Death by a thousand cuts

or … how to tax new construction (and thereby purchasers of new construction) yet another way. Is this where I pull out the argument that, “in this time of the housing market’s transition, this is not the time to put further strains on housing affordability”?

I’ve read this bill four times now and still can’t understand why this is needed. This is the addition to the current code that is being proposed (bolding mine):

2. a. In addition to all other fees imposed by law, beginning July 1, 2008, every local building department shall charge and collect a fee for its issuance of a final certificate of occupancy for any building or any structure, as defined in § 36-97, that is neither exempt from taxation by law nor actually valued at less than $100,000 at the time such final certificate of occupancy is issued. Each such fee shall become due and payable no later than 90 days from the date that the local building department issued the final certificate of occupancy associated with such fee.

b. The amount of such fee shall be five percent of the actual value of the building or structure, exclusive of the first $100,000 of such actual value, except that:

(1) The amount of such fee shall be reduced by two-thirds if the Governor declares that the economic benefits produced by such building or structure would outweigh any negative transportation impact caused by such building or structure; subject to subdivision 2 b (2), however, the local building department shall deposit such amount into the road improvement account, as described in subdivision 2 c, of the locality served by the local building department to be used only for transportation projects in such locality;

(2) The amount of such fee shall be reduced by one-third, independent of the reduction allowed by subdivision 2 b (1) if the governing body of the locality served by the local building department, by ordinance, declares that the economic benefits produced by such building or structure would outweigh any negative transportation impact caused by such building or structure; in such event, the local building department shall remit to the person from whom a fee was collected an amount equal to the total amount of such fee that the locality was authorized to accept, including the applicable amount authorized under subdivision 2 b (1);

(3) The amount of such fee shall not exceed $20,000; and

(4) If a building or structure is sold within 90 days from the date that the local building department issued the final certificate of occupancy for such building or structure but prior to the collection of the fee charged for the issuance of such final certificate of occupancy, then the amount of such fee shall be five percent of the consideration of the deed conveying such building or structure or the actual value of the building or structure conveyed, exclusive of the first $100,000 of such consideration or such actual value, respectively, whichever is greater, except that (i) such amount shall become due and payable on the date of the settlement of the sale and (ii) subdivisions 2 b (1) through (3) shall apply.

c. Except as provided by subdivisions 2 b (1) and (2), the local building department shall deposit two-thirds of each fee collected under this section into the Transportation Trust Fund to be used for transportation projects in the construction district that embraces the locality served by the local building department. The local building department shall deposit the remainder of all fees collected under this subsection into a separate road improvement account, which shall be established by the treasurer of the locality served by the local building department; interest earned on deposits shall become funds of the account. The governing body of the locality shall (i) expend funds from such account only for transportation projects in such locality, (ii) remit any or all funds of such account to the Transportation Trust Fund to be used only for transportation projects in the construction district that embraces such locality, or (iii) any combination thereof.

The more I read Richmond Sunlight, the more frustrated I get. So, the Governor may be called on to spot-exempt certain properties? Is this what the localities mean by “unfunded mandates”?

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1 Comment

  1. Dave January 16, 2008 at 01:04

    I won’t argue the merits of whether this is needed or not, but it is obviously an attempt at propping up the road construction (VDOT) funds. VDOT has been severely underfunded for several years and at the rate funding is going currently, their (VDOT) budget will only cover maintenance of existing roads with no monies left for new roads in a few years. Unless of course, a new or increased source of revenue is established.

    Gov. Kaine’s recently proposed budget shows cuts in the majority of the Commonwealth’s Departments. Piece these thoughts and facts together and I easily conclude that the Commonwealth will mandate the local governments to fund VDOT, if this is passed.

    Will $20k for the CO (Cert. of Occ.) on the typical high-end million dollar Albemarle house really matter? Will $20k matter to a $500k house, or $5k to a $200k house?

    It’s easy to understand that increased housing and thus cars on the road require bigger, better, or more roads, turn lanes, and stop lights, all of which are quite expensive. Outside of proffers for rezonings, this looks like a way for new houses (rather than existing houses and residents) to pay for the roads that will be needed.

    To go back to your comment, “…still can’t understand why this is needed.” Maybe it’s needed because the Governor is cutting budgets and wants roads built, or the sponsor of the Bill (Fauquier Co and surrounding area) represents constituents that want either less growth which they hope will go elsewhere because of the tax or actually want more roads.

    Then again, maybe the tax is not needed. It’s all about who will pay for the roads…