Culver City Measure RE: Fair Property Transfer Tax? Or 'Millionaire Mansion Tax?'

When Culver City residents cast their ballots in the next two weeks, they will also decide the fate of Measure RE, which would increase the city's real estate transfer tax (RETT) for sales above $1.5 million.

If approved, Measure RE would generate approximately $6 million per year by establishing a marginal tax rate with four brackets, based on sales price. The tax measure would also shore up the city's financial state which has been "slammed by the pandemic-induced recession," city officials said.

Opponents of this measure have labeled it “a millionaire mansion tax” and want Culver City “to address its own problems before asking residents for help.”

In August, the RE opponents triggered a lawsuit from Culver City Clerk Jeremy Green after they submitted their proposed statement against the measure which contained a controversial headline in capital letters, “Measure RE contains a sneaky provision. The City Council can broaden the tax by a majority vote.”

The opposition statement contained text stating that if the City Council “wants more of our tax dollars, with a majority vote, they can lower (Measure) RE's $1.5 million threshold to $500,000 or any level, raising taxes on even more residents and small business owners.”

According to Green, the original opposition statement was misleading because Measure RE “expressly prohibits the City Council from amending the ordinance to increase the authorized tax rate.”

During a hearing at Los Angeles Superior Court in September, both Culver City officials and opponents of Measure RE agreed on new language that those urging a “No” vote can use on election materials to be printed and made available to voters.

The approved revised text state, “Measure RE grants the city manager the authority to adjust tax tiers based on the Consumer Price Index. But rates will likely never decrease below those stated in the ordinance.”

Currently, the RETT in Culver City is .45%. If Measure RE is approved by the voters, the progressive tax rates would be for the following valuation thresholds:

Under $1.5 million: 0.45% (existing rate)

$1.5 million to $2,999,999: 1.5%

$3 million to $9,999,999: 3.0%

$10 million and up: 4.0%

Exempted would be 100% of deed-restricted affordable housing and the first transfer of newly-constructed multi-family housing.

According to city officials, approximately 70% of property sales would remain at the current 0.45% rate under Measure RE because their property sale price is under $1.5 million. (In calendar year 2019, approximately 73% of all property sales in Culver City were under $1.5 million.) Therefore, Measure RE would affect approximately 30% of all property sales, mostly luxury and commercial properties.

On Aug. 3, the City Council voted to place Measure RE on the Nov. 3 ballot, declaring that many of the city's longtime revenue streams to fall short of expectations, including sales taxes, transient occupancy taxes, parking revenue and business license fees due to the pandemic.

Protect Culver City (PCC), the political action committee against Measure RE, contend the City Council initiative was done “far too hastily to considered…Council will be selling this as a millionaire mansion tax. But it’s entirely likely the bar will be lowered to include virtually everyone.”

“We’ve asked the city attorney about the issue and, so far, have not received a response,” PCC said on its website. “It doesn’t mean we’re right, but this is what happens when bills are not methodically debated.”

During their August meeting, Councilmembers expressed confidence that Measure RE tax rates that are "fair, less burdensome and won't adversely affect" the local community.

Vice Mayor Alex Fisch, an early advocate of the property transfer tax increase, said "RETT is a more efficient and fair tax than most because it taxes socially created wealth (mostly land prices) a single time when the taxpayer has money to pay... The net effect is that house flippers and large developments will pay the greatest portion of the tax and no one has to pay until they are cashing out of Culver City."

Fisch continued: “the fact is, if we don’t raise additional revenue soon, there will, sooner rather than later, need to be substantial cuts to city services. The pandemic induced recession made things much worse by slamming the city’s finances.”

City officials said that financial projections show the increase in RETT “would have raised between $8 million and $19 million in 2019.”


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