S.B. 309 Single-family Home Rental Modifications: transcript

Senate Revenue and Taxation Committee, Feb 23, 2026

1. Committee chair44:21

   We'll do, we'll do Senator Johnson, Senate Bill 3 0 9.

2. Sen. John D. Johnson44:33

   Time is your Thank you Mr. Chairman. Uh, members of the committee. Thanks. Uh, before I present the bill, I wanna be transparent with the committee about something. Uh, commissioner Valentine contacted me over this week to flag administrative concerns with SB 3 0 9 is currently drafted. Uh, we've been communicating over the, the weekend. His office provided me a written list of those concerns, and I suppose they will be presented today that they're here, present today to discuss them. I think I welcome that. Uh, frankly, I expected it. This bill is doing something new. It creates a registration system, a tier to excise tax with entity aggregation requirements, and a grant program administrative, uh, administered across multiple agencies. Complex implementation deserves scrutiny from the people who have to make it work. That is exactly why SB 3 0 9 includes Sunset provisions quarterly public reporting, and built-in legislative review. This bill is designed to be refined. It is not designed to be perfect on day one, but I want to go further than that today. Commissioner Valentine raised four specific administrative concerns before he speaks. I want to address each one directly, because if I, I have drafted amendments that may help resolve them. Uh, what I am asking the committee to evaluate is not whether every implementation detail is resolved, is whether the policy objective is sound, whether this structural approach is correct, and whether utah's first time buyers deserve a serious legislative response to a documented market market failure. Since I did not get feedback on the amendments, I will continue to work on them and circle the bill until they are resolved. If I'm fortunate enough to get it out of the committee today, I believe the amendments will, uh, I will describe today. Demonstrate that this bill is both sound and policy and administer administer in practice. Let me explain what this bill is trying to solve and why Utah has added housing units. Permits are up. Cranes are visible across the wash Wasatch front, and yet, home ownership among Utahans. Age 25 to 34 has fallen to approximately 37% in Salt Lake County. It dropped from over 50% in 2000 to 39%. Today, nationally. First time buyers now represent just 21% of purchases with the median first time buyer age raging, reaching 40 for the first time in recorded history. The numbers here in Utah tell the story plainly, statewide, median home prices are approximately, are approaching $550,000 with Salt Lake County already there. And January 26th, 2026, sales hitting 5 77. Utah median household income runs approximately 95 to 104,000. A 20% down payment on a 577,000 home is $115,000. More than a full year of gross income before taxes, student debt, rent, or any other obligation supply alone does not explain this. Something else is happening in the market structure. Detached starter homes have historically functioned as high velocity household balance sheet assets, families buy, build equity, sell, and move up the ownership ladder. That turnover continuously replenishes entry level resale inventory. The same physical unit serves multiple first time buyers across the generation. Institutional rental portfolios are structured differently. They are designed for lower turnover and longer duration. When a starter home transitions into a portfolio hold resale velocity declines the unit remains occupied. Rental supply is unchanged, but that home reenters the ownership resale channel far less frequently. Each home held indefinitely as yield inventory removes not just one unit, but the entire resale chain it would've generated. Physical supply is unchanged. Effective ownership supply tightens at the margin. This is not an ideological claim. It is a duration and balance sheet function. Dis distinction. Some analysts argue that because institutional investors hold less than 3% of single family stock in any given state, their market impact is minimal. That framing misses the mechanism. The issue is not aggregate share. It is concentration in the specific entry level segment where first time buyers compete and the velocity effect on resale inventory. Studies document five to 10%, uh, price increases in neighborhoods with significant institutional buying, precisely because the concentration effect operates locally, not statewide. Compounding this institutional investors access capital at rates unavailable to individual buyers. A first time buyer with a conventional mortgage at 77% is not competing on equal terms. With an institution borrowing at 4% through REIT structures and bulk financing arrangements, the institution is not outbidding the family because the home is worth more to them. They are outbidding the family because they have structurally cheaper access to capital. That capital cost differential is the transmission mechanism when liquidity, when liquidity flows through financial institutions, early receivers deploy it before prices fully adjust. That sequencing naturally pushes capital toward long duration hard assets like housing. The first time buyer arriving later in the sequence faces already, uh, move by institutional acquisition. SB 3 0 9 does not attempt to correct federal monetary policy. It addresses what happens at the local level when that transmission alters ownership velocity in the entry level segment, what the bill does. Three components each addresses a different dimension of the problem registration. Every owner of a single family rental registers with a division of real estate by October 1st, 2026, disclosing the parcel county and beneficial ownership information. Right now, we lack good data on institutional ownership concentration in Utah. This creates that visibility and enables enforcement of existing primary residence exemptions that are currently being claimed by owners who do not qualify. Penalties for non-compliance are a hundred dollars per month per property with revenue deposited in the housing transit transition redevelopment fund excise tax on large portfolios beginning in 2027. Owners of 25 or more single family homes statewide pay a tiered annual, uh, tax. 2000 per home for portfolios of 25 to 29, scaling to 6,000 per home above 50. The threshold is de deliberate. At 25 homes, you are not a family with a spare rental, you are running an institutional operation. This does not prohibit institutional ownership. It imposes mod modest friction at scale, reducing the margin at which cheap, uh, institutional capital compete out competes individual buyers for entry level inventory at the margin. Some of those homes flow to owners rather than, rather than, uh, portfolios. And, and if an, And if an institutional investor decides to sell, rather than pay the tax that creates exactly the kind of ownership opportunity. This bill is designed to Purdue revenue recycling through competitive municipal grants. Every dollar of excise tax revenue flows into the housing transition and redevelopment fund. Municipalities compete for grants by identifying transition zones where institutional ownership represents restrictions and providing 20% of matching funds. Op properties are conver, uh, converted carry deed, uh, restrictions running with the land. Subsequent grants require demonstrated results, no results, no additional funding. Quarterly public reporting tracks the ownership data deed restricted units created, created grant outcomes and administrative cost. The governor's Office of Economic opportunity administers with a 10% cap on overhead. I I have some, uh, replies to some of the things that, uh, they will say, but just, just in closing here, I say these components, uh, work together. Re registration identifies where institutional ownership concentrates the excise tax generates revenue while creating friction. On the further, on further, ac accu AC acquisitions, municipalities use that revenue to rezone and transition properties. Deed restrictions ensure that those properties serve first time buyers permanently. Quarterly reporting enables continuous refinement. Each element is necessary. Registration without the tax creates visibility, but no incentive to change behavior. The tax without grants generates revenue, but no direct supply solution. Grants without registration lack the data to target them effectively. This bill would Sunset July 1st, 2023. In conclusion, I'll say for, uh, the generation of young Utahans priced out of single family home ownership, the status quo is not neutral. It is a structural outcome of capital sequencing, ownership, velocity changes and entry level markets. And, and an entry level market that has been systematically reshaped, uh, by forces. First time buyers, uh, cannot compete on equal terms. SB 3 0 9 is targeted market respecting correction, transparency, modest friction at scale, local solutions funded by the activity, creating the problem built in accountability. This is not government picking winners and losers. It is government recognizing that the playing field is already tilted and making a measured time limited effort to level it. Commissioners Valentine's concerns have made the, uh, will make this bill better. That is how good legislation is supposed to work. I came to this committee today, not just with a bill, with amendments that directly address every administrative concern is office raised, which actually we haven't really worked through all the way. So the, uh, i, I urge the committee favorable recommendation, uh, and welcome your questions. Thank you.

