CITY HALL ‚Äî Funding for affordable housing might be left up to those who already own homes.
City Hall wants to study a ballot measure that would let voters decide whether or not to raise taxes on property sales to build more low-income apartments.
The city‚Äôs redevelopment agency (RDA), which was dissolved in 2012 by the state in an attempt by Gov. Jerry Brown to plug a budget shortfall, was the primary local funding source for building and preserving affordable housing projects in the city by the sea.
Federal funding of affordable housing appears “bleak,” city officials said, and while state lawmakers have twice proposed a bill that would provide an estimated $500 million in support, it‚Äôs failed both times.
City Council will consider funding a voter survey to determine if there would be enough support to put the tax-raising item on the ballot in November.
The last RDA-funded projects were recently completed or are currently under construction. More than 250 income-restricted apartments will open in the beginning of this year and another 32 will open early next year.
“Staff anticipates that two or three additional housing rehabilitation opportunities will be funded from recent land sales,” said a report prepared by Director of Housing and Economic Development Andy Agle. “Once those opportunities are funded and completed, the (nonprofit) affordable housing pipeline in Santa Monica is expected to run dry.”
Previous surveys have shown that 55 percent of residents would favor doubling the current local tax on the sale of all properties worth more than $1 million. To increase a tax and earmark the money for a specific purpose, like funding affordable housing, two-thirds of voters would have to be on board.
But only half the voters are required to approve of a tax increase that is not tied to a specific purpose. Along with a vote for a general increase to the tax on property sales, a companion measure could be added, Agle‚Äôs report said, that would demonstrate voters‚Äô interest in increased revenue being sent to cover affordable housing.
Currently, City Hall takes a $3 cut from every $1,000 worth of property sold (Los Angeles County takes another $1.10). If a $1 million home is sold, City Hall gets $3,000. The buyer and seller can negotiate who pays the tax.
City Hall pulled in more than $5 million from property transfer fees in 2011-12.
In California, property transfer tax rates range from $1.10 all the way up to $25 per $1,000 of transferred value.
San Francisco, whose transfer rates city officials studied, has a graduated tax that takes more depending on how valuable the land is. The pricier the land, the higher the tax rate. The sale of a property at $250,000 requires a $6.80 tax per $1,000 while a property over $10 million nets the city $25 per $1,000 (that‚Äôs $250,000).
A tax on the sale of property would provide a hard-to-predict funding source, city officials said, but that works for affordable housing projects, which are backed once the money is available. The volatility, Agle‚Äôs report said, would not be a significant detriment.
At Tuesday‚Äôs meeting, council will decide whether or not to spend $27,800 for the voter surveys. City officials would return to council with the data and recommendations for a potential ballot in July.