Lawmakers cue up business legislation

They may be overshadowed by state budget woes, but many of the bills introduced in the General Assembly this year aim to help businesses and consumers.  Some would further limit payday and car-title lending. Others would give tax credits to homebuyers. One would ban plastic bags. n Here’s a wrap-up of some of the business-relate bills awaiting state legislators this week in Richmond .

Consumer lending

After debating ways to limit payday-lending abuses last year, legislators again may wrestle with the topic. The General Assembly voted during its 2008 session to limit the number of these short-term, high-interest loans a borrower could have at one time. Legislators also required that lenders use an online database to verify whether an applicant is eligible for a new loan.

This year legislators may examine credit-card-like loans that payday lenders have begun offering in the state. One major lender, Advance America, offers open-ended loans for as much as $750. Unlike small, fixed-term consumer loans, open-ended credit products aren’t regulated by the State Corporation Commission and its Bureau of Financial Institutions.

Advance America began offering open-ended loans in Virginia late last year to broaden the options available to its borrowers, said Jamie Fulmer , a spokesman for the Spartanburg, S.C.-based chain. For customers who allow their loan repayments to be debited from a bank account, the annual percentage rate is 365 percent, he said. For other borrowers, the rate is 456 percent.

Consumer advocacy groups contend that payday lenders have resorted to open-ended lines of credit to skirt the tougher rules that recently took effect for payday loans. Del. Glenn Oder, R-Newport News, has proposed barring payday lenders from offering open-ended lines of credit.

Fulmer said he had not yet seen Oder’s bill, HB1709 , but Advance America will oppose efforts to curb access to the products that it offers.

Car-title lenders already make open-ended loans to cash-strapped borrowers willing to put up the title of their vehicle as collateral. The loans, for a fraction of a car’s value, carry annual percentage rates exceeding 300 percent.

Consumer advocacy groups, including the Virginia Interfaith Center for Public Policy, said they are working with Sen. Mark Herring, D-Leesburg, on a bill to regulate car-title lenders. In some instances, title lending has been more harmful to consumers than payday lending because a loan default – and loss of a vehicle – hampered the borrower’s ability to get to work or perform crucial family tasks, said LaTonya Reed, an analyst with the Interfaith Center.

Efforts to reduce the interest rates that payday lenders and car-title lenders charge have gained support within the business community. Companies with employees who have been trapped by cycles of high interest payments have complained to the Hampton Roads Chamber of Commerce, said Ira Agri­cola , the chamber’s senior vice president for governmental affairs. In response, the chamber has advocated putting payday and car-title lending under Virginia’s Consumer Finance Act, which caps the annual percentage rate at 36 percent for fixed-term loans of $2,500 or less.

– Tom Shean

Mortgage lending

When concerns about residential-lending debacles hit the General Assembly last year, legislators approved more stringent standards for mortgage lenders and brokers, including requirements for background checks and education.

Consumer groups argue that those aren’t enough. Housing Opportunities Made Equal of Virginia Inc., a housing advocacy organization based in Richmond, has endorsed a bill, SB157 , that would require state-regulated mortgage brokers to work in the best interest of borrowers.

Establishing a broker’s fiduciary duty to the borrower is essential because mortgage brokers bore disproportionate responsibility for making subprime loans to people who could have qualified for less-costly prime mortgages, said Helen O’Beirne , director of the organization’s Center for Housing Leadership. The bill is sponsored by Sen. Donald McEachin, D-Richmond.

The Virginia Association of Mortgage Brokers doesn’t think the proposed requirement for a fiduciary obligation is needed, said Steve Baugher , its executive director. However, the association has been talking with Housing Opportunities Made Equal about a bill that would define a mortgage broker’s responsibilities to a borrower, he said.

“We’re still working on the language,” Baugher said. “We’re close, but we’re not there yet.”

A bill sponsored by Del. Robert Tata of Virginia Beach would provide borrowers facing foreclosure greater access to information on ways to prevent losing their home. HB1688 would require mortgage lenders to send written notices of programs or options that the mortgage holder provides. The bill also would provide borrowers a new right to address their defaults and bring their loans current.

– Tom Shean

Real estate

Two bills seek to stimulate Virginia’s economy by offering tax breaks for homebuyers.

SB906 , sponsored by Sen. Walter Stosch, R-Henrico County, would make a $5,000 tax credit available to a married couple buying a home within the next two years. The credit for a homebuyer who is single would be $2,500. HB1721 , sponsored by Del. Christopher Peace, R-Mechanicsville, would make a $2,500 tax credit available to married couples who are first-time homebuyers. An individual homebuyer would be eligible for a $1,250 credit.

The mix of bills involving real estate includes a proposal to change the way taxes for recording deeds are calculated on real estate transfers. HB1394 , sponsored by Del. Jackson Miller, R-Manassas, would require the taxes to be based solely on the stated amount paid for property, even if the amount is less than the value of the real estate sold. That would reduce the amount of local revenue available from the tax, the Department of Taxation said in an impact statement.

