February 16, 2017
CT Green Guide

CT considers local property sale tax for open-space efforts

Morguefile | witchespics
Morguefile | witchespics
Under a proposed bill, Connecticut towns would could charge a fee on certain property sales to raise funds to preserve land.

Legislators are weighing a proposal calling for a local-option tax on real estate purchases in order to boost local funding for the acquisition, preservation and stewardship of open space.

A bill currently before the Planning and Development Committee would allow municipalities to levy a buyer's fee on property transactions larger than $150,000 -- which is just above the statewide median home sales price in 2016.

The still sparse language in House Bill 6926 indicates the fee could be as high as 1 percent of the sales price.

For example, a property sold for $250,000 would yield a local-option fee as high as $1,000, to be deposited into a municipal account dedicated to open space.

Realtors and builders are opposed to the bill, arguing it would place an unfair burden that should be shared by all taxpayers, and that it could weigh on the housing market.

"This proposal would create additional impediments to Connecticut's fragile and still recovering housing market, which would further stall our overall economy," Mary Ann Herbert, past president of the Connecticut Association of Realtors, said in written testimony Wednesday. "The additional cost outlined in the bill is a cost which would most assuredly be passed onto Connecticut homebuyers. This action would have an immediate detrimental effect on home sales in our state."

Supporters of the bill, similar to unsuccessful 2010 legislation, argue that cities and towns need financial support to make up for a 50 percent cut last year to Community Investment Act funding that is used for open-space preservation. Gov. Dannel Malloy's recently unveiled budget proposed to keep that cut in place.

"Having a local funding source for open space is particularly important because the major state and federal open space grant programs – the Open Space and Watershed Land Acquisition Program/Community Investment Act, Farmland Preservation Program, Land & Water Conservation Fund, NRCS funding for farmland preservation, and others – require local matching dollars," Eric Hammerling, executive director of the Connecticut Forest & Park Association, wrote in legislative testimony. "If there isn't a mechanism to generate local matching funds...then many towns and local partners such as land trusts and water companies will not be able to participate effectively in these matching programs."

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