Realtors sue over 'Robin Hood' fee

Lawsuit aims to kill transfer tax before special election

Julie Ann Grimm | The New Mexican

7/24/2008 - 7/25/08

A local real-estate industry group launched another attack Thursday against efforts by city leaders to tax high-end home sales.

A state District Court lawsuit filed on behalf of the Santa Fe Association of Realtors and three property owners aims to thwart the tax before voters have a chance to weigh it in a special election scheduled for March.

The City Council decided last month to put the proposal to a vote, asking for permission to levy a 1 percent fee the portion of a home sale that exceeds $750,000. For an $800,000 home, for example, the fee would be $500. If a majority of voters approve, the proceeds from the tax would help create housing for people who work in the city, and the city would be the first in the state to enact such a measure.

But Attorney Karl Sommer argues in the court complaint that the tax is not authorized under state law because the conveyance of property is neither a product or service, the only two reasons named in the state statutes that allow such a tax.

The Realtors association, which has helped pay for thousands of dollars in radio and newspaper ads to fight the tax, announced the lawsuit at the close of business Thursday.

"The recently adopted real-estate transfer tax on residential property not only violates the prohibitions under New Mexico State Law, it unfairly and inequitably foists the financial costs of creating work-force housing and affordable housing upon land owners," reads a statement it issued at 5 p.m.

The other plaintiffs in the case are Roman Salazar, Charles Schiffer and Theodore and Eleanor Wadell, all identified in the complaint as owning property worth more than $750,000. Eleanor Wadell said Thursday that she did not wish to comment on the case, and neither her husband nor Salazar or Schiffer returned phone messages. A phone number listed for Schiffer rings at the office of Garcia Street Group, a real-estate and development company of which he is the principal. Salazar's phone listing is at an address on Canyon Road.

Mayor David Coss said he was not surprised the case came largely from Realtors. "They have never really supported any move the city has made toward keeping housing affordable and working on that issue, and they still don't," he said.

Reached at home late Thursday, City Attorney Frank Katz said he could not comment because he had not read the documents yet.

The lawsuit is the third legal challenge to a major city policy to be filed in recent months by similar interests. In February, a group of developers filed an action in federal court that protests an affordable housing program that requires 30 percent of all new housing be sold at certain prices. Later, the Santa Fe Association of Homebuilders added its name to the complaint.

In March, a group of property managers and out-of-town owners of Santa Fe vacation rentals sued over rules the city put in place to regulate the pervasive short-term rental industry.

Asked if this represents a particularly litigious time for the city, Katz responded:

"I have the sense that when the city actually does something to solve problems it inevitably upsets someone and affordable housing is a good example of that. Someone is going to get upset and when you get upset, what do you do?"

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.