Housing Commission Report

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Housing Commission Meeting: May 19, 2016 Agenda Item: 5-A

To: Housing Commission

From: Andy Agle, Director of Housing and Economic Development

Subject: Potential Ballot Measures Related to Revenue and Housing Recommended Action Staff recommends that the Housing Commission review, discuss, and make recommendations regarding ballot measures under consideration for the November 2016 ballot related to increasing revenues, affordable housing, and public schools. Executive Summary The Housing Commission’s December 2015 report provided the basis for the City Council’s January 2016 consideration of potential strategies and funding sources to continue Santa Monica’s long-standing commitment to supporting the housing needs of low- and moderate-income households. Pursuant to Council direction, Goodwin Simon Strategic Research has complete a poll of likely Santa Monica voters to gauge support for potential measures. Staff seeks feedback and recommendations from the Commission regarding potential approaches to the ballot measures. Background

Santa Monica has a long history of supporting social equity, housing affordability, and

community inclusivity. Santa Monica voters have expressed their support for housing

affordability through a series of voter-approved initiatives, starting in 1979 with the

adoption of rent control and continuing through 2010 with the adoption of Citywide

eviction protections. However, local measures to support affordability and inclusivity in

Santa Monica have been undermined by state actions, including legislation allowing for

vacancy decontrol of rent-controlled apartments and removal of rent-controlled

apartments, as well as the 2012 elimination of the Santa Monica Redevelopment

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Agency, the City’s primary funding source for the production and preservation of low-

income housing. Over the past five years, approximately 200 to 400 long-term, rent-controlled apartments have gone to market rents each year. Without a stable source of

financing for affordable housing, there has been a significant diminution in the tools available to the City to combat the loss of housing that is affordable to low- and

moderate-income households.

In November 2014, Santa Monica voters considered a ballot measure to increase the

local documentary transfer tax, as well as a companion measure to direct all funds toward affordable housing if the transfer tax increase was approved. In considering

whether to place a measure on the November 2014 ballot, the City completed a

telephone survey of likely Santa Monica voters (Attachment A.) The polling results showed strong support for affordable housing and majority support for an increase in

the documentary transfer tax. At the ballot box, a majority of voters supported directing funds toward affordable housing, though the transfer tax increase failed to receive

majority support. As a result, the City is left without a significant, stable source of

funding for affordable housing, thereby impacting the City’s ability to maintain inclusivity and diversity. At its August 23, 2015 retreat, the City Council reaffirmed its support for

affordable housing by identifying “maintaining an inclusive and diverse community” as one of its top strategic goals.

At its August 25, 2015 meeting, Council held a study session regarding the current state of housing affordability in Santa Monica, as well as various approaches to creating a

local funding source for affordable housing. During 2015, the Housing Commission focused its efforts on receiving broad input regarding the community’s support for

affordable housing and possible funding mechanisms to achieve affordable housing

preservation and production. The Commission hosted a series of meetings, including presentations from local experts, to understand the historical efforts and achievements

of Santa Monica’s affordable housing policy and programs, as well as the current dilemma regarding the need for affordable housing and lack of funding sources.

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The Commission also created several opportunities for the community-at-large to

provide input regarding the type and scope of affordable housing in Santa Monica, including a special weekend meeting. The Housing Commission’s efforts culminated in

a report to Council, provided as Attachment B.

On January 12, 2016, Council considered potential local funding sources for affordable

housing, using the report from the Housing Commission as the basis of its discussion. At that meeting, Counci l authorized Goodwin Simon Strategic Research (GSSR) to

conduct a voter survey regarding potential strategies. Discussion Between March 23 and 28, 2016, GSSR conducted a telephone survey of 602 Santa

Monica residents likely to vote in the November 2016 election. A summary of the poll is

provided as Attachment A. In considering potential measures for the November 2016 ballot, staff recommends that the Commission focus on three primary questions:

1. Which revenue measure is most likely to resonate with voters? 2. What should be included as a potential companion measure related to affordable

housing?

