Then on March 30, in the House Finance Committee, a bill that had nothing to do with raising taxes on maintenance fees – SB2401 SD1, was gutted and replaced with the language from HB2877, the measure previously defeated.
What does this mean for the homeowner that owns a townhome, condominium, or single-family dwelling in a planned community association? If this bill passes, then beginning July 1st of this year, maintenance fees of which are currently exempt from the General Excise Tax (GET), will be taxed. Many associations handle on a monthly basis, up to $100,000 or more on expenses coming and going of which now, that sum will face the tax.
On the principal of the matter, all community associations provide a wide variety of jobs for local people like gardeners, painters, plumbers, security guards etc., of which those wages and related services are already being taxed through GET and income earned by association employees. Coupled with the fact that many of the community associations maintain their own parks, recreation centers, and provide landscaping on city and state owned roads, it is apparent that association members are being hit with paying a tax twice.
This new tax is simply wrong on all fronts. Instead of being given a credit for reducing the demand on government owned facilities, homeowners in associations will be penalized. Unfortunately, the new tax was supported by many of the legislators and when added to all of the other fees and tax increases, this will definitely impact families trying to stay afloat in these economic times.
Many leasehold co-ops and condos are in the process of rent re-negotiations or have recently completed rent re-negotiations (which typically occur after 25-30 years from the lease inception). For example, a resident at Discovery Bay had her lease rent increased from $232 to almost $1,800 for the quarter. Now, in addition to the increased lease rent, leasehold unit owners will be burdened by the 1% tax and possible future increases. This is not the time for taxing homeowners faced with foreclosure or teetering on the brink of bankruptcy, both of which are at all time highs.
In the end, it would be illogical and bad policy to tax money that goes from one hand to the other for items associated with the basic necessities such as water, sewer, property tax and insurance. These common expenses are essentially monies paid to themselves that affect all of the members of the association.
I will continue to vote no on this tax increase and fight to see it defeated. However, I am only one vote out of seventy-six Legislators. You must make your voice made known to your elected representative that you too, are against this tax.