SR-400-004-07 (4)
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June 13, 1978
J U N 2 7 t978
Santa Monlca, Callfornla
TO:
Mayor and Clty Councll
FRQf.1 :
Clty Attorney
SUBJECT: Proposed Taxation on the Development and Constructlon
of Cooperatlve Apartment ProJects.
Introductlon
ThlS report transIDlts two proposed ordlnances
lmposlng a tax of One Thousand (~l,OOO) Dollars per unlt
on the development and constructlon of cooperatlve apartment
proJects.
Background
Recent changes ln state law have stlmulated
great lnterest ln cooperatlve apartment proJects, In part
because of the relatlve lack of state and local regulatlon
thereof. In February of 1978, the Clty Counell lmposed a
moratorlum on the constructlon, erectlon, development or
creatlon of stock cooperatlves pendlng the draftlng of local
regulatory and revenue ralslng ordlnances. The Counell at
that tlme expressed an lntent to treat cooperatlve houslng
proJects llke condominlums and dlfferently from apartment
proJects due to the dlfferent de8ands that the varlOUS types
of proJects place upon the Clty.
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In addltlon to regulatlng such factors as deslgn
and parklng standards, current local ord1nances governlng
condomlnlums provlde for the lmpos1tlon of a $1000 per un1t
tax on the construct10n and development of condomlnlums as
a solely revenue ralslng measure. The Plannlng Cornmlsslon
1S currently considerlng both proposed regulatory and revenue
ralslng ordlnances regardlng cooperatlves. However, in llght
of the recent approval of the JarVls-Gann measure, the Counell
must cons1der and adopt the proposed tax on development of
cooperatlves pr10r to July 1, 1978. To date, at least 1,000
unlts 1n the City have expressed a deslre to convert to co-
operatlves, ra1slng the potent1al of $1,000,000 1n needed
revenues for the C1ty.
It lS proposed that the C1ty Counell adopt the
proposed $1,000 un1t tax on cooperatlves 1n two forms:
(a) Adoptlon (by at least four afflrmat1ve
votes) as a revenue ralslng measure under Sect10n 6l9{d}
of the Munlclpal Charter.
Introduced on June 13, 1978, thlS
ordlnance could then be adopted on June 27, 1978 and become
effect1ve lmmed1ately upon adoptlon.
(b) Adopt1on (by at least four afflrmatlve votes)
as a regular ordlnance, effect1ve th1rty (30) days from and
after ltS adopt1on.
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Whlle the Clty Attorney's offlce feels that the
proposed tax falls properly wlthln the framework of Charter
Sectlon 6l9(d), It lS recommended that the Councll also adopt
the measure as a regular ordlnance as added lnsurance of
lts effectlveness in llght of the magnltude of revenue at
lssue.
Although not effectlve for thlrty days, lt lS antl-
clpated that the regular ordlnance would not thereby be subJect
to the Jarvls-Gann amendment llmltatlons on taxlng power. The
JarVls-Gann measure restrlcts the power of localltles to "lmpose,r
new taxes; thlS tax wlll have been "imposed" prlor to July I,
1978.
Note that the proposed ordlnances contaln a provlslon
permlttlng the Clty Councll at lts dlscretlon to defer the
collectlon of the tax when adequate assurances are provided
that the unlts wl1l be utlllzed for low or moderate lncorne,
elderly or hand1capped persons.
ThlS provls1on was developed
by staff 1D response to comments ln publlC hearlngs before
the Plannlng Commlsslon. DurlDg the month of July, It 1S
expected that the Plannlng COffiIT1SS10n wlll complete thelr
analYSls of the regulatory ord1nance regardlng coo~eratlves
and make thelr recommendation to the Clty Councll.
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Alternatlves.
Not app11cab1e.
Recornmendatlon.
That the Clty Councl1 adopt the two attached or-
dlnances lmpos~ng a $1,000 unlt tax on cooperatlve apartment
developments In the Clty of Santa Monlca at ~ts meet~ng of
June 27, 1978.
Prepared by: RICHARD L. KNICKERBOCKER, City Attorney
ANNE M. KIRLIN, Deputy Clty Attorney