BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 391 HEARING: 4/24/13
AUTHOR: DeSaulnier FISCAL: Yes
VERSION: 4/2/13 TAX LEVY: No
CONSULTANT: Grinnell
CALIFORNIA HOMES AND JOBS ACT OF 2013
Enacts the California Homes and Jobs Act; applies a $75 fee
on recorded real estate documents.
Background and Existing Law
The California Constitution prohibits transaction taxes or
sales taxes on transfers of real property (Article XIIIA,
Section 4); however, in 1967, the Legislature authorized
counties to approve an ordinance to impose a documentary
transfer tax (DTT), which applies to deeds of transfer of
realty within that jurisdiction, and is based on the value
of the transfer. In counties, the rate is fifty-five cents
($0.55) for each five hundred dollars ($500) of value. All
of California's 58 counties apply the tax, which is modeled
after the repealed Federal Documentary Stamp Tax. Cities
may also enact ordinances to impose a DTT: non-charter
cities within a County that impose a DTT may apply its tax
at half of the rate of the county and applies it as a
credit against the county rate. Charter cities may impose
a DTT at a higher rate under the municipal affairs doctrine
in the California Constitution (Article XI, Section 5). If
they do so at a higher rate than the non-charter rate, then
the city DTT does not serve as a credit against the county
tax.
Exemptions exist for public agencies acquiring land, land
acquired as a result of a plan of reorganization or
adjustment such as bankruptcy, and certain transfers in
lieu of foreclosure, among others.
The Government Code prescribes additional fees that county
recorders charge when recording a change in ownership of a
property. The law exempts public agencies from paying
these fees.
In 2006, voters enacted the Housing and Emergency Shelter
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Trust Fund Act, which authorized the sale of $2.85 billion
in general obligation bonds for various housing projects
(Proposition 1C), on top of $2.1 billion in general
obligation bonds approved in 2002 (Proposition 46).
According to the State Treasurer, the state has sold almost
all Proposition 46 bonds, but $1.26 billion of Proposition
1C authorized bonds have not yet been sold.
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating RDAs and
returning billions of dollars of property tax revenues to
schools, cities, and counties to fund core services. Among
the statutory changes that the Legislature adopted to
implement the 2011-12 budget, AB X1 26 (Blumenfield, 2011)
dissolved all RDAs. The California Supreme Court's 2011
ruling in California Redevelopment Association v.
Matosantos upheld AB X1 26, but invalidated AB X1 27
(Blumenfield, 2011), which would have allowed most RDAs to
avoid dissolution. RDAs' dissolution deprived many local
governments of the primary tool they used to increase the
supply of affordable housing.
Proposed Law
Senate Bill 391 enacts the California Homes and Jobs Act of
2013, which creates the California Homes and Jobs Trust
Fund in the State Treasury. The Legislature may
appropriate moneys in the fund to support development,
acquisition, rehabilitation, and preservation of low and
moderate income households.
SB 391 imposes a fee of $75 whenever a person records a
real estate instrument, paper, or notice required or
permitted by law to be recorded, including:
Deeds, grant deeds, trustee deeds, or deeds of trust,
Reconveyance, and quit claim deeds,
Fictitious deeds of trust,
Assignment of deed of trust,
Request for notice, and notice of default,
Abstract of judgment,
Subordination agreement,
Declaration or abandonment of homestead,
Release or discharge of lien or easement,
Notice of trustee sale,
Notice of completion,
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UCC financing statement
Mechanics' lien,
Maps
Covenants, conditions, and restrictions.
The measure specifically excludes from the fee any document
recorded in connection with a transfer subject to a
documentary transfer tax, essentially exempting property
transfers.
The bill provides that the fees shall be sent quarterly
with the Department of Housing and Community Development
for deposit in the Fund. Counties must pay interest at the
legal rate for any funds not paid within 30 days of the end
of the quarter.
The measure requires the Bureau of State Audits to conduct
periodic audits to ensure that the annual allocation to
individual programs is awarded in a timely fashion
beginning two years from the bill's effective date. The
Department of Housing and Community Development must
include in its currently required annual report how funds
raised by the fee spent, and post the report on its
web-site.
The measure also makes legislative findings and
declarations.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author,
"Everyone in California needs a safe and affordable place
to call home. For U.S. military veterans, former foster
youth, families with children, people with disabilities,
seniors on fixed incomes, and other vulnerable
Californians, however, the housing crisis isn't over.
Millions of Californians are caught in the "perfect storm"
- mortgages remain out of reach, credit standards have
tightened, and the foreclosure crisis has pushed more
people into a rental market already suffering from decades
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of short supply - leading to record-setting rent increases.
The most vulnerable risk joining the more than 130,000
Californians who are homeless on any given night.
Moreover, rents and mortgages within the reach of working
families are critical to maintaining California's business
competitiveness. Numerous business groups say California
needs to increase the supply of housing options affordable
to workers so companies can compete for the talent that
drives California's economy. At the same time,
California's investment in affordable homes has dried up.
