LOBBY DAY 2018 Overview & Talking Points

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LOBBY DAY 2018 Overview & Talking Points This packet outlines the key issues and Talking Points to cover in your meetings with your state legislators.

1 LOBBY DAY 2018 Overview & Talking Points This packet outlines the key issues and Talking Points to cover in your meetings with your state legislators. There is an overview of each bill along with the reasons why NYSAR supports or opposes that particular bill or issue. REALTORS should speak about these key issues if they affect their area in addition to any local matters you want to raise with your legislators. NYSAR Supports: 1. NY First Home Fiscal Study (First-Time Home Buyer Savings Account) Pg. 2 S.7316 (Senator Little) A.9039 (Assemblymember Ramos) Status: Passed Senate Assembly Ways and Means Committee 2. Transparency and Disclosure in Cooperative Housing Pg. 3 S.7523 (Senator Hannon) A (Assemblymember Lavine) Status: Senate Judiciary Committee Assembly Housing Committee S.4551 (Senator Sanders) No Assembly Bill Status: Senate Codes Committee A.3813 (Assemblymember Perry) No Senate Bill Status: Assembly Housing Committee 3. Real Estate Team Definition Pg. 4 S.3537 (Senator Lanza) A.6540 (Assemblymember Cusick) Status: Passed Senate (unanimous) Assembly Judiciary Committee NYSAR Opposes: 1. Real Estate Transfer Tax Increase on Conveyances of $5 million or more; Pg. 5 Additional Flip Tax on Properties in New York City A.9509-B (Assembly One-House Budget Resolution) Status: Pending State Budget negotiations 2. Real Estate Transaction Tax Increases Pg. 6 S.3526-B (Senator Breslin) A.3028-B (Assemblymember Fahy) Status: Senate Local Government Committee Assembly Calendar Number 241 S.2686 (Senator Breslin) Status: Senate Environmental Conservation Committee A.3990-A; A.9541-A (Assemblymember Thiele) Status: Assembly Local Governments Committee S.5364-A (Senator Seward) A.7209-A (Assemblymember Magee) Status: Senate Investigations & Gov. Operations Committee Assembly Ways and Means Committee A.9941 (Assemblymember Brian Miller) Status: Assembly Ways and Means Committee

2 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: NY First Home Feasibility Study (First-time home buyer savings account) S.7316 (Little) A.9039 (Ramos) Status: Passed Senate 1/8/18 Assembly Ways and Means Committee Overview: NYSAR-supported legislation to create a first-time home buyer savings account in New York passed the State Senate and Assembly in June 2017 and was approved by Governor Cuomo in December However, in Governor Cuomo s approval memo of the NY First Home legislation, he noted that due to fiscal and technical concerns, and rather than vetoing the bill, he would submit a chapter amendment (S.7316/A.9039) that would repeal the approved law and replace it with language requiring the Division of Housing and Community Renewal to issue a feasibility and economic impact study before June 30, NYSAR continues to strongly support the creation of a New York State first-time homebuyer savings account that provides for a state income tax deduction/subtraction of up to $5,000 per year ($10,000 per year for couples) to help New Yorkers save for the purchase of a first home. NYSAR will continue to work with legislators and state agencies to advance the program and introduce new legislation to fully implement a first-time homebuyer savings account. Please thank lawmakers for their support of last year s NY First Home bill, which passed the Senate unanimously and passed the Assembly with only 1 No Vote by Assemblymember Galef. Please also provide your lawmaker(s) with an update on the status of the bill by explaining the governor s action to repeal the program and issue a chapter amendment requiring a feasibility study that is due on or before June 30, The Assembly still needs to pass the bill (A.9039) directing the New York Division of Housing and Community Renewal to issue the study. The Senate already passed the bill (S.7316). Public Support and Economic Benefits: Polling showed overwhelming public support for the NY First Home program 1 : o 84 percent of New York voters supported the NY First Home program. o 80 percent of New York voters agree that the Governor and state Legislature should make it a priority to incentivize New Yorkers to save for a first home. An independent economic study found that the state and counties would see a 5-1 return on the state s investment in the program, resulting from increased tax revenue and economic development from participation in the program: o 19,714 home purchases (new and existing over five years); o $31m in revenue to NYS and counties in year one; $166m in revenue to NYS and counties over 5 years. For a copy of the economic study of NY First Home, lawmakers may contact Mike Kelly at NYSAR, ext Siena College Research Institute: NY Homeownership Poll conducted Nov. 27 Dec. 1,