3. Committee chair55:04

   Okay. Thank you very much. That conclude your presentation? Yes. Okay. We'll go to the committee for questions. Senator Harper,

4. Sen. Wayne A. Harper55:12

   Thank you. Um, this is an interesting proposal. It's got some good elements and some that some people do not agree to, which you've highlighted my question. Those on line 5 0 9 and elsewhere as I read it, it's detached only you have, uh, detached, uh, homes, but you also have town homes that are attached. They, they wouldn't be included under this.

5. Sen. John D. Johnson55:34

   Correct. And the question is, is why? Uh, I, I just felt like, you know, the, the goal was really to get, uh, families into single family detached homes. Uh, kind of the, the goal of home ownership. I, I didn't want, you know, I, I still think there's a valid reason for rentals. Town homes could be included and differentiated from apartments. But I, I think I was mainly targeting single family homes.

6. Sen. Wayne A. Harper56:03

   Okay. 'cause a lot of people buy a town home or condo as their first, uh, foray into the housing market. And so it was just wondering for the rest of

7. Sen. John D. Johnson56:12

   That, that's actually a very valid concern. I a valid point.

8. Committee chair56:16

   Thank you. Okay. Next up. Uh, seat seven. I think that's Senator Brammer.

9. Sen. Brady Brammer56:25

   Alright. Um, there's a lot of elements that, that I appreciate in this. I, I particularly like the, the push towards the, you know, and, and not to say anything different than the town homes being included, but I really like pushing for single family home ownership, uh, detached home ownership. I, I think that is a different product that, that when people own their own home and their property and no one else is, you know, it's, they're not adjacent. I think there's, there's something really great to that. Um, one of the concerns that I have on this is, it seems based on the premise of, you know, commercial lending, you know, not being on the, on equal footing with single family home lending. And I wanted to get your thoughts as to why that is and if it's something that we should be in the middle of equaling out, or if it's something that is a natural market based behavior that we should allow the market to, you know, is this because of government regulation or are we fighting against Adam Smith's invisible hand?

