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State Bill Could Help Ease Dramatic Drop in Affordable Housing for Santa Monica

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Niki Cervantes
Staff Writer

February 27, 2015 -- A dramatic drop in affordable housing for Santa Monica is prompting keen interest in state legislation announced this week that would help expand affordable housing by charging a $75 fee to record real estate documents.

“We need the money,” Councilmember Susan Himmelrich said of the bill by Assembly Speaker Toni Atkins, a San Diego Democrat. “Anything is better than nothing.”

Himmelrich told the Lookout that she also plans to push for an affordable housing ballot measure similar to the one defeated by voters this fall.

Aside from the fee for real estate documents, Atkins’ legislation would increase the state’s Low Income Housing Tax Credit by $300 million and create a “framework” for how California spends any funds received from the National Housing Trust next year.

It also would use a portion of Proposition 47 funds to reduce recidivism by providing housing and other support for those formerly incarcerated.

“Housing instability is affecting more people than ever before, including more young people and families,” Atkins said in unveiling the legislation at a news conference in Los Angeles.

“To make inroads against California’s housing issues, the Assembly is taking a comprehensive approach to increasing the amount of affordable housing in our state.”

The proposed legislation comes at a crucial time for Santa Monica, which – like California’s hundreds of other local governments – lost funding for affordable housing when redevelopment agencies were abolished by the state in 2011.

For Santa Monica, that meant the loss of $15 million it had been receiving annually. As a result, the City is now exploring alternate funding sources, including legal settlements and land sales. So far it has slightly less than $30 million.

Affordable housing Santa Monica has dropped precipitously with the demise of the City’s redevelopment agency. Affordable housing construction fell  from totaling 56 percent of all multi-family units built in the city during the 2013-14 fiscal year ending July 1 to just 19 percent of units currently being built, according to a recent report by city housing officials.

Himmelrich said she has hope for the Atkins legislation, although it still needs a vote of the legislature and the governor’s signature to become law.

Meanwhile, Himmelrich said the City should consider placing a measure on the ballot similar to Measure H, which called for an increase on the tax on real estate transactions of at least $1 million from $3 per $1,000 of assessed value to $9 per $1,000.

That measure lost soundly; the vote was 42.50 percent “ yes” to 57.50 percent “no.” A companion proposition, Measure HH, earmarked the money from Measure H for affordable housing. It just barely passed, squeaking by at 50.53 percent of the vote.

Next time around, Himmelrich said, the measure should increase the dollar fee per $1,000 based on the amount of the transaction.

In a city where homes easily sell at top dollar, it should not be too great a financial burden to pay extra to assist with affordable housing, Himmelrich said.

“People say, ‘I only sold my home for $5 million,’” she said. “I just think (the tax increase) is a small investment to pay for all our years in this community.”

Himmelrich said the ballot measure was not well understood and the campaign for it was “not run by the people who should have been doing it.”

She also attributed the defeat to low voter turnout. Try it again in a presidential election year and the results might be different, she said. “I think 2016, definitely,” she said.

While Santa Monica’s affordable housing production has been hard hit, Atkins made it clear at a news conference attended by officials throughout California that the problem is widespread.

The Public Policy Institute of California released a report in February that found nearly one third of mortgaged homeowners and 47.7 percent of all renters are spending more than a third of their household incomes on housing.

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