COUNCIL COMMITTEES
The Council Committees Meeting was held on November 8, 1999, at 6:45 p.m., with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Pitts, Mr. Leary, Mr. Truitt, Mr. Carey, Mrs. Malone, Mr. Salters, Mr. Weller, and Mayor Hutchison.
AGENDA ADDITIONS/DELETIONS
Mr. Leary moved for approval of the agenda, seconded by Mr. Carey and unanimously carried.
LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Councilman Leary, Councilwoman Malone, Mr. Gorman, and Mr. Merritt.
Proposed Ordinance - First Time Home Buyer - Transfer Tax Exemption
For the past several months, members have been reviewing the transfer tax exemption program for first time home buyers. During the Regular Council Meeting of October 25, 1999, members considered the committee’s recommendation regarding the program and approved the following recommendations:
1.Require mortgage companies to certify that, to the best of their knowledge, buyers have never held title to a residential property, stipulating that this be brought back for review in one (1) year to determine if it has caused hardship with regard to settlement.
2.Inserting a penalty section specifying fines and/or legal actions to be enforced if ordinance violations occur.
3.Include a non-refundable section stipulating that after a realty transfer tax is paid, any subsequent first time home buyer refund requests will not be honored.
4.Authorize the City Assessor to create a City of Dover First Time Home Buyers Exemption form which, after Council’s acceptance, will be distributed to all real estate attorneys as the only form accepted by the City.
It was noted that approval of these recommendations require an ordinance amendment.
Mr. Lucas, City Assessor, advised members that, as a result of Council’s action to approve the recommendations, the appropriate forms and proposed ordinance were submitted to City Solicitor Rodriguez for his review. The ordinance was revised by deleting the exemption cap and fine, adding language that requires the lending institution to submit an affidavit certifying to the first time home buyer’s qualifications, and changing the effective date to January 1, 2000. Mr. Rodriguez also confirmed that two (2) affidavit forms appear to be legally sufficient.
Due to the first and final reading requirements of the proposed ordinance, Mr. Lucas requested that the implementation date be changed to become effective February 1, 2000.
Mr. Salters moved to recommend approval of the proposed ordinance, seconded by Mrs. Malone.
Mr. Leary noted that the third sentence of the proposed ordinance states “. . . and provide a similar affidavit from his or her lending institution”, and reiterated concerns previously mentioned by mortgage lenders that the affidavit could delay settlement process and could be an expense to those that the program is to be assisting. It was his feeling that such a requirement would not be good business practice and suggested eliminating that portion of the ordinance.
After discussing this issue with lending institutions, Mr. Lambert stated that he understands the difficulties involved with requiring an affidavit from the lending institution. In accordance with the proposed ordinance, if an individual falsifies previous ownership, there would be a 1½% per month penalty on unpaid balances and upon Council’s directive, the matter could be referred to the Attorney General for criminal prosecution. Mr. Lambert felt that there should be a penalty implemented for those that falsify previous ownership and suggested that a $1,000 fine be included to deter individuals from falsifying this information.
Mr. Leary noted that the referral to the Attorney General would be for criminal prosecution, not civil.
Mayor Hutchison questioned referring such a matter to the Attorney General when prosecution could be accomplished through the Dover Police Department.
Mr. Lucas relayed concern with the concept of instituting a fine, explaining that there have been instances in the past when someone has signed a statement to receive the first time home buyers exemption only to discover that they did not qualify for the exemption. As examples, he advised members that there was a co-signer of a mortgage that was required to have their name appear on the deed, and who signed an affidavit indicating that they were not a previous home owner. Although they did not live in the home, since they were a co-signer and appeared on the deed, they were not eligible for the first time home buyer exemption. This individual is currently in the process of reimbursing the City for the amount that should have been paid at settlement. Also, Mr. Lucas advised members that the City allows for the first time home buyer exemption when a vacant lot is purchased, with the stipulation that a home will be built within 90 days of the purchase. There was an instance whereby a buyer purchased a lot, completed the exemption form at settlement and the exemption was granted. Although the purchaser had intentions of building a home on the lot, they were not planning on doing so in 90 days. This being some type of misunderstanding, the property owner has reimbursed the City for the exemption granted. Referring to the suggestion of instituting a fine, Mr. Lucas stated that legitimately both of these individuals would have been subjected to the $1,000 fine; however, it was his opinion that a fine would not have been appropriate.
Mr. Leary moved to recommend an amendment by striking the phrase “and provide a similar affidavit from his or her lending institution” from the third sentence of the proposed ordinance, seconded by Mr. Merritt and carried with Mrs. Malone voting no.
On a call for the question by Mr. Salters, the motion to recommend approval of the proposed ordinance, as amended, (Attachment #1) was carried with Mrs. Malone voting no.
Mr. Leary moved for adjournment, seconded by Mr. Salters and unanimously carried.
Meeting Adjourned at 7:10 P.M.
Respectfully submitted,
Robin R. Christiansen
Council President
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