OPINION: Conveyance fee will create jobs
Written by Matt Sattler | | news@toledofreepress.comEarlier this week, the Lucas County Commissioners approved a $1 increase in the County’s conveyance fee from $3 to $4 for every $1,000 of real estate transferred. Throughout the decision process, there was considerable debate regarding the increase. Opposition to the increase came from predictable sources, the Toledo Board of Realtors and Commissioner Ben Konop. Ostensibly, the aversion to the increase centered on the idea that the County should not raise any taxes or fees during an economic downturn.
Before inspecting the fee increase, it is worth spending a few sentences reviewing one of the increase’s opposing voices, which seemed especially intellectually dishonest. Commissioner Konop’s metronomic disapproval of anything Commissioner Pete Gerken proposes has moved beyond political gamesmanship. His thoughtless dissatisfaction to anything Gerken proposes is obstructing progress. Are residents really supposed to believe that yesterday’s Matthew Lesko, busy peddling public money to finance the purchase of art or pay for low-paying nonprofit jobs, is today’s Grover Norquist, railing against any tax increases? The absurdity of Commissioner Konop’s inconsistency on fiscal issues is only trumped by its irony.
To the conveyance fee increase, there are three main questions residents and decision makers should consider when assessing any tax increase. First, is the increase fair, that is, does it place an undue and unreasonable burden on any specific segment of taxpayers. Second, would the increase have a significant adverse effect on the product being taxed, such that demand will be fundamentally decreased. And third, will the increase improve the delivery of government services such that the increase is justified. When analyzing the $1 increase against these three criteria, the validity of the increase is obvious.
First, is the increase fair? Does the $1 fee increase place an undue or unreasonable burden on any segment of homeowners? To answer this, look at the average sales price of home in Lucas County, in November 2008. According to the Board of Realtors, the average sales price is $86,000. Translation – the fee will cost the seller an additional $86 at the time of sale. Therefore, for the average homeowner, in the average home, with an average interest rate (6%), the fee is less than one month’s principal payment on your mortgage (even in Month 1 of the payback). Opponents of the fee argued that the increase will be passed along by sellers to buyers. Given that most homes in Lucas County take longer than 30 days to sell and that the fee will most likely be less than the principal earned on the home during that time period, there should be no affect on sales prices.
Second, will the $1 increase have a significant adverse effect on the sale of homes, such that demand for homes in Lucas County will decrease? To answer that, decision makers should consider “temporal neutrality.” If a tax achieved temporal neutrality, the increase would not alter spending habits, change behavior, or affect the allocation of resources. Again, using data from the Board of Realtors, the conveyance fee increase will increase the average sales price in Lucas County from $86,000 to $86,086. Most reasonable policy makers could agree that the marginal increase in sale price will have little to no influence on spending patterns, behavior, and the allocation of resources in Lucas County.
Finally, will the increase in the conveyance fee improve the delivery of government services such that it is justified? This is the hardest of the three questions to address. While the Lucas County Improvement Corporation (LCIC) has had its challenges in the past, the fact remains that it is the proper vehicle to deliver public sector economic development services in Lucas County. I’ve used these pages frequently in the past to advocate for the organization and will continue to do so. The Board and staff are immensely talented, dedicated professionals. By altering the LCIC’s impractical funding formula and dedicating a revenue source for its operations, Commissioners Gerken and Wozniak have put the LCIC on the track to success. The organization can now worry less about how to pay the bills and more about job and wealth creation.
During an especially difficult economic time, Commissioner Gerken should be commended for keeping his eye on the ball. In the coming months and years as the LCIC continues its successes, residents should remember to thank Commissioner Gerken for his dedication and determination to create jobs in the face of adversity.
Matt Sattler, MPA, MUPDD
Sattler formerly worked for the LCIC and is now working in Northeast Ohio and pursuing his PhD in Urban Studies & Public Affairs.
A money grab. An excuse can always be made for a tax increase. Call it what you may. But graft is still graft. Theft! Graft jobs!
This comment was posted on December 19th, 2008 at 3:58 amMr. Sattler is trying to make sense out of nonsense. The idea that asking an already strapped tax base to accept the mandate that they will have to, yet again, hand over more of the money they don’t have is ludicrous.
The current housing market in Toledo is already in a bind. Many homeowners, if they are fortunate enough to sell their home, are having to go to the closing table with a large chunk of money in order to accommodate the sale. The homeowners are, essentially, paying the buyers to take the home.
And now they are supposed to accept, because Gerken/Wozniak said so, that they need to bring even more money? One dollar more is too much. Way too much.
Mr. Sattler, with all due respect, you may be highly educated but you are lacking the ground level vision that the ‘regular people’ in Toledo have to deal with.
That extra $1.00 is nothing more than an attempt to subsidize an under-performing agency that should be totally restructured. And I mean TOTALLY restructured.
I currently reside in an area where the conveyance fee is $2.00/$1,000. Economic development is strong, the housing market is strong and unemployment is at 5.2%. Raising the conveyance fee is NOT, I repeat NOT, the key to effective economic development.
This comment was posted on December 20th, 2008 at 11:47 am