Monday, April 16, 2007

Walters on Home Fees

Excellent analysis on coercive fees paid by home buyers, the interests who support them and why; which while serving a good cause, may be doing it badly.

Dan Walters: Home fee bill sparks odd lineup
By Dan Walters - Bee Columnist
Published 12:00 am PDT Monday, April 16, 2007

Developers who build homes and real estate agents who sell them usually march in political lockstep for obvious reasons. But this spring they're engaged in a pitched political battle over a new form of fee that home builders are attaching to subdivisions, placing developers in an odd-bedfellows alliance with their traditional enemies in the environmental community.

Both factions -- the California Association of Realtors on one side and the California Building Industry Association, environmental groups such as the Sierra Club and advocates for the poor on the other -- are arming themselves for war and fielding platoons of lobbyists, political organizers and public relations operatives.

The clash is over a Realtor-backed bill, carried by newly elected Sen. Lou Correa, D-La Habra, that would outlaw the fees, which are being labeled "private transfer taxes" by opponents and "reconveyance fees" by their supporters.

The fees, which started popping up a few years ago, work like this: A covenant is attached to a new home requiring that whenever and however many times it is resold, the buyer must pay a fee based on the sales price. By prearrangement the money goes to whomever the original developer specified, usually an environmental or charitable cause. A 1 percent fee on a $500,000 home would be $5,000.

Why? Once you get past all the self-serving rhetoric, the money is aimed at quieting opposition to new subdivisions from environmentalists and advocates of housing for the poor. Hush money? Perhaps, although recipients say it is devoted to worthwhile purposes such as preserving open space.