Plan Tax Rivals in Brookhaven Plan Taxes Rivals In Brookhaven
By Christian Murray
STAFF WRITER
October 13, 2003
A pitched battle is being waged between two old adversaries in the Town of Brookhaven - conservationists and builders - over a new tax on real estate transactions that could add thousands of dollars to the sale of homes.
At issue is Brookhaven's proposed community preservation fund, known as Proposition 1 on the Nov. 4 ballot, which aims to keep up to 39,000 acres of farmland, wetlands and shoreline out of the hands of developers.
If voters approve the proposition, the town plans to buy the land with funds it generates from a 2 percent sales tax on the sale of residential and commercial properties. Town officials say purchasers will pay the tax,which kicks in once a $250,000 threshold is reached. In practice, it means the buyer of a $400,000 house would pay an additional $3,000 in taxes, starting Jan. 1.
The tax is similar to one imposed in East End towns, which by most accounts has been successful at preserving land and was recently extended for another 10 years. But the Brookhaven tax is no shoo-in, and as the election nears, preservationists and developers are mobilizing to get their message out to constituents.
Louis Marcoccia, coordinator of the Brookhaven Citizens Against Higher Taxes, said home buyers who move to areas such as Selden, Centereach and Shirley have little to gain from the tax, since there is little open space in those areas for the town to buy. He says home owners in Eastern Brookhaven will benefit. 'We're going to do what is necessary to spread the word that this isn't fair.' Marcoccia said.
'It's unbelievable. Ridiculous,' said Maggie Hernandez, 41, of Selden, who is looking to spend $430,000 on a larger house in Selden or Center Moriches. 'We pay enough taxes as it is,' she said, without another $3,600 being tacked on. 'I will vote against it.'
Commercial real estate officials also are opposed because of the cost. For example, the buyer of a $20-million building would have to lay out $400,000 in cash, said Bob Wieboldt, executive vice president of the Long Island Builders Institute.
Late Friday, members of the development and real estate communities - through the Brookhaven Citizens Against Taxes - sought an injunction in State Supreme Court to change the wording on the ballot. A hearing is set for Friday.
'The ballot says that the buyer is responsible for the 2 percent tax,' said Steven Schlesinger, a Garden City lawyer who filed the application. 'But in many instances the seller would be on the hook,' such as when a buyer can't pay the tax or is a tax-exempt government or church.
Supporters of Proposition 1 such as state Sen. Kenneth LaValle (R-Port Jefferson) say that without a well-endowed fund, Brookhaven's natural environment might be in jeopardy. 'This fund will help generate a balance between development and land preservation,' LaValle said.
'People are on to developers,' said Richard Amper, executive director of the Long Island Pine Barrens Society. 'They know that they hurt them economically and environmentally,' he said. 'The cost of new schools, roads, police protection is more than new taxes. And then there is the traffic congestion.'
Real estate officials worry about the effect of the added costs on home sales. Lita Smith-Mines, a Commack real estate lawyer, said the existing 0.75 percent New York State mortgage tax, property taxes, escrow accounts, points and other fees can add 7 percent to the purchase price. For many buyers, she said, the new tax could be a deal breaker. 'Prospective buyers might look to buy houses in Smithtown, Huntington or New Jersey instead,' Smith-Mines said.
But the industry's fears are unfounded, said Inez Burbiglia, a Brookhaven Town spokeswoman. She said a similar fund created in the five East End towns in 1999 has had little impact on the real estate industry out east. More than 7,500 acres of land have been bought on the East End since 1999, records show. Also, proponents say, the transfer tax won't affect affordable housing, since it doesn't apply to houses sold below $250,000, or vacant land sold for less than $150,000.
The real estate and building industries have failed to garner the support of one major business group. 'I don't think that it will significantly hurt business,' said Matthew Crosson, president of the Long Island Association. 'It makes it more expensive, sure ... but open space attracts talent and people to an area.'
What Price For Open Space?
A controversial transfer tax proposal has pitted developers against conservationists in the Town of Brookhaven. Meanwhile, real estate professionals and prospective buyers and sellers are wondering how it will impact the market. Below is a look at 2003 median sales prices for homes in some Brookhaven communities and a look at how the new tax would impact a typical sale.
2003 Median Sales Prices Brookhaven Town
$275,000
Medford
$262,000
Manorville
$397,000
Selden
$265,000
Bellport:
$217,000
Miller Place
$382,500
Coram
$275,000
Port
Jefferson
$459,000
Mt. Sinai
$370,000
Setauket
$542,000
Centereach
$283,250
Lake
Ronkonkoma
$288,500
Closing the Deal
What it would cost to close a real estate transaction in the Town of Brookhaven with a proposed 2 percent transfer tax.
CLOSING COSTS:
Property taxes (about 9 months) $5,250
Mortgage tax $2,337
Private mortgage insurance $2,250*
Title insurance (buyer's policy) $1,864
Buyers attorney $1,000
Bank attorney $600
Home insurance $500
Title insurance (lender's policy) $431
Engineers report $400
Recording fees $340
Appraisal and credit report $325
Dept charges $300
Miscellaneous fees $200
ASSUMPTIONS
Selling price $350,000
Down payment $35,000 (10%)
Mortgage amount $315,000
Annual property taxes $7,000
PLUS ...
Community
Preservation Fund $2,000
Total closing costs $17,797
Total funds needed $52,797
(including down payment)
*Required on down payments of less than 20 percent. Rates vary, but on general average 0.007 percent of loan amount with first year's premium paid at closing.
SOURCES: Multiple Listing Service of Long Island, GE Mortgage Insurance
Copyright © 2003, Newsday, Inc.