3. Should the companion measure encompass local public school needs?

Each of the questions is discussed briefly below.

Revenue Measures

Pursuant to the Housing Commission’s recommendations, the potential ballot measures are conceived as a revenue measure and a companion measure that allows voters to

express their wishes regarding how the increased funds are spent. If the revenue measure is not approved by voters, the companion measure loses the ability to make a

direct impact on City policy and programs. As a result, selecting an appropriate

revenue measure is paramount.

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The GSSR poll, considered in tandem with a poll completed by Fairbank, Maslin, Maullin, Metz & Associates (FM3) in 2014 (Attachment C), provides voter reflections on

the three primary revenue sources recommended by the Commission in its December 2015 report (Attachment B.) The two polls show that there are similar levels of support

for increases in the sales tax and documentary transfer tax, as well as imposition of a

construction tax, with more than a majority of likely voters favoring each tax increases. As previously discussed by the Commission, the three measures would raise similar

funds on average, though the documentary transfer tax and the construction tax are extremely volatile and receipts in any year could vary dramatically. However, the City’s

experience with Measures H/HH on the November 2014 ballot shows that even with

majority support in a poll, organized and well-funded opposition can impact the success of a revenue measure. Among the three revenue measures considered by the

Commission, an increase in the documentary transfer tax and the imposition of a construction tax would likely engender organized opposition. Conversely, sales tax

increases have been embraced by communities throughout California and typically do

not stimulate organized and well-funded opposition. Many community members have expressed views that the sales tax is a “fairly distributed” tax because everyone pays it,

including residents, visitors, and businesses.

Companion Measure Related to Affordable Housing

A potential companion measure, which could allow voters to express their wishes that increased revenues be directed toward affordable housing, should be careful crafted.

The companion measure should address not only pressing local issues related to housing affordability; it should also address issues that are important to the local

electorate. Ideally, the companion measure should be broad enough that voters

understand how it will serve people in need, yet not so broad as to commit to programs that may not be successful over time. The following are housing-related uses of funds

that could be included in the companion measure.

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1. Acquisition and rehabilitation of existing apartments to protect current tenants and

provide long-term affordable housing. As previously discussed by the Commission, the measure could be limited to preservation of existing housing in order to provide

the double benefit of providing safeguards for existing tenants while creating deed-restricted affordable housing that could serve low- and moderate-income households

for many generations. Another advantage of limiting the funds to preservation is that

it alleviates fears that the increased revenues would be used to support development.

2. Providing affordable housing for emergency workers (nurses, paramedics, etc.) and

public school educators who serve in Santa Monica. The poll shows voter support

for housing targeted toward workers that provide key community services.

3. Providing affordable housing for Santa Monicans that are currently unhoused. Addressing homeless has recently risen to the top of the agenda for the County and

City of Los Angeles, following many years at the top of Santa Monica’s agenda. Los

Angeles leaders are considering a variety of strategies, including increasing funding for permanent supportive housing. Identifying permanent supportive housing in the

companion measure could show that Santa Monica continues its commitment.

4. Rental assistance to help rent-burdened Santa Monica households stay housed. Pursuant to the Housing Commission’s recommendations and the pilot program

which is expected to begin in the new fiscal year, the companion measure could

provide permanent funding for rental assistance programs.

5. Financing assistance to help moderate-income Santa Monica residents purchase housing in the City. The poll shows voter support for homeownership assistance

programs, though the scope and reach of such programs would likely be limited, given the price of ownership housing in Santa Monica.

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6. Building new affordable housing. Voters showed lower support for new affordable

housing construction compared to preservation of existing housing.

Companion Measure to Support Public Schools The poll tested the idea of a ½-cent increase in the sales tax, with a companion

measure that would allocate half of the increased revenues toward affordable housing

and the other half toward public schools’ needs. Directing funding toward public schools achieved the highest levels of support within the poll. Slightly lower voter

support for a ½-cent sales tax increase (compared to a ¼-cent increase) is countered by voter desire to increase funding for Santa Monica’s public schools. Preliminary

discussions with school district staff has indicated support for the notion of a joint

measure, with an opportunity to address school funding deficiencies in areas such as facility maintenance, technology, and kindergarten readiness.

