Real Property Transfer Tax Measure
July 26, 2022
• May 24, 2022 – Direct staff to study viability of Real Property Transfer Tax measure for November 8, 2022 ballot
• July 12, 2022 – Proposed measure presented to Council; Council directed staff to return on July 26, 2022 with certain amendments to measure
• July 26, 2022 – Amended measure presented to Council for consideration
Council Actions
• Tier 3 rate increased from $15/$1,000 to $20/$1,000 of transfer value over $8 million
• Remove exemptions for first time transfer of newly constructed residential property > 4 units and owner-occupied residential property 3 units or fewer
• Add a 10-year sunset clause for tax
• Amend advisory measure to include housing displacement services for seniors and low-income residents
Amendments to Proposal
Proposed Real Property Transfer Tax Measure-Rate
Tier
Rate
(per $1,000 of consideration or
property value)
Applies to
1 $3 Sales < $5 million
2 $6 Sales ≥ $5 million
3 $20 Sales > $8 million on increment above $8 million
(Tier 2 rate applied to entire sale)
• Applying the amended Tier 3 rate to the last four years would have resulted in additional revenue ranging from $9-$21 million.
Example: $10 million sale
Proposed Documentary Transfer Tax Measure-Rate
Tax = [$10,000,000*(6/1000)]+[$2,000,000*(20/1000)]=$100,0000 Tier 2 Rate Tier 3 Rate
Full sale
amount
Increment
>$8M
CURRENT PROPOSED
Proposed Documentary Transfer Tax Measure-Exemptions
# Proposed Exemptions
1 Exemptions in State law
2 Transfers to a non-profit for affordable housing
3 A deed to correct a previously recorded defective deed 4 Transfers that relate only to a change in the way in which the title is held
5 Transfers to or from a tax-exempt charitable organization 6 Ground leases having a remaining term of less than 35 years Comprehensive Real Property Transfer Tax Measure
“Shall the measure to enhance the City of Santa Monica’s general governmental services by increasing the one-time tax on real property sales over $8 million, and establishing an additional incremental tax of $20.00 per $1000 of the value in excess of $8 million, excepting transfers: per State law, involving tax-exempt charitable organizations, and certain ground leases; providing an estimated $9-21 million annually through February 28, 2033, be adopted?”
Proposed Ballot Language
Comprehensive Real Property Transfer Tax MeasureAdvisory Measure ADVISORY VOTE ONLY: If the “Comprehensive Real Property Transfer Tax Measure” is enacted, should its additional revenue be used for: (a) services to address homelessness, protect seniors and low-income residents from housing displacement, and behavioral health; (b) public safety and emergency response teams to address safety issues on City streets and in parks; (c) the reopening and staffing of public libraries; (d) after-school programs” for public school children; and (e) crossing guards near public schools?”
Advisory Measure Language
The November 8, 2022 ballot will also include a competing voter initiative proposing a transfer tax increase
• Both measures require 50%+1 voter approval to pass
• If both pass, the one receiving the most votes will prevail Other Notes
Approve resolution to place the measure on the November 8, 2022 ballot
Designate Councilmember(s) to prepare ballot arguments Direct City Attorney to prepare impartial analysis of both measures
Recommendations