State agencies have awarded nearly all of the
voter-approved bond funding for affordable housing.
Likewise, the elimination of redevelopment agencies has cut
off funding from the low- and moderate-income housing set
aside. The California Homes and Jobs Act begins to restore
California's historic investments in affordable homes by
creating an ongoing, pay-as-you-go source of funding
dedicated to affordable housing development. The act will:
Create 29,000 jobs annually, primarily in the
beleaguered construction sector.
Help businesses attract and retain the talent that
fuels California's economy.
Leverage an additional $2.78 billion in federal and
local funding and bank loans to build affordable homes
and create jobs.
Deploy these dollars in California communities
through a successful private/public partnership model.
Get California building again to create affordable
home options for all Californians."
2. Who pays ? An old piece of tax policy wisdom attributed
to Louisiana Governor Russell Long states that, "Don't tax
you, don't tax me, tax the man behind the tree." SB 391
assesses a fee of $75 whenever a person records one of a
specified list of documents with the county to pay for
public housing programs, except for documents that transfer
deeds of realty. As such, the responsibility to pay for
housing programs, previously paid for out by a combination
of redevelopment funds, state bonds, federal funds, and
proceeds from local exactions, is shifted onto the
individuals recording these documents, which includes
property owners, lenders, and borrowers, among others.
While resources for public housing programs have rapidly
dried up, is it appropriate to saddle a part of one class
of taxpayer with the burden to pay for affordable housing?
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For example, a contractor filing a mechanics' lien to
secure payment for services has to pay the fee, but the
individual purchasing a luxury home does not. The
Committee may wish to consider whether the correct group of
taxpayers should bear the general, public cost of providing
affordable housing.
3. Magic words . While SB 391 states that the charge it
imposes is a fee, Legislative Counsel has keyed the measure
a tax increase for the purposes of Section III of Article
XIIIA of the California Constitution. As such, the measure
requires the approval of 2/3 of the membership of the
Senate and the Assembly to be enacted. Prior to 2010,
specified fees could be enacted by majority vote, but this
authority was significantly limited by Proposition 26
(2010).
4. Show me the money ! Joint Rule 37.4 prescribes that any
bill requiring action by the Bureau of State Audits, as SB
391 does, contain an appropriation for the cost of any
audit. The Committee may wish to consider amending the
bill to provide the appropriation.
5. Do it again . SB 391 is almost identical to SB 1220
(DeSaulnier, 2012), which the Committee approved last year.
However, the measure received only 25 votes, two short of
the 2/3 necessary, on the Senate Floor.
Support and Opposition (04/18/13)
Support : California Housing Consortium (sponsor); Housing
California (sponsor); AARP;
Abode Communities; A Community of Friends; Alameda County
Board of Supervisors; Alameda
County Developmental Disabilities Council; Alpha
Construction Company; AMCAL Multi-
Housing; American Baptist Homes of the West; Amity
Foundation; Amstutz Associates;
Angelus Plaza; Ashwood Construction; Asian Pacific
Environmental Network; Association of
Regional Center Agencies; Asthma Coalition of Los Angeles
County; Bay Area Business
Roundtable; Bay Area Community Land Trust; Bay Area
Council; Bay Area Regional Health
Inequities Initiative; BRIDGE Housing; Burbank Housing
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Development Corporation; Cabrillo
Economic Development Corporation; Cahill Contractors;
California Apartment Association;
California Association of Housing Authorities; California
Association of Local Housing Finance
Agencies; California Building Industry Association;
California Coalition for Rural Housing;
California Coalition for Youth; California Conference of
Carpenters; California Council for Af
fordable Housing; California Council of Community Mental
Health Agencies; California Disabil
ity Services Association; California Housing Partnership
Corporation; California Partnership to
End Domestic Violence; California Police Chiefs
Association; California Reinvestment Coali
tion; California Rural Legal Assistance Foundation; Bill
Lockyer, California State Treasurer;
Casa Major; Century Housing; Century Villages at Cabrillo;
Cesar Chavez Foundation; CHISPA;
City of Emeryville; City of Jurupa Valley; City of Lynwood;
City of Oakland; City of Oxnard;
City of Pasadena; City of Riverside; City of San Joaquin;
City of San Jose; City of San Mateo;
City of Santa Barbara; City of Santa Monica; City of West
Hollywood; Coachella Valley Housing
Coalition; Community Corporation of Santa Monica; Community
Health Improvement Partners;
Community Housing Opportunities Corporation; Community
Housing Works; Community
Working Group; Contra Costa Health Services; Corporation
for Supportive Housing; County of
Alameda; County of Contra Costa; Curtom-Dunsmuir; DMB
Pacific Ventures; Domus Deveop
