Allentown pushes deed transfer tax referendum that Realtors group calls ‘misleading’
Allentown pushes deed transfer tax referendum that Realtors group calls ‘misleading’
Allentown residents Tuesday will vote whether to eliminate the city’s deed transfer tax assessed on all properties sold in the city.
But the question only tells part of the story, and that’s why the Greater Lehigh Valley Realtors urges residents to vote “no” on the question.
The city wants to increase the deed transfer tax to collect more revenue. To do that, however, voters must first approve a change to the Home Rule Charter to eliminate the tax, also known as the real estate transfer tax. The tax is 2% of the sale price, with the state getting half (1%) and the municipality and school evenly splitting the other 1%.
For example, if a property in the city sells for $100,000, the transfer tax totals $2,000, with the state getting $1,000, and the city and Allentown School District each receiving $500.
However, under the Home Rule Charter that establishes how Allentown operates, city council cannot raise the rates of certain taxes, including the deed transfer tax, above the rate set in 1996. The tax the city collects is set at 0.5%.
To increase the deed tax, the city must first remove it from the Home Rule Charter. Hence, the referendum.
In a memo to council, Mayor Matt Tuerk’s administration said removing the deed transfer tax from the revenue section “empowers Council to examine more equitable revenue sources.”
The city would use the added revenue “to provide funding for programs and services that taxpayers are accustomed to,” according to the administration’s rationale for the change outlined in a memo to city council.
At a council meeting on July 24 where the charter change was discussed, Councilman Santo Napoli said if city council, for example, doubled the deed transfer tax from 0.5% to 1%, the city could collect $2.3 million a year, according to minutes of the meeting.
That money, he said, could be used to provide assistance to homeowners to repair properties and provide financial assistance to increase local home ownership. He noted that in June 46% of properties sold in Allentown went to limited liability corporations, not individuals who would make the properties their home.
At the meeting, city council unanimously approved the referendum and its wording. The Lehigh County Election Board approved the question and placed it on the ballot.
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Allentown Referendum
Shall Section 807(B), Revenue, of the Home Rule Charter of the City of Allentown be amended to allow City Council, by Ordinance, to remove the Deed Transfer Tax?
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The Greater Lehigh Valley Realtors has undertaken a campaign urging voters to vote against the proposal. It developed a website, in English and Spanish, explaining its position.
The organization notes that the “referendum question is misleading to the point where it doesn’t even make sense.”
It points out that city voters by large majorities rejected a change in the deed transfer tax three times - in 2002, 2004 and 2005 - when the questions explicitly mentioned increasing the tax.
Asher Schiavone, director of government affairs for the Greater Lehigh Valley Realtors, summarized the group’s position in an email response to questions.
“Faced with an unclear referendum question, we needed to deliver a very clear message,” he wrote.
“Our informational campaign messaging of ‘Vote NO’ is clear and reflects the will of the voters the last 3 times this question was posed to Allentown residents in the early 2000s. The Greater Lehigh Valley REALTORS [urges] voters to Vote NO if you 1) think the referendum wording should be more transparent, 2) are against a self-imposed tax increase, 3) want to keep housing from becoming even less affordable.”