SR-07-08-2014-8B - 104-092 / 212-010City Council Meeting: July 8, 2014
Agenda Item: 1613
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Gigi Decavalles- Hughes, Director of Finance
Subject: Real Estate Transfer Tax and Affordable Housing Ballot Measures
Recommended Action
Staff recommends that the Council:
1. adopt the attached ordinance setting the real estate transfer tax at $9 per $1,000
of sales price for all real estate sales of $1 million or greater, subject to a vote of
the electorate at the November 4, 2014 election (Attachment A); and
2. adopt the attached resolution placing measures on the November 4, 2014 ballot
that would:
a. set the documentary transfer tax at $9 per thousand dollars of sales price
for all real estate sales of $1 million or greater;
b. allow voters to express their preference that if the transfer tax increase is
adopted, funds should be used to support affordable housing production
and preservation;
c. authorize certain members of the Council to submit arguments and
rebuttals concerning the measure; and
d. direct the City Attorney to prepare an impartial analysis of the measure.
Executive Summary
The State of California's elimination of the Santa Monica Redevelopment Agency has
dramatically curtailed the City's ability to support the production and preservation of
affordable housing. Without continued support of affordable housing, economic
diversity in Santa Monica may decline and the housing needs of lower- income members
of the community cannot be addressed adequately. Pursuant to previous Council
direction, staff recommends adoption of an ordinance and a resolution placing two
measures on the November 2014 General Municipal Election Ballot. The first measure
would set the real estate transfer tax at nine dollars per thousand dollars of sales price
for all real estate transfers over $1 million. The second measure would provide an
opportunity for voters to express their preference that the increased revenues be used
for affordable housing. The proposed ordinance and resolution are attached.
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Background
Council held policy discussions on February 28 2012 and December 11 2012 to
consider a variety of issues related to affordable housing in Santa Monica. The policy
discussions were held in the wake of the dissolution of all redevelopment agencies in
California, including the Santa Monica Redevelopment Agency (RDA.) The RDA
provided the primary local funding source for the production and preservation of
affordable housing in Santa Monica. During the years leading up to redevelopment
dissolution, the Housing Division invested over $15 million per year of redevelopment
funds to finance affordable housing through loans and grants to non - profit
housing organizations. The investment of local funds leveraged an additional $15 to
$20 million annually from private investors and institutional lenders. With the dissolution
of redevelopment, the flow of funds that can be invested in affordable housing, as well
as the City's ability to leverage outside funding, has been radically diminished. Current
budget projections show less than $1 million per year available for affordable housing
production and preservation in the coming years. With such limited funding, it will take
the City several years to accrue sufficient funds to support one affordable housing
preservation or production opportunity.
With state - mandated vacancy decontrol significantly impacting the affordability of Santa
Monica's rent - controlled apartment supply, financing the production and preservation of
affordable housing has been a critical tool in ensuring the continued availability of
housing that is affordable to households of all income levels and in maintaining
economic diversity in Santa Monica. Funding from the RDA played the central role in
the City's ability to finance the production and preservation of affordable housing, and
has been the cornerstone of Santa Monica's robust affordable housing program.
Since 1994, approximately 38 percent of all new housing built in Santa Monica has
been affordable to low- and moderate - income households, totaling nearly 1,600
residences that will serve many generations of families and individuals of
modest incomes. This is an outstanding accomplishment that few cities have achieved.
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The final wave of redevelopment- funded affordable housing developments has recently
been completed or is under construction. During 2014, over 250 new affordable
apartments have become available to low- income families, seniors, and artists.
Another 32 affordable apartments are expected to be completed in early 2015. Staff
anticipates that one or two additional housing rehabilitation opportunities will be funded
from recent land sales. Once those opportunities are funded and completed, the non-
profit affordable housing pipeline in Santa Monica is expected to run dry. Finding new
funding sources will be critical to continuing Santa Monica's commitment to a diverse
community with housing for people of all incomes.
As discussed in the City Council staff report of February 25 2014, prospects for
significant, new funding sources at the federal, state, or regional levels are dim. If new
funding sources are developed at higher levels of government, they will likely require
the availability of local matching funds, particularly in locations such as Santa Monica
where land and construction costs are high. If the City desires to maintain its
traditionally broad and deep affordable housing program, staff believes that the creation
of a new local funding source will be necessary. In the coming months, Council is
expected to consider an ordinance to implement a commercial / housing linkage fee.
While a commercial / housing linkage fee would play an important role in mitigating the
impacts of commercial development on affordable housing needs, staff does not expect
it to be a significant, on -going source of funding to invest in affordable housing. One of
the primary reasons is that there is not expected to be significant commercial
development in Santa Monica in the coming years.
Within the current development pipeline, most of the proposed projects are primarily
residential. Most of the significant commercial developments (hotels, mixed -use
creative office / residential developments) are anticipated to include affordable housing.
