Valley real estate fee may go flat

MAT-SU -- After hearing objections from real-estate agents and others, Mat-Su Borough Assembly members will once again tackle the recently passed real-estate transfer fee.

Several real-estate agents spoke July 20 and at previous public meetings in opposition to the Mat-Su Borough Assembly's real-estate transfer fee. On July 20, assembly members agreed to consider instituting a flat fee for real- estate transactions, rather than a fee based on the type and size of the property being sold or exchanged.

According to the ordinance passed May 28, which went into effect July 1, five acres of vacant land required a fee of $100, while a transaction of more than 100 acres required a fee of $1,000.

Similarly, the transaction of a single-family residential unit would bring a fee of $200, while a five- or six-plex would require a fee of $525, and the transfer of a piece of commercial property 3,000 square feet or less would require a fee of $500 and one with more than 10,000 square feet would require a fee of $1,500.

The discussion arose as the assembly considered a proposed fee schedule and set up how the fees would be determined and collected. Mat-Su Borough Assessor Allen Black told the assembly title companies had said they weren't interested in filling out the paperwork and collecting the fees on each transaction, for $10 per transaction, as proposed by the borough.

"They made it clear they have no desire to participate," Black said. When asked whether the borough could compel the companies to participate, Black said it could not.

Assembly Member Jody Simpson said she was surprised that the real-estate community could not be required to collect the fee, and asked how having the fee collected by borough staff would change the estimated cost of instituting the ordinance.

Mat-Su Borough Finance Director Tammy Clayton said it would change the collection cost very little, because borough staff had already incorporated a half-time position into the fiscal estimate for the fee.

Assembly Member Bruce Bush asked Clayton why the fee was higher when someone was selling or transferring 100 acres than when the transaction involved the sale or transfer of five acres.

Clayton said in reviewing the paperwork involved, transferring the larger pieces of property was, in some cases, more paperwork-intense. Bush asked whether it would be easier to implement a one-time, flat fee for all real-estate transactions, rather than having to determine which transaction category a particular piece of property fell under.

"It would be easier to do one fee," Clayton said.

She said members of the real-estate community have asked Mat-Su Borough Manager John Duffy to institute such a fee instead, and she estimated that $170 would be the appropriate amount for a flat fee.

Clayton said a flat fee would not significantly change the amount of money collected. She estimated a flat fee would bring in $980,000, while a categorized fee structure would bring in about $988,000. Both amounts, Clayton said, would vary with the number of real-estate transactions taking place each year.

Real-estate agent and former Mat-Su Borough Mayor Darcie Salmon reiterated a request several real-estate agents have made, that the borough place the collection of the transfer fee on hold until borough voters have a chance to consider two other potential revenue generators -- a natural-resources severance tax or a one-percent boroughwide sales tax.

Those two ordinances have not yet been approved for the October ballot. The assembly will discuss the proposed one-percent sales tax at a special 6 p.m. public hearing today, and the proposed severance tax will be discussed at the regularly scheduled Aug. 3 assembly meeting.

While assembly members did not discuss placing the fee on hold until after the October election, several did indicate support for the flat fee. A motion to bring the ordinance back, with a proposal to eliminate the fee categories and institute a $170 flat fee at the assembly's Aug. 3 regular meeting passed unanimously.

Duffy said while the Mat-Su Borough currently has the ability to collect the real-estate transfer fee, the borough has not yet started to collect the fee and he doesn't plan to begin doing so until clear regulations are in place.

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