Proposal Targets High-End Homes
Let the battle begin.
The Santa Fe Association of Realtors threw a hard punch at the city of Santa Fe on Thursday when it filed a lawsuit challenging a proposed tax on high-end homes as “invalid, unlawful and unenforceable.”
“The recently adopted real estate transfer tax on residential property not only violates the prohibitions under New Mexico State Law, it unfairly and inequitably foists the financial costs of creating work-force housing and affordable housing upon land owners,” the association said in a press release issued late in the day.
The city ordinance, approved unanimously by the Santa Fe City Council in June, proposes to fund affordable housing initiatives for the city’s work force by levying a 1 percent tax on the portion of any home purchase in excess of $750,000. Voters are being asked to approve the measure in a special election in March 2009.
Santa Fe Mayor David Coss, speaking to the Journal late Thursday, said he hadn’t reviewed the lawsuit.
But, he noted, “I guess I’m not too surprised, because the Realtors haven’t met an affordable housing program they liked.
“The governing body voted unanimously for this, and I think we represent a strong majority in Santa Fe that wants to keep moving forward on affordable housing programs and find ways to fund this,” Coss said. “It’s too bad they don’t want to let the people vote on it.”
The lawsuit was filed by the association and four homeowners with property valued at more than $750,000.
Essentially, the lawsuit says the real estate transfer tax doesn’t meet the state’s definition of taxes that can be imposed by local governments. Santa Fe’s proposed real estate transfer tax is invalid both because it is an excise that that fails to tax either a good or service and because it is a property tax determined by an assessed value, according to the lawsuit.
“We believe the real estate transfer tax ordinance adopted by the City ... is based on an improper interpretation of state law,” association president Mary Schroeder said in the press release.
The suit also says the tax is “unenforceable” because, while the ordinance prohibits recording a deed with the Santa Fe County Clerk until the tax has been paid, the city has no actual power to stop that from taking place.
And because the tax is prohibited, the March special election is also invalid, the plaintiffs maintain.
In addition to legal arguments, Schroeder argued in Thursday’s press release that the ordinance is inequitable, will increase the cost of homes and expand to include more dwellings as home values increase over time.
She did not return messages left Thursday. Karl Sommer, a lawyer involved with the lawsuit, also did not respond to an inquiry by the Journal.
New Mexico Realtors have never been shy about voicing their opposition to a real estate transfer tax in Santa Fe.
Realtors have consistently spoken out against transfer taxes in the past, and the state association promoted a bill during the 2008 legislative session that would have prohibited municipalities from imposing such taxes. The measure, which passed the Senate, failed to make it out of the House of Representatives.
A political committee established by the Santa Fe Association of Realtors also elicited controversy last year with ads in local media that depicted teachers, nurses and firefighters in opposition to the tax as an add-on to home prices. Local groups representing those professions later said the ads represented unauthorized and inaccurate representations.
“SFAR supports the efforts by the City of Santa Fe and the Real Estate Community to provide work-force housing and affordable housing,” the association’s press release said. “However, SFAR cannot support the City’s attempt to impose solely upon property owners the financial burdens of providing work-force housing and affordable housing.”
