Proposal would allow New London to charge real estate fee to preserve open space

New London — One environmentalist called a proposed bill allowing towns to enact a conveyance fee on real estate transactions a “no brainer” that would allow cash-strapped towns to preserve its open space and even protect home values.

One statewide builders association, one of the several detractors, argues it’s a “kick in the head to an industry that’s still down after an 11-year housing recession.”

A bill introduced to the General Assembly would allow the towns of Bethany, Bolton, Lyme and New London to collect a fee on real estate transactions for the preservation, stewardship or purchase of open space.

The proposed bill would create a pilot program and give the four municipalities the option of imposing up to a 1 percent buyer’s fee on the amount of a real estate purchase that is in excess of $150,000. For example, the purchase of a $180,000 home would generate up to $300 and a home purchased at $400,000 would generate $2,500.

The fee would be retained by the municipality and maintained in an account separate from the general fund, to be used for things like maintenance of parks, farmland and water resources or repayment of municipal bonds obtained for those purchases.

David Bingham, a member of the Connecticut Land Conservation Council that helped shape the bill, said the benefits of such a program are proven in case studies of communities that have enabled such a fee and helped boost things like agritourism, recreational trails and local food sourcing.

It also helps to provide a municipality with a funding source to match federal, state or private grants.

It’s a proposal, Bingham said, that has taken on different forms through the years but never seemed to gain traction with legislators. While he thinks the bill should be enacted statewide, Bingham said the pilot program proposed this year may attract more support since it initially is aimed at municipalities that have expressed interest.

New London Mayor Michael Passero said he sees it as an opportunity to pay more attention to city parks like Bates Woods and Riverside Park and boost the city’s overall quality of life. In tight budget years, he said that rather than further burdening taxpayers, the creation of a separate funding source would allow the city to be a better steward to the open spaces.

Bingham said New London doesn’t stand to reap a jackpot from the fee because of the $150,000 floor but it could use money for maintenance of trails, removal of invasive plant species and “human impact problems.”

“When you’re taking about budgets as badly strained as New London and where property taxes are so onerous, this is an outside source of income,” Bingham said.

Lyme First Selectman Steven Mattson wrote in support of the bill and said in written testimony, “if approved by Lyme residents, this program would provide our community with a sustainable source of funding for local conservation and stewardship efforts that would not impact the municipal mill rate or require additional bonding.”

The arguments against the bill have come from realtors and builders associations. Carol Christianson, a member of the Connecticut Association of Realtors, wrote a letter in opposition calling the title of the bill misleading.

“CTR believes this bill to be the establishment of a new tax and should be titled as such. Pilot programs are frequently just a first step towards statewide adoption,” she wrote.

Christianson argued that home buyers often struggle with closing costs and the proposal would only add to the burden. She argues it also could drive buyers out of the towns where the new fee would be used.

Bill Ethier, chief executive officer of the Home Builders and Remodelers Association of Connecticut, argued in written testimony that “it is wrong to place the burden of paying for these public benefits on the backs of only (homeowners) and other property owners who will be selling or buying property.”

A public hearing on the bill was held on Feb. 26 and the proposal was referred to the Joint Committee on Planning and Development.

g.smith@theday.com

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