No Curb on Home Resale Fees: Senate Panel Rejects Bill to Limit Levy on Homebuyers for Environmental Costs.

By Jim Wasserman, The Sacramento Bee, Calif.

May 9–A growing practice of charging California homebuyers thousands of dollars in special transfer fees will continue largely unchanged after state lawmakers Tuesday rejected a bill to rein in the trend.

The bill to regulate a practice that began nearly three years ago in two Roseville subdivisions died in the state Senate Transportation and Housing Committee after failing to win a single vote. That action ends any chance this year for strict new limits sought by the California Association of Realtors.

Sen. Lou Correa, D-La Habra, who carried the bill, called it a “sad day” for homebuyers. “This practice will spread in California without any checks,” he said.

Private transfer fees that can add $2,500 or more to the price of a $500,000 house work this way: Every time a house sells, the buyer pays a specific percentage of the sales price into a fund. Nonprofit groups use the money to buy and preserve land to offset the impact of housing growth. Funds can also be used to build low-cost housing.

“We’re back to where we are now, with no controls, no accountability and no oversight,” said Alex Creel, lobbyist for the Realtors, after the committee’s action.

More than 50 Realtors’ associations across California led a months-long campaign first to abolish the practice, then to regulate it. Their newest bill would have capped the fees at 1 percent of the sales price and limited assessment of the fees to 30 years. Currently, there is no cap on the percentage or limit on time.

But the associations largely failed to win statewide support. Committee Democrats wanted a 75-year limit and a maximum cap of 1.5 percent; Republicans opposed the idea of transfer fees altogether.

That left the momentum with California home builders, who rallied a powerful alliance of environmental groups, land trusts and affordable housing advocates to oppose the bill. Those groups view private transfer fees as an effective tool to finance expensive purchases of open space and farmland across several generations. Builders call the relatively new practice a cost of doing business in California, where major housing developments often are the object of lawsuits. Typically, legal settlements and permission to build follow significant concessions to environmental groups or housing advocates.

The legislation, SB 670, aimed to crack down on the practice now used in Roseville and the Martis Valley near Truckee. In both cases, developers sued by environmentalists agreed to multimillion-dollar concessions to be paid across decades by future homebuyers.

In Roseville in 2004, developers of two new-home communities now called Fiddyment Farm and WestPark agreed to a one-half of 1 percent resale fee to raise $85 million for 6,000 acres of nearby open space. The fees, levied across 20 years of home sales in those neighborhoods, will be paid to the Placer Land Trust.

Home builders, environmentalists and affordable housing advocates have advanced their own bill, Assembly Bill 1574, which is less restrictive. It requires better disclosure and declares fees must have a regional benefit. The bill is set for a vote today in the Assembly Housing and Community Development Committee.

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

Distributed by McClatchy-Tribune Information Services.

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