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HomeMy WebLinkAbout1987-CONCOM-rpt.pdf 1 LAND BANK LEGISLATION REPORT OF THE CONSERVATION COMMISSION ON ARTICLE 41 OF THE WARRANT OF THE 1987 ANNUAL TOWN MEETING WHAT IS LAND BANK LEGISLATION? Land bank legislation authorizes a tax on the transfer of real prop - erty, the proceeds from which are put into a separate account in the town treasury and used for purchase and maintenance of land It is 'Home Rule' legislation, authorizing a local option tax, which means that after acceptance by the local town meeting, it must be approved by the state legislature and signed by the Governor IS THERE A HISTORY OF SUCH LEGISLATION IN MASSACHUSETTS? Nantucket , faced with development of its shoreline and open spaces and a dearth of funds to purchase them and hold them in the public domain, wrote and approved the first Massachusetts land bank legis - lation Their bill was passed by the state legislature in 1983, and a similar one for Martha's Vineyard was enacted in 1985 Many other towns have passed, or are -writing their own versions of such a bill , but the legislature has not yet acted on any of them WHY THIS NEW TAX NOW? Open_ land, so important to our quality of life in Lexington, is a rapidly dwindling and non-renewable resource of immense value to the town Development is proceeding at a record pace As land values have soared in recent years, it has become economically feasible to develop smaller, more intractable parcels, and the value of the few remaining large tracts of land has skyrocketed It is within this context that the Commission is working to complete its master plan for conservation land Of the remaining open space in town, the Commission agrees 600 acres should be protected for its ecologic and scenic value The Commission's five year capital budget projection shows a need for approximately $1 million in each of the next five years to make progress towards this goal The town budget cannot absorb those costs within the constraints of Proposition 2 1/2 without making severe cutbacks in other services At the current pace of development, most of the remaining open space will be gone by 1995 or 2000 We must quickly find a way to preserve important parcels of land before nothing but scraps are left A tax on the transfer of real estate , the value of which reflects the quality of life in Lexington, seems an appropriate vehicle for obtaining funds to do so 7 2 CAN WE EXPECT LEGISLATIVE ACTION ON OUR BILL? Recently, the legislature has seemed to be headed towards producing state enabling legislation , which would set uniform standards and would be applicable to towns that choose to accept the legislation The Conservation Commission agrees that even if the state legis - lature chooses to set uniform standards, it is important for Lexing - ton to put before them a bill carefully designed to fit our needs We see flaws in the versions of state enabling legislation that have been produced so far , and believe that a well drafted bill can be influential in the production of a state act , even if not approved as a separate home rule bill by the legislature DID THE STATE TAX CAP REFERENDUM LAST NOVEMBER MAKE LAND BANK TAXES ILLEGAL? Not quite However, a major complication arises from that. referen - dum, approved in last November's election The bill was much more complicated than the ballot's wording would lead one to believe Section 4 of the referendum states that if the state legislature approves of any local option taxes, state tax revenues must be re - duced by an amount as nearly equal as possible to the amount raised locally by the tax Clearly, the legislature will not approve new local option taxes unless this requirement is abolished Senator Kraus has introduced a bill to amend the referendum by striking Sec - tion 4 The Commission agrees that the more local pressure there is to approve Land Bank legislation, the more likely the legislature is to pass Senator Kraus's amendment WHY SHOULD PART OF THE TAX PAY FOR LAND FOR HOUSING? There is, at present , an increasing awareness of the need to provide affordable housing within this town whose soaring real estate prices are excluding all but the most affluent buyers Housing and open space preservation have often been perceived as being in conflict , and the state itself has long tied its self-help reimbursements for purchase of conservation land to the provision of low and moderate income housing The need for legislative approval probably makes a housing component a necessity All versions of enabling legislation proposed up to this time have at least 20% of revenues designated for housing; and Governor Dukakis, in supporting Land Bank legislation, has advocated an even higher percentage for housing The Conservation Commission first proposed keeping the bill strictly a land bank bill , with BOX of revenues going to purchase conservation land, and 20% allotted to purchase of land to use as sites for low and moderate income housing We are persuaded, I 3 however, that the greater need at present is for funds with which to purchase existing housing units to add to the stock of affordable 1 rental housing in town The bill as presented to town meeting will allow both options P WHAT ARE THE SPECIFICS OF THE PROPOSED LAND BANK LEGISLATION? Sections 1-7 deal with the establishment and use of the two funds Sections 8-11 deal with exemptions, payments and penalties 1 Section 12 is a legal formality, and Section 13 deals with notifications etc necessary before the tax can be imposed, and establishes a time for its becoming effective I 1 AMOUNT OF TAX --- A 1 % tax is proposed, with a $100,000 exemption for each transfer of residential property Using 1985 land transfer figures, this would bring in