3 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Transparency and Disclosure in Cooperative Housing Purchase S.7523 (Hannon) A (Lavine) Status: Senate Judiciary Committee Assembly Housing Committee S.4551 (Sanders) Prior Assembly Sponsor: Englebright Status: Senate Codes Committee No Senate Bill Sponsor A.3813 (Perry) Status: Assembly Housing Committee Overview: NYSAR strongly supports legislation bringing greater transparency to the process of buying and selling cooperative apartments by setting up a mandatory timeline for the review, acceptance and/or rejection of a prospective purchaser s application. S.7523/A (Hannon/Lavine) would establish clear timelines for the receipt, acknowledgement, completion and acceptance and/or rejection of a cooperative purchase application by o Requiring a prospective purchaser s application to be acknowledged by the cooperative corporation within 10 business days of receipt. Failure by the board to acknowledge would result in an application being deemed complete. Following the submission of a completed application, a cooperative corporation has 45 days to inform a prospective purchaser whether consent to a sale is granted or denied. If after this period the cooperative corporation does not act on the application, a prospective purchaser may inform that failure to act within 10 days will constitute consent to the sale. If no action is taken following this 10-day notice period, the cooperative corporation shall be deemed to have consented to the sale. S.4551 (Sanders) would simply require a written statement of a reason why an application/applicant is rejected by a cooperative board. The legislation does not have a timeline component. A.3813 (Perry) would provide for a timeline and would require a cooperative board to give a reason why an application/applicant is rejected. If they are not a sponsor, ask them to sign on to the bills and encourage their conference to bring the bills to the floor this year for a vote, particularly the S.7523/A (Hannon/Lavine) bill. Please explain to lawmakers that currently cooperative boards are not required to respond to applicants in any timely manner. Boards can simply delay responding to an application for extended periods of time. During that period, the applicant may incur additional legal expenses, bank fees, and the potential loss of their financing agreement. These bills will remedy this problem by setting up a definitive timeline for a response. Why NYSAR Supports: If passed, these bills would significantly improve the transparency of the cooperative purchase by adding uniformity and predictability to the application process. Creating a timeline, as provided in S.7523/A would help all parties involved without imposing an undue burden on cooperative boards, or inhibiting the boards right to legally deny applications, nor diminish its fiduciary responsibilities to its shareholders. Similar legislation exists in Suffolk County and Rockland County and is being considered in Westchester County. In the sale of feesimple residential housing, a buyer negotiates with the seller for the transfer of real property between the two parties. In the process to purchase a cooperative apartment, however, the purchaser does not deal directly with the seller as the final arbiter to the transaction, but rather must apply to a cooperative board or committee for ultimate approval. The nature of cooperative boards application and review processes can have an injurious effect on the buyer and the seller, while also allowing cooperative boards the ability to unfairly deny housing opportunities to prospective buyers. The result can be that potential buyers will meet all reasonable financial criteria for ownership, but they are illegally denied or rejected from purchasing shares in the coop. 3

4 NYSAR SUPPORTS ENACTMENT OF THE FOLLOWING: Real Estate Team Definition S.3537 (Lanza) A.6540 (Cusick) Status: Passed Senate 3/13/18 (unanimous) Assembly Judiciary Committee Overview and Why NYSAR Supports: NYSAR strongly supports legislation that would define real estate teams in statute under Real Property Law. In recent years, teams have become a popular business model for real estate professionals. A real estate team will often consist of several individuals who work together to provide services to the public as a group. For example, one member of the team might handle showings, another may work on staging and open houses, while another may take care of obtaining and handling new listings, etc. This differs from the standard practice where an individual broker/salesperson will handle the entire transaction from listing to closing. The team model offers great benefits to the public and is a consumer-friendly method of handling the real estate transaction. Based on the increased popularity and use of teams in New York, the revised real estate advertising guidelines approved by the State Board of Real Estate in April 2013, have addressed and recognized advertising by real estate teams through state regulation. However, New York Real Property Law does not yet define teams like it does real estate broker, salesperson, associate broker etc. This bill aims to bridge the gap and create continuity between agency regulation and law by defining what a real estate team is under Real Property Law. Please ask Assemblymembers to consider sponsoring the bill and encourage their conference to bring the bill to the floor this year for a vote. Also, please thank your Senator for passing the bill on March 13,

