Before I go too far into this posting I want to make one thing clear. I do not live in Red Hook. I do business there and have always enjoyed a walk down Broadway or a ride down Fraleigh Lane to see friends. The golf course is beautiful as is the sub-division "The Fairways" that I helped finance. Red Hook is a great town. Combined with the rest of Northern Dutchess County it is a vibrant area with a great combination of natural beauty and tasteful development.

The reason I wanted to state this is because I have benefited from the beauty of Red Hook. It attracts many home buyers from Metropolitan New York and Westchester County. They want to come to an area that still has plenty of open area and a small town atmosphere that they are missing. They are trying to get to something that Red Hook offers. This is not an issue that is lost on the people of Red Hook. Over the past several months there has been a fight in town over the issue of maintaining open space. In order to maintain the character of the town the town fathers are proposing to purchase the development rights from qualified parcels and keep them forever open and free of development. On the surface this sounds like noble idea. You need to peel back the onion to get the full picture.

The new law in Red Hook is authorized by the Community Preservation Act. This law enables small towns to take action to maintain the character of the town. This can be done by preserving and restoring historic buildings and districts. It can also be used to raise capital to purchase development rights from farmers and other owners of large parcels of land to preserve them as open space for the enjoyment and recreation of the citizens of the town.

People will not give away their development rights. They must be purchased. Currently most of the open space in the Town of Red Hook is owned by farmers and part-time farmers who can sell the development rights to maintain the farmland as open space. Once purchased the parcel can't be developed, but can still benefit from the current tax code that reduces property tax assessments for farms and they can still operate the farm to maintain other income tax benefits but writing off losses in farm operation against earnings and profit from other business activities. This is not wrong; it is simply using the tax code to your benefit. Basically the new law could benefit large landowners, who have no intention of developing by paying them for their development rights.

These owners currently receive over $1,000,000 in tax reductions for their farm status from the town.

The town does not have the money to pay for these rights. The purpose of the vote on May 1st will be to allow the town to set up this program and fund their portion through a transfer tax paid for by the buyer. The tax will be a 2% tax on the difference between the sales price and the median home price for Dutchess County. The tax would be paid by people who are purchasing homes in excess of the median home price for Dutchess County. Currently the median home price in Dutchess County for 2006 is $356,900. This number was provided by the Mid Hudson Multiple Listing Service. It is important to note that the Mid Hudson Multiple Listing Service will not be the authority upon which to base the tax. I contacted them as they were able to provide quick and accurate information for this example. The MLS only tracks transactions that are posted by its members.

Here is how the tax would work. You purchase a home for $450,000. Take the purchase price and subtract the median price ($450,000 - $356,900 = $93,100). The tax will be levied against the $93,100. The transfer tax on this transaction would be $1,862.00 ($93,100 x2%). If the buyer made a 10% down payment their loan amount would be $405,000. This means hey would have mortgage tax of $3,215.00. This is $5,077.00 in transfer taxes for purchasing their new home. The shoestring that the home buyers are on just got shorter.

Do you really think the buyer is paying the tax, especially in a buyer's market? It will become another negotiation between buyer, seller and real estate agent. I can hear it now. "I love the house, but if you want me to buy it you will have to pay the transfer tax."

Let me make one thing clear. The tax applies to select properties. The tax will be levied against home sales that exceed the median sale price for Dutchess County. In Red Hook this predominantly impacts single family home sales. It will impact commercial property sales as well, although Red Hook does not have large commercial tracks. Finally, it does not impact the sale of the properties the law is designed to protect. The owners of the large parcels, who have sold their development rights, will not have to pay the tax when they sell their property. That is wrong.

If open space is so important and the whole town benefits, why do only a few have to pay the tab. Wake up Red Hook, you are being sold the wrong package.

For the record, I am for the preservation of the character of all towns. I live in Saugerties, a community not too different from Red Hook. We have farms and open areas and the Catskill Mountains. We do not have a tax for new homeowners to foot the bill for this To be sure we have active debates over the use of land and it is not easy to develop property there, but there is a dialog. If this law passes in Red Hook, the dialog will be over as you will have turned over the application of this law to a committee of 5-7 people as stated in the proposed law. The law states that they must have demonstrated experience in conservation or land preservation. It does not state how they will be selected or by whom. I am sure it won't be political.

Here are a couple of questions that need to be answered.

If the transfer tax enacted does not cover the costs of the program, where will the other money come from?

How will it be raised?

What if the tax causes people to select homes in other communities or has a negative impact on home prices, will their projections have a shortfall?

Builders pay large amounts in impact fees when developing a parcel of land. If you drive out the builders where will these impact fee come from?

The answer to this is that these fees will come out of your pockets. You live there you pay there. Like other towns in the area they will make sure they maximize each assessment and raise many of the fees you already pay. This will bring money in to cover the shortfall.

If the town has to borrow money to cover the shortfall, how will they do this?

Will the law being enacted enable the Town Board to borrow money to support this program without going back to the voters?

Maintaining open space and the historic character of our small towns in important. I do not think that anyone on either side of this issue is against that. Creating a suburban sprawl is not in the best interests of anyone. It hurts the land owner, future buyers, builders, real estate agents and lenders alike. Using the bill as proposed to tax a select few while even fewer folks benefit is inherently unfair. If open space is viewed as critical by all residents of the town of Red Hook, then all should be willing to pay for it. The law as stated will discriminate against home-buyers and sellers in the area by placing the financial burden of this plan squarely on these few shoulders.

I am for anything that benefits me financially...especially if I can get someone else to pay for it and make them feel good about it.

My mother always said not to complain about something unless you can offer a solution. If this is a critical issue to all of the residents of Red Hook they should be willing to pay for it through their property taxes. A small adjustment there will more easily raise the funds than imposing this tax. The amounts will be smaller as well. It can be done as a one time assessment as well. Once the funds are raised they can be distributed to purchase the development rights. In addition the assessment would also be borne by those who benefit. Why should the town tax a few people to benefit even fewer people so that they can receive a lump sum of cash (in the hundreds of thousands in many cases) to maintain their current large parcels of land at a discounted tax rate?

Finally, the folks who are working for the new law are not poor farmers; they are wealthy landowners who are trying to sell a use right on their property to gain a financial windfall. Like any smart business person, they have found a way for you to pay for it while making you feel good about it. They gain and it costs them nothing.  They are also trying to make the folks who are against the proposal look bad. We are not against clean water; we drink it just like you do.

We are against the unfair implementation of this law and we are against taxing a few to benefit the fewer.

These reasons are not as sexy or emotional as accusing someone of being against the environment and clean water. If the plan as proposed is so good and will benefit the community, why do its merits have to be hidden behind these kinds of accusations?

This is obviously important. Why not take the time to study and implement a fair and comprehensive program in a legitimate fashion. One that does not tax a few unfairly or leave the town exposed to conflict of interest law suits, which are bound to occur. If you think paying for the development rights will be expensive, waiting until the town had to pay attorney fees to defend it self against a law suit from someone whose property was turned down.
 
For more information please go to http://notransfertax.com I encourage you to find out more and get the facts. This is an important vote for the future of Red Hook. Don't vote with your heart and with false fervor that you are saving Red Hook by voting for this. Ask your representatives to answer the questions I have outlined above and make sure they give you the right answer. Maybe if they hear themselves say it enough times they will realize that this is a good idea but a bad proposal to implement it.