ment; EAH Housing; East Bay Developmental Disabilities
Legislative Coalition; East Bay
Housing Organizations; East LA Community Corporation;
Ecumenical Council Pasadena Area
Congregations; Eden Housing; Enterprise Community Partners;
Environmental Health Coalition;
Episcopal Community Services of San Francisco; First Place
for Youth; Foundation for
Affordable Housing; Fullerton Chamber of Commerce; Gonzalez
Goodale Architects; Habitat for
Humanity California; Habitat for Humanity Greater San
Francisco; Habitat for Humanity Inland
Valley; Habitat for Humanity Pomona Valley; Habitat for
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Humanity Riverside; Habitat for
Humanity San Gabriel Valley; Habitat for Humanity San Luis
Obispo County; Habitat for
Humanity Santa Cruz County; Hamilton Family Center;
Highridge Costa Housing Partners;
Hollywood Community Housing Corporation; Home Builders
Association of Tulare/Kings
Counties; Home Start; Homes for Life Foundation; Housing
Authority for the City of
San Buenaventura; Housing Choices Coalition for People with
Developmental Disabilities;
Housing Leadership Council of San Mateo County; ICON
Builders; InnerCity Struggle; Interfaith
Community Services; International Association for Women of
Color Day; Jamboree Housing
Corporation; John Stewart Company; Kennedy Commission; The
KTGY Group; Larkin Street
Youth Services; Laurin Associates; Lauterbach and
Associates; LeSar Development Consultants;
LifeSTEPS; LINC Housing; Little Tokyo Service Center;
Loaves and Fishes; Local Initiatives
Support Corporation; Los Angeles Area Chamber of Commerce;
Los Angeles Business Council;
Los Angeles Business Leaders Task Force on Homelessness;
Los Angeles Community Action
Network; L.A. Family Housing; LA Voice; Law Foundation of
Silicon Valley; Leading Age
California; League of Women Voters of California; Lutheran
Office of Public Policy; Mammoth
Lakes Housing; Marin Workforce Housing Trust; Mental Health
America of Los Angeles; Mercy
Housing MidPen Housing Corporation; Move LA; Multicultural
Communities for Mobility;
Mutual Housing California; Nancy Lewis Associates; National
Community Renaissance;
National Council of La Raza; National Housing Law Project;
Natural Resources Defense
Council; Neighborhood Housing Services of Los Angeles
County; Neighborhood Partnership
Housing Services; NeighborWorks Orange County;
Nevada/California Indian Housing Associa
tion; Non-Profit Housing Association of Northern
California; Northern Circle Indian Housing
Authority; Northern California Community Loan Fund;
Opportune Companies; Orange County
Business Council; Orange County Housing Trust; Pacific
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Clinics; Palm Communities; Pasadena
Public Health Department; Peninsula Interfaith Action;
Penny Lane Centers; People Assisting the
Homeless; Peoples' Self-Help Housing Corporation;
PolicyLink; Public Advocates; Related
California; Resources for Community Development; Ruiz
Brothers Construction Co.; Rural
Community Assistance Corporation; Rural Communities Housing
Development Corporation;
Sacramento Homeless Organizing Committee; Sacramento
Housing Alliance; St. Joseph Center;
St. Paul's Senior Home and Services; San Benito County
Housing and Economic Development
Department; San Gabriel Valley Consortium on Homelessness;
San Luis Obispo County Housing
Trust Fund; Self-Help Enterprises; Service Employees
International Union (SEIU) California
State Council;
Sierra Business Council; Sierra Club California; Silicon
Valley Leadership Group; Skid Row
Housing Trust; Sonoma County Task Force for the Homeless;
Southeast Asian Community
Alliance; Southern California Association of Non-Profit
Housing; SPUR; Stand Up for
Neighborly Novato; State Independent Living Council; State
Treasurer Bill Lockyer; Step Up on
Second; Sun Country Builders; Sunseri Construction;
Tenderloin Neighborhood Development
Corporation; Thai Community Development Center; Thomas
Safran and Associates; T.R.U.S.T.
South LA; Turning Point Community Programs; United Homeless
Healthcare Partners;
United States Veterans Initiative; United Ways of
California; United Way of Fresno County;
United Way of Greater Los Angeles; Valley Economic
Development Center; Venice
Community Housing Corporation; Visionary Home Builders;
Wakeland Housing and Develop
ment Corporation; Walton Construction Services; Western
Center on Law and Poverty;
Women Organizing Resources, Knowledge, and Services
(WORKS);
Opposition : Board of Equalization Member Michelle Steel;
Board of Equalization Member George Runner; Butte County
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Clerk-Recorder; Calaveras County Clerk-Recorder; California
Land Surveyors Association; California Land Title
Association; City of Cypress; Colusa County Clerk Recorder;
Contra Costa County Clerk-Recorder; County Recorders'
Association of California; County of Lassen; County of
Orange; El Dorado County Recorder-Clerk; Hamman Real
Estate; Inyo County Clerk Recorder; Marin County
Assessor-Recorder-Clerk; National Notary Association;
Nevada County Clerk-Recorder; Plumas County Clerk; San
Bernardino County
Recorder-Clerk; San Luis Obispo County Clerk-Recorder;
Sonoma County Clerk-Recorder-Assessor; Stanislaus County
Clerk-Recorder;