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Proposed Ballot Initiative Exempts Multi-Family Housing from Transfer Tax


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By Jorge Casuso

April 1, 2024 -- Former Santa Monica mayor Pam O'Connor filed a ballot initiative with the City Clerk on Thursday that would exempt the sale of multi-family housing from the transfer tax hike approved by Santa Monica voters in 2022.

The proposed measure amends Measure GS, which raised the transfer tax by $56 per $1,000 for Santa Monica properties that sell for $8 million or more to fund local schools, homelessness prevention and affordable housing projects.

Instead of alleviating the housing crisis, the notice to circulate the petition states, Measure GS "effectively taxed the production of new multi-family housing units, greatly threatening the financial feasibility of critically needed new housing options."

As a result, "the City is both losing out on unbuilt multifamily housing units as well as the anticipated funding from Measure GS," proponents of the change said in a statement Friday.

“Sometimes, initiative measures have unintended consequences that must be fixed,” O’Connor said. “Not only will this amendment allow us to meet our State-mandated housing requirements, it will help keep rents lower and prevent displacement.”

State housing officials have mandated that Santa Monica plan to add 8,895 new housing units -- some 6,200 of them affordable -- by 2029 or face losing further control over local zoning and planning.

"Given our dire housing and affordability crisis -- now is NOT the time to threaten the affordability of housing in our city or discourage the creation of multi-unit housing projects," the notice to circulate the petition states.

"This tax on this specific type of housing is too risky and too dangerous given our current and future need."

Proponents of the proposed initiative point to a study published by the UCLA Lewis Center for Regional Policy Studies that looked at a similar Transfer Tax Measure in the City of Los Angeles.

The study found that "applying the tax on new multifamily housing could generate very little additional revenue but reduce the production of market-rate and below-market housing," proponents said.

According to the City's 2023 FY financial statements, in its first year, Measure GS -- which is expected to raise some $50 million a year -- generated $17 million, with the first $10 million going to Santa Monica schools.

The proposed measure -- which would affect sales after January 1, 2025 -- leaves the tax intact for single family homes and those commercial and industrial properties that do not qualify for the partnership exemption.

Former Mayor Sue Himmelrich, who sponsored Measure GS, argues that the City will easily exceed its State mandate to build some 2,700 market-rate units and that the transfer tax will help fund the creation of much-needed affordable housing.

She notes that GS exempts affordable housing and that market-rate development projects are required to provide only 10 percent affordable units before other incentives are applied.

The proposed measure, Himmmelrich said, "is for all the people who want to profit off their apartments for the highest possible amount.

"All I want to do is create more affordable housing so people who work here can afford to live here."

The ballot initiative was filed after a Los Angeles County Superior Court judge ruled in August that the transfer tax does not violate California's single-subject rule by funding both local schools and affordable housing programs ("Judge Upholds Transfer Tax Hike," August 3, 2023).

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