- The Washington Times - Saturday, January 5, 2008

A Virginia real estate tax took effect this week with support from the Northern Virginia Association of Realtors during one of the worst housing slumps on record.

Despite high foreclosure rates and falling home values, the association is backing the tax because revenue from the grantor’s levy would help pay for transportation improvements in Northern Virginia.

“I think right now is a horrible time to hit sellers” with the new tax, said Mary Beth Coya, the Northern Virginia Association of Realtors’ vice president for public and government affairs. But the sacrifice of an additional $4 tax per $1,000 value of the property sold is worthwhile, the real estate trade group says.

“For the first time ever, we went along with an increase in the tax because the transportation problems are so great,” Mrs. Coya said.

The grantor’s tax is a one-time fee paid at settlement levied on home sellers by the Northern Virginia Transportation Authority. State transportation officials estimate it will raise $171 million a year to widen roadways and expand public transit in Northern Virginia. Other taxes and fees levied by the transportation authority on hotels and autos would bring the total annual revenue for transportation to about $325 million.

The Virginia General Assembly approved the grantor’s tax in early 2007 after transportation lobbyists argued worsening traffic conditions left no better choice.

Before Jan. 1, Northern Virginia home sellers paid a grantor’s tax of $1 for every $1,000 of property value for the homes they sold. The new tax raises the rate to $5 for every $1,000 of property value.

“The only way this could have been considered is that 100 percent of the money stays in Northern Virginia,” Mrs. Coya said.

The tax created disputes within the real estate industry. Opponents warned it would hurt their industry and the local economy.

They included the statewide Virginia Association of Realtors, which is not affiliated with the Northern Virginia Association of Realtors.

“Any time additional taxes are imposed on buyers or sellers of real estate, it’s been our experience that the cost of home ownership will increase,” said Lisa Noon, spokeswoman for the Virginia Association of Realtors.

Ned Perry, president of 1st Mariner Bank’s mortgage division, said his company is trying to sell 26 foreclosed houses in Loudoun and Fairfax counties.

The new grantor’s tax “will have an impact on our ability to sell those houses,” he said.

The houses are valued at a total of about $10 million. The grantor’s tax on them rose from $10,000 last week to $50,000 this week.

The higher grantor’s tax applies to home sales in Arlington, Fairfax, Loudoun and Prince William counties and the cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park.

Much of the area is represented by Virginia Sen. Kenneth T. Cuccinelli II, a Republican from Northern Virginia’s 37th District.

Mr. Cuccinelli voted for the grantor’s tax in a departure from his policy of limiting taxation and encouraging private development of transportation infrastructure.

“The only reason I voted for it was because in my area we were getting strangled” with transportation congestion, he said.

He described the legislation that included the grantor’s tax as a compromise bill and “an ugly one,” but one that left no better options.

“In the next five years, we’re never going to see anything else less bad,” Mr. Cuccinelli said.

He also questioned whether the tax could withstand court challenges. A Virginia Supreme Court hearing is scheduled for Tuesday to review whether the Northern Virginia Transportation Authority can impose taxes and fees to pay for transportation projects.

The authority is set to hold a public hearing Thursday at George Mason High School in Falls Church on its six-year transportation plan.

Planned projects include improvements to the Fairfax County Parkway/Fair Lakes/Monument Avenue Interchange, widening of the Prince William County Parkway from four to six lanes, a dedicated transit lane for buses in Arlington and Alexandria and matching funds for purchase or maintenance of Virginia Railway Express locomotives.

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