SB395: Don’t Invest in Nevada Bill – Are YOU Supporting Our State’s Future?
Governor Joe Lombardo has been shaking things up in Nevada with a whopping 75 vetoes during the 82nd Legislative Session. Asserting his influence, this historic amount of veto power marks his pivotal role in shaping the state’s laws. Each veto carries significant implications for Nevadans, influencing daily lives and the broader economy.
This article aims to dissect the governor’s veto of Senate Bill 395 (SB395) transparently and with a non-partisan viewpoint, offering insights into the bill’s intent, the governor’s rationale for vetoing it, and the potential impacts on Nevada. If you care about the well-being of your home, its economy, and the people who live here, then you are in the right place.
Want to take your current place in the political process a bit further? Find out below!
But first, what is SB395, and why should you care?
Background on SB395
Senator Dina Neal introduced the bill intending to impose significant restrictions on corporate acquisitions of residential real estate in Nevada. If you’re alarmed by any words in this sentence, impose should take the cake perhaps the entire meal. The bill proposed capping the number of units that corporations and their affiliates could purchase in a single calendar year to a thousand (1,000) units.
It also aims to establish a registry within the Secretary of State’s Securities Division to track these transactions. But there’s more. The registry requires businesses to disclose ownership details on property deeds.
To grasp the essence of SB395, imagine a bustling neighborhood where families seek to buy homes. In this analogy, large corporations are akin to investors who might purchase multiple homes simultaneously. SB395 would limit how many homes these investors could buy within a year, intending to ensure that more homes are available for individual families while unintentionally dismissing potential business opportunities for the state and its residents.
Proponents argued that such a measure would level the playing field, making it easier for Nevadans to find homes without stiff competition from deep-pocketed corporate buyers. However, since its inception, the bill has been seen as a controversial approach to addressing house concerns, garnering naysayers from the Henderson Chamber of Commerce and the Nevada Home Builders Association. Both opposed the bill due to unattended impacts and fear of public freedoms being threatened by an unnecessary bill. Even Neal acknowledged in a Senate Judiciary bill hearing that there may be legal questions about the state’s authority to restrict the housing market in this way.
“The central public purpose of this bill is to allow families to purchase homes without having to bid against investors,” she told the committee. “The idea is to limit the amount of transactions that happen within a year, to free up property, so that individuals can actually go and purchase property. We currently know we are in a housing crisis.”
SB395 emerged in response to a trend in which private equity-backed entities and large corporations had bought thousands of homes across Nevada over recent years. Some perceived this surge in corporate acquisitions as contributing to rising housing costs and decreasing availability for residents looking to buy homes. But we’re now frantically grasping at straws rather than listening to residents about how to address the said crisis.
Governor Lomboard’s Stand: Protecting Nevada’s Economic Growth
Gov. Lombardo’s decision to veto SB395 rested on several key considerations. The governor describes the 1,000 properties limit as arbitrary in this veto message. He adds that’ll only worsen Nevada’s current struggles in ensuring residential availability.
“This bill would remove millions of dollars in commerce tax revenue from businesses engaged in the sale of real estate, detrimentally affect blue-collar trades by decreasing demand for new construction, and chill interest from Nevadan lessors during a period when renters are in desperate need of greater residential availability,” he wrote in his veto message.
Nevada’s commerce tax imposes annual taxes on businesses for the privilege of doing business in our great state. This business entity tax contributes to the Silver State’s general funds, helping to pay for education and government assistance programs. The limits suggested in SB395 would be a disinvestment in the future of our general fund.
The governor emphasized that while the bill’s intention to promote homeownership was commendable, new homeowners will be impacted by costs elsewhere as the general fund takes a hit. Lombardo’s argument includes the reality that strict limits on corporate acquisitions could in fact lead to less homes for those who want to achieve homeownership.
If you are in the construction trade, one of the biggest workforces in Nevada, you may not even be able to afford to buy the limited homes that would be available – and that you would be paid to help build – because SB395’s limits would deter new and outside interests.
