Sides begin to form in transfer-tax debate
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Friends of Capitalism might join fight against proposed rule
7/25/2008 - 7/26/08
The city of Santa Fe is facing a legal challenge about its proposed real-estate transfer tax. Questions remained Friday, however, about who is lining up with the opposition.
The Santa Fe Association of Realtors hired attorneys Karl Sommer and Jan Ahern to file a state District Court complaint on its behalf this week. The complaint attempts to stop the March election on the proposed tax.
Meanwhile, one of the four people listed on the complaint said his name appeared there by mistake. Roman Salazar, Sommer's uncle, said Friday that he talked with Sommer about the potential case, but never agreed to be a part of it. Sommer said Friday that there was a misunderstanding.
"It was a mistake," said Salazar, 72. "My role in Santa Fe is that I have always been an advocate for affordable housing and for the poor, and my best friends work at City Hall."
Salazar said he's in favor of the proposed tax.
"I am OK with it, as long as it helps people; that is what it is all about," he said. "My whole family lives on Canyon Road. It's not because we can afford it. It's because we inherited it."
Three others listed on the lawsuit and identified as people who own homes worth more than $750,000, Theodore and Eleanor Waddell and Charles Schiffer, did not return phone calls seeking comment.
The city decided last month to seek voter approval of a fee on high-end home sales. The tax would only kick in when a home sells for more than $750,000 and would be calculated as 1 percent of any price over that threshold. For example, an $800,000 sale would result in a $500 fee.
The Realtors Association, along with its state counterpart, has been vocal against the effort since it first popped up among the city governing body during the most recent go-round. Last year, the groups lobbied the Legislature in attempt to thwart it.
Realtor Karen Walker is also upset her trade association is painting brokers with a broad brush. She noted the Santa Fe Realtors Association board of directors acted without notifying members.
"This little cadre of people makes all these decisions, which I think is unfair to us because we are duespayers, but is also misleading to the public because they think that all brokers agree with what our board says, and that is not necessarily the case," she said.
Walker said she believed the proposed tax was "modest enough" that it would not imbalance the market. She questioned, however, what she said was a trend toward the city's requiring property owners to inequitably foot the bill for certain programs. She cited two recent property tax increases, one to pay for a bond for parks and one to increase funding for public safety.
The transfer tax proposal has been floating around for the better part of the last decade. Sommer's argument against it is based on the premise that the state law only allows cities to impose taxes that are on a product or service. He also argues the city can't preclude the county clerk from recording a deed without proof the tax has been paid, a provision of the proposed rule.
Another group that might lend a hand in the fight against the rule is not made up of Realtors. The citizen's advocacy group called Friends of Capitalism has taken a stand on the issue.
"We are a citizens' alliance formed to support free markets, limited government, low taxes and private property," said Josh Gonze, a financial consultant who formed the group in January." We support capitalism because it's ethically right — it's not only the only workable practical (way) to run a city; it's fair and just."
The group is considering formally organizing as a legal entity so it can write amicus briefs, arguments that weigh in on cases as "friends of the court."
Although Eldorado homeowner Paul Hibbert wouldn't be able to vote in the city election, he said he's part of the capitalist's group because he doesn't like to see the local government lean toward socialism or require some to pay the way for others. "I just see these incursions into legitimate areas that are unjustified, and it's just creeping socialism," he said.
If a judge grants the Realtors' request, the matter might not get before voters as planned in the spring. A poll conducted by the city last year indicated a similar proposal that applied to homes sold for $500,000 would meet narrow approval. The poll found 52 percent of Santa Fe voters surveyed said they either strongly supported or somewhat supported such an effort.
According to Realtors, the median price of a home in Santa Fe is $344,000. The city has had rules in place for several years that require developers to build and sell 30 percent of their homes at fixed prices. It also provides limited down-payment assistance. Those rules are also the subject of pending litigation.
City backers say the transfer tax is needed as a sustainable source of revenue and will earmark all that cash to get working families into Santa Fe homes, including hundreds who earn wages here but live in other communities.
Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.