Commercial components of any new developments will also likely be offset by existing,
on -site commercial structures. While only a portion of the projects may ultimately make
it into construction, it does provide a reasonable proxy for the type of development that
will be expected. As a result, if approved, the new fee will likely be an important, though
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relatively insignificant, source of funding for affordable housing, requiring funds to be
accumulated over multiple years to be sufficient to create or preserve affordable
housing. Maintaining the City's robust affordable housing program will require
additional local funds.
Discussion
At its February 25 2014 meeting, Council discussed an adjustment to the real estate
transfer tax rate in order to increase City revenues that could be used to support
affordable housing. A real estate transfer tax is collected by a county recorder
whenever commercial or residential property changes hands and an ownership transfer
document is recorded. All California counties collect a transfer tax of $1.10 per $1,000
of transferred value. In addition, many California cities charge an additional transfer
amount that is collected by the county recorder and paid to the respective city.
Santa Monica collects an additional amount of $3 per $1,000 of transferred value that
goes to support general City programs. Currently, city transfer rates in California range
from $1.10 to $25.00 per $1,000 of transferred value. (See Attachment C for a list of
California cities' transfer rates.)
For example, if a property in Santa Monica sold for $1,000,000, the Los Angeles County
Recorder would collect a transfer tax of $4,100 ((1,000,000/1000)(1.10 +3.00)), with
$1,100 for the county and $3,000 for the City. Payment of the transfer amount can be
negotiated between the buyer and the seller.
The idea of increasing real estate transfer rates and later directing the increased
receipts toward affordable housing is appealing for a variety of reasons. First, transfer
receipts can vary widely from year to year, based on transactions that occur during any
year. Such receipts tend to be affected by the general volume of residential and
commercial sales and the exact timing of significant sales. For example, a handful of
significant commercial property sales in one year, combined with brisk residential sales
activity, could spike transfer receipts, while minimal commercial and residential sales in
a subsequent year could drop municipal receipts. (See Attachment D for historical
transfer fee receipts in Santa Monica.) The volatility of transfer receipts would make it
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difficult to fund an operating program that has relatively fixed costs each year.
By comparison, affordable housing opportunities are funded once sufficient funds have
been collected to support the opportunity. As a result, the volatility of the funding
source would not be a significant detriment to the City's funding system for affordable
housing.
Increasing the transfer rate and later allocating funds toward affordable housing also
has appeal from a policy perspective. While the existing AHPP ensures that new
market -rate residential development mitigates the need for affordable housing, and the
proposed housing linkage fee will help mitigate new commercial development's impact,
there is no means to address the affordable housing impacts of existing commercial and
residential properties, particularly those that were developed before current affordable
housing policies were in place. Increasing the transfer rate on property transfers and
later allocating it toward affordable housing could allow a small portion of the escalation
in values of existing residential and commercial properties to be dedicated to promoting
economic diversity and to helping address the housing needs of low- income members
of the Santa Monica community.
Increasing the real estate transfer rate would require voter approval. There are several
reasons that voters could embrace an adjustment to the transfer rate. First, residents
encounter the transfer tax only when they are buying or selling property, which is a rare
occasion for most residents. Second, residential sales prices in Santa Monica have
peaked at a level that is commensurate with their pre- recession levels.
(See Attachment E for median residential sales prices since 2000.) As a result, most
residential sales are expected to involve value appreciation that far surpasses any likely
amount of the transfer rate. Sales by longer -term owners can see doubling, tripling, and
quadrupling of values since purchase. Local brokers and appraisers estimate that
commercial property values have similarly recovered from the recession. Second, the
payment of the transfer tax can be negotiated between buyers and sellers and the
payment is accompanied by a variety of other escrow and closing costs that many
buyers and sellers consider to be part of the cost of the transaction. Finally, with a
minimum transaction threshold for application of the higher rate, such as one million
dollars, homeowners of more modest means would be shielded from the increased rate
when they sell their homes. A threshold also would ensure that virtually all commercial
transactions would pay the higher rate, ensuring that existing commercial properties
contribute to the community's needs when a sale occurs.
In reviewing transfer tax receipts from previous years, staff estimates that the additional
receipts from setting the transfer rate at $9 per $1000 of sales price over $1,000,000
would generate between $4 million and $10.2 million per year. The wide range
presented is due to the volatile nature of real estate transfers, as discussed above.
Staff estimates that except in very slow real estate markets, making the additional funds
available for affordable housing would replace approximately half of the affordable
housing program previously funded by redevelopment. If the state is able to develop
and execute a plan for affordable housing funding, local funds could leverage state
funds and make Santa Monica more competitive for those funds.
Adjusting the local transfer tax for general municipal purposes would require approval
by over 50 percent of voters. A companion measure could provide voters with an
opportunity to demonstrate their desire that the increased revenue be directed toward
affordable housing.