Why would a company jump through all this red tape to build homes in a state that has a big red flag saying: “Hey, we don’t necessarily want you here, but we’ll take your money and your time if you abide by our extreme rules.” He also expressed concerns about the administrative burden of the proposed registry, which could increase costs for businesses and potentially discourage investment in the state.
Unpacking SB395: Threat or Solution to Nevada’s Housing Challenges?
The proposed limit may seem significant initially, but it becomes clear that it would have hurt Nevada’s reputation as a business-friendly state. According to the Nevada Housing Division’s 2012 report, the average apartment complex comprises around 200 units. Therefore, the restriction imposed by the proposal could have significantly hindered large entities from making significant investments in Nevada’s housing market.
If the legislature overrides Lombardo’s veto in 2025, the repercussions of SB395 will unquestionably impact the housing market, resulting in decreased demand and potentially lower property values. If there are fewer companies building homes, there will be less options for Nevadans to find the right financial pathway to homeownership.
Those that were lucky enough to purchase homes, before the increase in demand for homes drove up the prices, will then see all that luck suddenly vanish as the value of the property they worked so hard for declines. Due to reduced corporate investments, Nevada homeowners might need more home equity. Corporate investments in real estate play a vital role in stimulating job creation, including construction, property management, and maintenance, while contributing to increased tax revenue and community development.
Tracking and limiting the influence of corporate investors within Nevada’s already strained housing market is not only an ambitious proposal but one that requires leaving out the room for Nevada to continue to be seen as a place investors want to come to do business. Neal argued that states are entitled to enact such legislation because it is pertinent to a legitimate state purpose. The “Nevada Current” reported that she likened it to the state requiring construction companies to employ a workforce of at least 50% of Nevada residents.
But what role does the state play in stabilizing the housing market when said market is like any business model: staying afloat on demand and supply. By limiting the housing market’s natural ebb and flow, the state will unintentionally impact supply and demand. In an opposition letter, the Henderson Chamber of Commerce said that its registry would not necessarily lead to more in-state business but “materially affect economic development and freedom within the State of Nevada.” It would be “overreaching and burdensome.”
The Ripple Effect: How SB395 Could Shape Our State’s Future
Aiming to address housing affordability and encouraging home ownership is commendable, but at what costs? By limiting corporate investments, we are limiting Nevada’s economic growth. Restrictive measures like those proposed in SB395 might discourage investment altogether, leading to reduced housing supply, increased costs for homebuyers, and potential job losses in related industries such as construction. The veto underscored the delicate balance between regulatory measures to promote affordable housing and ensure a vibrant, business-friendly environment.
Governor Lombardo’s veto of SB395 reflects a careful evaluation of the bill’s potential impacts on Nevada’s housing market and economy. While sympathetic to the bill’s goals of promoting homeownership and curbing corporate influence, Lombardo concluded that there were more effective means of achieving these objectives than the proposed restrictions. Instead, he emphasized the importance of fostering a regulatory environment that encourages responsible investment while addressing housing affordability through measures that promote economic growth and expand housing supply.
Understanding the rationale behind Governor Lombardo’s vetoes, including his decision on SB395, is crucial for Nevadans interested in participating in the legislative process. It highlights the complexities of policymaking and the need for balanced approaches that consider both short-term goals and long-term economic sustainability. Moving forward, informed civic engagement and advocacy can play a critical role in shaping policies that reflect the interests and aspirations of Nevada’s diverse communities.
Let Your Voice Be Heard
As residents of Nevada, we have the opportunity and responsibility to stay informed, engage with our elected officials, and support policies that promote inclusive economic growth and housing affordability. You can do your part by stopping by Nevada Policy’s Action Center and voicing your concerns to elected officials. Doing so contributes to a vibrant and resilient future for the Silver State, where opportunity and prosperity are accessible to all.
