Banking on the land

Part 3

by Jason Gay

But talk to someone like Chip Faulkner, and he'll give you an entirely different perspective. Faulkner, a smooth-talking associate director with Citizens for Limited Taxation and Government, a conservative interest group, thinks the idea of real-estate transfer taxes is discriminatory, ill-conceived, and dangerous.

"If you look at the types of people pushing this, we're talking about self-righteous yuppies," says Faulkner. "It's people coming down from the high hill to tell the peasantry how they are going to spend their money."

Indeed, much of the criticism of transfer taxes centers on the politically charged distinction between conservation and elitism. Faulkner, Cellucci, and others believe that these taxes will prevent working people from buying the homes of their dreams. Furthermore, buying more green space -- and restricting its development -- makes property values rise, driving average wage earners out of many real-estate markets, critics say.

This position, predictably, is shared by the state's real-estate lobby, one of Massachusetts's largest and most powerful interest groups. Even though a 1 or 2 percent tax is a pittance when compared to the overall cost of buying a home -- especially when spread over the length of a 30-year mortgage -- real-estate agents believe that a transfer tax will be the proverbial straw breaking a lot of potential home buyers' backs.

"It would definitely make a difference," says Jack Spurr, the chairman of the governmental-affairs committee of the Massachusetts Association of Realtors, a 14,000-plus-member organization.

But Cellucci and the real-estate lobby's anti-elitist posture starts to droop when one considers the exemptions that transfer-tax advocates propose. Most of the proposals exempt the first $100,000 of any real-estate purchase, so someone trying to buy the $150,000 home of his or her dreams would only have to pay transfer taxes on $50,000 of the price -- $500 dollars if the tax is 1 percent. Additional exemptions can also apply for first-time home buyers and land gifts.

And it's harder to say that a transfer tax, especially if it were initiated statewide, would unfairly penalize a minority of residents. Homes in Massachusetts tend to turn over every eight years. "Over time, just about everyone will pay this tax," says state senator Henri Rauschenbach, a Cape Cod Republican and a land-bank supporter.

As for the argument that land-bank purchases stop reasonable development and squeeze average people out of the real-estate market, that simply hasn't been the case on the Vineyard and Nantucket. Not only has development continued, but the properties that these land banks pursue aren't modest half-acre lots sought by average home buyers. Land banks want to buy the most coveted pieces of land, where home prices could easily reach seven figures. If any group is losing land to the islands' land banks, it's millionaires; both the Vineyard and Nantucket land banks have often faced resistance from elites when they've pursued property.

But whether or not you believe that the transfer tax is elitist, it's still a new tax -- and that's what troubles Cellucci the most. The acting governor has consistently restated his belief that transfer taxes represent an "end run" around the state's current local tax-raising procedure, Proposition 2¹/₂. If cities and towns desperately want to buy green space and restore tattered properties, the governor asks, why can't they do it the old-fashioned way, and ask voters to raise their property taxes?

But that's an unrealistic expectation, transfer-tax advocates say. Today, the budget process in many Massachusetts cities and towns has come to resemble a dike-plugging scramble: communities often meet only the most immediate civic needs, like schools, public safety, and infrastructure repair, while ignoring important longer-term goals such as open-space protection.

"Towns are tapped out," says state representative Eric Turkington, a Falmouth Democrat and a key transfer-tax advocate. "They'd love to preserve open space, but they don't have the money to do it."

Turkington points out that in the last eight years, the 15 towns on Cape Cod have combined to preserve a paltry 700 acres -- or a pathetic 370 if you exclude Falmouth's contribution. Money for open space is also tight at the State House level. The state's annual budget for land purchases continues to hover around $40 million; a considerable sum, but hardly enough to support the entire state's environmental needs.

All of which makes Cellucci's very public anti-elitist posturing look like a hasty move, intended to distinguish him from both his political competitors and his predecessor. Bill Weld endorsed transfer taxes not as an environmentalist, but as a libertarian, saying that if state communities wanted to implement such taxes, they were entitled to do so. After all, any good Republican believes that communities have the right to chart their own courses without excess state interference. But it's clear that Cellucci's distaste for any new taxes trumps the traditional conservative tendency toward home-rule decentralization.

Of course, there are charges that other forces are at play, that the acting governor, facing the political fight of his life next year, is beholden to all-powerful real-estate and development groups. And there are suggestions that Cellucci is trying to champion the transfer-tax and land-bank issue before GOP gubernatorial rival Joe Malone grabs it.

"My guess is that he had to out-Republican Malone," says state senator Bob Durand, a Marlborough Democrat and a childhood friend of Cellucci's who has worked for more than a decade on land-bank legislation.

There are rumblings in the state GOP that Cellucci made a mistake in lashing out so strongly against transfer taxes and land banks, miscalculating the considerable bipartisan support for these measures. But that's not the worst scuttlebutt. There is also talk that transfer-tax advocates may already have enough votes in the State House to override a Cellucci veto -- an embarrassing setback for any governor, but particularly for a neophyte one entering an election year.

Back to part 2 - On to part 4

Jason Gay can be reached at jgay[a]phx.com.