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Realtors take tax fight to the ballot

Real estate agents earn their pay by charging a percentage of a home's sale price.

It turns out they'll go to great lengths - including amending the Oregon Constitution - to keep the city of Portland or other government entities from doing the same.

The Oregon Association of Realtors, backed by the National Association of

Realtors,

is the first group out of the gate to qualify an initiative for the statewide ballot in November.

It's called the 'Protect Our Homes' measure, and it would enact a permanent ban on 'real estate transfer taxes' - government speak for sales taxes on the sale of property - by inserting a new prohibition in the state constitution.

'A real estate transfer tax can be a real barrier to completing home sales; it can rack up thousands of dollars,' says Jon Coney, spokesman for the Protect Our Homes campaign.

One need look no further than across the Columbia River to Vancouver, where a homeowner selling his or her home pays a 1.78 percent tax that's shared by the state of Washington and Clark County. That could easily add up to $2,000 or more per sale.

Multnomah County Commissioner Deborah Kafoury says the Realtors' initiative is 'completely unnecessary.' She reasons that Washington County is the sole government in Oregon that levies a real estate transfer tax, and that's a relatively small 0.1 percent of the sale prices.

State law bars other local governments from adding new transfer taxes, Kafoury says. And even when Democrats held a 'supermajority' in the House and Senate in the 2009 session, they couldn't muster the votes to overturn that law, she says.

But the Realtors have had to play defense in past legislative sessions when the city of Portland, affordable housing advocates or others proposed changing that state law to tap what could be a lucrative source of revenue.

'There's a lot of pressure from municipalities and other government sources to look for revenue; we all understand that,' Coney says. 'This is a preemptive strike against that.'

The Oregon Association of Realtors already has put up about $695,000 in in-kind and direct cash contributions to get the measure qualified and lay the groundwork for the fall campaign, according to campaign finance reports filed with the state Elections Division.

The National Association of Realtors has ponied up $1.1 million, including $675,000 on May 30.

'That's a first salvo, I think,' Coney says of the recent check from the national trade group.

The campaign plans a major effort, including television commercials, to get the initiative adopted, he says.

Controlling the money

Local governments and affordable housing advocates are the loudest critics of the measure, but no group has emerged to lead an opposition campaign. Political insiders say it will be hard to counter the Realtors' message that they're fending off a sales tax on home sales, because Oregonians hate sales taxes. There's also no natural constituency with the kind of money needed to fight the measure, Kafoury says.

The Housing Alliance, a coalition of several dozen groups supporting affordable housing, may take a position on the initiative later this month, says Janet Byrd, the convener of the coalition and executive director of Neighborhood Partnerships.

The Housing Alliance successfully lobbied for an additional fee on real estate documents in the 2009 legislative session. The fee raised $11 million a year for affordable housing projects.

That wouldn't be affected by the Realtors' initiative, but advocacy groups don't like the idea of limiting their options.

'A (real estate transfer tax) is actually a very effective way to raise revenues; it's a good idea,' says John Van Landingham, staff lawyer for Lane County Legal Aid & Advocacy Center.

Thirty-seven states have real estate transfer taxes, and it doesn't seem to have hurt their real estate markets, he says.

There's never been a study showing that real estate transfer taxes affect the sale of real estate, says Michael Anderson, the Portland-based affordable housing organizer for The Center for Community Change in Washington D.C.

'If $150 is going to make or break whether they buy a house, they probably should not buy a house anyway,' Anderson reasons.

But there's no guarantee a transfer tax would be set that low. Van Landingham put together a coalition in Salem to support a 1 percent real estate transfer tax in the late 1990s, and got some support from the homebuilders and banker lobbies, with the promise that the money would be divvied up for affordable housing, local governments and community infrastructure.

'If you controlled where the money went, you could benefit everybody involved in real estate, including Realtors,' Van Landingham says.

But he could never get the Oregon Association of Realtors on board.

'Realtors seem to have taken a death pledge to oppose (real estate transfer taxes) everywhere,' he laments.

The National Association of Realtors labels real estate transfer taxes 'double taxation,' reasoning that owners of homes already pay annual property taxes. The trade group has actively aided recent efforts to bar real estate transfer taxes in Louisiana, Missouri, Arizona and Montana.

The trade group has not sought to reverse any existing real estate transfer taxes, Coney notes.

Coalition deal

In the 2009 session, the Housing Alliance struck a deal with bankers, Realtors and homebuilders trade groups to support the increase in the real estate document recording fee increase, Byrd says. In exchange, affordable housing advocates agreed they would not try to change the law barring real estate transfer taxes.

That coalition is no longer viable.

The homebuilders have agreed to endorse the Realtors' initiative, partly to support their longtime ally, says Jon Chandler, chief executive officer of the Oregon Home Builders Association. The Realtors fear that a transfer tax could get out of control and adversely affect home sales, he says.

Chandler was surprised that the Realtors, who have been hard hit by the housing slump, would be able to tap such large sums of campaign money from their members.

'If I had to raise a million bucks from my members,' he says, 'I'd be hitting the plasma bank frequently.'