10. Sen. John D. Johnson57:32

    Well, there's a, there's a concept called the Cantal on effect, which basically in, in an inflationary period, uh, these, these corporations actually have access to the funds before they get to the, before they get down, uh, the level. And so I, I think that's part of the problem right there, is that they have an inherited advantage, uh, because of the way things are structured in, in addition, I mean, you know, you think about it, uh, if you, if you don't put 20% down, you also have private, uh, mortgage insurance, which is another thing that, that, uh, advantages the corporate ownership. 'cause they, they basically buy these assets with cash. They, they create a large portfolio to, to decrease the amount. And so what I'm worried about, honestly, is you, you think about how this disrupts the whole housing market, because at that, at the lower level, you, you've got, you've got houses that traditionally turned as, as people would, would elevate up into the higher market. I'll use an example of my daughter, uh, just, just bought a new home. And, uh, 20 years ago she bought a home for $150,000 in Logan. Okay. And, uh, that home when, when she sold it, uh, three years ago, actually, uh, was about 450,000, which allowed her to buy a $530,000 home. And, uh, at about the same payment that she was making before my, my son on the other hand, and daughter-in-law, uh, were not so fortunate to have gotten into the market because, because you, you think about it, this is the largest store of wealth that a, that an individual has. And if, if you're never able to en enter that market, how are you gonna get to the next stage of the market? This is actually upsetting the whole thing, even though most of these portfolios are, are concentrated towards the, the, the lower end of the market. And so I, you know, I I, I find that I, I find that problematic. I mean, and, and this does not create, this does not, uh, attack the, you know, monetary policy or anything that's going on. Right. We have no control over that. But you think about it, people, corporations buy these houses they apply for, you know, and then the individual renting the house actually applies to get a reduced amount of property tax, right? Because, because the, it's their primary residence. And, and that causes a real problem, I think, in the market. I, you know, I don't know if that answers your question, but it kind of looks at that.

11. Sen. Brady Brammer1:00:08

    I guess the, the part that concerns me is even the, the idea that, uh, you know, part of the reason why the, the capital is cheaper is because they're bringing 20% or more down in cash, which means you've got 20% equity and your loan to value is now protected with a whole lot more equity than you otherwise would have. And if we're saying that that's wrong for the market to do that, and the government now needs to intervene and stop that, I worry about, you know, that, that becomes a heavy hand of government as opposed to the free market looking at the loan to value and the risk of valuation for the issue. And, and so that, that's where I'm a little bit concerned getting in the middle of it, is, is that there's really good reasons why their capital is cheaper. Number one, they may have more, so they may not need as much capital, but the biggest reason is because their loan to value is different than your typical homeowner coming in on an FHA loan of 3% down or something like that. Which, which that's why you have PMI insurance because your risk is higher. And so now you're trying to insulate the, lend the, you know, the lender on that, because the risk is so much higher when you don't have 80%, when you have above 80% loan to value. And so I just don't want to create a, a system that that fails to reward risk and re reward, you know, that fails to, to reward, um, the market influences. And so that, that's where I get a little concerned on this, is when we try to make it out that the commercial lenders get access to things that others don't. Well, they paid more money to get access to those lower rates. To be frank, is, is what I'm getting at. And I worry about making that the boogeyman, uh, when, you know, I don't think it is. So,

12. Sen. John D. Johnson1:02:03

    Look, I, I, I agree with that. I, I think that, you know, we looking at the 4% versus 7%, right? That's, that's the market effects. But on top of that is also the PMI insurance, right? And so, so I, you know, and, and to me it's kind of sad that they're using, I mean, these, these, but Even the market insurance is, is there, Because on top of, I, I understand that.

13. Sen. Brady Brammer1:02:29

    Yeah. That, that should be the differential, right? Because The commercial lender can't even get a loan that has PMI. Right. You know, and, and so they don't, I mean, typically there may be a product out there, but so that, that's kind of, yeah. Anyways, that was my biggest Concern. No, I thi I, I think it's a valid concern.

14. Committee chair1:02:49

    Okay. Senator Escamilla.

15. Sen. Luz Escamilla1:02:54

    Thank you, Mr. Chair. I, I don't see a fiscal note. Do you have a fiscal note senator on this bill?

16. Sen. John D. Johnson1:02:59

    No. I, I, I don't. That hasn't been produced yet.