Under the current law, a circuit court clerk bases the recordation tax on the greater of the amount paid for the property or its actual value.

Efforts to limit the use of eminent domain by writing restrictions into Virginia’s constitution are back. SJ290 is sponsored by state Sen. Mark Obenshain, R-Harrisonburg. While the Hampton Roads Chamber of Commerce endorses limits on use of eminent domain, the chamber figures that can by accomplished by statutes rather than constitutional measures, chamber official Ira Agricola said.

– Tom Shean

Sales tax and retailers

Virginia’s struggling merchants took up arms after Gov. Timothy M. Kaine proposed in his 2009 budget to do away with the so-called “dealer discount,” which returns a portion of the state sales tax to retailers.

The “dealer discount” compensates retailers for the time and expense of collecting, accounting for and remitting the sales tax. Kaine has said Virginia now needs the $64.3 million that goes back to merchants more than they do.

The average dealer discount is $449 per year. About 122,000 small merchants, who are the bulk of the Virginia businesses receiving the discount, earn $62,500 or less per month in sales and get an average of $85 back from the state.

“It’s a small amount of money. It’s more the principle,” said Margaret Ballard, vice president of advocacy for Retail Alliance, the Hampton Roads merchants association, and its legislative lobby arm, the Virginia Retail Federation.

Larger retailers, with monthly sales of more than $208,000, receive an average discount of $5,833.

“They need some support from the state,” she said. “They’re not getting bailouts or bridge loans from anybody.”

Retailers hope to persuade the appropriations committees in both houses of the General Assembly to amend the governor’s budget to keep the dealer discount, Ballard said. As an alternative, retail groups are proposing that the state pursue other avenues for boosting sales-tax revenue, such as collection from out-of-state retailers that deliver goods to Virginia but don’t charge the state sales tax.

– Carolyn Shapiro

Medical malpractice

A year after the General Assembly raised the ceiling on medical malpractice settlements to $2 million, a bill would boost the ceiling to $2.75 million and install a formula for future annual increases. SB843 is sponsored by Sen. Henry Marsh III, D-Richmond.

The Medical Society of Virginia opposes the bill, in part, to allow time to determine how the existing cap is working, said Keith Hare , the organization’s director of government affairs. The $2 million ceiling took effect July 1. The society, Hare said, has met with many state legislators to express its concern and formed a coalition with other organizations of health professionals to oppose the bill.

For the Virginia Association of Trial Lawyers, raising the ceiling on malpractice settlements is one that “we care a great deal about,” said Jack Harris, its executive director.

– Tom Shean

Lottery

Public officials in a handful of states, including California and Illinois, have been pushing to sell or lease their states’ lotteries. In Virginia, Del. David Poisson, D-Loudoun County, is back this year with another bill to privatize the lottery after an effort in last year’s session went nowhere. HB1686 would require Virginia’s State Lottery Board to complete a privatization study by Dec. 1 and to privatize the lottery’s administration by July 1, 2011.

– Tom Shean

Plastic bags

Many consumers are thinking twice about using plastic bags. Retailers including the Farm Fresh supermarket chain and discount giant Wal-Mart now sell reusable bags for a buck so customers can cut down on disposables if they choose.

Sen. Patricia Ticer, D-Alexandria, wants to take the matter out of consumers’ hands, proposing to ban retailers’ use of plastic bags statewide. SB873, would allow for plastic bags made for reuse or from more durable materials.

The plastic-bag issue emerged in late 2007 when an Isle of Wight County official proposed banning plastic bags there to protect cotton farmers who had seen tossed-aside sacks damage machinery and ruin finished cotton. The General Assembly didn’t give the county permission, as state law requires, to implement a ban.

Retailers oppose a statewide ban, said Retail Alliance’s Margaret Ballard. Instead, they have recommended that the state increase public education about plastic bag use, alternatives to it and recycling programs.

– Carolyn Shapiro

The port

Port activity could yield extra funding for transportation projects in Hampton Roads under a bill proposed by Del. Glenn Oder, R-Newport News. HB1579 establishes an equation by which an increase in the number of cargo containers moving through the port could result in as much as $300 million per fiscal year being set aside for local transportation infrastructure.

“Port-related activities all affect our transportation network,” Oder said. “It would only make sense that if these areas continue to grow that some of the revenue from that growth would flow to improving the roads.”

The bill could be beneficial when cargo volumes recover from the current downturn, said Joe Harris, a Virginia Port Authority spokesman.

“What it does is it reinvests in the communities where the terminals are to improve that local transportation infrastructure,” Harris said. “You can be great inside the fence, but once your cargo leaves the gate, it’s got to have road and rail and stuff like that to get to where it’s going.”

It will be almost a year before the joint legislative subcommittee studying whether to privatize the state’s port facilities makes its report.

