PAR urges legislators to stop adding fees to real estate transaction

The Pennsylvania Association of Realtors® presented testimony regarding blight before members of the Senate and House Policy Committees in Pittsburgh yesterday.

Mark Mohn, vice chair of PAR’s Legislative Committee, said while Realtors® understand the impact blighted properties have on the value of surrounding buildings, the association thinks it’s unfair to levy taxes and fees on homeowners and homebuyers as a means to finance blight remediation.

“No one knows better than Realtors® how abandoned real estate affects the value of surrounding properties,” Mohn said. “According to the 2015 Keep America Beautiful report, blighted residential houses can impact nearby homes, decreasing their values by as much as $7,000.”

In the past, PAR has supported legislation that addressed issues surrounding blight. PAR supports House Bill 773, which would reduce the time frame for adverse possession from 21 years to 10 years. The association also supports proposed legislation that would reduce the time frame for fixing code violations from 18 months to 12 months.

“However, we believe it’s unreasonable to continue to use homeowners and homebuyers as the financial resource to fund a host of programs and services that should be funded by state or local broad-based taxes,” Mohn said. “The real estate market has become an easy target to impose additional fees to the transaction to help fund a range of programs. We are slowly picking away at the American dream of homeownership.”

Currently, Senate Bill 486 has proposed allowing counties to impose up to an additional $15 fee to file a deed and up to $15 to file mortgage documents to fund blight demolition. On the whole, document filing fees have doubled in the past 10 years. Each fee piled onto the real estate transaction risks losing more first-time homebuyers. “It’s unfair that responsible property owners and buyers continue to be punished for an issue that affects the entire community,” he said.

Mohn cited examples of properties in Berks County where he works as a Realtor®. “For severely blight-stricken areas like the city of Reading, the financial costs of adding additional fees to the transaction are even worse. An average-priced home of $57,867 has an average of $1,820 in real estate taxes. Reading applies a burdensome 5 percent realty transfer tax, making the closing costs more than $10,800. As interest rates increase, these costs will continue to skyrocket and knock more and more homebuyers out of the market. There simply is no more meat on the bone for added fees,” he said.

PAR is urging legislators to consider alternative methods of funding blight remediation. Many other states allow municipalities to hold a bond referendum to provide financing for blight remediation. This gives a voice to the residents who are affected by blight in their communities and would allow the county to collect funding from a broader base. In addition, new innovative ideas like Social Impact Bonds encourage investors to find a course of action that is likely to improve blighted spaces and yields savings. Municipalities agree to pay back outside investors for a successful transformation, garnering payment from the expected savings of less blight such as reduced police, fire and public welfare costs.

Other organizations testifying included: Urban Redevelopment Authority, Steel Rivers Council of Governments, Turtle Creek Council of Governments, Pennsylvania Housing Alliance, Wilkinsburg Community Development Corporation, Pennsylvania Economy League of Greater Pittsburgh, Pittsburgh Lank Banks, and Bridgeway Capital.