So even if the transfer tax rate increases with property price in Culver City, a higher sale price still always means more revenues to the seller under Measure RE. Shockingly, this is not the case for Measure ULA. - ThreadSky

mottsmith.bsky.social • 96 days ago

So even if the transfer tax rate increases with property price in Culver City, a higher sale price still always means more revenues to the seller under Measure RE.

Shockingly, this is not the case for Measure ULA.

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mottsmith.bsky.social•96 days ago

Measure ULA was designed baffingly with a "cliff" starting at $5mm, and another at $10mm.

A $4,999,999 sale in LA pays 0.45% or $22,500 in trasnfer tax.

A $5mm sale pays 0.45% + 4% = $222,500. That's 10X more(!) So a $5mm sale in LA is now worth ~$200K LESS than a $4.9mm one. That's just dumb.

mottsmith.bsky.social•96 days ago

(Side note: Measure ULA thresholds were raised slightly on June 30, 2024. The 4% rate now kicks in at $5,150,000 and the 5.5% rate starts at $10,300,000.)

mottsmith.bsky.social•96 days ago

Another difference: Measure RE imposes lower overall rates than ULA (1.5-4% versus 4-5.5%), but it applies to less expensive sales (starting at $1.5mm vs. $5mm).

This, combined with its marginal structure, seems to help RE preserve the incentive to sell much better than ULA does.

mottsmith.bsky.social•96 days ago

Also, Measure RE exempts the 1st sale of new multifamily, and all affordable housing. It thus preserves multifamily project feasibility--whether market-rate or low-income. (Note: It's missing an exemption for new commercial/industrial, but there's not a lot of that in CC. Bigger issue in LA.)

mottsmith.bsky.social•96 days ago

It's not clear how we'll be able to fix Measure ULA & get the market back on functional ground. But it is clear that if we don't, it will be nearly impossible to meet our housing production goals or keep LA from bleeding jobs & manufacturing. We must find a fix.

mottsmith.bsky.social•96 days ago

Again, HUGE thanks to Sara Soudani and Jill Wright at Commonwealth Title, who generously provided the megabytes of transactional data to support this analysis.

/end

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