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Residents Could Favor Tax Hike for Affordable Housing

Ben Allen for State Senate

Richard Bloom For State Assembly 2014
Richard Bloom for State Assemblymember 2014

Santa Monica Real Estate Company, Roque and MarkHarding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore Kutcher & Kozal, LLP

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By Jonathan Friedman
Associate Editor

June 3, 2014 -- New polling information shows Santa Monica residents might be willing to allow a real estate tax hike in exchange for an increased development of affordable housing in the city.

Santa Monica lost significant funding for affordable housing since the State eliminated the Redevelopment Agency (RDA) in this city as well as the other RDAs throughout California more than two years ago.

An April poll funded by the City and conducted by Fairbank, Maslin, Maullin, Metz & Associates showed 57 percent of residents would vote in favor of or lean toward supporting a measure that would increase the City’s tax on real estate transactions from $3 per $1,000 of the sale price to $9 per $1,000 on properties selling for more than $1 million.

Currently, the City charges $3 per $1,000 regardless of the sale price.

Also, 59 percent of respondents said they would favor or lean toward supporting an advisory measure for the money generated from the tax hike to be allocated toward affordable housing.

Support for both possible measures increased after residents heard “educational statements about the documentary transfer tax and the City’s affordable housing program,” wrote Andy Agle, Santa Monica’s director of housing and economic development, in a memo submitted late last week to the City Council.

The so-called real estate transfer tax is paid every time a property changes hands. All Counties in California collect $1.10 per $1,000. The amount Cities take on top of that varies, but many grab more than the $3 collected by Santa Monica, according to Agle’s memo.

San Francisco was the only City included on Agle’s list that charges a different rate depending on the value of the sale. The range is $5 to $25.

“While the polling shows general support for the measures, it also indicates that the majority support is not definitive and that education plays a critical role in support for the measure,” Agle wrote.

He continued, “As a result, if the measures are placed on the ballot, education and outreach by affordable housing supporters will be critical to ensuring that voters understand the measures and go to poll to vote for them.”

At its July 8 meeting, the council will consider one or more proposals from staff for a real estate tax hike to be placed on the November 2014 ballot.

Agle wrote in the memo that the City built nearly 1,600 residences “that will serve many generations of families and individuals of modest incomes” with redevelopment money since the Santa Monica RDA was created shortly after the Northridge Earthquake in 1994.

Current projections, Agle wrote, show under $1 million will be available per year for affordable housing in Santa Monica going forward. This is compared to an average of $15 million per year during the RDA era.

“With such limited funding, it will take the City several years to accrue sufficient funds to support one affordable housing preservation or production opportunity,” Agle wrote.

A bill sponsored by former Santa Monica Mayor and current Assemblymember Richard Bloom would require the State to release $750 million in redevelopment money. It cleared the Assembly last week and is currently before the Senate.

It is not clear how much of that money would go to Santa Monica if the bill passes in the Senate and Gov. Jerry Brown signs it, and it would not be an ongoing funding source as the tax hike could create. Agle did not address the bill in his memo.

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