Next Steps

Staff anticipates presenting the ballot measure choices to the City Council in June.

Based on Council direction, staff would return to Council in July with proposed ballot language.

Prepared by: Andy Agle, Director of Housing and Economic Development Attachments:

A. Goodwin Simon Strategic Research (GSSR) Polling Memo, May 2016 B. Housing Commission Report, December 2015 C. Fairbank, Maslin, Maullin, Metz & Associates (FM3) Polling Memo, May 2014

P.O. Box 366 Culver City, CA 90232 310/558-4761 (phone) 310/558-0539 (fax) email: paulg@goodwinsimon.com website: www.goodwinsimon.com

MEMORANDUM May 11, 2016 TO: ANDY AGLE City of Santa Monica FROM: PAUL GOODWIN Goodwin Simon Strategic Research RE: Relevant Findings from Voter Survey on Affordable Housing

Funding Options Introduction and Methodology Goodwin Simon Strategic Research conducted a telephone survey of 602 likely November 2016 voters living in the City of Santa Monica. The survey was conducted between March 23 and 28, 2016. The purpose of the survey was to help the City make decisions about a possible measure on the November ballot to fund efforts to increase access to affordable housing and for other vital civic needs. Overview and Recommendations The survey finds that Santa Monica voters recognize the effect that the diminishing supply of affordable housing -- and the accompanying rise in the cost of housing -- is having on the city and its quality of life. This effect is experienced in a direct and personal way, with huge proportions concerned about how the cost of housing threatens their quality of life and the city’s future. As a result, between 50% and 60% of voters appear willing to support a ¼-cent or ½-cent transaction and use tax with an accompanying companion measure directing the city council to spend the money on affordable housing and other city needs. The ¼-cent tax option would be spent primarily on affordable housing, whereas the ½-cent tax option would provide enough funds to be split evenly between school purposes and affordable housing. Voters are enthusiastic about using the funds for a range of housing purposes. These include rental assistance to help low-income renters stay in Santa Monica,

Goodwin Simon Strategic Research Page 2

help for nonprofits to purchase existing apartment units to preserve them as affordable housing, low-interest financing for middle-class workers seeking to purchase a first home, and apartments for the homeless. In short, most voters recognize that the affordable housing crisis affects them personally, and they recognize how they would benefit from a city effort to address the problem. Furthermore, a sufficient majority is willing to pay to address this problem, and we believe that this majority can be strengthened if more voters learn why the money is needed and how it will be spent. Thus, we do recommend that the city proceed to the ballot with a transaction and use tax and a companion measure. Although support appears slightly higher for a smaller tax, we believe that the larger tax offers three advantages:

• First, a larger tax means more revenue for needed city and school services.

• Second, a larger tax allows some of the funds to be used for public education, and Santa Monica voters have consistently expressed their support at the ballot box for funding local public schools.

• Third, by including funding for schools, the larger measure has the potential

to activate and motivate parents, teachers, and the broader school community in support of the tax measure. This community has a long, proud, and successful history of supporting revenue measures designed to improve public education and the quality of life in Santa Monica.

We recognize that a well-organized and well-funded effort will be needed to bring this measure to a successful conclusion. This will not be an easy endeavor, and it will require the participation of all the diverse communities that are active in public life in the city. But the need is critical, and we believe Santa Monica can and will rise to this occasion. Findings Voters Are Concerned about the Rising Cost of Housing and Its Effect on the City The survey clearly demonstrates that voters recognize the rising cost of housing as a major concern that is affecting their life in Santa Monica. They understand that housing affordability is directly connected to their future in the city, to the ability of their children to live there, and to the diversity and feel of Santa Monica:

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• More than three of four voters (77%) say the cost of housing has gotten worse in Santa Monica over the past three or four years.

• Exactly three of four voters (75%) say that they have a great deal or some

concern that the rising cost of housing will turn Santa Monica into a place where only the wealthy can live.

