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New State Law, Santa Monica Transfer Tax Measure Shoot for Same Goal

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By Jorge Casuso

October 7, 2022 -- Last week, Governor Gavin Newsom signed an affordable housing law that does for Los Angeles County what Mayor Sue Himmelrich's proposed transfer tax increase would do for Santa Monica.

Like Measure GS on the local November ballot, the new law would fund renter protection programs and finance new affordable housing developments across the County, including Santa Monica.

The law creates the Los Angeles County Affordable Housing Solutions Agency, which can place funding measures on the ballot in L.A. County, including all of its incorporated cities, after its assumes powers in April 1.

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The funding measures include imposing various special taxes, such as a parcel tax and transfer tax, as well as issuing bonds secured by increasing property taxes within the County's jurisdiction.

The new law has spurred a debate on the need for Mayor Himmelrich's ballot measure, which would raise Santa Monica's transfer tax by $56 per $1,000 for properties that sell for $8 million or more.

Former Mayor Denny Zane, who is behind the transfer tax measures in Santa Monica and Los Angeles, contends that both the new law and Measure GS are needed to make a dent in the housing crisis.

"If the County as a whole has a whole revenue source, then we would have a real shot at making a big difference in ending homelessness," Zane said.

Marc Verville, vice chair of the Santa Monica Audit Subcommittee, disagrees.

"The Himmelrich tax is 100 percent duplicative of the State's SB679," Verville said. "The last thing we need is a double taxation."

Verville contends that affordable housing is a regional issue that should be addressed at the County level.

"In Santa Monica, you're putting a tax on arbitrary political borders," Verville said. "We're addressing a regional issue within these arbitrary boundaries."

Zane worries that the funding levied by the new County agency is not a sure bet, since Ballot measures placed by the new County agency would require a two-thirds majority, unless a petition is circulated to place the measure on the ballot.

The new law "does not create a tax. It creates an agency with the authority to place measures on the ballot,” Zane said. "As of now, it doesn't have money."

According to a legislative analysis, the new State law applies "to all cities within Los Angeles County, including charter cities."

And it requires that revenue "be allocated according to a geographic distribution schedule, as specified."

Under a State mandate, Santa Monica must plan to add 8,895 housing units over the next eight years, more than two-thirds of them affordable, if its Housing Element is to receive final approval.

Meanwhile, the City of LA, must plan for 455,000 new housing units, 185,000 of them for low-income residents.

While Measure GS would immediately guarantee an estimated $50 million a year to help address the local housing crisis, Zane said, the funding generated under the new State law "is not likely to be sufficient."

Verville counters that the State law makes Himmelrich's tax, which has no expiration date and includes single family homes, unnecessary.

“Given this highly targeted new county-specific agency will address the regional need for affordable housing and renter assistance, it makes no sense that our city is voting on a city-specific and duplicative Santa Monica transfer tax,” he said.

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