San Diego’s real estate community is pushing back against a proposed piece of legislation that would increase funding for affordable housing by placing a fee on document recording.
“They’re calling this a fee but we still think it’s a tax,” said Chris Anderson, 2015 president of the Greater San Diego Association of Realtors.
“Also, like all fees and taxes, we feel it’s going to grow and this is just the entry of it,” Anderson said. “We also feel that California cannot afford another growing subsidy -- it’s not sustainable right now.”
Assembly Speaker Toni Atkins proposed AB 1355 in February as part of her affordable housing legislative plan that would increase the amount of affordable housing in California. The bill calls for establishing a permanent source of funding through a $75 fee on real estate transaction documents -- excluding home purchases -- with a cap of $225 for transactions that require more than one document.
More than 2,000 Realtors from the state heard from Atkins mid-April at the California Association of Realtors annual Legislative Day in Sacramento, and they met with legislators about issues affecting the real estate industry. Representatives attended from SDAR, along with the North San Diego County Association of Realtors and the Pacific Southwest Association of Realtors.
Housing costs in the state are above national averages. Californians spend a disproportionate share of their income on housing, according to a February report from the Public Policy Institute of California.
The report said the share of Californians with excessive housing costs is high: 32.6 percent of mortgaged homeowners and 47.7 percent of renters spend more than 35 percent of their total household incomes on housing, compared with 24.1 percent and 42.5 percent, respectively, nationwide. The report was part of a multitopic publication highlighting the state’s most pressing long-term policy challenges.
“The permanent funding source, which earned overwhelming support from California’s business community, will generate hundreds of millions annually for affordable housing and leverage billions of dollars more in federal, local and bank investment,” Atkins said in the announcement. “This plan will reap benefits for education, health care and public safety, as well. The outcomes sought in other sectors improve when housing instability is addressed.”
Richard D'Ascoli, CEO of PSAR, which sent 20 members to Sacramento to hear from Atkins and speak with San Diego's Assemblymembers and State Senators, said homeownership is a priority for the association.
“Whenever a bill is passed that can potentially make home ownership more expensive, we are concerned,” D’Ascoli said. “California should be focused on legislation that will make it less expensive to build new housing stock.”
Anderson said affordable housing funding shouldn’t be just on the backs of homeowners -- if anything, it should be spread across more groups so that everyone would contribute.
California’s redevelopment agencies had set aside $1 billion per year for affordable housing, but with their 2011 elimination came the disappearance of that funding stream.
Also included in the Assembly Democrats plan for affordable housing is increasing the state’s Low Income Housing Tax Credit by $300 million; legislation to create a framework for California’s spending of funds from the National Housing Trust Fund; and using some of the Proposition 47 funds to reduce recidivism through investment in rapid rehousing and housing supports for former inmates.
Local support for the legislation comes from San Diego Mayor Kevin Faulconer, the San Diego Housing Federation and the San Diego Regional Chamber of Commerce.
But local real estate groups -- along with CAR -- were careful to say that they didn’t necessarily oppose Atkins’ legislation, but, they would continue working with the speaker to find a common ground.
“Our goal during our meetings in Sacramento will be to meet with Speaker Atkins and hopefully reach an accord that would allow our NSDCAR directors to review the provisions of AB 1335 and support positive changes,” said Anita Quillman, chairman of NSDCAR.
Quillman, a broker with Sea Coast Exclusive Properties, said the industry is not opposed to the bill at this time.
“The cost and availability of affordable housing is a significant problem,” Quillman said. “NSDCAR directors do have concerns that AB 1335 puts the challenge of funding affordable housing on the backs of those involved in a real estate transaction.”
Anderson, of Town & Country Real Estate in Ramona, told The Daily Transcript before Legislative Day that Atkins has been meeting with real estate groups regularly. Atkins had told SDAR that the proposed legislation is different from past iterations because it caps the amount of fees per transaction at $225, which had been a previous concern.
The fee would not be placed on purchase transactions, but would be levied on other real estate-related transactions, such as updating names on a trust, moving a home ownership into a trust, adding children onto a title, or streamline refinancing.
“There’s a whole lot of activity that way and there might be more that way right now,” Anderson said.