After stalling a few weeks ago for lack of the needed two-thirds vote majority, 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.
SB 2 (Atkins; D-San Diego) authorizes a county to adopt an ordinance authorizing a fee for recording and indexing every instrument, paper, or notice required or permitted by law to be recorded.
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.
Yes, upwards of a $300 million-dollar tax on real estate documents paid by you and your tenants.
While we are sympathetic to the need for more affordable housing, and support many policies that will actually produce rooftops, we disagree with the way this bill is written.
According to the County Recorders’ Association of California, this bill increases the minimum recording fee by 750% (i.e. from $10 to $75), which will impact small contractors recording mechanics liens or releases, customers releasing child support, tax or other liens to clear their credit; or a widow/widower recording an affidavit of their spouse’s death; building managers filing lease addendums, and many other recorded documents.
Further, this bill creates administrative challenges for County Recorders. The Inyo County Board of Supervisors argue that by exempting sales documents, this bill singles out those facing foreclosure and miners who are required to file annual proof of labor forms to keep their claims, but exempts the purchase of multi-million dollar homes.
As an example, in order to address vocal opposition, this bill exempts certain transaction from the tax – if you buy a two million dollar home you don’t pay the tax; but if you record a simple lease addendum you do.
We are asking that SB 2 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.
This bill may be heard as early as Monday in the Assembly and we will keep you posted.