17. Sen. Luz Escamilla1:03:03

    Okay. I'm not sure what it is. And then one more question, Mr. Chair. So, um, on this, Um, so the, this excise tax and, um, do you foresee a, an impact on renters? I mean, so we've been talking about trying to stabilize renters, right? Just we need people with housing. Uh, we all want the ultimate goal, which is single family home ownership. I, I, I, I, I appreciate that. And, and being, I think, clear that there is a, it's not an equal footing, you know? Um, the corporations certainly have other pieces, and I spent 14 years of my career in banking, not on, on, on this type of lending, but, um, we're enough to know just how that happens. But I'm, I'm interested in hearing from you on, on this, on the tax and how do, how do you think it's gonna shift cost? And if we're trying to stabilize right now, renters, uh, at a minimum to make sure there's housing, I mean, people with housing, how do you foresee this impacting that?

18. Sen. John D. Johnson1:04:14

    Well, you know, when I, when I looked at the market, it seems to me that, uh, many of the large apartment complexes and stuff are now in offering pretty, pretty good incentives to get people in the apartments, which tells me there's, there's probably a little bit of, uh, excess supply in, in some sense, right? We've, we've built a lot of apartments and, and, you know, that goes to the condo thing too, right? And that's why I tried to center this just on one segment of the market. Uh, will there be effect? I I tend to think that those, uh, you know, if you look at the elasticity of demand of these things, I, I, I think we've reached a point where, you know, they, you know, they're, they're at margins now that are pretty, pretty tight. But I, but I, and that's why I actually wanted an exit strategy with these grants, right? So that these portfolios could be turned.

19. Sen. Luz Escamilla1:05:04

    But, uh, will that, will that impact rents?

20. Sen. John D. Johnson1:05:08

    I can't say that it won't, but, but I, I, that's why I left apartments and, and condos and other things, town homes out of, out of this.

21. Sen. Luz Escamilla1:05:18

    So thank you. Thank you, Mr. Chair.

22. Committee chair1:05:20

    Okay. Thank you very much. Okay. I think that concludes questions from the rest of the committee.

23. Committee chair1:05:27speaker not certain

    I'm just gonna ask a couple, um, this feels like, you know, just, I was just looking through housing data over the weekend, and we have underbuilt our market compared to demand. And so there's two ways obviously to deal. There's lots of ways to deal with this. One is dealing with, you know, availability, having, you know, greater inventory, you know, fixing the denominator would help the numerator in this situation, right? It seems like you're trying to impact the numerator, right? For, you know, for how much is going to housing afford, you know, how much is going to, uh, these, uh, call 'em, for lack of a better word, industrialized portfolios of single family homes. It seems like you're trying to deal with the numerator at the same time. Uh, there are other bills that are failing, you know, fortunately or unfortunately dealing with the denominator. Why do you feel like dealing with this component of the demand cycle is better than dealing with the supply side? Well, I mean, this, this does affect the supply side too, because of the, because of the velocity of, of, of movement in these, uh, properties at one level, right? Mm-hmm. So it does, uh, affect the supply side. Uh, it, Do we have any, do we have anything that shows impact of like how many, you know, how many portfolios are out there, what the size of these portfolios are? I was trying to figure out how you calculate a fiscal note on this, and I just don't know how many would qualify or how many would fit into this bucket. You know what I mean? Yeah. That was part, that was part of the, the, that, that was part of the, uh, thoughts behind this registration system, right?

24. Sen. John D. Johnson1:07:11

    Mm-hmm. Uh, I mean, the fiscal note really, I mean, if you, if you think about the fiscal note, part of this is positive income, right? And it, and, you know, we can adjust where that goes depending on, you know, what has to be paid as far, far as administrative cost, right? But I don't, I, you know, I mean, this cer the administrative costs certainly will generate the fiscal note, right? Yeah. But, but will the, you know, will the cost, I, I don't know that the other cost will be part of the fiscal note. Yeah. If I, you know, just thinking about it off the top of my head, I don't know.

25. Committee chair1:07:52speaker not certain

    Yeah, that's fair. I'm, I'm actively trying to figure out which side of this is the problem. You know, if this is a, if this is a supply side problem, then, you know, and maybe it's multifaceted to say that there's, you know, there's lots of components of this problem.

26. Committee chair1:08:12speaker not certain

    Here's my primary worry if I may, Mr. Chair. Uh, my, my primary worry is if you think about what home ownership has traditionally done this is, this is the biggest asset that most people in our country own. Mm-hmm. Right? And if you, if you talk about their wealth, most of their wealth is tied up in their homes. And if, if, if people never get to enter that market, they never get to go up the ladder. Mm-hmm. And, and that's the thing that worries me the most. Hmm. And so, you know, the how do we fix that problem? I mean, I think, I think this is a good attempt towards there is this perfect. Do, do we need to, you know, do, do we need to work on, you know, some of the things that, uh, commissioner Valentine is gonna bring up?

