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Judge Upholds Transfer Tax Hike

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By Jorge Casuso

August 3, 2023 -- A Los Angeles County Superior Court judge on Thursday issued a tentative ruling that found former Mayor Sue Himmelrich's transfer tax does not violate California's single-subject rule.

Judge H.J. Ford III denied the California Business Roundtable's motion for judgment on the pleadings, stating that the initiative does not generate funding for two separate purposes as stated by the plaintiffs ("Lawsuit Seeks to Void Transfer Tax Hike," January 18, 2023).

He instead granted a judgment for the defendants, who argued that the increased funding for affordable housing programs and public schools generated by the tax "are reasonably related" to the goal of alleviating rent burden.

After Judge Ford issues a final order, the plaintiffs are expected to appeal the ruling to the California Appellate Court.

"I'm thrilled," said Himmelrich. "It's the correct result."

The California Round Table's attorneys did nor immediately return a request for comment.

Measure GS, which was approved by local voters last November, hikes the transfer tax by $56 per $1,000 for Santa Monica properties that sell for $8 million or more to fund local schools, homelessness prevention and affordable housing projects.

Himmelrich said she does not know how much money the tax hike has generated so far for the City, which would reap 80 percent of the projected $50 million a year, and the School District, which would receive 20 percent.

"The tax assessor is already collecting (the additional tax)," Himmelrich said. "It's a question of whether you spend it because it could be clawed back.

"I'm fiscally conservative," she added. "I don't think you should spend money you don't have, but this (ruling) makes it safer. Ultimately I believe we have the better argument in this case."

The plaintiffs -- represented by Bell, McAndrews & Hiltachk, LLP -- argued in a motion filed on May 30 that the two subjects funded by the measure "are not reasonably germane to each other."

"This legal conclusion is clearly, positively, and unmistakably true no matter how the court might consider the question," the plaintiffs wrote in their motion.

The motion filed by Himmelrich and her husband, Michael Soloff, as official proponents and interested persons counters that increased funding for affordable housing programs and public schools "are reasonably related."

Both share "the common theme or purpose of comprehensively addressing the rent-burden problem for lower and moderate income households in Santa Monica," the defendants wrote in a motion also filed on May 30.

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