• Seventy-four percent of voters (74%) say that they have a great deal or some

concern that due to the rising cost of housing, their friends or children will no longer be able to afford to live in Santa Monica.

• Sixty-eight percent of voters (68%) say that they have a great deal or some

concern that the rising cost of housing is diminishing the small-town community feel that Santa Monica once had.

• Sixty-two percent of voters (62%) say that they have a great deal or some

concern that they personally will be priced out of living in Santa Monica.

• As a result of this anxiety about the effect of rising housing costs, three of four voters (75%) say there is a need for more funding to preserve affordable housing in Santa Monica. This includes 50% who say there is a great need for more funding for this purpose.

• Using a split-sample methodology, we found that a slightly lower 69% say

there is a need for more funding to provide additional affordable housing, suggesting more acceptance by voters of preserving existing affordable housing rather than providing new housing.

A Majority of Voters Would Support a Transaction and Use Tax with a Companion Measure to Preserve Affordable Housing Using a split-sample methodology, the survey tested support for a ¼-cent and a ½-cent transactions and use tax, each paired with a companion measure designating the funds for city services.

• The ¼-cent version would generate about $8 million a year, with the funds used for purposes associated with preserving affordable housing.

• The ½-cent version would generate about $16 million a year, with half the

funds used for maintaining affordable housing and the other half used for school and educational purposes.

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Support for the tax measures, and their associated companion measures, is shown in Table 1. There is relatively little difference in response to the smaller versus the larger tax measure. Table 1: Initial Response to Ballot Measure Options (Split-Sample Methodology)

¼-Cent

Tax ¼-Cent

Companion ½-Cent

Tax ½-Cent

Companion

Yes in favor 55% 58% 52% 59%

No to oppose 35% 32% 38% 32%

Not sure 10% 10% 10% 9% Construction Tax Option Also Earns Strong Support We tested an alternative to the transaction and use tax: a 5% tax on the cost of renovating commercial properties, with the funds used to pay for preserving affordable housing…” Sixty percent would vote in favor of this option, with 34% opposed. Response to Proposed Uses of the Tax Revenue As shown in Table 2, voters show strong interest in using the tax revenues for school purposes and for affordable housing uses, helping both renters and potential homebuyers.

Table 2: Percent Favoring Proposed Uses of Revenues from the Transaction and Use Tax

% Favor

On-going maintenance and repair of local public schools and classrooms 80%

School, educational, and after-school programs in Santa Monica 79%

Providing affordable housing for nurses, firefighters, and paramedics who provide emergency services in Santa Monica

75%

Proving affordable housing for Santa Monica public school teachers 74%

Providing low-interest financing for middle- and working-class Santa Monica residents who want to buy a place in the city

73%

Helping nonprofits buy existing apartment buildings in Santa Monica to protect current tenants from being pushed out by rising rents

68%

Rental assistance to help Santa Monica renters afford to stay in their apartments 67%

Providing apartments for the homeless to get them off the street 66%

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Response to Ballot Measure Options after Hearing about Uses and Cost In addition to the uses of the tax revenue, the survey shared with respondents that it would cost them about 6 cents/$100 spent in Santa Monica for the ¼-cent version and about 12 cents/$100 spent for the ½-cent version. The survey also shared that groceries, prescription drugs, utilities, and rent are all exempt from the tax. The survey further shared with respondents some likely concerns about the measure, including the result of Measure H in 2014, and a comparison with Measure Y and YY in 2010. After respondents had heard these pros and cons, they were asked again how they would vote on the measures, in this case, combined into one package for the smaller tax and one package for the larger tax. As shown in Table 3, support rose measurably into the mid- to high 50s in this “aided” vote question.