27. Sen. John D. Johnson1:09:02

    I, I think so. Mm-hmm. But I, but I actually think that the policy question is, is pretty solid in a way. Yeah. Uh, somehow, right? Somehow we, we need to rebalance that, so, so our children can actually have a chance at owning a home and building a financial asset.

28. Committee chair1:09:22speaker not certain

    So I think I, I mean, I agree with that, especially those components, right? We've got a lot of policies that we've created that benefit, you know, my generation and older, I, I wasn't gonna say your generation we're, we're pretty close. Yeah. Um, uh, but, you know, we, uh, we've got a lot of policies that benefit, you know, the older generations. And I, I worry that we've done so much to incentivize being older that we haven't done enough to incentivize being younger. Right. So, uh, so that's, uh, you know,

29. Sen. John D. Johnson1:09:54

    Well, the other side of that too, if I may, Mr. Chair, um, is that, you know, if, if you think about, uh, even our taxing structure, right? Uh, allowing, uh, allowing a reduced property tax on a corporate owned home, you know, people will say that, well, that, that makes the rent lower. I don't, I don't believe it really does. Mm-hmm. You know, but, but you think about you, you think about doing that, right? So now all residents are paying more, and, and in effect, that's giving the corporate owners e even bigger incentive, right? To be in this market. And this, this tax, this excise tax was actually created to kind of offset that balance. Yeah. You know, I don't know if it's perfectly done, but I, but I think it's just an, it, it, it is an attempt at, you know, kind of equalizing that market.

30. Committee chair1:10:50speaker not certain

    Yeah. No, I, I appreciate that. 'cause that's, uh, I think, you know, uh, my, I think my one concern that I'm trying to figure out is timing. We've got a short amount of time left in the session, and this is a pretty weighty policy to try and, uh, to try and wade through without, with incomplete data. You know what I mean? I'm wondering if we shouldn't have, you know, I don't know. I'm trying to figure out if there's a way we can get part of it without getting all of it, um, and make significant steps towards your policy goals. Have you thought about prioritizing which things you care about the most in the bill versus parts

31. Sen. John D. Johnson1:11:29

    You don't? Well, I, I, I think the registration process would be a good start to that. Yeah. Right? Where in order to, in order to qualify, uh, under the, the, uh, you know, primary residence exemption, yeah. You'd at least have to identify up the ladder where, where, uh, who's the beneficiary ultimately of the, uh, of, of that. Right. I, I, I think that certainly could be a priority part of it, certainly, and that would give us the data that we need. But, uh, you know, and I, I'm, I'm willing, like I said, you know, based on, based on feedback here to, you know, circle this and figure out if there are parts of it we can carve out to, to go forward. But I mean, that's up to the committee though, so,

32. Committee chair1:12:19

    Yeah. Okay. Appreciate it. Yeah. I think that concludes questions. Let's go to the public for public comment. Who'd like to speak on this bill? Raise your hand. Okay.

33. Committee chair1:12:28

    Uh, I see two. So why don't you both come forward, sign in, uh, introduce yourselves, tell us where you're from. I know both of you, but the rest of the public needs to hear from you as well. Commissioner Valentine, if you'll come forward as well. We got two seats there, and we'll let, commissioner Rock will join me, so let's just Okay, sounds great.

34. Justin Allen, Rental Housing Association of Utah1:12:48

    Uh, Justin Allen with the Rental Housing Association, um, I'll be, be brief. We have some members of the Rental Housing Association who are in this space, and, uh, we have concerns. We, we share Senator Johnson's desire to try to increase opportunities for Utah Utahns for home ownership when the time is right. But, um, want to remind the committee that, uh, uh, there are approximately a third of, uh, of Utahans who are in the rental housing space. We need to have good rental housing opportunities, um, are in our membership. We represent everything from mom and pop landlords to apartment communities, to, uh, people who do own, uh, many of these single family home rentals. And they do, uh, meet a, a, a need out there. Um, there are, uh, a lot of Utahans who would like to live in, uh, a nice desirable single family home neighborhood who are maybe not in a position to, uh, want to purchase a home yet, either because of, um, affordability or because they're not sure they're gonna be in Utah for, uh, a long time with their professional responsibilities. And so, uh, this does meet, uh, a need, this type of, of rental housing does meet a need. And, um, we also just generally speaking, believe that these type of housing, uh, issues are best, uh, dealt with through, uh, trying to introduce more market forces and competition and, uh, and less on, uh, taxes and fees. And, uh, so, um, we have major concerns with this bill and just the policy in general being the right, uh, approach to try to address this situation. And, uh, uh, would, would love to work with Senator Johnson and, and, uh, you know, to continue these conversations, but believe this policy issue needs more time and, uh, would, uh, would ask you to, um, to not support this at this time. Thank you.

