The 2018 Louisiana Legislative Session convened on March 4, 2018 and closed on June 24, 2018 with the adjournment of the Third Extraordinary Session. During the Regular Session and the Three Extraordinary Sessions, Governor John Bel Edwards signed more than seven hundred bills into law. While most of the focus this year was on the budget and other “big-ticket” items like the referendum on non-unanimous jury verdicts, there are several bills that may affect our clients and their businesses. What follows are some highlights of legislation that passed and will become law, as well as a pertinent piece of legislation vetoed by Governor Edwards.

Creation of Louisiana Small Business and Entrepreneurship Council

HB 591 – ACT 327 establishes the Louisiana Small Business and Entrepreneurship Council. The Council will identify pertinent issues to the operations of small businesses and advise both the Department of Economic Development and the governor on issues affecting the competitiveness of small businesses in Louisiana. The Council is also tasked with creating strategies to strengthen entrepreneurship in Louisiana. Every year, the Council will publish an annual report to the legislature setting forth the state of small businesses and entrepreneurship in Louisiana.

Upshot: The Council should help the Department of Economic Development, the governor, and the legislature identify strategies and incentives to support small business growth and entice entrepreneurs to start new businesses in the state.

Tax Sale Notice to Deceased Parties

SB 511 – ACT 574 amends Louisiana Revised Statute 47:2156 which sets forth the procedure for a tax sale purchaser to provide post-sale notice to “tax sale parties.” Under the Revised Statutes, tax sale parties include, among others, the tax debtor and anyone holding a mortgage, privilege, or encumbrance on the property. Act 574 provides that if a tax sale party is deceased, notice to the succession representative or curator, if applicable, is sufficient post-sale notice.

Upshot: This Act provides some clarity as to whom post-sale notice must be delivered if the tax sale party is deceased. But be careful! As with all tax sale issues, just because the Act is now law in Louisiana does not mean it complies with the U.S. Constitution’s right to due process. As of now, it is unclear if Act 574 satisfies federal due process requirements and tax sale purchasers should proceed with caution.

Prohibition on Electronic Surveillance in Short-Term Rentals

HB 634 – ACT 633 prohibits the installation and use of cameras in short-term rental units in bedrooms and bathrooms. An owner is still permitted to install and use cameras in common areas of a short-term rental but if he chooses to do so, he must clearly post written notice of such electronic surveillance. Violation of Act 633 entitles the aggrieved guest to a civil cause of action against the owner and recovery of actual damages, attorneys’ fees and costs, and punitive damages.

Upshot: Over the last year, too many Airbnb owners have been caught surreptitiously videotaping and recording their guests. Act 633 protects the privacy of short-term rental guests and codifies this common-sense principle.

Phase-In of Reassessed Ad Valorem Taxes on Homestead Exempt Properties

SB 164 – ACT 718 is a proposed constitutional amendment regarding ad valorem taxes on homestead exempt properties. Currently, the Louisiana Constitution states that property subject to ad valorem taxes be listed on the assessment rolls at its assessed value and that all property subject to taxation be reappraised and valued at intervals of no more than four years. The proposed amendment provides that in a reassessment year, if the assessed value of a property subject to a homestead exemption increases by greater than 50% of the amount of the property’s assessed value the previous year, the owner’s additional tax liability is phased-in over a four-year period and the property cannot be reassessed during those four years. As a result, owners of a homestead exempt property will not have to pay the increased tax liability every year.

For example, in the first year, the owner will pay the previous tax bill (the “base amount”) plus an additional ¼ of the amount of the increase in the assessed value; in the second year the owner will pay the base amount plus ½ of the amount of the increase in the assessed value; in the third year the owner will pay the base amount plus ¾ of the amount of the increase in the assessed value; and in the last year, the owner will pay the base amount plus the full amount of the increase in the assessed value. If the property is transferred during the phase-in period, the property will be assessed at its full assessed value. And, if the increase of more than 50% is due to improvements or construction on the property, then the phase-in will not apply.

Upshot: In neighborhoods where home values may be rising astronomically due to an influx of short-term rentals, the proposed amendment will protect actual homeowners by phasing-in the additional tax liability caused by a reassessment of greater than 50% percent. Those homeowners will invariably owe less in taxes due to this amendment. However, it is important to note that the phase-in would not apply in cases where the increase in reassessment is due to new improvements or construction on the property. The amendment will be submitted to voters at the statewide elections held on November 6, 2018.

Prohibition of Inclusionary Zoning Vetoed by Governor Edwards

SB 462, which passed both the House and Senate by wide margins, eliminated the ability of local municipalities and parishes to pursue “inclusionary zoning.” In its simplest terms, inclusionary zoning is a device that requires a certain percentage of new residential construction to be set-aside for low-income families. SB 462 would have prohibited local governments from forcing developers to set-aside a percentage of apartments or condominiums at below market rent in order for the developers to receive the necessary building permits to begin construction.

Governor Edwards vetoed the bill because he believed it could “jeopardize federal funding available to local governments for affordable housing programs.” However, Governor Edwards also noted that no local governments have enacted inclusionary zoning policies and that if no municipality or parish implements such legislation within the next year, he is willing to sign a similar bill in 2019.

Upshot: Nothing, for now. But expect to see newly elected Mayor LaToya Cantrell and the New Orleans City Council attempt to enact inclusionary zoning policies during the next year. Both Mayor Cantrell and the City Council have pressed for more affordable housing options in Orleans Parish, and Mayor Cantrell was an outspoken critic of SB 462. With Governor Edwards effectively providing a one-year deadline to enact inclusionary zoning legislation, Mayor Cantrell and the City Council will likely move this issue to the top of their legislative agenda in the second half of 2018.

Filed under: Commercial and Business Litigation, Commercial Real Estate, Industry News, Residential Real Estate
Archives >