Summary of Poll
On February 25, 2014, Council authorized staff to engage Fairbank, Maslin, Maullin,
Metz & Associates (FM3) to conduct a telephone survey of Santa Monica voters in order
to better understand voter attitudes toward the real estate transfer tax and affordable
housing in general. In April 2014, FM3 conducted a telephone survey of 501 Santa
Monica voters, with a margin of error of plus or minus 4.4 percent. Attachment E
provides a summary of the survey results. The survey found that 56 percent of voters
believe there is a great need or some need for additional funding to provide affordable
housing in Santa Monica. A majority of survey respondents expressed some level of
support for increasing the real estate transfer tax from $3 to $9 per thousand dollars of
sales value for properties sold over one million dollars, as well as for an advisory
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measure supporting use of the increased funds for affordable housing. Of those
surveyed, 57 percent said they would definitely vote yes, probably vote yes, or would
lean toward voting yes on the real estate transfer rate adjustment. Fifty -nine percent
expressed similar levels of support for an advisory measure related to affordable
housing funding. After hearing educational statements about the real estate transfer tax
and the City's affordable housing program, support for the transfer rate adjustment
increased to 61 percent and support for the advisory measure increased to 67 percent.
Survey respondents indicated the strongest support for the measures if the funds were
used only for affordable housing, including acquisition and rehabilitation of existing
apartment buildings, with the strongest support for housing for seniors, veterans,
persons living with disabilities, and people who live or work in Santa Monica.
While the polling shows general support for the measures, it also indicates that the
majority support is not definitive and that education plays a critical role in support for the
measure. As a result, if the measures are placed on the ballot, education and outreach
by affordable housing supporters will be critical to ensuring that voters understand the
measures and go to the polls to vote for them. In considering whether to place the
measures on the ballot, Council will need to assess the community resources that could
commit to supporting a ballot measure campaign, particularly because the City is not
allowed to use its resources to advocate for ballot measures.
Summary of Ballot Measures
As envisioned, the adjustment to the real estate transfer tax would be considered a
general tax and thereby would require a simple majority (50 percent plus one) for voter
approval. The companion measure would allow voters to express their preference that
the funds be allocated toward affordable housing, if the real estate transfer tax
adjustment were to be approved.
Attachment B is the resolution submitting the measures to the voters of the City of
Santa Monica. The title of the measures are as follows:
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PROPOSITION " ". Shall an ordinance be adopted that amends the real estate transfer
tax so that for commercial and non - commercial real estate sold for one million dollars or
more, the tax rate would be $9 for each thousand dollars of sales price?
PROPOSITION " ADVISORY VOTE ONLY.: If the proposed transfer tax on
commercial and non - commercial real estate sales is approved by voters, should the
revenue be used to preserve, repair, renovate and construct affordable housing for low -
income people who work or live in Santa Monica, including seniors, veterans, working
families and persons with disabilities?
In addition, the resolution authorizes the City Council to submit arguments and rebuttals
concerning the measure. Council may designate one to five members to submit
arguments and rebuttals for the measure. Finally, the resolution directs the City Clerk to
transmit a copy of the measure to the City Attorney and directs the City Attorney to
prepare an impartial analysis of the effects of the measure on the existing law as well as
on the operation of the measure.
Arguments and rebuttals shall be submitted in accordance with State Elections Code
Sections 9280 -9287 and Santa Monica Municipal Code Section 11.04.125. The
Elections Official will set the deadline for submitting arguments as 14 days from the date
the election is called on the measure and the deadline for submitting rebuttals to
arguments as 10 days after the deadline for submitting arguments on the measure.
The advisory measure does not raise taxes; rather, it expresses Santa Monica voters'
preference if the real estate transfer tax is increased. The results of the measure would
not bind the current or future city councils as to use of the revenues. In 2010, Santa
Monica voters approved a transactions and use tax, as well as a companion measure
expressing a preference that half of the revenues from the transactions and use tax be
used to support school programs. Since adoption of the two measures, Council has
allocated 50 percent of all revenues to school programs.
Alternatives
Council may choose not to adopt the resolution and thereby avoid placing the measures
on the ballot. Council could also choose to place alternative measures on the ballot.
E-3
Council also could choose to set the transfer rate at a different level. For example, if the
rate for sales over $1 million were set at $6 per $1,000, annual receipts are estimated to
range between $2 million and $5.1 million. However, the voter poll showed that
dropping the rate to $6 did not result in a statistically significant increase in voter
support.
Financial Impacts & Budget Actions
The cost of placing the measures on the ballot will be covered by the FY 2014 -15
election budget. Voter approval of the transfer tax measure is expected to increase
General Fund revenues by $4 million to $10.2 million per year, depending on the
number and value of real estate transfers that occur during any year. Voter approval of
the companion measure would create significant new revenues to support the
resumption of the City's affordable housing production and preservation program.