35. Unknown speaker1:14:42speaker not certain

    Mr. Allen, do you have, uh, does your association have data on, you know, single family owners or, or like, do you have owners of single family? I, my understanding is your association is mostly like apartment buildings that wouldn't apply for this.

36. Justin Allen, Rental Housing Association of Utah1:15:00

    You, you, you might be surprised, actually, I think within, uh, roughly the 300 to 400,000 rental units in the state of Utah, we think about a third of them are single family homes. How many, sorry? 300, 375,000 or so, I think is the nu most recent number. But we, we believe about a third of those are single family homes. I, so I don't have good data in terms of how much, how much of that, uh, single family home stock, you know, is institutional investors versus, you know, smaller number of investors. But yeah,

37. Unknown speaker1:15:27speaker not certain

    That's the, that, that would be the ultimate question I think that Senator Johnson's getting to. How do you feel about the registration or the disclosure part of, uh, of the, of the bill?

38. Justin Allen, Rental Housing Association of Utah1:15:38

    Well, I think that already, you know, a lot of these folks do have to work with their county assessors if they are trying to get that primary residential property tax exemption. So I think there already are some, uh, mechanisms in place to track, you know, some of that through, through, uh, that, that tax process, I believe. Okay. Yeah.

39. Committee chair1:15:54

    Okay. Thank you. Thanks. Great. Commissioners.

40. John Valentine, Utah State Tax Commission1:16:05

    Uh, thank you, Mr. Chairman. Um, commissioner John Valentine, chairman of the Utah State Tax Commission. I'm joined today by my fellow Commissioner, commissioner Rebecca Rockwell. Uh, we, we wanna say at the beginning that, uh, Senator Johnson has been very responsive to our concerns, and we really appreciate that because sometimes we can come up with a better piece of legislation by working through the administrative concerns. The present version of the bill is not administrable, we cannot administer it, and we are still struggling to, to understand what kind of physical impact it would have. Uh, we have submitted our documentation to the fiscal analyst who is still working on the fiscal impact of the bill. Uh, with that, Mr. Chairman, we can answer any questions. I didn't think you wanted me to go into all the detail, but I can, if you need to.

41. Committee chair1:16:54

    Uh, it would be helpful, I think just for, uh, just for the record to give a little inventory of things that are minister above audit, that'd be helpful.

42. John Valentine, Utah State Tax Commission1:17:02

    Okay. The first ones are lines 4 59 through 4 68, where we have to match ownership of different rental properties across the state to determine if there's a single owner. The di difficulty with this, Mr. Chairman, is that single owner may not be as clear as it could be. For example, is an LLCA single owner or is the five members, or 20 members of the LLC each a single owner? Just issues like that are just very difficult. Um, do we have to match Social security numbers and f fess? We can't tell what's, who is an owner unless we have that information. Now we have a privacy issue because that information's now going out to others than the tax commission. Um, we have soon on line 4 59, the, the end of the owner is, um, imposed on if they own a fractional part. So if you have four people as a family who own a property, are they now covered? We don't know. Uh, lines 5 21 through 5 23, um, the property manager may not actually know every client that's in a home that they're managing. They're managing a home and they have a single contact person, but they may not know who it is. Uh, line 5 31, many properties are being rented out on short term rentals in areas that are not permitted by their local community to be short term rentals. Um, those communities are gonna be enforcing as soon as they find out that there's a short term rental in their community, they're gonna be enforcing their ordinance against that person. So, disclosure that they're renting a short-term rental in a non short-term rental community is gonna be very difficult to enforce. Uh, lines 5 50, 46 to 5 47 seem to acknowledge the division of real estate will have the information to link together owners of 25 or more homes. We're not certain that even with the disclosure, they'll have those kinds of linkage. Those are just some of the problems that we've identified at this point. And again, um, the good senator has given us responses and proposals for those. And, um, I'd like to now defer to my colleague, uh, commissioner Rockwell, And as to the tax, oh, commissioner Rebecca Rockwell, Utah State Tax Commission.

43. Rebecca Rockwell, Utah State Tax Commission1:19:24

    As to the fiscal impact response that we submitted to OLFA, because this is a new tax type, we're requesting programming costs for a new tax type and a couple of full-time employees to audit and administer the new tax. Um, as to the revenue side, uh, as the bill is currently written, we believe that there's a high likelihood that investors will reorganize their property portfolios into smaller, separate entities to get below the 25 unit threshold. And so we believe that currently the revenue gain that could be recognized from the excise tax is indeterminate. And of course, we recognize that OLFA has the ultimate responsibility for the fiscal note on that. But just want you to be aware in response to your question, Senator Escamilla, that is what we have submitted.

