Posted on: Saturday, April 30, 2005
Taxes on real estate purchases may go up
| • | Transit tax option OK'd |
| • | Chart: How proposal will affect land sales |
By Gordon Y.K. Pang and Derrick DePledge
Advertiser Capitol Bureau
People who buy property that costs over $600,000 would pay more in taxes under a plan designed to help pay for affordable housing and land conservation.
The proposal, approved by a House and Senate conference committee yesterday, would increase conveyance tax rates on all categories of property sold for $600,000 or more, and all residential properties bought as second homes or investments.
House and Senate conferees last night also advanced a companion affordable housing bill that lawmakers said would spur construction of homes for lower-income families.
Yesterday was the last day for measures to move out of conference for final votes next week.
Among other action, negotiators passed a measure they hope will provide enough incentive for retailers to participate in the state's fledgling beverage container recycling program. Lawmakers also agreed to new DNA sampling requirements for felons and tighter restrictions on political contributions.
Democratic leaders from both chambers called the conveyance tax bill a landmark measure that would direct money toward two important areas — the development of affordable rental housing and the purchase of so-called "legacy lands," including parcels with natural, environmental and cultural value. The affordable housing dollars would be earmarked for the Rental Housing Trust Fund, which already receives a share of conveyance taxes for a program that gives low-interest loans or grants to qualified landowners and developers to build lower-priced units.
Monumental first step
The Department of Land and Natural Resources would determine how the land conservation money is to be used. Uses could include grants to counties or nonprofit agencies for the purchase of valued parcels.
The conveyance tax netted about $15 million last year. Of that, 25 percent went to the Rental Housing Trust Fund; 25 percent to the Natural Area Reserves System; and 50 percent into the state general fund.
The bill that advanced yesterday is expected to collect more than $36 million. The distribution would change to 10 percent for the new Legacy Land Fund; 30 percent for the Rental Housing Trust Fund; and 35 percent for the general fund. The Natural Area Reserves System would continue to get 25 percent.
Jeff Mikulina, director of the Sierra Club Hawai'i Chapter, hailed the establishment of the fund as a monumental first step toward land preservation.
But Mac Lowson, president of the Hawai'i Association of Realtors, said the conveyance tax is being used inappropriately when its original intent was to pay for the cost of recording sales and managing conveyances.
Proponents said the increase would affect only a small number of sales since only 7 percent of all transactions are for properties valued at more than $600,000. They also noted that the state's conveyance tax is among the lowest in the nation.
Affordable housing was among the main stated objectives for Democratic leaders and Gov. Linda Lingle when the session began in January, and House and Senate lawmakers wrestled over the final language of the bill last night.
The package would give first priority for the loans and grants in the Rental Housing Trust Fund to developers who build units for families making up to 80 percent of median income. A portion of that must be for those making as little as 30 percent. The second priority would be for developers setting aside units for families making 140 percent of the median income.
The bill also requires that the troubled Housing and Community Development Corp. of Hawai'i be split by July 1, 2006. Proponents of the split believe the public would be better served if one agency administers public housing projects while a separate one focuses on development of affordable housing.
Bottle law assistance
The measure to spur the state's "bottle law" sets aside up to $3 million from the deposit fund for retailers who install recycling centers at their stores, or hire someone to do so, by Dec. 31. Retailers would be eligible for rebates of between $30,000 and $90,000 per store.
The bill also sets aside an additional $3 million that would be available to recyclers, nonprofits or other groups who want to establish recycling centers.
Ed Thompson, executive director of the Hawai'i Food Industry Association, estimated that it costs about $25,000 for each reverse vending machine, and said he expects each vendor would need at least three machines, one each for plastics, glass and aluminum containers.
Lawmakers also agreed to a bill that would authorize law enforcement to collect DNA samples from all convicted felons, and to a bill that would bar political contributions from contractors who have business with the state and limit out-of-state contributions to no more than 20 percent of a candidate's fund-raising during each campaign reporting period.
