If you buy and sell a house for the same price on the same day, you will owe $500,000
This is not a 'wealth tax' as the signature gatherers proclaim - it is a real estate transfer tax. They are completely different things.
With this new transfer tax, if you buy and sell a house for even the same price, you will owe $500,000. And as the threshold is not inflation adjusted, in a very few years it won't be just the wealthy paying this, it will be everyone - even for modest homes.
And then the house-flipping industry will stop... This will have a crushing effect on realtors, remodeling, construction and related industries, and of course on Santa Monica's business taxes, real-estate taxes and sales taxes.
This transfer tax (by far the highest in the state at this threshold level) will freeze Santa Monica's real-estate in place, stopping aspiring home-owners from buying a place of their own.
If a home sale is delayed, it prevents updating the property tax basis, keeping the old, lower property tax in place. Just a few delayed sales will completely counteract the tax generated by this ballot measure. The transfer tax happens occasionally... property taxes are paid every year.
Existing property taxes fund a raft of things beyond schools... police, fire, roads, libraries, parks etc etc. Whereas the new transfer tax is almost entirely for housing non-residents (and just a small slice for schools).
Thus we will reduce the funding for a wide array of city needs and replace it with the transfer tax which almost entirely targets a single issue - to the detriment of everyone in the city, apart from those moving into our city to occupy the affordable housing.
(SM rent control tenants are not eligible to occupy these affordable apartments - they will be almost exclusively for non-residents.)
The sponsors say in their handouts that this measure is intended to help pay for the unfunded state mandate to build 6000+ affordable homes (cost $4Billion+).
No other cities in the state are proposing a tax like this - they realize it's self-defeating madness.
The state won't take over planning control for any cities who don't have 5% transfer taxes - and to claim so is utter nonsense.
Right now, there is no money to pay for the state mandated 6000 affordable apartments, and they may not happen as a result - avoiding a whole bunch of parking hell, school funding shortfalls, jammed schools, endless construction of huge buildings with no parking right next door to you, etc etc. But this ballot measure will help enable this.
Those 6000 apartments will bring in perhaps 1000, or even 2000 students, requiring an extra $20 Million to $40 Million. Which is a $10Million to $30Million shortfall for schools, meaning less per-child funding in our schools, rather than more.
As buildings convert from market rate residential and commercial/industrial to (non-property tax paying) affordable housing, the tax base of the city will shrink. The (fewer and fewer) property tax paying residents will not only be paying for the current students, but will now be taxed to pay for a whole load more students who won't be paying property taxes towards the schools.
Very soon the school system really will become underfunded, and the quality of schooling really will collapse.
The sponsors say this tax will help the rent burdened... but this new tax will weaken the traditional tax base of the city and reduce the city's ability to help. They say that the new tax will be for a variety of housing purposes. But those appointed to the commission to control the new tax revenue will be under pressure (both from the state and from local politicians and their developer friends) to use the revenue solely for new buildings. And we will still depend on the existing, ever shrinking, traditional property taxes to help existing rent burdened tenants.
If this tax passes, then general purpose property taxes are going to shrink rapidly... because of delayed property sales impacting tax valuations, and from replacing tax-paying buildings with affordable buildings. Traditional, general purpose property taxes will effectively be replaced with this single-issue tax - and everyone in the city will suffer from underfunded police, fire, roads, parks, libraries etc, etc. We will suffer from jammed underfunded schools. And we will suffer from giant buildings with no parking and New York level parking Hell.
And rent control tenants can't even move into the new buildings, but must just watch in horror as they sprout next-door.