Prepared by: Andy Agle, Director of Housing and Economic Development
Approved: Forwarded to Council:
Andy Agle, Director TM Rod Gould
Housing and Economic Development City Manager
Approved:
' Gigi Decavalie"ughes, Director
Finance
Attachments:
A. Ordinance
B. Resolution
C. April 2014 Voter Survey
D. Historical Real Estate Transfer Receipts: 1991 - 2012
E. Median Residential Sales Prices: 2000 — 2013
E
Attachment A
Ordinance (CCS)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
SETTING THE REAL PROPERTY TRANSFER TAX RATE
AT N NE DOLLARS PER THOUSAND
THOUSAND DOLLARS
OF SALE VALUE ALL SALES OF ONE
ADOPTION DOLLARS R GREATER,
ELECTORATE
WHEREAS, all redevelopment agencies in California, including the Santa Monica
Redevelopment Agency, were dissolved on February 1, 2012; and
WHEREAS, the Santa Monica Redevelopment Agency generated nearly $40
million per year that was used for Santa Monica community priorities such as seismic
safety improvements to public buildings, affordable housing, and capital improvements;
and
WHEREAS, the dissolution of the Santa Monica Redevelopment Agency
severely diminished the funds available to address Santa Monica community priorities;
and
WHEREAS, many residents live in the City of Santa Monica because the City
invests in community priorities, offering extensive services and programs that
substantially enhance quality of life; and
WHEREAS, residents depend upon the City to continue to protect their quality of
life and effectuate community priorities, but with the loss of redevelopment funds, the
City must seek other resources; and
WHEREAS, an increase in the real property transfer tax would partially fill the
revenue gap left by the loss of redevelopment funds; and
WHEREAS, all City revenues are subject to annual independent audits with
public review of the City Budget being widely available, including at City Hall, on -line
and at the public library; and
WHEREAS, median sales values for commercial and residential properties have
fully recovered from the recession that began in 2007; and
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WHEREAS, the existing City of Santa Monica real property transfer tax is set at
only three dollars per thousand dollars of sales price for all sales of commercial and
residential properties; and
WHEREAS, the City of Santa Monica proposes to set the City of Santa Monica
real property transfer tax for all sales of commercial and residential properties sold for
one million dollars or more at nine dollars per thousand dollars of sales price; and
WHEREAS, the proposal would set the real property transfer tax in accordance
with state law; and
WHEREAS, under applicable law, the City Council of the City of Santa Monica
must set the proposed real property transfer tax rate and then present it to the
electorate of the City of Santa Monica for adoption by majority vote of the people.
NOW THEREFORE, the City Council of the City of Santa Monica does ordain as
follows:
SECTION I. Chapter 6.96.020 of the Santa Monica Municipal Code is amended
to read as follows:
Section 6.96.020 Transfers affected and amount of tax
Effective 9etobe 15T 1991 January 1 2015, there is hereby imposed on each
deed, instrument, or writing by which any lands, tenements, or other realty sold within
the City of Santa Monica shall be granted, assigned, transferred or otherwise conveyed
to, or vested in, the purchaser or purchasers, or any other person or persons, by his or
her or their direction, when the consideration or value of the interest or property
conveyed (exclusive of the value of any lien or encumbrance remaining thereon at the
time of sale) exceeds one hundred dollars, a tax The tax will be imposed at the rate of
three dollars for each one thousand dollars of property sale value or fractional part
thereof for all sales less than one million dollars. For all sales of one million dollars or
reater the tax will be im osed at the rate of nine dollars for each one thousand dolQa�rs
of ro ert sale value or fractional art thereof. Prior
threet dollars O bfor each e
January 1 2015, the tax at the rate of
thousand dollars of property sale value or fractional part thereof shall remain in effect.
SECTION 2. Any provisions of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
2
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 3. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. The City Clerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption.
APPROVED AS TO FORM:
M RSHA r NES M UTRIE
Ci yy ne
Attachment B
RESOLUTION NUMBER 10823 (CCS)
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
SUBMITTING TO THE VOTERS A MEASURE PROPOSING TO SET
THE REAL PROPERTY TRANSFER TAX RATE
AT NINE DOLLARS PER THOUSAND DOLLARS
OF SALE VALUE FOR ALL SALES OF ONE MILLION DOLLARS OR GREATER,
ALONG WITH AN ADVISORY, COMPANION MEASURE
ASKING WHETHER THE INCREASED REVENUES
SHOULD BE SPENT ON AFFORDABLE HOUSING,
AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON
TUESDAY, NOVEMBER 4, 2014,
AND AUTHORIZING CITY COUNCIL MEMBERS TO FILE
WRITTEN ARGUMENTS FOR OR AGAINST THE MEASURE
AND N MPARTIAL THE
ANACITY
LYSIS OF ATTORNEY THE O
TH MEASURE PREPARE
WHEREAS, all redevelopment agencies in California, including the Santa Monica
Redevelopment Agency, were dissolved on February 1, 2012; and
WHEREAS, the Santa Monica Redevelopment Agency generated nearly $40
million per year that was used for Santa Monica community priorities such as seismic
safety improvements to public buildings, affordable housing, and capital improvements;
and
WHEREAS, the dissolution of the Santa Monica Redevelopment Agency
severely diminished the funds available to address Santa Monica community priorities;
and
WHEREAS, many residents live in the City of Santa Monica because the City
invests in community priorities, offering extensive services and programs that
substantially enhance quality of life; and
WHEREAS, residents depend upon the City to continue to protect their quality of
life and effectuate community priorities, but with the loss of redevelopment funds, the
City must seek other resources; and
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WHEREAS, an increase in the real property transfer tax would increase
revenues for the City of Santa Monica; and
WHEREAS, the City Council could allocate those increased funds toward the
production and preservation of affordable housing; and
WHEREAS, increased funding for the production and preservation of affordable
housing would allow the City of Santa Monica to continue if efforts to address the
housing needs of low- income seniors, veterans, working families, and people with
disabilities; and
WHEREAS, on June 10, 2014, the City Council adopted resolutions calling for
and giving notice of a General Municipal Election on November 4, 2014; and
WHEREAS, the proposal would set the real property transfer tax in accordance
with state law; and
WHEREAS, the City Council of the City of Santa Monica proposes to place the
following proposition amending Chapter 6.96.020 of the Santa Monica Municipal Code,
along with a companion advisory measure,. on the ballot at the General Municipal
Election to be held on November 4, 2014.
