Of the three bills mentioned above, SB 2 remains extremely controversial and is the subject of the most speculation about whether or not it can garner the needed two-thirds vote to pass; at one point this week the L.A. times even ran a story with the screaming headline, “Democrats lack votes to pass key California Housing Bill.”

SB 2 is a regressive tax on all recorded real estate documents, except those related to an actual sale of a home or a building.  In other words, the largest transactions where the tax would be least felt, are not subject to the up to $250 per transaction tax that it authorizes, but every small day-to-day type of transaction is.  Currently to file your lot line adjustment you pay around $36.  Under SB 2 that jumps over seven times to $261 – a outrageous tax increase.

Concern is strong with many in the Legislature about SB 2, and not just the fact that it is a regressive tax.  But the numbers being presented by the author underscore the fact that this will produce a paltry amount of money that goes to affordable housing, and even less comes back to local communities, while layering on a big tax on families and small businesses.

For example, under SB 2, in Orange County alone, it is estimated that over 390,000 documents would be subjected to the tax, generating about $20 million in tax revenue.  But according to advocates for the measure, the formula in the bill would return less than $6M back to Orange County to spend on affordable housing and homeless programs.

This is not a good return on investment and many policymakers recognize that, even in the face of a concerted effort to convince them otherwise.  Because of the directives in the bill and the fact that only 70% of the tax revenue is distributed back to locals, we are worried that this scenario could be common in many counties.

However, our industry remains opposed to the new taxes contained in SB 2 as the bill is a regressive measure that inserts a convoluted tax into the middle of day-to-day real estate business and does very little to directly produce affordable housing.

We think if the Legislature just folded this program into the budget it would easily pass, remove the complicated taxation scheme, and garner lots of support.

© 2007-2012 Building Owners and Managers Association of California (BOMA Cal)