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City Replaces Ballot Argument Opposing 'Luxury Tax' Measure

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By Jorge Casuso

August 18, 2000 -- In a highly unusual move, the City on Tuesday replaced the argument opposing a tax measure that will appear on the November ballot.

The arguments were switched after two separate filers attempted to submit arguments opposing Measure SM, which would boost the City's "luxury" real estate tax to help pay for essential services, City officials said.

"One opponent filed a complaint claiming that the other opponent’s filing was administratively incorrect," said City spokesperson Constance Farrell.

"Upon review, the City Clerk and City Attorney agreed with the complaint, leaving only one valid argument against the measure, which is now the argument of record."

The new argument -- which was posted on the City Clerk's website Tuesday -- was signed by attorneys Matt Neco and Stanley H. Epstein, who challenged the filing chosen by the City.

The argument contends the measure -- which would double the real estate transfer tax on sales exceeding $5 million from $3 to $6 per $1,000 -- was "BADLY written by the current City Council, fails to close loopholes and may have created some."

The new argument doesn't challenge the tax increase itself, but the way it is structured.

"An incremental increased transfer tax is a good idea, but that's NOT what this proposal is," Neco and Epstein wrote. "This should be a progressive tax."

The argument also challenges the City's contention that the tax would generate $3 million more a year and warns that the affordable housing exemption is poorly drafted and could lead to "expensive litigation.

The Measure, Epstein said, fails to close "obvious loopholes" in the real estate transfer tax law that has cost the City millions of dollars.

"This fix required simple drafting revisions and no voter approval and, therefore, again questions whether the mediocre quality of staff work merits the huge salaries and benefits," Epstein told the Lookout.

The argument concludes, "Next election let's have a better, well written and impartial transfer tax increase measure."

The previous statement initially chosen by the City opposed the increased tax outright.

It argued that Santa Monica's real estate transfer tax is already the second highest in the County and that increasing it would harm small businesses crippled by the coronavirus shutdown.

"COVID-19 and civil unrest have impacted our community," the old argument reads. "Now, the City Council wants to raise taxes on small businesses.

"Small and independent rental property owners will be adversely impacted," the opponents wrote.

"This tax could result in more large multi-national corporations owning the apartment and condo complexes in our city. We don’t need more national corporations becoming our landlords."

The argument also contends that "as a general tax, the City cannot designate how the revenue will be spent."

The argument was signed by former Rent Commissioner Robert Kronovet; Greater L.A. Realtors® President Ryan Ole Hass and two small business owners.

According to the ballot language, Measure SM would "protect essential services including addressing homelessness, cleaning beaches/parks, public safety/fire/emergency response, protections for tenants and seniors, supporting libraries, small business recovery, food for the hungry, and after-school/ mental health services for youth."

The argument in favor of the measure says the measure addresses "the unprecedented public health threat of COVID-19, the economic impacts it has created, and the overall stress that people are feeling."

"Measure SM is a vital part of rebuilding our community’s strength, and it raises taxes only on corporations and those who sell properties worth $5 million or more," the argument states.

"Renters, people living with homelessness, families struggling with uncertain employment, homebound senior citizens, and those struggling with mental health issues will all benefit from Measure SM."

The argument in favor is signed by Mayor Kevin McKeown, local League of Women Voters President Natalya Zernitskaya and Community for Excellent Public Schools (CEPS) Chair Shari Davis.

Also signing the argument are UCLA-Santa Monica Hospital nurse Tim Van Pelt and former mayor Denny Zane, co-chair and co-founder of Santa Monicans for Renters’ Rights (SMRR).

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