New Santa Monica Real Estate Tax Initiative
Santa Monica voters should expect a real estate transfer tax initiative on their ballots this fall. If passed, it would raise the transfer tax rate from 0.6% to 5.6% for properties valued at $8 million or more.
This tax will significantly impact both commercial and residential properties and their tenants.
Santa Monica's Real Estate Transfer Tax
The City of Santa Monica currently has a two-tiered Real Estate Transfer Tax. The initiative would add a third tier.
- Tier 1: 0.3% assessment for a property valued at less than $5 million.
- Tier 2: 0.6% assessment for a property valued at $5 million or more.
- Proposed Tier 3: 5.6% assessment for a property valued at $8 million or more.
The proposed initiative is called "Funding for Homelessness Prevention, Affordable Housing, and Schools Ballot Measure."
As the title states, revenue from this measure would go toward funding school and homelessness prevention programs. In addition, the initiative would create a funding formula dictating the proportion of funding to each program.
The initiative would also create an eleven-member Resident Oversight Committee. The committee would be responsible for prioritizing spending according to the set formula.
Overall, it is hard to reconcile a proposal for affordable housing that raises the cost of properties in the city.
The Status of the Proposed Tax Initiative
This initiative is citizen-driven but backed by Mayor Sue Himmelrich.
It reportedly has enough signatures to qualify. However, the city clerk's office is validating the signatures.
If enough signatures are valid, the measure will be on the November 2022 ballot. It will need a majority of voter support to pass.
It may not be the only real estate transfer tax on the ballot.
Councilmember Phil Brock has proposed a competing real estate transfer tax measure.
City staff will present the proposed alternative ballot measure at a city council meeting in July.
It has a smaller tax rate of 1.5% for properties valued at $8 million or more. The city council would be able to spend funds generated by this alternative measure at their discretion.
Business and residential tenants are likely to face increased costs as a result.
Consider supporting our Industry Defense Fund as we push back against costly initiatives like this one.