The Star Beacon; Ashtabula, Ohio

Local News

April 30, 2009

New tax attacked

Several show up to oppose extra transfer fee

JEFFERSON — Unlike the no-show response to the first hearing, the second and final hearing on the board of commissioners’ proposal to raise the county’s transfer tax drew a choir of protest.

Eight individuals showed up for the hearing, held Thursday afternoon in the commissioners’ meeting room, and most characterized the increase as yet another burden on sellers of Ashtabula County real estate.

“I’m opposed to the tax,” said Tom Hitchcock of Andover.

“I’m opposed to any additional taxes, especially with the increase in real-estate taxes,” said Jim Elliot of Dorset, who called it a “back door” tax.

“Most people don’t know about it until it is too far into the sale to do anything about it,” he said.

Commissioners have proposed raising the transfer tax, which is paid by the seller when real estate or a manufactured home is transferred to a new owner, including in foreclosure sales. They are seeking to boost the tax from 20 cents per $100 to 30 cents per $100 of valuation. There is also a 10 cents per $100 mandatory transfer tax; thus, the total tax would be 40 cents per $100 valuation.

On a sale of $100,000, the new tax would cost the seller an additional $100 for a total of $400. Today the tax is $300.

Commissioner Daniel Claypool said the transfer-tax boost is necessary to fund the county’s tax map room, an essential service in the process of selling and transferring real estate. Map-room employees are funded by the general fund, but in the county’s budget crunch, staffing the room has been cut from three to two employees. The third worker was transferred to the county engineer’s office and paid from a different fund. In good times, there have been as many as four map-room workers.

“As far as I’m concerned, this extra 10 cents will be directed to the operation of this room,” Claypool said. “If not, I see that room closing or the hours of operation cut.”

Nick Mazzaro of Rock Creek said commissioners would be “committing suicide” if they shut down the office. “We have enough trouble in the real-estate industry now.”

“As soon as you do that, you shut the county down. You know it; we know it,” Mazzaro said.

Commissioner Joseph Moroski has opposed the hike from the time it was proposed in March. His concern is that it will erode the proceeds from the sale of county real estate, which has taken a beating in valuation already. It also will make short sales, which have narrow or nonexistent margins, even more challenging.

Jim Janson of the Chicago Title Agency said about 20 to 25 percent of the real-estate transactions in Ashtabula County are short sales in which the seller walks away with little or no money.

“Every little additional (expense) is going to make a sale less likely to occur,” Janson told commissioners.

Mazzaro said the tax comes at a time when property owners are being told to pay larger real-estate tax bills as a result of the county having used appraisers’ 2007 values.

“The people of Ashtabula County are getting gypped,” he said.

“It’s to the point where I’ve just had it as a property owner,” Jim Elliott said. “It seems like everything gets dumped on us as property owners.”

The tax increase has been projected to raise $100,000 for the balance of the year, but Janson said according to his calculations, which are based on dismal first-quarter real-estate sales figures, the revenue would be closer to $75,000.

On the other hand, if the real-estate market improves to the 2006 level, the tax would bring in an additional $257,000 annually into the general fund, estimates Janson. County administrator Janet Discher said it costs the county about $128,000 to staff the map room with three employees.

The transfer tax was last increased in 2001, when it was raised from 10 cents to 30 cents. That money was earmarked for “the protection and preservation of the county’s natural resources and to stimulate economic development.” In practice, the money was set aside to pay down the debt on the Lodge and Conference Center at Geneva-on-the-Lake. The county pays about $1.2 million annually toward the lodge debt, a topic several of the citizens brought into their comments.

“Sell it,” said Ashtabula resident Muriel Murphy of the lodge. “You are spending too much. … You have to learn how to spend wisely.”

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