Table 3: Final Response to Ballot Measure Options (Split-Sample Methodology)

¼-Cent

Tax + Companion ½-Cent +

Companion

Yes in favor 59% 56%

No to oppose 35% 39%

Not sure 6% 5%

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Date: December 17, 2015 To: Mayor and City Council From: Housing Commission Re: Affordable Housing Strategies

BACKGROUND

The residents of Santa Monica long have sought to preserve our City’s economic diversity. In 1979 the voters placed rent control into our City Charter. In 1990 the voters amended the Charter to require that 30% of all new housing be permanently affordable to and occupied by households earning no more than the Los Angeles County median income, and that half of that 30% be permanently affordable to and occupied by households earning no more than 60% of the median income. In 1998 the voters amended the Charter to permit the expenditure of City funds to create affordable housing units each year, equal to up to one half of one percent of the existing housing stock (i.e., approximately 250 units per year).

The Santa Monica City Council, backed by the voters and resident groups,

has taken further important actions to provide affordable housing and so preserve our economic diversity. Chief among these actions has been the dedication of City land and the expenditure of City funds to help non-profit organizations create 1,845 new affordable housing units, and acquire 1,096 existing housing units for use as affordable housing. In 1992 the City Council adopted an Affordable Housing Production Program (“AHPP”) which requires developers of new for- profit multi-family residential properties to deed restrict a portion of those units as affordable housing units (either on-site or off-site), dedicate land, or make monetary contributions to the City Housing Trust Fund. Private developers have deed restricted an additional 1,008 units as affordable housing under this program.1

1 Data provided by staff indicates that 474 of these units (47%) have been or are being created by for-profit developers in 100% affordable projects that were approved under prior law (subsequently changed by the City Council) that permitted rent levels for moderate income households that approached or equaled market rents for small units at that time, and permitted expedited approval of 100% affordable housing projects that consisted mostly of such moderate income affordable units. The City also has 529 units of deed restricted affordable housing that were created using HUD funds only.

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As a result of these and other efforts, the City of Santa Monica historically has been a community that has welcomed and provided housing security to residents at all economic levels. But this hallmark of our community is steadily eroding. For example, whereas 60% of our housing stock was affordable to those earning up to 120% of median family income in 1998, only 33% of our housing stock remained affordable to such households in 2013.2

The principal cause of this erosion of affordability is California’s Costa

Hawkins Act, which precludes the City from imposing any control on the initial rent charged to a new tenant upon moving into a rent controlled apartment (“vacancy decontrol”).3 As a result of vacancy decontrol, more than 14,500 Santa Monica rent control units that in 1998 were affordable to households earning just 80% of the median family income no longer are affordable even to households earning 110% of the median family income (i.e., $70,280 for a family of four).4

This represents 29% of the City’s housing stock that was affordable 17 years ago but no longer is affordable. Given these trends, and the continuing rise of market rents in Santa Monica, virtually all of the 11,742 rent control units that remain affordable to households earning up to 110% of the median family income will become unaffordable once the current tenants leave.5 Once that fully occurs –

2 See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at Fig. 7. HUD defines housing as affordable to a household when it need not expend more than 30% of its income on that housing. 3 See 2014 Santa Monica Rent Control Board Annual Report at p. 19 & Fig. 16. Rent control continues to limit the amount by which this initial rent can increase each year, thereby assisting a new tenant who can afford the initial rent to remain a long term member of our community. 4 See 2014 Santa Monica Rent Control Board Annual Report at p. 20 & Figs. 17- 18; 7/16/15 Remarks to Housing Commission by Stephen Lewis, General Counsel to Santa Monica Rent Control Board (confirming that Figure 18 uses median income for family of four to calculate affordability). 5 See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at Fig. 5. The 11,742 units excludes the 1,096 deed restricted acquisition/rehab units. 80% of all rent control units affordable in 1998 to those earning 110% (or less) of median family income and thereafter subjected to vacancy decontrol no longer were affordable in 2014. See 2014 Santa Monica Rent Control Board Annual (footnote continued)

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which could take less than 20 years at present unit turnover rates6 – the only Santa Monica housing affordable to those in the bottom half of the economic distribution will be our deed restricted affordable housing stock.