The subcommittee’s chairman, Del. Harry R. “Bob” Purkey, R-Virginia Beach, has filed a bill to ensure the port would not be able to change ownership without approval by both the governor and the General Assembly. However, HB1739 maintains that the Virginia Port Authority may lease facilities to another entity and issue revenue bonds without legislative permission.

“I hope the ports are never sold,” Purkey said. “I hope ownership is retained by the state of Virginia forever because, frankly, I think it’s one of the most valuable assets the state has.”

– Kathy Adams

Railroads

Sen. Louise Lucas, D-Portsmouth, has filed a bill establishing standards for mobile “camp cars” used by railroads to house traveling track maintenance workers. SB807 would mandate that the cars provide ample space, clean water and restrooms, heat and air conditioning, and other amenities. It also would require railroads to allow local health and union officials to inspect the cars.

Norfolk-based Norfolk Southern Corp., the only major U.S. railroad that still uses camp cars, opposes the bill, spokesman Robin Chapman said in an e-mail.

“The reason is that we believe regulations concerning such matters should be consistent nationwide,” he said, adding that the Rail Safety Improvement Act of 2008, which Congress passed in October, also addressed camp cars.

The International Brotherhood of Teamsters, which represents some rail workers, would prefer to eliminate the camp cars altogether, but its efforts have failed so far, said Greg Marston, state legislative director for the track workers division of the union. He called Lucas’ bill a step in the right direction.

Rail workers “deserve a little bit better place to stay when they’re forced to work away from home,” Marston said. “Some of the guys are opposed to staying in the camp cars. Some wouldn’t mind it as bad if they would take a little better care of them and improve the living conditions a little.”

A new state agency would oversee rail projects, planning and financing under SB864, filed by Sen. John Edwards, D-

Roanoke. The Rail Transportation Development Authority would replace the Department of Rail and Public Transportation’s Rail Advisory Board.

Another Edwards bill, SB863 , would establish the TransDominion Express Commission to study improving passenger rail in the western half of the state.

– Kathy Adams

Employment law

Some unemployed people would no longer face reductions in benefits if they held part-time jobs under SB917 , proposed by Sen. W. Roscoe Reynolds, D-Martinsville.

“If a person had a part-time job and a full-time job and they lost the full-time job, I think it’s unfair to reduce their benefits,” Reynolds said.

The policy also harms employers, he said, by reducing the pool of part-time workers.

The Hampton Roads Chamber of Commerce, opposes the bill, said the chamber’s Ira Agricola, arguing that businesses would pay more for unemployment insurance.

“If someone has a part-time job, that’s great, but it should be counted as wages and not taken out of the equation,” Agricola said.

Another bill, HJ640 , from Del. Christopher Saxman, R-Staunton, seeks to enshrine Virginia’s right-to-work code, which guarantees that workers may not be forced to join a union, in the state constitution.

“It’s incumbent upon us to protect the next generation of workers and companies from overturning one of the most important pieces of public policy that ensure our economic growth in the commonwealth,” Saxman said.

A House bill defeated last year would have removed prohibitions against government employees engaging in collective bargaining, he said.

“Given that the most recent assaults on that statute have occurred here in the legislature, I think it’s appropriate to protect that in our constitution,” Saxman said.

– Philip Walzer

Telephone rates

Two years ago, Verizon Communications Inc., the state’s largest local-telephone company, asked Virginia regulators to cease oversight of its land-line phone rates. The company argued that adequate competition has developed from cable, wireless and voice-over-Internet-protocol companies to effectively regulate prices without government involvement.

In late 2007, the State Corporation Commission granted that certain parts of the state – including metropolitan areas such as Hampton Roads – had enough phone-service alternatives to allow price deregulation for residential and small-business customers. However, it ruled that competition had not developed to the point that it could remove rate controls statewide.

Verizon and state regulators disagree on whether wireless phone carriers should be considered in assessing whether competition is effectively controlling prices, said Robert W. Woltz Jr., president of Verizon Virginia, the company’s operating arm for most of the state.

Verizon is now pushing legislation , sponsored by Del. Samuel A. Nixon Jr., R-Richmond, that specifies wireless service as an acceptable competitor to land-line phone service in determining whether regulation is needed, Woltz said.

The bill also would direct the State Corporation Commission to declare that the company’s entire service territory is competitive enough to remove price controls once regulators determine that 75 percent of households in that territory have enough alternatives for phone service. Verizon is close to that 75 percent threshold, Woltz said.

Under the commission’s previous ruling, most of Verizon’s customers already are subject to deregulated prices. Regulators put a cap on Verizon’s price increases, allowing it to increase monthly rates on basic land-line service by no more than $1 a year for five years. That same cap would apply in the rest of Verizon’s territory if the proposal is passed and the company meets the 75 percent minimum.

– Carolyn Shapiro