Homebuyer relief may endanger open space program

THE BALTIMORE SUN

Like a lot of environmentalists, I've been nervous but accepting -- up to now -- of Gov. Parris N. Glendening's vigorous campaign to remake Maryland's image as a pro-business state.

You have to buy his basic premise that a healthy economy and clean environment complement each another even if this happy synergy can be elusive in real life.

On paper, the Maryland Chamber of Commerce buys in too. Quality of life, including a clean environment, is a major element of its recently published economic growth plan.

So it is perplexing how badly the chamber is fumbling the chance for an era of better cooperation -- all for a prize more symbolic than substantive; also one achievable in saner ways. The business group seems close to persuading legislators to subsidize home sales across Maryland by raiding millions from the very program designed to preserve nature as the state develops.

Driving the issue is the popular desire to reduce closing costs for homebuyers, especially first-timers. At $6,500 to $8,400 on typical new homes, costs here are among the nation's highest.

(They actually are double that if you include agents' commissions -- but like Social Security in federal budget negotiations, that item is not on the cutting table).

To the many thousands of dollars involved in closing costs, a state transfer tax of 1/2 of 1 percent contributes several hundred dollars. Half that, typically a few hundred, is paid by the homebuyer; the remainder by the seller.

So, the chamber's proposal to eliminate the tax for first-time buyers, up to the first $150,000 of a home's price, is a modest incentive at best. For the rest of homebuyers, new exemptions sought by the chamber would save about $50 apiece, typically.

Modest, indeed -- but collectively, that transfer tax has been the engine of Maryland's immensely successful Program Open Space, raising more than half a billion dollars since 1969 to preserve about 250 square miles, or 162,000 acres of prime forest, parks, wetlands and agriculture.

The reliance on the transfer tax was the real genius of the program, a national model when Maryland began it. The faster that development proceeded, the faster money built up to make sure an increasingly crowded state had open spaces forever.

The program recognizes that growth not only generates taxes and jobs but also inevitably diminishes irreplaceable natural capital.

Acreage figures can't begin to show the worth and scope of Program Open Space through the years.

Its assets range from the state's second highest waterfall in Harford County, to prime terrain for deer and turkey hunting and near-wilderness hiking in Western Maryland, to miles of unspoiled river front on the Eastern Shore.

Recent open space preservation includes a remnant of the finest old-growth oak forest in America, just a few miles from the Capital Beltway; also protection for Anne Arundel County's last trout stream.

Also greenways in West Baltimore; a waterfront park that is Cambridge's hope for revitalization; prime bay beach access in Southern Maryland; and 2 square miles of public hunting paradise on the Nanticoke River.

For all that, the program has fallen far short of state needs. It was crippled by legislative raids that took more than $250 million to help out with budget crunches in the last decade. Full funding, amounting to $70 million to $90 million a year, will be phased back in completely by next year.

But preservation of land, meanwhile, is about 75,000 acres short of the 1990 goal, which was to preserve 10 per cent of Maryland. And that goal was based on a grand underestimate -- that today's Maryland would have developed about 10 per cent (630,000 acres) of its land. Population growth, combined with sprawl development, has usurped closer to 17 per cent.

Moreover, the program has been stretched to include other objectives: around $8 million a year goes to preserving farmland, a couple million more to endangered species habitat. Add to this the growing realization that open space is far more than just recreation and wildlife habitat. Forests and wetlands are well-documented pollution filters, absorbing and cleansing pollution before it reaches Chesapeake Bay.

And they do it free. A forested acre reduces the runoff of airborne nitrogen, a key bay pollutant, four times more than a paved acre. Sewage plants spend hundreds of millions to reduce nitrogen that much.

All this, the chamber proposes to whack for somewhere between $10 million and $30 million each year -- to save some homebuyers a few per cent on closing costs.

The range of the impact underscores the fact that no one knows how many first-time homebuyers there are, or how to define one. (Is a Virginia millionaire, moving here, one?)

To plunge down this path, as a House Ways and Means subcommittee seems poised to do, would be a travesty. There are better ways to get all, or most, of the way to more reasonable closing costs:

* Pass another chamber-backed measure that changes the pre-payment of a year's property tax -- by far the largest component of the high closing costs.

* Go ahead with some type of transfer tax exemption for first-time buyers, but make sure it won't affect the net amount coming into Program Open Space and can be adjusted in the likely event that fiscal impact projections are off.

Traditional chamber allies, such as the Maryland Association of Realtors, back such a "revenue neutral" measure because they appreciate the benefits of open space to the state's economy.

There are at least a couple of ways to offset losses to the open space program from a first-time homebuyer exemption. Foremost would be to follow the state's own growth policy. Endorsed by all local governments and business groups, it advocates guiding development into existing developed areas and away from forest and farmland.

Accordingly, eliminate all exemptions for buyers of homes that represent sprawl development.

Governor Glendening, a strong advocate of growth management and environmental protection, ought to insist on this, even if it means delaying some of the closing-cost legislation for study over the summer.

Revenue losses from first-time buyers could also be offset by reducing the token exemption on the first $30,000 of all home purchases -- it's worth about $75 per buyer, about 1 per cent of typical closing costs. Yet, look at what even 75 bucks preserves when channeled collectively into Program Open Space -- about 25 acres of typically endangered species habitat, 150 acres of farmland easements, 30 acres of municipal parkland or 275 acres of state parkland.

This year's General Assembly is sure to be a good one for business interests, which is fine. But we desperately need to prove that doesn't mean a bad year for the environment.

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