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  • REAL ESTATE DOCUMENT TAX A POISON BILL FOR AFFORDABLE HOUSING DEAL

    Posted: July 14, 2017 | Posted by Crystal Whitfield | No Comments

    As we reported last week, the SB 2 (Atkins; D-San Diego), a bill that will authorize a tax on almost every recorded real estate document, was brought up with no notice and passed with all Democrat Senators voting for the new tax, lobbing the bill over to the Assembly.  Less than a week later the bill was heard in the Housing Committee and passed on a party line vote.

    Now, as tense negotiations are happening on reauthorization of California’s Cap-and-Trade program, it is reported that several progressive members of the Legislature are pushing to have this bill be on the table as part of any a final deal on Cap-and-Trade.

    How taxing our documents has anything to do with greenhouse gas trading markets is a bit baffling, but hey, its Sacramento.

    However, if the legislature does want to connect the two issues, we believe there is an easy path forward as there are a list of 10-15 bills that would make sense to consider and adopt – but SB 2 is not one of them.  And we believe that inclusion of SB 2 would be a poison bill that would make any such deal unsuccessful.

    In order to move the bill forward, it has been amended to exempt building sales but keep every day document recording, which makes the bill an incredibly regressive tax.  Our position has long been, apply the tax to all transactions in a smaller amount, but the bill has actually been changed to move away from that.

    According to the Senate Appropriations committee analysis, this bill will result in a $200 million to $300 million tax on commercial and residential property owners and tenants.  These funds will be redirected to a number of government programs at the Department of Housing and Community Development (HCD) and the California Housing Finance Agency (CalHFA) focusing on affordable housing.

    While we are sympathetic to the need for more affordable housing, and support many policies that will actually produce rooftops by addressing the underlying issues that are real impediments to building housing.

    We are asking that if SB 2 were to move forward, it be amended to focus on Governor Brown’s stated goals to address affordable housing of cutting red tape, delays, and unnecessary expenses to housing construction that would make housing more affordable to all Californians.  We also call on the legislature to address the thicket of environmental law known as CEQA which quashes many projects through cost and delays and unnecessary lawsuits, before a shovel is ever put in the ground.

    If more funds are needed, our industry is willing to accept a new tax as long as it is applied evenly, fairly, and transparently across the board and is accompanied by some of the reforms supported by Governor Brown.

    California needs more housing.  But simply creating a new tax and new government programs is not going to produce rooftops as it does not address the impediments to building more housing.

    Hopefully a package of bills will move forward that addresses the affordable housing crisis.  This bill, however, should not be one of them.



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