Real estate transfer fee passes

MAT-SU -- Selling, buying or transferring ownership of property in the Mat-Su will be a little more expensive, with the Mat-Su Borough Assembly's adoption of a real estate transfer fee Wednesday afternoon.

The ordinance, sponsored by assembly members Bill Allen, Jim Colver, Mary Kvalheim and Betty Vehrs, passed with their support, but was opposed by assembly members Bruce Bush, Talis Colberg or Jody Simpson. Nearly 40 area residents who attended the Wednesday afternoon public hearing, many Valley realtors, also opposed it. Some challenged the borough to call the ordinance what they felt it was -- a tax -- while others said the claim it would reduce the tax burden on property owners was inaccurate.

"The borough set forth with a task to diversify the tax base, but the tax base is basically the landowner," Red Secoy, a broker with Roger's Real Estate told the assembly. "This is still putting the burden on the same group of people."

Darcie Salmon, a real estate broker and former borough mayor, said the borough was setting itself up to double-dip, as some real estate is transferred several times in succession. If an owner of a large tract of land sells that property to a builder, Salmon said, the borough would get a fee. If that builder subdivides the land, builds new homes and sells lots to individual landowners, the transfer fee is collected once again.

Mary Vincent, also a real estate broker, said the transfer fee would affect many property title transfers that currently involve little in the way of monetary exchanges. When couples marry, for example, if they decide to have joint ownership of a property, the property will fall under the borough requirements for transfer of property.

Wallace Reely, a retired government employee, said he plans to eventually give the 95 acres remaining of the homestead his family has held for three generations to his children. Such a transaction, he said, would normally have no cost.

"This fee, if it comes about in any way, should exempt no-money transactions," Reely said.

The ordinance, as explained by the informational memorandum accompanying it at the public hearing, is geared to offset the cost to the borough of real estate transactions.

"Because many of the services and support functions associated with real property transfers can be identified, it may be appropriate to institute a fee system whereby the users of these services help to directly fund the cost of the services," the memo states.

But some who testified suggested those users were already paying fees elsewhere to the borough.

"The only cost not covered by some other fee, some other place, is to change the name of the person on the property," said Kevin Sorensen, also a real estate broker. "The whole notion that, if you go by the theory behind all this, it costs $1 million to change a name … but it's a minimal cost to institute [the fee] is preposterous -- I don't believe it."

Several who spoke suggested instituting taxes in other areas -- foregoing the coal-bed methane ordinance and taxing coal-bed methane developers, placing taxes on junk vehicles, taxing the removal and transport of gravel and taxing residents who, one testifier said, "propagate like rabbits," knowing the borough will take care of them, and who refuse to pay their share.

Others suggested that, instead of adding a new fee to generate revenue for a growing education budget, the assembly should simply refuse to fully fund the school district's requested budget.

"Look at the school budget … the state has fully funded [schools]," said Pia Cottini, who then pointed out the additional $2.7 million the school district requested above what the maximum amount suggested by the borough manager. "Do we have to give it to them? Don't you have to say 'no' once in a while?"

When the assembly began deliberations on the transfer fee, there was little doubt where each assembly member stood. The three members who were not sponsors of the amendment spoke early in the discussion, outlining why they opposed the new fee.

"It all does go back to the property owners," Colberg said. "It doesn't diversify."

"It is a tax -- right on the property owner," Bush said, adding that he believed the tax may slow the rate of property transfer, and thereby the rate of growth in the Valley because of the tax.

Simpson raised several questions along the way about the fee, and the particulars of implementing it, but said she couldn't support it because it was not what her constituents wanted. And, she said, she didn't think the ordinance was finished.

"I believe it's flawed, incomplete and poorly conceived," Simpson said after a failed effort by Bruce Bush to postpone the ordinance while borough staff worked out details of implementation, some of which were not yet finished when the assembly heard the ordinance.

Through their discussion, assembly members agreed to make a few changes to the ordinance -- Kvalheim proposed an amendment that put in place a ranking system for the transfer of commercial property. Under the original ordinance, the transfer of commercial property all cost $1,500. Under Kvalheim's structure, the fee varies according to building size, with buildings over 10,000 square feet ringing in at the $1,500 limit.

Colver put forward an amendment to allow people seeking to clear a clouded title to do so without paying the transfer fee. Colberg put forward an amendment that would prohibit borough staff from requiring the sales price of the property -- information that has, in the past, been provided only voluntarily by buyers.

In discussing the main motion, Colver addressed his comments to those gathered in the borough assembly chambers. He said he believed the ordinance protected those who live on fixed incomes and can't afford yearly hikes in property tax.

Allen said he saw the ordinance as a way the assembly, in what several assembly members have said is a tough year for the budget, could fund education. Allen, along with several other assembly members later in the meeting, said he looks forward to the day when other revenues are brought forward, so the assembly can repeal this ordinance and stop the real estate transfer fee.

Borough Mayor Tim Anderson asked Borough Manager John Duffy to bring forward two additional tax proposals -- a 1-percent sales tax and a gravel severance tax -- that the assembly could consider placing on the October borough election ballot.

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