive outcome for the industry.

Massachusetts
A bill was introduced allowing owners to voluntary surrender their timeshare to a managing entity or developer (HB 1658), as long as they have no outstanding payments due to the HOA and no other liens on the timeshare. One of the most significant concerns with this bill is that it will be the responsibility of the remaining owners in the association to bear the costs of ownership when an interest is returned to a developer or managing entity and goes unsold. This could create a negative spiral effect if more and more owners are priced out of their timeshare, eventually leading an association into bankruptcy. The bill went to hearing in front of the Judiciary Committee where ARDA and ARDA-ROC offered both written and oral testimony in opposition. No decision has been reached at this time, and we continue to monitor this issue.

Missouri
HB 526 was introduced in January, repealing existing provisions regarding non-judicial foreclosure and requiring that all foreclosure proceedings be handled judicially beginning August 28, 2015. ARDA-ROC objects to this bill as it takes away a very important tool from HOAs and narrows the range of foreclosure options. Given the high cost of foreclosures, repealing the existing non-judicial foreclosure provisions will make the foreclosure process too expensive and time-consuming for one-week timeshare interests for an HOA. The bill was referred to House Committee on House-Civil and Criminal Proceedings where it remained through the end the session without any action taken. ARDA will continue monitoring this issue in future sessions.

Nevada
A recent proposal by Governor Sandoval to modify Nevada’s Business License Fee (SB 252), has a wide-reaching impact that extends beyond Nevada’s borders. In an effort to grow state revenues, the Governor proposed to increase the business license fee that is required for any business to operate in the state. Naturally, a bill like this affects every industry operating business in Nevada. ARDA, along with our members who have an interest in the state, our lobbyists, and the entire business community, have been very engaged throughout the bill’s progress through the legislature, in an effort to find ways to reduce its impact and continue to work toward a fair solution.

Another bill ARDA was monitoring, (SB 320), would have required the addition of a one-page disclosure to the Point of Sale (POS) disclosures relating to the timeshare resale market. The bill would have required several disclosures be included in the one page document—stating that the future value of a timeshare interest is uncertain and the developer may have limited an owner’s resale rights, and that a real estate agent may not want to list a timeshare. ARDA offered amendments to this language prior to its final hearing, where it did not receive final Committee approval. While we don’t anticipate the bill will resurface, we will continue to monitor it going forward.

New Hampshire
ARDA-ROC supported legislation relative to the resale and transfer of condominium and subdivision time-shares (SB 115) that seeks to combat related fraudulent schemes in New Hampshire did not pass the legislature this session. We will continue our efforts to obtain passage of this bill and will seek enhanced support from New Hampshire owners and HOAs.

Pennsylvania
In April, a bill was filed (HB 884) seeking to amend Title 68 (Real and Personal Property) of the Pennsylvania Consolidated Statutes. The bill is a result of several complaints Rep. Tim Briggs received from his constituents regarding a vacation club, and while it’s intended to solve for those issues, it wraps our industry up in the bill, inadvertently impacting timeshare sales in the Keystone State. The bill is still in committee and has not been scheduled for hearing. We are currently consulting with our members who operate in the state and are engaging local lobbyists to help correct this bill so that its provisions focus on vacation clubs and not timeshares.

Puerto Rico
After heavy lobbying by the tourism industry in Puerto Rico, of which ARDA was an active participant, as well as by the general business sectors, legislation seeking to repeal the current Tax Code in favor of an all-encompassing Value Added Tax system was defeated. But with an economy still desperately in need of new revenue streams, a new bill (HB 2482) was quickly passed and signed into law, increasing the current seven percent sales-and-use tax to 11.5 percent, imposing a four percent tax on services and business-to-business transactions, and stipulating that the sales-and-use tax, as well as the services tax would become an 11.5 percent VAT on April 1, 2016. ARDA will monitor the implementation of this law and consult with other members of the tourism industry, as well as the Puerto Rico Tourism Company, to enact amendments or obtain administrative rulings to improve its impact on the industry.

South Carolina
Two separate bills were introduced in South Carolina’s House and Senate (H 3671 and S 523 respectively) that, if enacted, would eliminate important tax exemptions that exist today for timeshare. These exemptions include the sales tax exemption on the gross proceeds from the sale of timeshare interests, and the sales tax exemption on the exchange of timeshare interests. Imposing these taxes would discourage owners and guests from exchanging into South Carolina resorts, as they will be charged an unprecedented exchange tax to do so. Additionally, taxing the sale of timeshare would negatively impact future sales and deter further development in the state. The legislative session concluded on June 4 with no action on the bill, but it will remain in place for the 2016 session. In the interim we have committed to working with the sponsors to come up with a solution that protects South Carolina consumers and recognizes the utility of the trust model.

Another bill was introduced that would permit timeshare owners to voluntarily surrender their timeshare to an association upon meeting certain provisions. This bill will not get a hearing before the Judiciary until next session, however, we have begun having discussions with committee members about the devastating impact this would have on the South Carolina timeshare industry and its owners.

Texas
Consumer protection is, and always will be a priority for us here at ARDA and ARDA-ROC. In a big step towards protecting the integrity of timeshare ownership in Texas, Governor Abbott signed into law the ARDA-ROC supported consumer protection bill (HB 2261/SB 738) that ensures better protection for timeshare owners against fraudulent timeshare transfer company activity. The bill provides clearer definitions for “transfer” and “termination” as it relates to timeshare products, and seeks to deter illegitimate companies or individuals from conducting deceptive business practices such as falsely representing itself as a legitimate transfer or exit company.

USVI
ARDA continues to build on the momentum of our successful relationship-building efforts with the new U.S. Virgin Islands (USVI) government and are gearing up for a busy legislative session there. We’re currently reviewing proposed changes to the draft property tax regulations, which aim to streamline the tax collection process, and will be meeting with members who have an interest in the USVI in the coming weeks to discuss other key objectives for the coming year, such as non-judicial foreclosure legislation.

The Governor, meanwhile, has expressed interest in a more thorough timeshare act to provide the tools his administration needs to grow the timeshare industry in the USVI—with emphasis in St. Croix. ARDA will look to coordinate another meeting between industry and the Governor to discuss these goals in the future.

Utah
During the 2015 session, Rep. Gage Froerer filed HB 422 providing for a number of changes to the Utah Timeshare and Camp Resort Act. The changes, requested by the Utah Division of Real Estate and supported by ARDA and ARDA-ROC, were intended to update sections of the act to reflect changes in timeshare products and use as well as improve the Division’s ability to provide oversight by providing additional clarity to the statute. The bill passed the House but did not receive approval by the Senate prior to the end of the legislative session.

Virginia
ARDA partnered with the Virginia Resort Development Association (VRDA) on the passage of two bills in the Commonwealth. The first (HB 1795/SB 1016) provides an exemption from real estate licensure for an owner’s affiliated companies. The second (HB 1794/SB 1015) reduces the advertising costs for deed of trust foreclosure sales by allowing for an abbreviated advertisement with a web address where more information can be found.

Wisconsin
ARDA has been working with the Wisconsin Realtors to eliminate a licensing requirement for timeshare sales associates and a redundant form required at time of sale. The language will be included in a larger bill put forth by the Realtors, likely to be filed following the summer recess.

Keep Up with the Latest
We regularly update our websites with the latest information on our legislative activities, so be sure to visit ARDA.org and ARDA-ROC.org regularly for the most recent news, issue briefs, consumer advisories and ARDA-ROC accomplishments.

And of course, we’ll continue to keep you posted on all things government affairs right here, throughout the year. We look forward to another busy season ahead and to sharing our updates with you—stay tuned for more!