Despite hours of heated discussion last week, decisions on a pair of dueling ballot measures to raise taxes on property sales above $8 million were pushed to a July 26 Council meeting due to ongoing confusion and controversy over the specifics of each measure.

Mayor Sue Himmelrich has authored a property tax proposal to fund affordable housing and the school district. Council is required by law to put the measure on the ballot as Himmelrich pursued it as a citizens petition initiative and the City Clerk has already verified the signatures. Despite initially voting to approve the measure, Council then reconsidered their decision and eventually postponed the vote to July 26 to allow for the completion of a report on the measure.

Councilmember Phil Brock has authored his own measure that uses a similar tax to fund priorities that he feels are of more immediate concern to residents. He is seeking to place it on the ballot via Council vote. 

Santa Monica already has two tiers of real estate transfer tax charging 0.3 percent on transfers under $5 million in value and 0.6 percent on transfers over $5 million in value. 

The Mayor’s proposal would charge a 5 percent rate for properties worth 8 million or more in value and is estimated to raise $50 million annually. The first $10 million of that would go to local schools and the rest to build affordable housing and provide rent subsidies to protect tenants from displacement. If approved by voters, the priorities for revenue would be fixed and not subject to change.

Brock’s measure would charge a 1.5 percent tax on properties sales over $8 million with the funding earmarked for a variety of priorities including crossing guards, libraries, after school childcare, public safety and homeless response services. However, if approved the measure would not legally require the revenue go to any specific cause and its spending would ultimately be at Council’s discretion. 

The two authors engaged in a heated debate over the proposals in a July 12 Council meeting.

Himmelrich accused Brock of writing his measure to deliberately undermine hers. If both property transfer tax measures are placed on the ballot and approved by a majority of voters, the measure with the greatest vote count will take effect.

“You copied the tax that we brought forward and collected all the signatures for because you couldn’t think of a different one and because you thought that ours was too much burden on who, the rich people?” said Himmelrich, later adding, “There are 10 different taxes you could do that wouldn’t just be hijacking what we were doing and turning it into a developer’s wet dream and that’s really what this is doing.”

Brock criticized Himmelrich’s measure for its lack of a sunset clause, for being out of step with what he believes are resident priorities, for being too onerous on property owners.

“Your tax which was a never ending… effort to aid construction in the city and I looked at it and said, ‘here’s what we need now: we desperately need more police on our streets through a homeless liaison team, we need our library’s open,” said Brock.

During the meeting Himmelrich also took issue with the many exemptions to the property transfer tax under Brock’s proposed measure. The two most controversial exemptions are the first time sale of newly constructed residential property with four or more units and any sale of owner occupied residential housing with no more than three units. 

“I believe you took a developer’s wish list and turned it into a ballot measure that then had your public safety and cleanliness wish list and what you’re ignoring is the terrible housing needs of everyone,” said Himmelrich. 

Brock’s measure underwent revisions during Council discussion including raising the proposed tax by .5% and adding a 10 year sunset clause. Brock also said he would be open to eliminating some of the exemptions.

Staff will return to Council with Brock’s revised measure on July 26. During this meeting Council will also hear a report on Mayor Himmelrich’s proposed measure, before redoing the vote to place it on the ballot.

Clara@smdp.com