Unfortunately, the City’s ability to respond to this affordable housing crisis

experienced a serious setback when the State abolished redevelopment agencies in 2012. Prior to that time, Santa Monica had used over $15 million in redevelopment funds each year either to create new affordable housing, or to acquire existing rental units and preserve them as affordable housing.7

In this report the Housing Commission provides recommendations for

addressing the housing needs of those households earning the median income or less. The threat to this portion of our community is dire, both because market rate units no longer are affordable to such households, but also because HUD data indicates that a large portion of the Santa Monica renter households earning less than the median family income faces a severe housing cost burden (that is, they are paying more than 50% of their income for housing).8

The Housing Commission also is concerned about the threat to households

earning up to 200% of median family income, and will conduct further investigatory efforts and deliberations in the new year regarding possible courses of action to prevent the loss of this group from the City. This threat is not as acute as the threat to those households earning the median family income or less. This is because Rent Control Board data indicates that a large portion of the rent

Report at p. 20 & Fig. 1. Given that market rents continue to increase, that 80% figure likely will be close to 100% in the future. 6 For example, 8,977 of the 11,742 rent control units that today remain affordable to households earning up to 110% of the median family income are occupied by the same tenant that occupied the unit prior to vacancy decontrol going into effect in 1999. Between 400 and 550 such long-term rent controlled units were lost to vacancy decontrol each year from 2009 through 2014. See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at Fig. 5 and pp. 14-15; 2014 Santa Monica Rent Control Board Annual Report at p. 11 & Fig. 5. 7 See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at p. 17. 8 See discussion at page 6 & note 14.

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controlled units remain affordable at this time to households earning up to 200% of median family income, even with vacancy decontrol,9 and because HUD data indicates that the existing burden of housing costs is not as severe for this group as it is for residents at lower income levels.10 But this will change over time as rents continue to rise. And, based on anecdotal information, it appears that rents on newer uncontrolled units already are unaffordable to households earning up to 200% of median family income. Further, home ownership of any kind currently is out of reach for any but the wealthiest of Santa Monicans.

PRIORITIES MOVING FORWARD

Assist Lower-Income Santa Monicans To Remain In Their Rent Controlled Homes

At present, there are 11,742 rent controlled units that are affordable to households earning 110% of the median family income or less. This represents roughly 23.5% of our current housing stock. By contrast, there are just 4,436 deed restricted affordable housing units in the City, representing roughly 9% of the total housing stock.11 Recent experience shows that it now costs the City roughly

9 For example, staff obtained data from the Rent Control Board regarding initial rents for controlled units subject to vacancy decontrol during 2015. Using the AHPP adjustments to median family income for household size and household size occupancy standards, it appears that 86% of studio and one bedroom apartments, and 73% of two bedroom apartments, remained affordable to households earning 200% of size-adjusted median family income (.7 of median family income for studios, .8 for one bedroom units, and .9 for two bedroom units). Using the same approach, 71% of studio units, 58% of one bedroom units, and 22% of two bedroom units remain affordable to households earning 155% of size-adjusted median family income. 10 See discussion at page 6 & note 14. 11 See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at Fig. 5. The City also administers 1,092 Section 8 tenant- based vouchers. Because the holders of these vouchers almost all live in either deed restricted or affordable rent control units, they do not add to the City’s current overall supply of affordable housing (although they do facilitate the ability of those with the least income to remain a part of our community).

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$115,000 per bedroom to assist a non-profit developer to create new affordable housing, and roughly $300,000 per bedroom to assist a non-profit developer to acquire, rehabilitate and preserve an existing unit as affordable housing.12

The City should do everything practical to keep lower-income Santa

Monicans currently living in rent controlled apartments in their homes. This is the most cost effective means of preserving Santa Monica’s existing economic diversity because vacancy decontrol will make virtually all of the remaining affordable rent controlled units unaffordable when the current tenants leave, and because it is expensive to provide replacement affordable housing units.

The City recently has taken important legal actions to protect at-risk tenants.

