Real-estate tax battle looms
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Voters could decide fate of so-called 'Robin Hood-style' tax
10/9/2007 -
Voters would get to decide whether to impose a tax on high-end real-estate sales under a proposal on today's Santa Fe City Council agenda.At least one councilor has changed his stance since a 4-3 vote last month stalled efforts to put the question on next spring's municipal-election ballot.
Councilor Miguel Chavez last month voted against holding hearings that could move the tax proposal to the ballot. But he said Tuesday that he now supports the idea because new ordinance language provides that some of the revenue could help pay property taxes on homes acquired through the city's affordable-housing program.
Representatives of the area's sizable real-estate business community, however, are fighting what some proponents see as a Robin Hood-style tax — one they say would take from the rich to benefit people shut out of Santa Fe's expensive housing market.
A series of full-page advertisements in local newspapers this week decry what opponents call "the home tax," contending it would further drive up the cost of all housing — even though the tax would be levied only on sales of homes priced at $500,000 or more.
The ads carry the phone number of the Santa Fe Association of Realtors, although the sponsorship is identified in the ads as a new group called Santa Fe Housing Opportunity Partnership.
Denise Keron, chief executive officer of the Realtors association, said the ad hoc group is made up of statewide real-estate groups and private property owners as well as the Santa Fe Chamber of Commerce.
The group is willing to take the fight as far as the City Council does, she said Tuesday.
"The cost gets passed on to individuals, and it will arbitrarily raise every home price in the city," she said. "If this happens in the city, it will go to the county, and it will happen all over the state."
The transfer fee is an excise tax, which state statutes allow cities to impose with voter approval, according to City Attorney Frank Katz.
The proposal exempts the first $500,000 of the sale price of a home, then applies a one percent fee to any amount paid over that threshold. So a home that sells for $600,000, for example, would be assessed a $1,000 fee.
Based on previous years' homes sales, revenue from such a tax would top $3 million annually, according to city estimates. The cash could be used for a variety of affordable-housing purposes including land acquisition, construction and operation.
Councilor Karen Heldmeyer, a sponsor of the resolution to get the tax on the ballot, said Keron's statement is erroneous as are the newspaper ads and related Web site.
Heldmeyer, a child psychologist, said, "A small increment added to the cost of a house that's already over $500,000 is not going to be what we call in psychology a 'just-noticeable' difference, especially given all the other costs that we associate with a house of that value."
Councilors on the city Public Works Committee discussed the measure Tuesday and voted against recommending approval, but tonight's full City Council agenda calls for a vote on whether to hold a public hearing later this month on the issue.
Councilors Matthew Ortiz, Carmichael Dominguez and Ron Trujillo said Tuesday that they don't like the idea of putting the transfer tax on the upcoming March 2008 municipal ballot because it would interfere with another proposal in which voters would decide the fate of a bond issue to fund park improvements. Dominguez and Trujillo also said they wanted to see a higher threshold for the tax so it would not affect middle-income homeowners in the future.
An anti-tax ad published Tuesday raised more than a few eyebrows because it depicted a woman in emergency-response bunker gear below the words "If I can't afford to live in Santa Fe, I can't protect you in Santa Fe."
City Fire Chief Chris Rivera said he received about 10 calls from people who wrongly assumed the Fire Department was involved in the political fight because of the ad. He said the statements and picture are an inappropriate use of his department's image.
"It made it look like it was a firefighter in the city," said Rivera, "And that person, that equipment, nothing about that ad was the Santa Fe Fire Department."
City Clerk Yolanda Vigil said the governing body has until at least Nov. 14 to make a final decision about what questions will be on the ballot. Also scheduled for the March election are changes to the city charter, four City Council positions and the municipal judgeship.
Vigil said state law requires ballot language for the March election to be approved by the governing body by Dec. 11 at the latest. However, she is not encouraging the council to wait that long because a delay could affect an already-approved timeline for election candidates, she said.
Councilor Chavez said he originally believed the transfer tax would have an adverse impact on the price of all housing, although he did not have information that proves or disproves that idea.
"I am looking at the other benefits," he said. "It seems like if there are these other benefits, and we can be specific in what we can use this money for. I am saying the plusses will outweigh the unknown."
If no other councilors change their positions, Mayor David Coss could be forced to cast a tie-breaking vote. Coss said Tuesday that he did not expect to be asked to make that decision, however, because Councilor Rebecca Wurzburger wasn't planning to attend today's meeting.
"If four city councilors want to have a public hearing, we should have a public hearing," said Coss. "That does not mean I would vote to put it on the ballot."
Councilor Patti Bushee, who as Public Works Committee chairwoman didn't participate in Tuesday's 3-1 committee vote, said she didn't think the measure would pass muster with voters due to the mixed message from councilors. Councilor Chris Calvert, a co-sponsor of the measure, cast the dissenting vote Tuesday.
Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.
Correction: The proposed real-estate transfer tax would be assessed on that portion of a home's sale price that is above $500,000. A previous version of this story included incorrect information on the calculation.