Proposition "S" Opinion Jim Jacobson Interviews Mat Millen on Proposition S, the $225 Parcel Tax Initiative

(The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of Action Apartment Association, Inc.)

There is an election on June 3. The only issue on the ballot is an increase in the parcel tax. The SMRR controlled Santa Monica-Malibu Unified School Board is asking voters to pay an additional $225.00 per year in property taxes. That means that if you own a single condominium each condo pays $225.00.

Why are you opposing Proposition S, which may provide more money for our schools?
Because this regressive tax is virtually the same tax, at only a slightly lesser amount, that the voters rejected in last November’s election. The changes are mostly cosmetic; they don’t address the basic unfairness of a flat tax, or the financial problems of the school district itself. We already are paying a parcel tax of over $100.00 plus two S.M.M.U.S.D. bonds and two S.M. College bonds.

We’ve heard that this tax discriminates against owners of small rental properties. Is this true?
Yes, even from the standpoint of a rental-housing provider. Every parcel in Santa Monica will be taxed the same. So the luxury apartment buildings on Ocean Ave. pay the same $225.00 as a small rental property. Further S.M. Place, the luxury hotels, the Water Gardens and MTV office buildings all pay the same $225.00 as us. Tenants in the big rental housing projects, owned by large corporations, will only pay pennies a month. For smaller properties, the tax load is correspondingly greater. And if you’re an owner of a smaller building, with units already at market rents, the additional costs could be difficult to recoup. One of the reasons the school district backed this type of tax is so the large property owners who are members of the Chamber of Commerce wouldn’t oppose it. Chamber President Elect Nat Trives said a tax based on square footage of the improvements would have cost some Chamber members considerably more than $225.00 a year. So for the big developers to pay less, the small property owners have to pay more.

Isn’t there an exemption for seniors who occupy their homes?
Maybe. It is not clear whether the SMRR controlled school board will allow for exemptions for senior rental housing providers who live in one of their rental units. The potential exemption only applies to owner-occupied properties. It was supported by a former Rent Control Board member and retired Judge. Clearly, if your rental property is not your primary residence, you can’t claim the senior exemption. I don’t’ have any confidence in the SMRR controlled school board allowing senior rental housing providers who in live in one of the units in their building to be granted an exemption. In fact, the promotion of the senior exemption could contribute greatly to straining landlord/ tenant relations.

How so?
Well, your senior tenant, particularly if they’re in a house or duplex, isn’t going to be happy when you pass the cost along to them. They hear “senior exemption” and they’re going to assume it applies to them. When they learn it doesn’t, these are the seeds of friction and hostility on the part of your tenant.

Will the Rent Control Board allow us to pass through the tax to tenants?
In theory, the Rent Control Board is supposed to allow us to pass it through. But in practice, there are problems. Traditionally, rental housing providers end up paying the first six months of the tax due to the lag in rent control board authorized pass-through. Anyone on a lease cannot have his or her rent increased. And, of course, rental-housing providers will pay the tax out of their pockets on any and all vacant units.

Will the parcel tax increase fix the school’s budget problems?
No. As you know, we already pay a school parcel tax, two S.M.M.U.S.D. bonds, two S.M. College bonds and 10% utility tax. Well, it means we should probably expect yet another parcel tax; that’s been the way the SMRR controlled school board has handled things to this point. Ironically, the State is in such bad financial state that even if this parcel tax passes, that funding might not even end up at the schools. According to an article in the April 19 edition of the L.A. Times, the State could end up reducing educational funding by the amount of the parcel tax. So we may pay more in taxes with no net benefit to the schools.

So Prop. S seems like a bad bet for you?
For all of us. If we’re expected to finance our schools, lets do it the right way, with fair taxes, with everyone doing their fair share, and with measures that guarantee our school district will receive the funding they need. That’s the main reason Proposition EE was rejected in November. It’s unfortunate the SMRR dominated council is playing games with our children’s education. The main reason to vote No on Proposition S is to make the SMRR City Council change their priorities from funding non-resident social services programs and development of low-income housing projects for non-residents and contribute more of our tax money to the schools. And the schools need to come up a fair and equitable measure that all of us can back, not just a tax that benefits SMRR special interest groups.

The City has a budget of about $360 million. Why should we pay more taxes when the City has our tax money that could help the schools?
The City spends millions of dollars on non-resident social service programs, and millions developing low-income housing for which the majority of the units are then leased to non-residents of Santa Monica. If Prop. S is defeated it will force the SMRR controlled council to give a higher priority to our school children and cut back on spending for non resident social programs.

Why vote absentee?
The election is on June 3. There are no other issues on the ballot. Requesting an absentee ballot before May 27 and voting at home is the easiest way to protect your property rights.