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Council Amends Brock's Rival Transfer Tax Measure for Upcoming Vote

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By Jorge Casuso

July 13, 2022 -- Despite a stiff lobbying effort by powerful opponents, the City Council on Tuesday voted to amend a property transfer tax proposed by Councilmember Phil Brock and vote on it in two weeks.

The move incensed Mayor Sue Himmelrich, who had just seen the Council vote to place her own transfer tax measure on high-end properties on the November ballot during the Council's first packed meeting in more than two years.

While the Council had no choice after the mayor's measure qualified, Himmelrich had been confident Brock's rival measure -- opposed by Santa Monicans for Renters' Rights (SMRR) as "perverse" -- would go down.

Himmelrich, whose measure gathered more than 10,000 signatures, accused Brock of "high-jacking" her idea of raising revenues with a transfer tax on properties that sell for more than $8 million ("City Council to Place Mayor's Tax Measure on Ballot," July 8, 2022).

Brock, the mayor said, had turned her measure "into a developer's wet dream, a cheaper one that has a lot of feel good stuff."

"You copied the tax that we brought forward and collected all those signatures for," Himmelrich said. "It's really cynical we have this in front of us now. It shouldn't be here."

Instead of killing Brock's measure, the Council voted to amend it -- including stripping key exemptions for developers -- and vote on July 26 whether to place it on the ballot, where it would go head-to head-with the mayor's tax.

Brock's watered down version -- which exempts single family homes and, in its original version, buildings sold by their developers -- would charge a transfer tax of $15 per $1,000, instead of $53 under Himmelrich's measure.

And while Himmelrich's tax would raise an estimated $50 million a year for homelessness prevention, affordable housing and schools, Brock's version funds a menu of initiatives and programs chosen by the Council during Santa Monica's economic recovery.

These include everything from restoring library and after-school playground hours and crossing guards at schools to funding public safety initiatives.

Himmelrich's tax, Brock said, "won't be meeting the needs of residents now. You're tax is a never-ending tax to aid construction of affordable housing.

"There should not be any lifetime taxes in Santa Monica," Brock said. "I think our residents are sick and tired of being taxed forever."

Himmelrich shot back that her tax would not affect "the community" but only apply to fewer than 50 individual property owners who can easily afford the minimum $424,000 tax on an $8 million sale.

"We are talking about wealthy properties and a handful," Himmelrich said. "We are talking about a tiny portion of the market."

While the tax won't make a big dent on wealthy property owners, Himmelrich said, it would build affordable housing and help thousands of struggling seniors and families, some of whom are "eating cat food at the end of the month" in order to pay their rent.

After an hour-long discussion -- half of which was a heated one-on-one debate between the Himmelrich and Brock that sometimes became personal -- the Council approved major amendments to Brock's rival measure.

Key was Councilmember Christine Parra's successful motion to remove two key exemptions for developers. One would have exempted the initial sale of newly built properties with more than four units.

That exemption would have applied to the 60 luxury condominiums that will be part of the Fairmont Miramar Hotel's redevelopment ("Coastal Commission Gives Miramar Redevelopment Enthusiastic Approval," March 11, 2022).

"I don't want them to get it free," said Parra. "I think they should be taxed.

The amendment -- which also dropped the exemption for some newly constructed single-family residences -- was approved on a 5 to 1 vote, with Himmelrich casting the dissenting vote.

The Council also voted 5 to 1 to raise the threshold for the tax from $15 to $20 for every $1,000, adding between $2 and $5 million a year earmarked for homelessness prevention programs.

Other amendments would increase the threshold based on the Consumer Price Index (CPI) after five years and set a 10-year sunset clause.

Himmelrich's last ditch effort to sink Brock's measure failed by a 2 to 4 vote, with Mayor Pro Tem Kristin McCowan joining Himmelrich's effort to keep it off the ballot.

Tuesday's votes dealt a major blow to SMRR, which has dominated City politics for the better part of four decades and lobbied hard over the weekend to kill Brock's measure.

Both of the group's co-chairs -- former Mayor Denny Zane, who ran the campaign for Himmelrich's measure, and former Housing Commissioner Michael Soloff, Himmelrich's husband, who co-sponsored and co-financed the measure -- testified.

Zane echoed Himmelrich's key arguments against Brock's measure, while Soloff called the Council session -- which also included a measure to drop the maximum allowable rent from 6 to 3 percent -- "the most important Council meeting of your career."

Soloff blasted Brock's measure as a "perverse" attempt to increase the chances of defeating Himmelrich's tax and "a perverse use of this Council's power."

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