A Statewide Problem Requires a Solution in Which Everyone Helps

There's no question that California needs a new way to pay for programs that help keep a roof over the heads of low- and moderate-income families. The attempt du jour is Senate Bill 391, which imposes a recording tax of $75 per document on a statewide basis and is well on its way to becoming law. And, IMHO, it’s the wrong way.

The need to find a funding source for housing is one of the results of the ill-advised dissolution of redevelopment. The Legislature, in an attempt to grab local tax dollars to pay its own bills in 2011, shut down redevelopment agencies across the state.

Forgotten in the budget grab was a gold nugget: state law required redevelopment agencies to use 20 percent of their revenue on low- and moderate-income housing. Now the Legislature is finally getting around to plugging the hole it created.

But rather than enacting a small, sensible tax that might tap all Californians (since the provision of affordable housing is something that affects ALL Californians), the Legislature is set to enact a tax that would affect only home buyers and sellers and lenders.

SB 391, the California Homes and Jobs Act of 2013, would add a $75 fee to every "real estate instrument, paper or notice" filed at a county recorder's office. Such papers include deeds, liens, maps, notice of defaults, and notice of trustee sales. Currently, the cost to file such papers in San Mateo County averages around $15 for the first page and $3 for each additional page.

(Note: SB 391 is a “per document” tax… not a “per page” tax, though interestingly it is opposed by the County Recorders' Association of California =- the very group that will be charged with implementing the mandate.) The bill is currently ‘on suspense’ in the Assembly Appropriations Committee.

According to an analysis of the bill prepared for the Assembly Committee on Housing and Community Development, this new tax would raise an average of $525 million a year. The money would be placed into a “California Homes and Jobs Trust Fund,” created by SB 391.

The fund would be expected to develop a long-term, statewide housing plan and invest in ways that would pay to implement it. Unfortunately, the ‘allocation formula’ in SB 391 is also under fire since it’s so nebulous. L.A. County (for example) could gobble up all the revenue raised by the tax, leaving nada/zip/zero for the rest of the state… but that’s a whole ‘nother issue.

The bill's author, State Sen. Mark DeSaulnier (D-Concord) who is running for Congress, rightly notes: "Millions of Californians are caught in the 'perfect storm. Many 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 of short supply. The most vulnerable, such as those who struggled to make rent before the foreclosure crisis, face even more uncertainty in today's housing market. They risk joining the 130,000-plus Californians who are homeless on any given night.”

Yet, ensuring that all Californians have access to safe, affordable housing benefits everyone, not just home owners and lenders. A statewide problem calls for a true statewide solution… not a statewide application on a limited demographic. Besides, if everyone pitched in, the amount that each would pay would be far less. And here’s the kicker: Because it is a tax (not a fee), SB 391 must be approved by a 2/3 vote in both the Assembly and the Senate – no mean feat… which should tell you a statewide solution that encompasses ALL Californians is the right way to proceed.