NOW THEREFORE, the City Council of the City of Santa Monica does ordain as
follows:
SECTION 1. A General Municipal Election has been called for on November 4,
2014 for the purpose, among other things, of electing City Council members and
submitting measures and ballot propositions to the voters.
SECTION 2. At the General Municipal Election called for November 4, 2014, the
following proposition shall be submitted to the qualified electors of the City of Santa
Monica:
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SECTION 5. The City Council authorizes its members, as follows, to file written
arguments for and against the measures:
FOR:
AGAINST:
All written arguments filed by any person in favor of or against any measure,
including any rebuttal arguments, shall be accompanied by the names and signatures of
the persons submitting the arguments as required by applicable law, and any names,
signatures and arguments may be filed until the time and date fixed by the City Clerk in
accordance with applicable law, after which no change may be submitted to the City
Clerk unless permitted by law.
SECTION 6. The City Clerk shall cause the text of the measures, together with
the City Attorney's impartial analysis, and any arguments for or against the measures,
as well as any rebuttal, to be mailed to all qualified voters with the sample ballot. In
addition to other notices and publications required by law, the City Clerk, not less than
forty (40) days and not more than sixty (60) days before the General Municipal Election,
shall cause the text of the measures to be published once in the official newspaper and
in each edition thereof during the day of publication. The City Clerk is authorized to give
such notices and to fix such times and dates as are required by law or which are
appropriate to conduct the election properly.
SECTION 7. The provisions of Resolution Numbers 10810 (CCS), 10811 (CCS),
10812 (CCS), and 10813 (CCS) are referred to and incorporated as necessary for more
particulars concerning the General Municipal Election to be held on November 4, 2014
and the placing on the ballot of these measure and the conduct of the election. In all
respects, the election shall be held and conducted as provided for by applicable law,
including resolutions. The City Clerk is authorized and directed to procure and furnish
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Adopted and approved this 8th day of July, 2014.
Pam O'Connor, Mayor
I, Sarah P. Gorman, City Clerk of the City of Santa Monica, do hereby certify that
the foregoing Resolution No. 10823 (CCS) was duly adopted at a meeting of the Santa
Monica City Council held on the 8th day of July, 2014, by the following vote:
AYES: Councilmembers: Davis, McKeown, Vazquez, Winterer
Mayor O'Connor,
NOES: Councilmember: Holbrook
ABSENT: Councilmember: Mayor Pro Tern O'Day
ATTEST:
Sarah P. Gorman, City Clerk
Attachment C
Fairbank,
Maslin,
Maullin,'
Metz &
Public Opinion Research
& Slralegy
TO: Interested Parties
FROM: Fairbank, Maslin, Maullin, Metz & Associates (FM3)
RE: Summary of City of Santa Monica Issues 2014 Survey
DATE: May 16, 2014
Between April 12 °1 — 19 "', 2014, Fairbank, Maslin, Maullin, Metz & Associates (FM3) conducted
a telephone survey of 501 City of Santa Monica voters who are likely to vote in the November
2014 General Election.' The margin of error for the full sample is plus or minus 4.4 percent;
margins of error for subgroups will be higher.2
The three main goals of this survey are to:
(1) Examine general perceptions of the City
(2) Explore perceptions on the need for additional funds to provide affordable housing in
the City
(3) Gauge the level of support for measures that would help address the need for additional
affordable housing in Santa Monica
The key survey findings include:
• A majority of voters consider the City to be headed in the right direction
• About half of all voters perceive the City has a need for additional funds, both generally
speaking and specifically to provide affordable housing
• A majority of voters support a ballot measures to create new revenue for the City by
increasing the existing documentary transfer tax
• A majority of voters support an advisory ballot measure encouraging the City Council
to use that revenue to provide affordable housing in Santa Monica
The balance of this memo provides a detailed summary of the findings.
' Respondents were given a choice to conduct the survey in English or Spanish.
