December 17, 2014
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Realtors fear bills would impede growth

Realtors rallied at the State House yesterday to bring attention to five pieces of proposed legislation they say would reverse gains in the housing market and could result in the loss of 2,000 jobs.

Judging from the initial response from the office of House Speaker Nicholas Mattiello, the demonstrators don’t have too much to fear. Mattiello has made revitalization of the economy his top priority.

But the realtors aren’t taking any chances.

Susan Arnold, chief executive officer of the Rhode Island Association of Realtors, said earlier in the day she hoped about 100 members would show up in an effort to underscore their concerns.

Arnold, who is an attorney, said she personally doesn’t have an issue with the intent of some of the measures. She said, however, enacting them at this point would “place a burden on the economy and the homeowner, which we certainly do not need.”

While Arnold agrees more affordable housing is needed, she said an increase in the real estate conveyance tax by 25 percent to subsidize rental housing would hurt first-time homebuyers. She said it would appear that the increase is not much when compared to the overall cost of a property, but to many people just starting off it can mean a lot.

“Right now we’re in the midst of a nice up tick in homes,” she said. “We don’t want to cripple anything.”

“Our legislators need to understand that we are just starting to recover from one of the worst housing downturns in decades and we’re still on shaky ground. Our inventory of homes for sale is extremely low. Adding more financial hurdles for sellers could stop the housing recovery in its track,” said association president Robert Martin in a statement.

The realtors are also troubled by House bill 7724 and Senate bill 2684, which would require all cesspools to be replaced within 12 months of transfer.

The legislation has gained the endorsement of environmental groups. Arnold notes that neither Connecticut nor Massachusetts have similar legislation and pointed out that since the Department of Environmental Management has identified cesspools as a potential source of water pollution and stepped up awareness of the situation, the number of cesspools in the state have been reduced to 25,000 from 50,000. Arnold said septic systems to replace cesspools cost a minimum of $15,000 and can run to twice and three times that amount.

Requiring new owners to replace a cesspool within 12 months of acquiring a property, she said, would have an adverse effect of those trying to sell. Buyers would just look to buy another house, she said.

Bruce Lane, broker owner of Williams & Stuart Real Estate with offices in Warwick, Cranston and Pawtuxet Village, agrees that cesspools should be eliminated, but over a period of time and with a program that enables people to stretch out payments. Lane is especially concerned by Senate bill 2409, which would change the status of independent contractors.

If enacted, the bill would override the Internal Revenue Service definition of independent contractors, requiring agencies like his to define brokers as employees subject to payroll taxes, disability insurance and Workers Compensation. The bill is not restricted to real estate brokers and would change the status of all independent contractors.

Lane said his firm has 48 agents. Of the total, he said, he has five employees who are on the payroll.

If required to place all 48 on the payroll, Lane said he would be faced with multiple additional costs – not to mention requirements under the federal health care law.

“This is such a scary bill on such a fragile economy,” he said.

Lane estimated of the state’s 4,000 real estate brokers about half would lose their jobs.

In an informal conversation Tuesday at the State House, Mattiello said he had problems with the independent contractor bill and any measure that would hinder growth of the economy. Mattiello’s spokesman, Larry Berman, hoped to have a more defined position statement as of yesterday afternoon. That was not forthcoming by the Beacon deadline. The realtors also have issues with House bill 7904, which would give DEM the right to demand energy reductions in all buildings, and Senate bill 2562, which would increase lead fines from $500 to $5,000.


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