Tax sought on land transfers

Commission votes 8-3 to request legislative action

By Michael Erskine for The Commercial Appeal

December 21, 2004

The Shelby County Commission, after pointed debate with leaders of the real estate and development industries, voted 8-3 Monday to ask state legislators to pass a countywide tax on real estate transfers.

The tax, the big-ticket revenue item on the county's legislative agenda for next year, could generate $18 million to $20 million a year to help pay off county debt or fund school operations.

County officials, faced with a debt that's reached $1.7 billion, are looking for revenue sources other than property taxes to help pay essential costs.

But the lack of a unanimous vote by the commission Monday could spell major trouble for the proposal at the state level.

State Sen. Mark Norris, vice chairman of the county's legislative delegation, said state leaders want unanimous support from local bodies before acting on major legislation, something lacking in this case.

"It's going to have a rough way to go," Norris said.

If approved by the state, a vote of two-thirds of the commission in favor of the tax would be required for it to be enacted. A similar bill failed to win state approval in 2001.

The commission delayed action until Jan. 10 on two other related proposals for revenue sources -- an impact fee and an adequate facilities tax.

The transfer tax would be applied to real estate sales countywide. The maximum rate called for in the proposal is 37 cents for every $100 of house value, meaning it would add $370 to the closing costs of a $100,000 house. The county tax would be equal to what the state currently collects on real estate transfers.

Bob Turner, president of the Memphis Area Association of Realtors, called the three proposed taxes a "Band-Aid" approach to solving the county's fiscal problems that will hurt house buyers.

John Duke, former president of the Memphis Area Home Builders Association, said less spending, not more taxes, was the answer.

"We are losing the battle for jobs and housing to DeSoto County and Fayette County," he said.

Some commissioners, however, grew irritated at the staunch objections of industry officials.

Commissioner Julian Bolton said the county has been very good to the real estate and development industries over the years, and now those industries need to work with county officials to find new revenue.

"Because you won't partner with us, you're losing me, and I think you're losing others, too," Bolton said, alluding to his future votes on new developments.

Commissioner Deidre Malone said the commission hasn't seen a development it hasn't supported. "We have to stop at a certain point and decide what the right thing to do is for all of Shelby County," she said.

Voting in favor of the request for a real estate transfer tax were commissioners Bolton, Malone, Walter Bailey, Joe Ford, Michael Hooks, Cleo Kirk and Bruce Thompson. John Willingham initially passed but changed his vote to "yes" before it was recorded.

Commissioners George Flinn, Tom Moss and David Lillard voted "no." Joyce Avery abstained. Marilyn Loeffel was absent.