2 Some results do not equal 100% due to rounding.
2425Colorado Avenue. Sidle180 1999 Hon ison Street Suile 1290
Santa Alonica, CA 90404 Oakland, CA 94612
Phone: (3)0) 828 -1183 Phone: (510) 451 -9521
Fax." (310) 453 -6562 Far: (510) 451 -0384
Summary of the Ikey Results from the 2014 City of Santa Monica Issues Survey Page 2
(1) General Perceptions of the City:
A majority of voters have positive views of where the City is hearted
As seen in Figure 1 below, 51 percent of voters feel that the City of Santa Monica is headed in
the right direction and about one -third (36 percent) perceive that the City is pretty seriously off
on the wrong track. Thirteen percent are undecided.
Figure 1: Opinion of Santa Monica Voters on the Direction of the City
Right Direction 51%
Wrong Track §EINIJIMIJIMM 36%
Don't Know 1,,.. 113%
40% 60% e0%
(2) Perceptions of the Need for Additional Funding for Affordable Housing:
More than one half of all voters perceive that the City generally needs additional finds
Fifty -six percent of respondents said that the City of Santa Monica has a great (15 percent) or
some (41 percent) need for additional funds to provide the level of city services that residents
need or want (see Figure 2 below). Thirty -five percent identified little or no need for additional
funding. The balance of voters (nine percent) are undecided.
Fifty -six percent of respondents said that the City has a need for funds to provide additional
affordable housing. This is equal to the percentage who said the City had a general need for
funds, but twice as many (29 percent) identified the need for funds for affordable housing as a
"great need." Thirty -two percent identified little or no need for additional funding to provide
affordable housing, while twelve percent are undecided.
Figure 2: Perception of the City's Need for Additional Funds
Great need EM 15%
Some need
Total Great/
41 /o Some Need
56%
Little need 16% 1 Total Little/
No Real Need
No real need 19% 35%
Don't know 1, =1 9%
® 29%
Total Great/
Some Need
27 /a
56%
12%
Total Little/
20%
No Beal Need
32%
U 12%
015 20% 403 W%
Fairbank,
Muslin,
Maullm,
Metz &
,lssociates'
Summary of the Key Results from the 2014 City of Santa Monica Issues Survey
Page 3
(3) Support for Documentary Transfer Tax /Affordable Housing Companion Measures:
Initial /Current level of support
A majority of voters (57 percent) initially support a general purpose, simple majority measure
to increase the existing documentary transfer tax by six dollars per one thousand dollars of
sales on commercial and non- commercial property sold for over one million dollars.
Respondents were initially read the following possible ballot language:
"Shall the existing documentmy transfer tax on commercial and non- commercial property
sold for over one million dollars in the City of Santa Monica he increased by six dollars per
one thousand dollars of sales?"
City of Santa Monica voters indicated that if the election was held "today," a majority (57
percent) would support the measure.3 Initially, 32 percent of voters do not support the measure.°
A further eleven percent are undecided (see Figure 3).
Figure 3: Vote on the Documentary Transfer Tax Increase Measure
Definitely yes 27% Total
Probably yes 15% Yes
Undecided, lean yes 15% 57%
Undecided, lean no
Probably no
Definitely no
Undecided
Total
No
21% 32%
20% 30% 40%
Voters were also asked abort it companion measure that would advise the Santa Monica City
Council to use funds from the documentary transfer tax increase to provide affordable
/rousing in the City. A majority of voters (59 percent) initially support the advisory measure.
Respondents were initially read the following possible ballot language:
"ADVISORY VOTE. To provide affordable housing for low- income people who live or work
in Santa Monica, including working families, seniors on fixed incomes, veterans, the
homeless, and people with disabilities, shall the City of Santa Monica provide loans to
qualified non-profit housing organizations to repair, renovate, build and acquire affordable
3 Definitely vote yes: 27 percent; probably vote yes: 15 percent; lean toward voting yes: 15 percent.
" Definitely vote no: 21 percent; probably vote no: seven percent; lean toward voting no: four percent.
F'airbank,
Maslen,
Mnttllin,
Metz &
flssociates.;
Summary of the Key Results from the 2014 City of Santa Monica Issues Survey
Page 4
housing if voters approve increasing the existing documentary transfer tax by six dollars per
one thousand dollars of commercial and uou- conu:ercial property sides of over one million
dollars in the City of Santa Monica ?"
City of Santa Monica voters indicated that if the election was held "today," a majority (59
percent) would support the simple majority measure.5 Initially, 30 percent of voters do not
support the measure.b A further twelve percent are undecided (see Figure 4).
Figure 4: Vote on Advisory Measure to Use Documentary Transfer Tax Measure Funds to
Provide Affordable Housing
Definitely yes
i P 1 1i
P 29%
1 Total
Probably yes
18%
Yes
Undecided, lean yes
12%
59%
Undecided, lean no
4%
Total
Probably no
8%
No
130%
Definitely no
18%
Undecided
�, -.. 12%
0% 10'/0 20's
30%
40%
Reaction to information about the package of ballot measures
Respondents also heard the following statement about the current documentary transfer tax and
the proposed changes to the tax brought about by passing the measure:
"I would now like to tell you a little bit about the documentary transfer tax It is an existing,
one -time fee that the city imposes when residential and commercial real estate is sold
Currently in Santa Monica, the fee is set at three dollars per every one thousand dollars
regardless of the price of the real estate that is sold. The ballot rrreasure we have been
discussing would increase that rate to nine dollars per every one thousand dollars in sales
price only for property sold for over one million dollars in Santa Monica. It will not change
the rate for property sold for less than one million dollars."
Fifty -two percent of respondents said that the information made them more likely to support the
measures, while twenty -one percent reported that it made them less likely and thirty -three
percent said it did not change their position on the measures.
' Definitely vote yes: 29 percent; probably vote yes: 18 percent; lean toward voting yes: 12 percent.
s Definitely vote no: 18 percent; probably vote no: eight percent; lean toward voting no: four percent.
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Metz &
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Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 5
Reaction to educational and critical statements about the ballot measures
In order to test a variety of Santa Monica voters' opinions (pro and con) about the proposed
companion measure, the survey presented respondents with a series of both educational
statements describing the need for increasing the availability of affordable housing in the City, as
well as critical statements suggesting reasons why voters should not vote for the proposed
measures 7
Educational Statements
After each educational statement was read, respondents were asked to indicate whether hearing
the educational statements made them more inclined to vote for the measure. More than 60
percent of Santa Monica voters said they were more inclined to support the measures because
educational messages included the need to provide a safety net for vulnerable individuals
and ensuring local control and accountability for affordable housing funds. The individual
results on these messages are presented below:
This measure provides a safety net to Santa Monica residents who are vulnerable to losing
their home (67 percent more inclined to vote yes after hearing this statement).
This measure gives Santa Monica locally controlled funds to make affordable housing more
available (66 percent more inclined to vote yes after hearing this statement).
This measure includes strict fiscal accountability to ensure that funds will be spent as
promised (64 percent more inclined to vote yes after, hearing this statement).
A presentation of educational statements increases support for the documentary transfer
tax measure to 61 percent, with 32 percent opposed and seven percent remaining
undecided. Support for the companion advisory measure increases to 67 percent (two -
thirds of the electorate) with 29 percent opposed and rove percent remaining undecided.
After the initial vote in response to the documentary transfer tax ballot summary, an explanation
of the documentary transfer tax and a reading of educational messages, voters were asked again
how they would vote on the measure if an election were held "today." On the second vote,
support increased by four percent, from 57 to 61 percent.' Opposition remained at 32 percent.
The percentage of undecided voters declined from eleven to seven percent.
On the second vote, support for the companion measure advising the City to use the revenue
generated by increasing the documentary transfer tax to provide affordable housing rose eight
percent from 59 to 67 percent.70 Opposition fell one point from 30 to 29 percent." The
percentage of undecided voters declined from 12 to five percent (see Figure 5).
' Statements are paraphrased in this memo to highlight . the key aspect of the statements.
' Definitely vote yes: 31 percent; probably vote yes: 18 percent; lean toward voting yes: 12 percent.
' Definitely vote no: 22 percent; probably vote no: seven percent; lean toward voting no: three percent.
10 Definitely vote yes: 32 percent; probably vote yes: 22 percent; lean toward voting yes: 13 percent.
Definitely vote no: 21 percent; probably vote no: five percent; lean toward voting no: three percent.
Fair bank,
Mashn,
Maultm,
Metz &i;
Associates
Summary of the Key Results from the 2014 City of Santa Monica Issues Survey
Page 6
Figure 5: Vote after Educational Statements on the Documentary Transfer Tax Measure
and Companion Advisory Measure
Undecided WON 5% = �0
Critical Statements
Voters were also read critical statements and asked to indicate whether hearing the respective
statement would make them more inclined to vote against the measure. The impact of the
critical statements is more modest than the educational statements. More critical messages
motivated between 35 and 45 percent of respondents to say they would be more inclined to vote
no on the measure. These results never met the legal threshold of 50 percent needed to defeat a
measure. The critical statements include claims that the measure will increase density and traffic
in Santa Monica, that the City already has the necessary funds to provide additional affordable
housing and that taxpayers are already overburdened.
After hearing critical statements about the measures, 59 percent of Santa Monica voters
still support the documentary transfer tax measure. Thirty -three percent oppose the
measure and eight percent are undecided. Sixty -two percent support the companion
advisory measure, 29 percent oppose it and nine percent are undecided.
