Realtors' PAC wins some -- and loses some

Even if you're not currently being represented by a realtor as a buyer, investor, landlord or seller, you might be interested to know that the Connecticut Association of Realtors' Political Action Committee has been hard at work on your behalf. Last year the RPAC had many achievements. Every year our state legislators continue a barrage of legislation aimed at real estate. Some bills are a reaction to issues that could conceivably hurt buyers or tenants, but many are focused on generating additional revenue from a favorite cash cow -- real estate transactions.

The wins

An example of this was a proposed conveyance tax of 1 percent levied directly on buyers of real estate on any amounts over $150,000. Given last year's average Greenwich selling price of $2,435,456, this would require the buyer to write a check at closing for $22,854.56. This would be in addition to the conveyance taxes currently paid by the sellers.

We expect to see this bill or a variant of it again in this legislative session. Thanks in part to the RPAC, State Senators got the message that this tax would hurt Connecticut's economic recovery. A potential revenue gain of up to $95 million was anticipated.

If you're a landlord, you were responsible for paying 1.5 percent interest on your tenants' security deposits last year regardless of what interest they earned at the bank. I don't know where you keep your deposits, but my money market accounts were paying a not-so-whopping interest rate of 0.05 percent.

This means you had to supplement whatever the bank was paying out of your own pocket to make up the difference. Cleary that was unfair to landlords given current interest rates. Thanks to the RPAC's efforts in Hartford, the interest rate requirement was at least dropped to 0.16 percent for 2012. This shows how out of touch Hartford can be.

In the Connecticut Senate, SB 832: Restrictions on Vegetation Removal Near Wetlands was successfully opposed by the RPAC. This bill, if enacted, would have placed large belts of additional private land under the jurisdiction of town wetlands commissions. Except for manicured grass, landowners would have had to demonstrate "no likely impact" when they altered or destroyed plant life within 100 feet of a watercourse or wetland.

In the Connecticut House, HB 6378: Mandatory Fire Sprinkler Systems was also opposed by the RPAC. This bill would have required all newly-constructed homes to be equipped with expensive automatic fire extinguishing systems. The RPAC said this should be a matter of informed consumer choice, not government fiat. The law would have raised the cost of all new construction, perhaps also putting it out of reach for some.

Remember bed bugs? Senate Bill 1049: Requiring Property Owners to Document Bed Bug Infestations would have mandated all owners of condominium units and rental properties to provide documentation of any bed-bug infestations, including eradication measures, prior to the sale or lease of their property. The RPAC urged further study of the bill, pointing to serious flaws in the proposal.

If you're a seller you'll appreciate this kill: HB 5473: Mandatory Septic System Inspections. This bill in the House would have required, prior to the sale of any property served by a septic system, a written evaluation of the system and leaching field for operational performance and structural conditions. The RPAC objected to this inflexible (and costly) time-of-sale mandate.

This one's even more onerous: HB 6544: Energy Evaluation And Building Labeling. This property labeling and disclosure law for virtually all commercial and residential buildings would made landlords responsible for providing a history of their property's heating expenses at the time of rental and also would have allowed towns to circumvent the state building code.

The losses

Now for the dark side. Unfortunately, not every anti-real estate legislative action was killed. We must be living at the north pole where every day is June 21 since the planned sunsetting of the Extra Municipal Conveyance Tax did not happen, again.

Most Connecticut towns were scheduled for a 56 percent roll-back of the municipal portion of the seller's conveyance tax on July 1, 2011 from 0.25 percent to 0.11 percent. Surprise: The termination date was canceled.

More bad news: The State conveyance taxes were increased on non-residential properties by 25 percent from 1.0 to 1.25 percent and on residential properties up by 50 percent from 0.5 percent to 0.75 percent for the first $800,000 and from 1.0 percent to 1.25 percent on sales amounts over $800,000. In addition, the property tax credit on State income taxes was reduced from $500 to $300. It seems that once taxes are put into place they don't ever end.

This Week's Success Quote

"I can't change the direction of the wind, but I can adjust my sails to always reach my destination." -- Jimmy Dean

Ken Edwards is the principal Broker for Edwards & Associates and has lived in town since 1974. All opinions expressed in this column are entirely his own and not those of this publisher. Comments, questions and suggestions may be sent to K_W_Edwards@Yahoo.com or call or text him at 203-918-4444. Questions of general interest will be addressed in this column while others will receive individual responses.