5 NYSAR OPPOSES ENACTMENT OF THE FOLLOWING: Real Estate Transfer Tax Increase on Conveyances of $5 million or more; New Flip Tax on Properties in New York City A.9509-B (Assembly One-House Budget Resolution, Parts RR and UU) Status: Pending State Budget negotiations Overview and Why NYSAR Opposes: The State Assembly Majority released their one-house budget resolution on March 12, In their resolution, the Assembly proposes increases in state real estate transfer tax rates (A.9509-B, part RR) on the conveyances of residential and commercial properties in New York State valued over $5 million. (Proposed increases range from an additional 0.3 % to 1.5 % ). This is in addition to the existing state transfer tax rate of $4 per $1,000, New York City s transfer tax rates of 1 % to % depending on the value and type of property, as well as an additional 1 % New York City Mansion Tax on any property valued over $1 million, which is paid by the buyer. Additionally, the Assembly budget resolution proposes to institute a new Flip Tax (A.9509-B, part UU) which would impose an additional real estate transfer tax on properties (defined as: properties of 1-5 separate residential units) that are transferred or flipped within two years of the original purchase, within the City of New York. Residential properties within New York City sold or flipped within one year from a prior purchase or conveyance would be subject to an additional 15 percent real estate transfer tax to be paid by the seller, or an additional 10 percent real estate transfer tax if the property was transferred within two years. There are several exemptions to this tax, including conveyance to a family member, financial hardship or loss in value, or death. If the value of the property declined between the pending conveyance and the original sale within the prior two years, the property would also be exempt from the imposition of the additional tax. New Yorkers are being overtaxed at an alarming rate. These new taxes are being proposed at a time when our state is struggling to attract new businesses and industry. New York also saw an overall population loss in 2016 for the first time in a decade. New York State is already regarded as one of the highest taxed states in the country. In fact, New York ranked 49 th in a 2018 nationwide study of state business taxes done by the Tax Foundation. Raising the cost of purchasing real property will only continue to make us less competitive economically with other states. These measures are seen are revenue generators by the Assembly majority but ironically will only serve to dampen real estate activity and reduce revenues from existing real estate transaction taxes such as the transfer tax and mortgage recording tax. And although these new real estate transfer tax increase proposals are paid by the seller, in reality the payment of these taxes will become a negotiation between the seller and the purchaser. These proposals would dramatically increase the tax burden imposed on the real estate transaction, particularly in New York City, and would make home buying and renting less affordable for residents. New York State should be working to approve legislation that encourages businesses and individuals to move and stay in New York, not impose new and higher taxes that are driving people and businesses away. Please ask Assemblymembers to oppose these bills and ask their conference leaders to remove these provisions during final budget negotiations. Please ask Senators to hold the line on these harmful tax increases by opposing these proposals and asking conference leaders to remove these provisions during final budget negotiations. 5

6 NYSAR OPPOSES ENACTMENT OF THE FOLLOWING: Additional Real Estate Transaction Tax Increases Real Estate Transfer Tax to Create Community Preservation Fund (NEW TAX) S.3526-B (Breslin) A.3028-B (Fahy) Status: Senate Local Government Assembly Calendar No. 241 S.2686 (Breslin) Status: Senate Environmental Conservation A.3990-A (Thiele) Status: Assembly Local Governments Real Estate Transfer Tax to Create Peconic Bay Community Housing Revolving Fund (NEW TAX) A.9541-A (Thiele) Status: Assembly Local Governments Otsego County Mortgage Recording Tax Increase (NEW TAX) S.5364-A (Seward) A.7209-A (Magee) Status: Senate Investigations & Government Operations Committee Assembly Ways and Means Committee A.9941 (B. Miller) Status: Assembly Ways and Means Committee Overview and Why NYSAR Opposes: NYSAR strongly opposes real estate transfer taxes and mortgage recording taxes at all levels of government. The Community Preservation Fund and Housing Revolving Fund legislation would allow municipalities to increase the real estate transfer tax up to 2 percent to provide a revenue stream for the respective funds: S.3526-B/A.3028-B would specifically allow the Town of Bethlehem to impose an additional 2 percent real estate transfer tax through a public referendum. A.3990-A would allow any municipality outside of New York City to attempt to impose such a tax to create a community preservation fund. A.9541-A would allow the Peconic Bay region to impose an additional 2 percent real estate transfer tax through public referendum. With regard to the Community Preservation and Housing Fund bills, NYSAR respects communities wishing to preserve their neighborhoods and establishing a revolving fund for housing, however, funding for such initiatives should not be placed solely on the backs of buyers and sellers of real estate. Additionally, S.5364-A/A.7209-A and A.9941, which impose new increases to the Mortgage Recording Tax rate ($.25 per $100 financed and $.50 per $100 financed respectively) in Otsego County, are just the latest examples of municipalities attempting to raise taxes on the real estate transaction. The mortgage recording tax is a regressive tax, which if the homebuyer pays cash for the property, the mortgage recording tax is not imposed. The vast majority of purchasers who cannot afford to pay cash for their home are then penalized and forced to pay additional state and local mortgage recording taxes. More frequently, local governments are looking to the real estate transaction for additional revenue streams by extending and increasing local Mortgage Recording and Real Estate Transfer Tax rates on homebuyers. Increasing real estate transaction taxes simply robs equity from homebuyers who could better use such funds towards down payments. New York State consistently ranks at or near the top of states with the highest real estate closing costs in the nation. In fact, New York had the dubious dishonor of having the highest closing costs in the country in 6

7 Further increases to the tax burden imposed on the real estate transaction will prevent prospective purchasers from being able to achieve the American dream of homeownership throughout the state. Please ask lawmakers in the Assembly and Senate to oppose these bills and vote NO if the bills come to a vote in committee or on the floor. 2 Bankrate.com: Bankrate s 2017 Closing Costs Survey - Average Closing Costs by State, May 16,

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

The People of the State of New York, represented in Senate and Assembly, do enact as follows: Page 1 of 5 STATE OF NEW YORK 7523 IN SENATE January 19, 2018 Introduced by Sen. HANNON -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend