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Brock Proposes Alternative to Mayor's "Outrageous" Transfer Tax
 

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By Jorge Casuso

May 26, 2022 -- Councilmember Phil Brock proposed a transfer tax measure on Tuesday to counter what he called the "outrageous" measure Mayor Sue Himmelrich is trying to place on the November ballot.

Brock's measure, which the Council voted to consider, is far more modest than the mayor's -- raising some $15 million a year instead of the $50 million estimated to be raised under Himmellrich's proposal.

It is also a general tax, addressing a menu of budget line items that can change over time and include boosting funding for public safety, fighting crime, addressing the homeless problem, restoring library hours and reopening after-school programs.

Himmelrich's initiative, while focusing on the "worthy goals" of funding affordable housing and education, "would not address the matters that residents care most about," Brock said.

"It's clear to me that we don't currently have the resources to address these priorities in the way we'd like."

His proposed “Comprehensive Real Property Tax Measure,” Brock said, "would provide us with a safety valve without tremendous cost."

While Himmelrich's “Funding for Homelessness Prevention, Affordable Housing, and Schools” measure requires the valid signatures of 6,929 Santa Monica voters to make the November 8 ballot, Brock's counter-measure only requires four Council votes.

Both measures would require a simple majority of Santa Monica voters to pass. If both earn more than 50 percent of the vote, the one with the most votes would prevail.

In addition to the amount raised and the initiatives funded, there are other key differences between the two measures that would result in a hard-fought and expensive campaign.

Brock's measure would charge a real estate transfer tax of $15 per $1,000 on commercial properties that sell for more than $8 million, with the tax applying only to the amount above that threshold.

Himmelrich's proposed tax would charge $53 per $1,000 on all properties valued at $8 million or more, with the entire amount taxed.

While Himmelrich's measure would exclude sales of properties that become deed-restricted affordable housing, Brock's exempts non-profits, sales to and from charitable or religious organizations, defective deeds and inherited properties.

His transfer tax, Brock said, "would not severely burden our residents who buy or sell a property."

Under Brock's proposal the Council would have the discretion to allocate the funds; under the Mayor's proposal an appointed board would allocate the funds based on a formula prescribed in the measure.

Under the formula, 20 percent of funds collected -- the first $10 million -- would go to local Santa Monica schools, between 30 and 50 percent would go to build housing targeted for the homeless and another 30 to 50 percent would subsidize rents for vulnerable Santa Monica tenants.

Any funds above $50 million would be deposited in the two funds based on the 20-80 percent formula.

"It is fair, equitable, and right" that property owners who have "enjoyed the benefits of City services and programs" should "leave a small portion of the proceeds with the City to help fund" the targeted programs, according to the measure.

The six Council members present -- Himmelrich did not attend the budget session due to illness -- directed staff to draft Brock's proposed measure, with several saying it is uncertain the mayor's measure will make the ballot.

"I think it's a really interesting suggestion," said Councilmember Gleam Davis. "We don't know if (Himmelrich's petition drive) is going to be a successful effort."

Himmelrich said Monday that her campaign -- sponsored and funded with her husband, former Housing Commissioner Michael Soloff, -- plans to submit signed ballot petitions to the City Clerk by mid-June ("Mayor's Transfer Tax Campaign to Submit Signatures Next Month," May 23, 2022).

Once the signatures are submitted, the Clerk has 30 days to verify that the petition contains the minimum required number of signatures.

The petitions are then sent to the Los Angeles County Registrar-Recorder's office, which has 30 working days to conduct a random sampling.

The deadline to place a measure on the ballot is August 12, said City Clerk Denise Anderson Warren.

"The Council would have to bring (Brock's measure) back no later than the second meeting in July," Anderson-Warren said.

The Council on Tuesday also supported staff’s recommendation to place a Transient Occupancy Tax (TOT) measure, or "bed tax," on the November ballot.

The measure would raise an estimated $4 million, an amount the Council agreed wasn't enough to restore many of the City services cut after the General Fund lost more than $180 million due to the impacts of the coronavirus shutdown.


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