Assembly considers real estate transfer fee

MAT-SU -- The Mat-Su Borough Assembly is preparing to consider several additional sources of revenue to offset raising property taxes within the borough, but one proposal may go into effect by July.

The real estate transfer fee will be considered by the Mat-Su Borough Assembly at a special public hearing set for 1 p.m. tomorrow. Following the public hearing, the assembly will continue budget deliberations, with a goal of adopting the budget.

If put into effect, the real estate transfer fee may be a first for Alaska. Mat-Su Borough Manager John Duffy said the fee has been used in other areas, such as in Wisconsin and in Aspen, Colo. The fee would go into effect when property is bought or sold in the Mat-Su, an action that Duffy said takes place about 6,000 times a year here.

For people buying a residential home, the fee would be $200. Those purchasing five acres or less of property would be charged $100, and fees for both tracts of land larger than five acres and homes designed to house more than one family increase depending on the acreage or number of units included, with a commercial piece of property ringing in at $1,500.

Duffy said the fee was put forward for consideration because the transfer of property, in addition to the growth of the community, has a direct affect on the need for services within the borough.

"This was an attempt to address growth," Duffy said. "We had between 2,100 and 2,300 new structures last year … we're seeking to diversify our revenue source and try to reduce the impact on property owners."

Duffy said the fee may require slight changes to the borough's existing account setup, but he said he believes it can be incorporated without additional infrastructure or employees. He said if it's approved by the assembly, borough staff will try to have the process incorporated into the closing process already a part of real estate transfers.

The fee, Duffy said, is an attempt to reduce the annual property tax burden on property owners, and he estimated it may generate up to $1 million over the next fiscal year, if enacted at Wednesday's meeting.

"For the vast majority of property owners … they may have to pay the fee four times in a lifetime," Duffy said, "whereas property tax is an annual event."

Contact Rindi White at rindi.white@frontiersman.com.