Quick Take
Lookout politics columnist Mike Rotkin comes out against an affordable housing proposal put forth by realtors to rival one proposed by local activists, saying it is an attempt to confuse voters and subvert the democratic process. It’s not about creating housing, he says. He calls on Santa Cruzans to channel the energy used to beat back Big Cola last November to reject this initiative. Signatures on the petitions for the rival initiatives are due May 9. They need 3,620 signatures to qualify for the November ballot in the city.
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Santa Cruz citizens demonstrated an amazing willingness to stand up to the arrogant power of the cola industry when, last November, despite being outspent 50 to 1, they voted to impose a local tax on sugary soft drinks.
Almost nobody predicted Measure Z would triumph, but citizens did manage to defeat a powerful lobby in a democratic contest.
We now have a similar situation in the property sales transfer and parcel taxes proposed by a coalition of local affordable housing activists. We have two rival plans, only one of which is serious.
The second, a plan created by realtors, is not a serious option. It would result in a tax that simply does not raise enough money to make any difference in affordable housing. It is a blatant attempt to confuse voters and undermine the democratic process.
I believe the voters of the city of Santa Cruz need to now, once again, as with the sweetened beverage tax, speak out in their outrage at a small, powerful group of narrowly self-interested, wealthy people trying to subvert our democratic community processes with their deceptive initiative. Please do not sign their petition, and if it appears on the ballot alongside the legitimate community effort to address a real affordable housing crisis, vote no.
After over two years of careful discussions with a variety of affordable housing and other progressive activists and organizations, community leaders, with support from the city, developed a reasonable measure that provides enough subsidies to make sure the new housing constructed in Santa Cruz under state mandates is affordable by the people who work and live here.
It won’t help the unhoused or folks without regular income. But it will support teachers, police officers, firefighters, health care workers, agricultural sector workers, city and county workers, entry-level employees at the Regional Transportation Commission and the Metropolitan Transit District and merchants and baristas throughout our community who can’t afford to rent a home in our community without help.
From the start, those pulling this effort together with support from the Santa Cruz City Council and Mayor Fred Keeley went out of their way to accommodate the realtor community. They worked to craft a measure that would be a modest tax on their profits. The profits in home sales in Santa Cruz are among the highest in the nation and truly off the charts.
The realtors did not create these super profits through some cleverness or extra initiative on their part. These property values result from community processes beyond any of their, or our, control.
The measure taxes home sales only of more than $1.8 million. The city would collect a 0.5% tax on properties selling for $1.8 million to $2.5 million, but would apply the tax only to the amount above $1.8 million, not total sale price. For example, a home selling for $2 million would pay a 0.5% tax on $200,000, or $1,000. Transfer tax on a $3.5 million sale would be $13,500. And there is a scale that goes up to 2% for properties that sell for more than $4.5 million, with a cap at $200,000. A home sold for $5 million would be subject to a transfer tax of $38,500.
This is asking for only a comparatively modest contribution to solving our affordable housing crisis from some of the wealthiest members of our community.
In addition, the proposed measure includes an additional parcel tax of $96 for every parcel in the city of Santa Cruz. That tax will never increase. The idea is for everyone to help us solve our affordable housing crisis. Also, because the parcel tax never changes, we know exactly how much money it will raise over its 20-year life.
Knowing that amount of money will come in means the city can issue a municipal bond and spend that money up front and use the parcel tax income each year to pay off the bondholders, including interest.
That means we don’t need to wait to begin building affordable housing so desperately needed by our community.
It would be one thing if the realtor community decided to either sit this one out or even announce opposition to the proposed measure. But what the Santa Cruz County Association of Realtors has done is much more underhanded.
They have created a countermeasure on the same ballot with a lower parcel tax, because they think it will make their measure more popular. They have reduced how long the tax is collected from 20 to 10 years and reduced the percentage of the proposed property sales transfer tax.
The truth is, they don’t actually support any property sales transfer tax. This isn’t a serious political effort. They just want this on the ballot to confuse voters, make it harder to gather signatures or pass it once it is there.
Let’s not get fooled.