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Counselor

Only three weeks after Arizonans voted emphatically to ban transfer taxes on home sales, the City Council was preparing to discuss a 1 percent transfer fee on many new homes.

That was until late Friday, when staffers from Councilwoman Regina Romero's office said they would delay the item during Tuesday's council meeting because Romero wanted a broader discussion on the city's affordable-housing trust fund.

The office had wanted to pull the item from the agenda completely, but City Attorney Mike Rankin said it was too late.

Romero and Councilwoman Karin Uhlich previously had backed a "voluntary" 1 percent point-of-sale transfer fee that would have applied to any house or condominium whose builder had entered into a development agreement.

Development agreements are contracts between the city and a developer to do things they otherwise wouldn't do, beyond a standard rezoning. Such agreements are often used to share the cost of building roads and other infrastructure, to collaborate on parking, for pre-annexation accords or when the city sells public land.

Money from the fee — equal to $2,000 on a $200,000 home — would have gone to the city's housing trust fund, used to pay for such things as home repairs and down-payment assistance for low-income residents.

The fee would have applied to any sale of the home in perpetuity and been enforced through a deed restriction attached to the home.

But late Friday, Romero aide Mac Hudson said city staffers had posted the wrong agenda item, and the council office hadn't realized it until being called by a reporter and other council aides.

Once Romero realized the posted agenda item called for a vote on the transfer fee, rather than a broad discussion of the housing trust fund, Hudson said the office moved to pull or delay the item.

Hudson said Romero's office "got the message" that the community wasn't ready for a 1 percent transfer fee, and instead Romero had wanted to discuss the affordable-housing trust fund — what it does, whether it's needed and how to fund it.

Earlier in the day, Romero said the 1 percent transfer fee was intended to be only part of the discussion on how to potentially fund the trust fund.

"We have a wonderful toolbox, but we don't have the tools," she said.

Uhlich said the city has been searching for a long time for a viable and sustainable revenue stream to fund the trust fund and noted that the transfer fee could be one way to do it.

In September, the push for the 1 percent transfer fee threatened to derail a proposal to convert apartments to condominiums Downtown. However, the project was approved unanimously after Romero dropped her push to put a "voluntary" 1 percent transfer fee on the Flats at Julian Drew Block, which proposed converting apartments into 53 condominiums in a 91-year-old building off South Fifth Avenue.

On Nov. 4, nearly 77 percent of Arizona voters passed Proposition 100, which banned any real estate transfer taxes on the sales of homes statewide. In Pima County, more than 70 percent of voters backed Proposition 100.

Citing that vote, the Tucson Association of Realtors' director of public affairs, Colin Zimmerman, said a council vote on the transfer fee would be illegal, or at the very least "against the spirit of the law."

In September, though, he'd stated the opposite, that the "voluntary" fee was probably legal under Proposition 100. However, he contended that something isn't voluntary if you can't get your project approved without it.

Rankin, the city attorney, said Proposition 100 would not "prohibit a negotiated term of a development agreement" such as the transfer fee, and therefore would be legal.

From its creation in 2006 through September, the city's housing trust fund has taken in $650,000 and has committed $385,000 for homeowner repairs, down-payment assistance and employer-assisted housing.