After subcommittee adjustments, council votes to place transfer tax reform on ballot

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At a special meeting on Aug. 3, the Culver City city council approved the addition of a ballot measure to increase the transfer tax on properties valued at over $1.5 million. This measure will be voted on in the November general election.

The property transfer tax is a tax that is put onto properties being sold, and both parties are generally liable. The liability is also severable, and sellers traditionally pay the tax in California.

Currently, property transactions in Culver City are subject to two transfer taxes: one to LA County that is equivalent to 0.11% of the sale price of the property, and one to Culver City that is currently set at 0.45%, or $4.50 per $1,000 of the property’s sale price.

In its meeting on July 27, city council was presented with a paper by the UCLA Lewis Center for Regional Studies, which focuses on research on regional issues in Los Angeles.

According to that paper, the property taxes in Culver City are dramatically low, and it was noted at the meeting that Culver City’s heavy reliance on its sales tax over its property taxes makes the city an outlier in that regard.

According to the report, “Los Angeles’ population is 4.5 times larger than San Francisco’s, and the total assessed value of property in the city is more than 2.3 times higher, yet San Francisco collects significantly more transfer tax revenue each year.”

While the models initially presented started the increase at the very bottom bracket, with even the most conservative models bumping the tax up to .65% for properties $750,000 and below, councilmembers Alex Fisch and Thomas Small came together as part of an Ad Hoc subcommittee to further tweak the scale to fit Culver City.

The result is the following ballot language: 

Shall the measure to maintain essential services, including deferred parks/facilities/street maintenance, addressing homelessness, after-school/senior services, and economic recovery, by increasing the one-time 0.45% tax on real property sales, adding 1.5% on amounts from $1,500,000 to $2,999,999, 3% on amounts from $3,000,000 to $9,999,999, and 4% on amounts $10,000,000 and above, except for sales under $1,500,000, affordable housing, and first transfer of new multi-family properties, and providing $6,000,000 annually until repealed, be adopted?

These numbers are actually adjusted to be heavier on the middle part of the spectrum than the primary example used in the Lewis paper: San Francisco.

While San Francisco’s scale begins increasing the tax to amount greater than Culver City at .5% for $250,000 and less and .66% for properties $250,000.01 to $999,999, but that number only goes up to .75% from $999,999.01 to $5 million, whereas Culver City would eclipse that number from $1.5 million and beyond.

However, these numbers are conservative when compared to Senate Bill 5998, which was passed in Washington state on May 21, 2019. While Culver City does have an additional tier of 4% that SB 5998 did not, the Washington bill’s rate starts at 1.1% for properties $500,000 and below. The tax for properties between $1.5 million and $3 million is more in the Culver City proposal, with Washington state’s tier for $1.5 to $3 million sits at 2.75%

With Mayor Goran Eriksson in attendance at this meeting after some unrest came about when he was not present at the July 27 meeting, the vote to place the measure on the ballot passed.