CITYWIDE – A small majority of recently polled Santa Monica voters favor City Hall’s tentative plan to fund affordable housing through a tax on the sale of real estate.

Since the dissolution of the redevelopment agency in 2012, construction and purchase of new apartments for low-income residents has slowed to a near halt. Before the dissolution, City Hall would spend more than $15 million annually to fund affordable housing.  Since 1994, about 38 percent of all new housing built in the city was affordable.

“The investment of local funds leveraged an additional $15 to $20 million annually from private investors and institutional lenders,” said Andy Agle, director of Housing and Economic Development, in a recent report. “With the dissolution of redevelopment, the flow of funds that can be invested in affordable housing, as well as the City’s ability to leverage outside funding, has been radically diminished.”

Without the RDA, budget projections show that about $1 million a year will be available for affordable housing.  At that rate it would take several years to accrue enough cash to cover one affordable housing project, city officials said.

By the end of next year, the affordable housing pipeline will run dry, city officials say.

In response, City Council decided to study the impacts and popularity of increasing tax rates to fund affordable housing.

When real estate is currently sold in Santa Monica, City Hall takes $3 per $1,000 of transferred value. If a house is sold for $1 million, for example, City Hall gets $3,000.

Council, with approval from voters, could raise that fee. Some California cities, like Oakland and Berkeley, collect $15 per $1,000. In San Francisco, they have a graduated tax; the higher sales pay a higher cut. In any sale over $100,000, San Francisco takes $5 per $1,000, whereas in any sale over $10 million, they take $25 per $1,000.

To raise the rate, council would have to place the item on the November General Election ballot and get support from half the voters. To raise the rate and set the funds aside for something specific, like affordable housing, they’d need support from two-thirds of the voters.

Or they could place two items on the ballot: One that asks for a rate increase for the transfer of real estate (requiring 50 percent approval) and another that asks that funds from a rate increase be used to fund affordable housing (also requiring 50 percent). If they both receive a simple majority, the tax could be City Hall’s solution to funding affordable housing. Even at the $3 per $1,000 rate, City Hall has brought in more than $7 million in some years. As median sale prices increases, a rate boost could come close to bringing affordable housing funding back to RDA levels.

Earlier this year, council commissioned a study to find out if the tax increase would fly with voters in November.

A polling company asked voters if they’d support a $6 increase to the rate of sales worth more than $1 million. They found that 57 percent of Santa Monica voters would approve of the tax if the election were held today. Only 27 percent said they would definitely support it, while 15 percent said they probably would and another 15 percent said they were undecided but leaning toward supporting it.

About 21 percent of those polled said they definitely would not support it. Seven percent said they probably wouldn’t and 4 percent said they were undecided but leaning toward opposition of the measure.

Another 11 percent remained undecided.

When asked if they would support setting the cash aside for affordable housing, the numbers were nearly identical, with support rising slightly to 59 percent.

When educated on the topic support rose, up to 61 percent in support of the tax and 67 percent supporting the use of that tax for affordable housing.

Interestingly, even when voters were read critical statements, support for both measures rose.

Support for the tax rose to 59 percent after critical statements. Support for the tax being spent on affordable housing rose to 62 percent.

“In considering whether to place the measures on the ballot,” Agle said, “council will need to assess the community resources that could commit to supporting a ballot measure campaign, particularly because the City is not allowed to use its resources to advocate for ballot measures.”

Council will likely ponder the ballot measure at its July 8 meeting.

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