slightly over $1 Million annually -There are 12 other exemptions listed in Section 8, most of them taken from proposed state enabling legislation, including transfers to the government or to charitable organizations, divisions of marital assets, transfers without consideration within an immediate family etc We have included as exemption (d) trans - fers of "property sold at less than market value and subject to deed restrictions ---° , so that sale of units such as those at Muzzey school will not be subject to the tax 2 HOW WILL REVENUES BE DIVIDED BETWEEN CONSERVATION AND HOUSING? --- It is proposed that 80% go into the Conservation Land Bank Fund and 20% into the Housing Fund 3 HOW MAY THE CONSERVATION FUND BE USED? ---Section 4, paragraphs 2-6, sets forth the provisions for use of this fund, and Section 7 sets forth limitations on the use of lands purchased with the fund The Conservation Commission may purchase land or interests in land, but only after approval of a majority of the town meeting, or in the case of bonded or eminent domain purchases, after approval of 2/3 of the town meeting Proposed purchases must be in accordance with a "Conservation Land Bank Plan' (see definitions) The Commission may use the funds without prior town meeting approval I for expenses incidental to land acquisition and to administration of the fund (up to 10% of each year's Conservation Land Bank revenues) , and for maintenance and management of lands purchased with the fund or owned previously (up to 10 % of each year's Conservation Land Bank revenues) A provision is made for an Endowment Fund for land management , into which currently unneeded management funds may be 4 put so that money will be available for that purpose after the tax is eventually abolished Allowance is also made for use of the fund to .pay off previously authorized conservation debt 4. HOW MAY THE HOUSING FUND BE USED?--- This is covered in Section 4, paragraphs 7-9 It is proposed that the Selectmen have control over the housing fund They may purchase housing or land without town meeting approval (unless bonding is necessary, in which case a 2/3 vote of town meeting will be required) and turn them over to the Housing Authority, Lexhab, or some other legal entity established for this purpose When sites for housing are purchased, the appropriate authority, being then owners of the property, will be able to apply for state funds to draw up plans No town meeting approval of the plans will be necessary for scattered site housing that conforms with the regulations of the zoning district in which it is located If town meeting approval for development requiring zoning changes cannot be obtained after two separate attempts, the site must either be used in conformance with the regulations for the zoning district , or must be sold and the proceeds returned to the fund Properties designated for open space preservation on the Conservation Land Bank Plan may not be purchased by the Selectmen for housing 5 HOW WILL THE TAX BE PAID? --- This is-covered primarily in Section 9 The state enabling legislation proposed so far requires that payment be made to the Register of Deeds at the time of transfer and before recording of the deed If payment is not made in full , the deed may not be recorded We do not feel that the Lexington town meeting can impose this extra task on a county employee Having our own tax collector collect the tax before recording of the deed would, however, impose an undue hardship on the real estate lawyers who must see that the tax is paid before recording can take place We have therefore proposed instead that the tax be a lien on the property being transferred That lien will be included on all Lien Certificates issued by the Tax Collector to lawyers during the process of clearing the title Mortgage banks would not allow completion of a transfer without having proof positive that the money was at hand and ready for payment Unless the tax is paid in advance of transfer, the lien on the property will be recorded with the deed, and will remain in force until a certificate of payment , issued by the Tax Collector, is received by the Register of Deeds Payment is due within 15 days after recording of the deed 5 6. WHO IS LIABLE FOR PAYMENT? --- Because the tax is a lien on the property, we have proposed that the buyer be liable If the seller were liable, and were able somehow to defeat the purpose of this Act and effectively disappear without paying all or part of the tax due, the purchaser would eventually have to pay the tax to clear the title to the property This is not, however, a situation we expect to encounter very often There have been arguments that the seller , who is reaping the profits of the sale, could more easily afford to pay the tax However, there is nothing in the Act to prevent the buyer and seller from coming to whatever equitable arrangement suits them for payment of the tax The market will finally determine the maximum amount a property will bring, and in actuality, the tax will probably be shared through some compromise on the sale price, no matter who is liable under the law The state legislature seems to be leaning towards liability of the seller , primarily, we understand, out of a distaste for having legislators vote for a tax that they themselves, as potential home sellers, will not have to pay We think that it is in the interest of the person who will be acquiring a property with a lien on it if he or she is also the person responsible for eliminating that lien 7- ARE THERE PENALTIES FOR NON-PAYMENT ORUNDERPAYMENT? --- Yes, and they are included in Section 1ff and 11 Section 11 also sets forth the appeal procedure available to persons aggrieved by a determination of the tax and/or penalties due