Several recently enacted New Hampshire laws will impact landowners and developers in the state. Among the legislative changes for 1997 is an expansion of the real estate transfer tax, imposition of a new excavation tax, provision of greater incentives for redevelopment of contaminated property, allowance of single-member limited liability companies and technical changes in the subdivision and site plan review process.

First, the real estate transfer tax was expanded to apply to transfers of ownership interests in "real estate holding companies" beginning July 1, 1997. A real estate holding company includes any entity engaged in the business of holding, selling or leasing real estate which either (i) derives more than 50% of its annual gross receipts from owning or selling real estate or (ii) holds real estate worth more than 50% of the total value of the entity's assets. The tax, currently at the rate of $1.00 per $100 in value (split evenly between buyer and seller), will apply even if title to the property does not change hands. Although the statutory language is unclear on how the tax will be applied in specific circumstances, if a 10% interest is transferred in a real estate holding company with real estate valued at $1,000,000, for example, then presumably a tax of $1,000 will apply to the transfer. Accordingly, landowners and developers should be cautious when transferring interests in any entity which might constitute a real estate holding company. Before any transfer, the parties should consider all planning and strategic options to minimize or avoid the tax.

A second important tax-related measure imposes a new tax, beginning January 1, 1998, on the excavation of sand and gravel at the rate of $0.02 per cubic yard excavated. This tax will not apply to excavations in which the material is used on-site in the development of a parcel of land.

In environmental matters, the legislature followed up on last session's Brownfields legislation by clarifying a municipality's ability to acquire contaminated property without liability to convey it to a Brownfields program participant. The bill also gives municipalities special leeway in granting tax abatements to facilitate the transfer of Brownfields property. These measures provide additional incentives for the redevelopment of contaminated property.

New legislation also allows single-member limited liability companies. This legislation gives landowners and developers greater flexibility in structuring their ownership vehicles and provides significant tax and liability benefits.

Finally, two technical measures affect the subdivision and site plan review process. One bill clarifies the times within which Planning Boards must begin formal consideration of and approve or disapprove subdivision or site plan applications. Another bill requires applicants for subdivision or site plan approval to notify holders of conservation restrictions in addition to abutters prior to hearing and approval.