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Transfer Tax Hike Lawsuit Hearing Set for August

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By Jorge Casuso

June 7, 2023 -- The parties in a lawsuit that seeks to void Santa Monica's transfer tax hike have filed motions for a hearing in Los Angeles County Superior Court set for August 3.

The lawsuit filed January 9 by the California Business Roundtable against the City and School District claims that Measure GS violates the California Constitution's “single-subject” rule because it generates funding for two separate purposes ("Lawsuit Seeks to Void Transfer Tax Hike," January 18, 2023).

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The measure sponsored by former mayor Sue Himmelrich, which was approved by local voters last November with 53.49 percent of the vote, provides an estimated $50 million a year for affordable housing programs and public schools.

In a motion filed on May 30, the plaintiffs -- represented by Bell, McAndrews & Hiltachk, LLP -- argue that "these two subjects 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.

"This case is not about the wisdom or merits of GS, it is about compliance with a clear constitutional rule. 1 + 1 = 2. Measure GS is unconstitutional."

The motion to dismiss the case against the City -- 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.

The motion cites Measure GS's findings that "the extreme rent burden faced by so many of our low income neighbors forces them to spend much less on food, on health care, and on their children's development than they would if they had affordable rents.

"This in turn contributes to the educational achievement gap experienced by some of our community's children."

The money generated by GS -- which hikes the transfer tax by $56 per $1,000 for properties that sell for $8 million or more -- is allocated to two government entities, the City and the School District.

Under the measure, the first 20 percent of the funds raised goes to fund local schools and the other 80 percent to fund homelessness prevention and affordable housing projects.

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