44. Committee chair1:20:24

    Okay. That conclude your public comment? That does, Mr. Chairman. Thank you. Okay. Excellent. I'll bring it back to, is anybody else?

45. Committee chair1:20:31

    Uh, there's somebody else online, I think Adrian, Adrian Toddman. If you'll, um, we'll elevate you and, and have you turn on your camera, introduce yourself and tell us where you're from, please.

46. Adrianne Todman, National Rental Home Council1:20:47

    Good morning, everyone. Um, I'm Adrian Todman. I am the CEO of the National Rental Home Council located in Washington, dc. I am joining all of you this morning to represent our members in Utah who are providing quality rental homes to families across the state. We stand in opposition, sadly, of SB 3 0 9 because we believe it will harm, availability, affordability, and the quality of rental housing for families across the state. Prior to my time in this role, I served as the Deputy secretary and the acting Secretary of the US Department of Housing and Urban Development. So I have a very deep appreciation and respect for the desire to ensure that we are creating opportunities for home ownership, particularly first time homeowners. My members. And I see the inventory that they manage as a stepping stone for many families who live in Utah, who prefer to live in a home, but are perhaps not quite ready to purchase a home, whether because of lack of down payment, because they have to, uh, clean up their eligibility and credit to acquire home ownership, or they are living in Utah on a, on a temporary basis, and ultimately will be moving out of the state. And renting a home is the proper, um, environment for them at this point in their life. Our residents include military families. It includes members of the service industry. It includes traveling nurses, it includes line enforcement officers. It includes, in many ways the backbone of many of our communities who we want a steady home to live in and desire that type of environment rather than an apartment. I have visited Utah many times over the course of my career. It's a beautiful state. I recognize it as being a state that is, that has the same housing affordability challenges as many other states across the country. And I joined many others. When I say that the correct solution to that is building more housing supply. I know that many leaders in Utah, um, including the governor, recognized that increasing supply ultimately is the best path to make sure we are controlling housing costs, not just for residents, but for first time homeowners as well. So I would ask this August Body to not consider this legislation. Um, and National Rental Home Council stands ready to work with anyone who wants to improve the housing costs of families in Utah for renters and for first time homeowners as well. Thank you so much for taking this opportunity to listen to me this morning.

47. Committee chair1:23:38

    Thank you very much for your testimony. Appreciate it. Thank you. Okay. I think that concludes public comment. We'll bring it back to, uh, the committee now for questions or actions on the bill. Senator Cullimore?

48. Sen. Kirk A. Cullimore1:23:56

    Yeah, thank you, chair. I think, I think the problem that the sponsor is trying to, to address is, is definitely on point. Like we've got housing affordability issues. Um, there's, there's, uh, I I think the policy goal of getting people into homes, because that's where wealth is created and, and retained is, is a good point and a worthy policy goal. Uh, my concern is there's, there's a lot of questions about the, the, uh, the implementation of the program as it's currently constituted, as, as we heard from the tax commission. Um, and, and I guess some, some of the outstanding questions I have in addition to what the, the chair previously raised is whether, whether this furthers the policy goal of getting more people into homes or whether it hinders people that, uh, are, are trying to live in a community in a single family home, but can't, can't afford home ownership yet, does it discourage that that particular product in the market, or does it unduly burden that particular product in the market where we've got people that maybe are transitioning, maybe they're starting a family and would like to live in a single family home, but, but can't afford it yet, and are looking to plant roots somewhere. And, and so I, I, I think there's just a lot of unknowns out there. And while, you know, encouraging home ownership is, is a worthy goal, and we're trying to address that from many angles. I'm not, I'm just not, uh, I just, I just don't have my head wrapped around this, this particular bill yet and what that would mean to the market at large. And so what we've heard is that maybe there's, there's an ability to work on this bill still. Maybe, maybe we look at just a registration and get some, some of the data that would help support furthering these policies. And so I think because there's a fair amount of work still that, uh, we, we hold the bill or, or move a motion, would be to move to the next agenda item, uh, which will give some time to further develop this.

49. Committee chair1:25:57

    Okay. Thank you. We'll go to Senator Johnson for response.

50. Sen. John D. Johnson1:26:03

    Uh, I, I, I guess that's a little bit disappointing, but, uh, I, uh, you know, I believe, you know, I, I could address each one of the things that they, they brought up that probably, I mean, they didn't really go into detail what their, what their th things were, nor have I got any feedback on, uh, what my proposed, uh, fixes to that are. Um, you know, um, you know, maybe we could carve it down just to the registration part of it. Uh, but you know, if we, you know, I guess moving to the next agenda item, we would simply just put this out in the air somewhere. I don't know, uh, I don't know what that would mean in terms of, uh, what the committee would do, but, uh, I mean, that's certainly up to the committee.

