Transfer tax will preserve open space, Warwick officials say

| 28 Sep 2011 | 02:51

    WARWICK-There are two schools of thought on the proposed real estate transfer tax that is likely to be presented to Warwick voters this November. One is that this money will improve the quality of life in Warwick by preserving more open space and enhancing the value of houses. The other is that homebuyers will look elsewhere — Goshen, Chester, Cornwall, Monroe, Vernon — to avoid yet another cost associated with buying a house. The housing market could suffer. Residents may find themselves waiting longer to sell their properties because of the additional cost to live here. Warwick has been trying to preserve its natural beauty for years now. It has used federal and state money to buy the development rights to some local farms, leaving the land forever green. Five years ago voters passed a purchase of development rights (PDR) law, allocating $9.5 million to supplement the funding. Two years ago, the town began its campaign to get the state to allow town residents to decide whether to impose a transfer tax on most properties sold in the town. Three weeks ago, the Legislature said yes, and last week legislators sent the bill to Governor George E. Pataki. Pataki has come out in favor of a transfer tax in the past, so Warwick officials doubt he will veto it. This version of the transfer tax would allow the town to impose a .75 percent tax on all real estate transactions, with the proceeds going into the town's open space preservation fund. There are exemptions. The first $100,000 of the selling price of a home would not be subject to the tax. The first $50,000 of the price of land would be exempt as well. Someone buying a home for $400,000 would pay $2,250 in the transfer tax: .75 percent of $300,000, which includes the $100,000 exemption. There are other exemptions as well. The tax would not apply to land sold to the government or transactions with agricultural, conservation, scenic, or open- space easements. It would not be applicable to purchases that modify a previously recorded deed nor to land sold at a tax sale. Bona fide gifts would also be exempt. Many of the town's officials are in favor of the tax, including the town supervisor, Michael Sweeton, and the village mayor, Michael Newhard. They believe giving voters the choice is the way to go. As with the PDR program already in place, Warwick town officials have said protected land will only make living in Warwick more desirable, as it has in other areas. The town is in for a battle, though. For the most part, realtors oppose the tax. Marie Pennings, who runs the Prudential Rand real estate on Railroad Ave., said the voters of Warwick will reject it. "At first I wasn't really calculating how much this will cost buyers," said Pennings. "But with the cost of houses in Warwick, it will be a substantial amount." Pennings said Warwick has enough open space. And with the town zoning code calling for cluster houses, open space is part of every development. "Every subdivision before the board will be deed-restricted, with acres of open space in the future," said Pennings. "We have plenty of PDR land already. We don't need to keep anymore open space in Warwick." Sweeton is realistic. He knows this fee has met opposition from real estate professionals and builders before. He looks at it simply as a way for newcomers to contribute to what the town has worked to put in place. For now, the town awaits the governor's signature on the bill. It will then draw up a proposition for voters to consider in November.n/Sharon/Kristen Ihde