Capitol Battle Looms Over Housing Resale Fees

By Jim Wasserman, The Sacramento Bee, Calif.

May 8–The question of who pays for multimillion-dollar concessions made by home builders to environmental and housing groups faces a key Capitol test today, with implications for thousands of Californians who buy houses in years ahead.

With a vote scheduled before the Senate Transportation and Housing Committee, associations representing real estate agents and home builders are also maneuvering other bills into place. The moves playing out this week are part of a struggle over whether homebuyers or home builders will shoulder most of the costs of easing future impacts of new houses.

At stake are what’s known as transfer, or resale, fees. Here’s how they work: Every time a house is sold, the buyer pays a specific percentage of the sales price into a fund. Nonprofit groups use the fund to buy and preserve range or farm land that offsets the impact of housing growth. Or they channel it to construction of low-cost housing.

The California Association of Realtors, which represents nearly half the state’s 520,000 real estate agents, wants more restrictions on these fees, which originated in Roseville and are now spreading statewide.

The group has tried unsuccessfully to ban the practice, but now hopes to persuade lawmakers to limit it. It argues that the fees have no caps and little public oversight, and will make the state’s already expensive houses that much harder for buyers to afford. The group is backing Senate Bill 670, to be heard today.

"When we first started, we said they shouldn’t be doing it at all. But if they are going to be doing it, there should be some responsible limitations," said Alex Creel, lobbyist for the Realtors group. "It shouldn’t be the Wild West out there."

Realtors want fees capped at 1 percent of sales prices, a 30-year time limit and assurances that the home builder’s first buyer also will pay the fee. Currently, there are no limits, and builders generally don’t charge their first buyer.

Arrayed against SB 670 is an alliance of home builders and environmental and housing groups. It calls transfer fees a powerful tool to finance open space, affordable housing and better quality of life across several generations. It wants the committee to reject most of the Realtors’ proposed limits.

"You will find all the groups are opposed to a cap and the time limit," said Kimberley Dellinger, lobbyist for the California Building Industry Association, a statewide home builder trade group.

She said the Realtors’ proposals amount to a ban, because under such rules "none of us would use it."

As the lobbying mounted Monday, builders and Realtors had related bills in the wings:

–Assembly Bill 1574, backed by builders, would require better disclosure to prevent surprises. The bill also would allow builders to avoid charging their first buyer if the builder also is contributing significantly to the nonprofit groups receiving the fees. The measure passed the Assembly Judiciary Committee and will be heard Wednesday before the Assembly Housing and Community Development Committee.

–Assembly Bill 980, backed by the Realtors, requires better disclosure of the fee for future buyers where it’s already in effect, such as Roseville and Martis Valley. It’s scheduled to be heard today by the Assembly Judiciary Committee.

Roseville initiated the state’s first resale fees for the environment in 2004 at its Fiddyment Farm and WestPark communities. Future resale buyers there will pay up to $2,500 on a $500,000 house to the Placer Land Trust to help buy up to 6,000 acres of open space. The fee, expected to raise $85 million across 20 years, helped settle an environmental lawsuit against developers and cleared the way to build 8,400 new houses.

The idea has since been replicated to settle a long-standing legal battle over growth plans in Martis Valley near Truckee. Now, developers planning thousands of homes in San Benito and Kern counties are considering such fees to fund farmland preservation and affordable housing programs.

If passed today, SB 670 moves to the Senate Judiciary Committee. It must pass the full Legislature and be signed by Gov. Arnold Schwarzenegger to become law.

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Copyright (c) 2007, The Sacramento Bee, Calif.

Distributed by McClatchy-Tribune Information Services.

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