Realtors chief resigns amid debate on tax

LaRocca says decision is unrelated to fight over transfer levy

Had `irreconcilable differences'

Bond-rating official urges county to continue capital projects spending

February 06, 2003|By Larry Carson | Larry Carson,SUN STAFF

The president of the real estate group battling to defeat the Robey administration's plan to increase the Howard property transfer tax has resigned, just as the fight is coming to a head.

Rick LaRocca said yesterday that his action is not related to the tax issue that will be the subject of a key public hearing tonight in Howard County Council chambers, but he agreed that the timing of his decision is awkward.

County Executive James N. Robey wants state legislators to approve an increase in the transfer tax to raise $215 million for school construction over eight years, and then pay off the debt. After tonight's legislative hearing in Ellicott City, the delegation is scheduled to vote on the bill next week in Annapolis.

Opposing the tax increase, the county's Realtors group has sponsored newspaper advertisements and lobbied legislators because the measure would increase the cost of closing on a house. Buying a $250,000 home would cost $1,250 more at settlement.

"The transfer tax is not part of the decision," LaRocca said about his announcement Monday at a board meeting of the Howard County Association of Realtors. "I am in support of the board's decision on that."

It was unclear whether his departure will affect how the county's state legislators vote on the issue next week.

LaRocca said he left because of what amounted to "irreconcilable differences" with board members that "came down to integrity and principle." He would not elaborate further.

Melvina Brown, another agent who is the group's treasurer, refused to talk about the resignation, but she said the Realtors will be represented at the hearing tonight. "We'll be there," she said.

Meanwhile, an official of one of the big three New York bond-rating houses told Howard County's Spending Affordability Committee yesterday that failing to build and maintain roads, bridges, buildings and schools can hurt the county's credit rating as much as overspending could.

Robey's transfer tax plan is based on his assertion that the county does not have enough money to pay for all of the school projects and maintain the county's other infrastructure needs, but committee members were told not to worry.

"You have to address the needs of your county," Joseph D. Mason, regional manager for Fitch Ratings, told the group, which is trying to decide how much the county can safely borrow for those purposes.

"I don't think you need to worry about pushing the debt up a bit to meet needs," Mason said.

If those needs are not met, he said, the county's allure as a prosperous place may begin to fade, dimming its long-term economic outlook - and forcing bond rating agencies to think twice. Howard is one of just a few localities nationwide and three in Maryland to hold the highest rating. The AAA designation means prestige and lower interest rates.

Last year, the committee recommended selling bonds to borrow $50 million for capital budget expenses, rejecting $60 million as too high.

But selling $100 million in bonds for schools would not change the county's financial posture in the eyes of New York-based rating houses, Mason said, despite the current $410 million of existing county debt.

"You're an affluent community that's growing," he said, where the debt, compared with the county's assessable base, is still relatively low at 1.92 percent. That rate would continue to decline even if the county sold $60 million in bonds each year through 2012, according to figures that Raymond S. Wacks, the county budget director, supplied to the committee last year.

"If you're between 2 [percent] and 5 percent, you don't have a lot to worry about," Mason said.

What the rating houses look for is how well a county is managed - whether the government has sound planning to balance debt against revenues, whether the county can - and has the political will - to pay for what it is buying, and whether there are sound plans for replacing revenues lost in some unanticipated downturn.

"I think you've got some room to push it," Mason told the group. "The important thing is to address the issues," he said.

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