In spite of critical statements made against both measures, voters continue to support the
measures at higher levels than the 50 percent plus one threshold necessary for passage (see
Figure 6: Vote after Critical Statements and Figure 7: Progression of Vote). Fifty -nine
percent said they would vote yes to increase the documentary transfer tax, a decline of only two
percentage points from the vote after educational messages. 12 The percentage of voters who
report they would vote no increases one percentage point from 32 to 33 percent.13 The
undecided voter percentage also increases by one percentage point from seven to eight percent
12 Definitely vote yes: 26 percent; probably vote yes: 19 percent; lean toward voting yes: 14 percent.
" Definitely vote no: 24 percent; probably vote no: five percent; lean toward voting no: four percent.
Fnirbnnk,:
Mristin,`?;
Maullin,'
Metz &
Associates
Summary of the Key Results from the 2014 City of Santa Monica Issues Survey
Page 7
Opinions on the companion advisory measure to dedicate funds to providing affordable housing
are somewhat more fluid as support falls five percentage points from 67 percent to 62 percent. 14
The percentage of voters who report they would vote no increases one percentage point from 28
to 29 percent.15 The percentage of undecided voters increases from five percent to nine percent.
Figure 6: Vote after Critical Statements on the Documentary Transfer Tax Measure and
Companion Advisory Measure
Undecided 8%
°n zox <axi
9%
wn ww
Figure 7: Progression of Votes on the Documentary Transfer Tax Measure and Companion
Advisory Measure
Vote After
Initial After Critical
Vote Educ. Stmnts.
Total Yes 59 ° 67% 62%
/
Total No 30% 29% 29%
Undecided 12% 9%
5% _
Initial
Vote
57%
Vote After
After Critical
Educ. Stmnts.
60%
61% 59%
32% 32% 33%
11%
w Definitely vote yes: 32 percent; probably vote yes: 17 percent; lean toward voting yes: 15 percent.
15 Definitely vote no: 23 percent; probably vote no: four percent; lean toward voting no: two percent.
60%
F GO%
20 °A
0%
Fairbank,'
Maslin,`.:.
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Metz &'Z!S.':
issociatesa.
Summary of the I {ey Results from the 2014 City of Santa Monica Issues Survey Page 8
Support,for the ballot measures at different tax rates (aid structures
A majority of respondents reported that they would support an alternative dedicated measure that
would expressly link the increase in the documentary transfer tax to spending on providing
affordable housing.
The alternative measure was supported by as many as 61 percent of respondents with 35 percent opposed
and 3 percent undecided. This level of support is well above a simple majority, but below the two - thirds
threshold needed for this dedicated type of measure to pass.
More than half of voters reported that different tax rates and structures would make them
more likely to support the measures.
As the structures of the measures are still being determined, the survey tested different tax rates
and structures to understand their impact on overall support. More than half of voters said that
the following would make them more likely to support the measures:
If the documentary transfer tax were set at a higher rate for higher- priced properties (57
percent Much More /Somewhat More Likely)
If the documentary transfer tax increase only applied to sales of property over five million
dollars (57percent)
If the measure raised the documentary transfer tax by $3 instead of $6 per $1,000 of sales (54
percent)
Importance of how the Documentary Transfer Tax funds are spent
Nearly three - fourths of Santa Monica voters report that they would be more likely to
support the ballot measures if funds were used to support vulnerable seniors.
Among the many potential ways to increase affordable housing in Santa Monica, voters reported
the following four components would make them much more or somewhat more likely to
support the measures at rates of between 62 and 72 percent:
• Using funds for rental housing support for vulnerable seniors who are at risk of losing their
assistance due to state actions (72 percent Much More /Somewhat More Likely)
• Making loans to non - profit housing organizations to renovate older apartment buildings for
additional affordable housing (69 percent)
• Providing short-term, transitional housing subsidies to Santa Monica residents who are at risk
of becoming homeless (69 percent)
• Making loans to non -profit housing organizations to acquire land and build additional
affordable housing (62 percent)
Roughly seven -in -ten Santa Monica voters report that they would be more likely to support
the measures if funds were set aside in a separate trust fund used solely for providing
affordable housing or if the measure required that preference for affordable housing be
given to people who live or work in Santa Monica.
Fairbank,
juaslin,'
Maultin,
3lletz` &`;,''
Associates...
Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 9
Voters were asked about several accountability provisions to ensure funds are used as promised.
Respondents said the following provisions would make them much more or somewhat more
likely to support the measure at rates between 53 and 72 percent:
Requiring that all funds be set aside. in a separate Santa Monica Affordable Housing trust
fund so that funds cannot be used for other purposes (72 percent Much More /Somewhat More
Likely)
Requiring that preference for affordable housing funded by the measure be given to people
who live or work in Santa Monica (69 percent)
Requiring the measure to expire after 10 years (53 percent)
Fairbank, ;
Maslin,'
Metz &
.4ssociales:`.
Attachment D
Attachment E
MEDIAN RESIDENTIAL SALES PRICES
SANTA MONICA
2000 -2013
Median Sales Price
Santa tvl inica, CA I All properties I All years
$1.20M
e et
$5001( 41 \t 3 / i, 1%
$3388
$2001(
$OK
2000 2001 2002 2003 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013
El All properties
SOURCE: TRULIA