PAR Testifies on Growth Management/Recovery Fund

Impact Fees, Transfer Tax Increase Overall Cost of Housing

By Jennifer Shockley

Yes, Virginia, there is a legislature. And this summer, squeezed between campaigning, backyard barbeques and gearing up for Election Day, legislators held hearings and informational meetings around the state on a range of issues.

Though the noise level surrounding the Capitol had dropped a decibel or two, a buzz still emerged from the hearing rooms as legislators heard comments on growth management, victim recovery funds, insurance fraud, illegal immigration, Uniform Construction Code, home improvement legislation, stem-cell research and affordable housing funds.

While PAR monitors most of these issues, the association provided comments on growth management and victim recovery funds.

Growth Management

The legislation providing for growth management  would allow municipalities and school districts within designated “growth counties” to impose:

1. Impact fees on residential developers ranging from $13,000 to $31,000 per unit.

2. Limited building moratoriums that would allow municipalities to freeze building permits for up to two years.

3. An additional one-percent realty transfer tax. The growth county would use half the revenue from the additional tax to fund agricultural land and open space preservation programs. The other half would go to the school districts for general fund expenditures.

PAR President Len Ferber testified that while impact fees are ultimately used to benefit a community, they also increase the overall cost of housing since many times the actual costs are passed on to the purchaser through increased lot prices.

Ferber told legislators that “REALTORS® have an immense amount at stake in the debate over growth and offered to help suggest creative and innovative solutions. “Restricting growth affects housing costs, economic expansion and the ability to freely use property,” said Ferber. “It also depletes the amount of buildable land available to accommodate growth.”

Along with PAR, the PA Builders Association also criticized the measure, while representatives from various school districts supported the concept.

Recovery Fund

PAR Legislative Chair Ellen Renish testified before state legislators regarding a bill to repeal the existing Real Estate Recovery Fund (RERF) and place its current revenue in a proposed Professional and Occupational Affairs Recovery Fund (POARF).

The legislation provides that all 770,000 licensees in the Commonwealth – including real estate licensees, appraisers, doctors, nurses, funeral directors and cosmetologists – would pay a $10 fee at every biennial license renewal. This would be a change from the current RERF where license holders are only assessed if the fund drops below $300,000.

In her testimony, Renish said that the RERF has functioned well. She voiced concern that changing its nature so drastically would make real estate licensees’ fees paid into the proposed fund “more likely to be depleted by claims against medical licensees.”

PAR opposes this legislation because it will be costly for licensees; it will encourage unnecessary and frivolous complaints; it will undermine the civil law system and RELRA; and it will deny licensees due process.

Copies of the full text of the testimony for both issues may be found on the PAR web site at www.parealtor.org in the Legislative & Regulatory section.