With all pending affordable housing projects expected to be complete by 2015 and scarce resources available to finance more, Santa Monica may raise property tax on real estate transfers.
The City Council Tuesday will decide whether to gauge how receptive voters would be to raising the 0.03 percent tax Santa Monica levies on property sales to shore up the City’s dwindling affordable housing fund.
“If we don’t take action… there will be fewer and fewer opportunities for lower income households to be able to live in Santa Monica,” said Andy Agle, Santa Monica’s director of Housing and Economic Development.
Mayor Pam O’Connor agreed.
“We’ve always been a leader for producing affordable housing,” she said. “Now we need to find other means” to continue to meet Santa Monica’s goals.
Over the last 20 years, Santa Monica has leveraged funds to build about 1,400 housing units affordable to “low- and moderate- income households,” according to City staff.
In that time, Santa Monica spent an average of $15 million annually — about the same amount the City spends on its library system — to help build or maintain affordable housing.
But in 2012, Santa Monica’s primary affordable housing funding source dried up after Governor Jerry Brown dissolved California’s 400 redevelopment agencies (RDAs) to help balance the State’s budget. (“City Council Sets Priorities for Future Development in Santa Monica,” February 14, 2013)
While Santa Monica has looked to Sacramento for relief, it has not been forthcoming.
Senate Bill 391, which would provide $500 million to support affordable housing statewide, has failed to gain enough traction to make it past the legislature two years in a row.
And Assembly Bill 1229, which would have given cities more authority to require developers to build affordable housing as part of market-rate projects, died on the Governor’s desk after Brown refused to sign it into law. (“Governor’s Veto Frustrates Santa Monica’s Affordable Housing Advocates,” October 15, 2013)
“If Santa Monica wants to continue its commitment to creating affordable housing opportunities, it cannot rely on uncertain opportunities at the federal, state, and regional levels,” staff said.
Another option on the table, Agle said, is to charge developers of commercial office space a fee to support new affordable housing construction.
But with so little commercial development proposed in Santa Monica in the foreseeable future, the amount of money the fee would generate would come nowhere near what is needed, according to officials.
Raising the property transfer tax is the only option that could come close to making up the lost redevelopment agency money, Agle said.
But the question of how high to raise the property tax, and exactly what the tax increase would be used for, remains open. If the Council gives the go-ahead Tuesday, staff will have Fairbank, Maslin, Maullin, Metz & Associates poll voters.
A tax increase dedicated to funding affordable housing would require a supermajority, or two-thirds of the vote, to pass. If the increase was for general use, it would only need a simply 50 percent majority.
Recent polling showed that a bond measure to temporarily raise property taxes to help pay for a $78 million fire station would have fallen well short of the supermajority needed to pass.
If the property transfer tax meets the same fate, Agle said Santa Monica will have to reconsider its strategy.
“We’re going to have to keep looking but we’re also going to have to be realistic that there are not a lot of opportunities at the Federal, State and regional levels” for affordable housing funding, Agle said.