51. Unknown speaker1:26:53speaker not certain

    Let me ask you, Senator. Um, I think, you know, it is getting laid, uh, in the session. No bill's dead, but, you know, we're getting close. Um, the tax commission did point out several things that I felt like, you know, from a administration standpoint, were very difficult to manage. And so I feel like Senator Cullimore, um, motion is a, is a, I'm, I'm willing to support that motion. Um, I think coming back with a sub that deals with potentially the registration component, um, maybe getting some reporting from the counties, uh, if they're already tracking this data or information, maybe that would be valuable as well. Um, but a conversation with, uh, with UAC to figure out, you know, let's, let's see if we can figure out how to manage these things. Um, but I do think there's also some LLC registration privacy issues that are involved in this as well. Um, you know, somebody at the one that was most persuasive to me was the, the fact that, and I know this is the case, 'cause I think this is exactly what I would advise a client to do, which is I would just break up every project or every ownership group into 24 units and have an LLC that owned 24 units. And I would just, that's all I would do. I mean, that, that literally get around, you know, put a hole in it the size of, uh, that would really kind of, I think, ruin your process or your, your desired policy objective. And that one component alone, uh, I, I don't see a solution for it because, um, I'm not the best attorney in the world. Um, but I'm, I'm not too bad. Uh, I could find a way to, to get around just about, I think, just about anything dealing with that component, especially with how, uh, every owner identifies and how each ownership group identifies. Um, and so I'm, I'm not sure, just based on that one component alone, that it's possible to actually get to the bottom of your policy objective without asking for disclosure of every owner within an LLC group. And then trying to track which LLCs own which part of it, and then figure out how much is substantial ownership. Uh, I apologize, uh, that could get really messy. However, at the same time, on the corporate side of things, there aren't gonna be a lot of groups that own more than 25, you know, to, to that point. And so, uh, you know, trying to refine what that owner definition is, is I think, super important to make sure that we can accomplish your policy objective. So for that reason, I'm in the mode of trying to figure out what can we preserve to help you get to your policy objective. The registration piece might be helpful. Some of those things might be helpful, and I'm, I'm happy to help you look at those things. But for right now, I think I'd support the motion to move on to the next item on the agenda.

52. Committee chair1:29:57

    Anybody else? Okay. Um, why don't we have, uh, do you want a sum, Senator Johnson then?

53. Sen. John D. Johnson1:30:04

    Well, just in, in answering your thing, I mean, he did correctly identify that the original disclosure language was not administrable, but, uh, 'cause you cannot, I, I mean, you cannot aggregate ownership across multi-layer LLC structures without a reliable, unique identifier. Uh, this amendment would fix it that directly we would use the FI in identifier as the primary option, which is a, uh, which is a disclosure at the federal level that these, these large companies have to abide by. And so, yes, uh, you know, the intent never was to, uh, to attack, uh, you know, groups in Utah like the doctors or lawyers or something that have a, a small portfolio of houses. It's really to get at these large corporate, uh, ownership things. And, and, uh, so the fence in identifier would be the primary option because sophisticated inve investors already have one under the Federal Corporate Transparency Act, we are not creating a new burden. We are leveraging existing federal disclosure at the state level. For an investors without a fence in identifier, we require only the last four digits of a social security number or I 10 submitted through a secure non, uh, non-public portal. Not the full number, not a public record, a, a protected record under Title 60 3G. The 20% ownership threshold, uh, aligns with Vincent's own beneficial ownership standard is not arbitrary. It is the established, uh, federal benchmark for meaningful ownership interest. Passive minority investors below 20% who exercise no decision making authority are explicitly excluded. This bill targets controlling owners, not pa passive participants. So tho those are some methods that, that could be used to address your, your concern. But yeah, I agree. They can be worked with, it's just gonna take a little more time than we may have in the committee to try and finalize them. And this is not the kind of issue that I'm super comfortable, um, letting go without having that thing finalized.

54. Committee chair1:32:10

    So, uh, Senator Cullimore to sum, um, I'll waive. Okay. He'll waive All in favor of the motion to move on to the next item of the agenda, please say, aye. Aye. Any opposed? Passes unanimously. Thank you very much, Senator. Thank you, Senator. Oh, Senator Fillmore. Senator Fillmore, I didn't hear your vote. If you're online and would like to vote, he just dropped off and he just dropped off. Okay. So we'll count it. We won't count his vote. It'll be four to zero. Okay.