These include the strengthening of the tenant anti-harassment ordinance and the funding of a second full time housing attorney at the Santa Monica office of the Legal Aid Foundation of Los Angeles (“LAFLA”). In order to determine the efficacy of these measures, and to quickly identify any further actions needed, the Housing Commission recommends that the City Council request and review reports on a minimum of a quarterly basis from the City Attorney, LAFLA, Code Enforcement, and the Rent Control Board – as well as receive public input – on challenges to tenant retention, actions taken in response, adequacy of enforcement resources, and potential improvements to existing tenant protection laws.

In making this recommendation, the Housing Commission recognizes that

most owners of rent controlled buildings comply with the law and are providing a vital service to the City in maintaining its economic diversity. The Housing Commission publicly recognizes and honors these landlords, most especially those who owned their buildings continuously since the enactment of rent control, and those who rent to Section 8 tenants. The Housing Commission supports staff’s intention to develop a recommendation to the City Council for further public recognition of these landlords by the City.

The Housing Commission further recommends that the City develop a fund

to provide rental assistance when doing so will keep low income Santa Monicans

12 See Exhibit A hereto (10/19/15 spreadsheet of project costs and City costs from Andy Agle). Acquisition and rehabilitation – although generally less expensive overall – is more expensive to the City because the projects do not qualify for State or federal tax credits. See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at p. 5.

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currently living in rent controlled units in their homes, such as seniors and totally disabled individuals with fixed incomes, and low wage families. The size of this population is not known at present. Anecdotal information – including inquires to staff from renters seeking assistance – indicates that such a population exists. And this population might be a large one, given that the most recent HUD data available estimates that there are 6,325 Santa Monica renter households earning 50% or less of the median family income that are paying more than 50% of their income for housing.13 Given the uncertainties surrounding the scope of the need, and the best design for administering such a fund, we recommend that the City develop a pilot program with initial funding of $250,000. If the results of the pilot program confirm that the need is greater and that the program at scale would be cost effective, then greater funding resources should be devoted to the program.

Protect And Expand The Supply Of Deed-Restricted Affordable Housing

Given vacancy decontrol and the realities of the rental market, Santa Monica’s long term ability to maintain economic diversity will depend upon its supply of deed-restricted affordable housing units. Consequently, the City should protect its current stock and produce new affordable housing units. The Housing Commission recommends:

• Proactive and more comprehensive monitoring of compliance with

AHPP and development agreement (DA) requirements for tenant

13 See HUD CHAS Data for Santa Monica, California (based on 2008-2012 ACS Survey) at Chart entitled “Income by Cost Burden (Renters only)”, available at http://www.huduser.gov/portal/datasets/cp/CHAS/data_querytool_chas.html. This group consists of 4,375 Santa Monica renter households earning 30% or less of the median family income (some 65% of all such households), and 1,950 Santa Monica renter households earning from 30% to 50% of the median family income (some 58.6% of all such households). This same HUD data estimates that more than 50% of household income is spent on housing by 1,315 Santa Monica renter households earning from 50% to 80% of the median family income (some 27.1% of all such households), by 285 Santa Monica renter households earning from 80% to 100% of the median family income (some 9.7% of all such households), and by 90 Santa Monica renter households earning from more than 100% of the median family income (some 0.6% of all such households),

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income qualifications and rent levels in existing and future deed- restricted affordable housing units.

• Proactive and more comprehensive efforts to connect qualified residents and workers with all existing and future deed restricted affordable housing units in the City.

• A return over time to at least the $15 million annual affordable housing funding levels from local sources that existed prior to the dissolution of redevelopment in 2012. The Housing Commission’s specific recommendations regarding local funding mechanisms and the uses for those funds are set out in the next section two sections of this report.

In order to maximize the impact of funds raised, the City should review its existing inventory of land to identify sites than can be devoted to the development of affordable housing. For example, the Housing Commission supports using a portion of the Big Blue Bus site for affordable housing, subject to a feasibility study.14

• Incentivize homeowners to add auxiliary dwelling units as deed restricted affordable housing. The City of Los Angeles is studying the concept, and such a program already is in place in Sonoma County.15

We believe the City should develop such an affordable auxiliary dwelling unit program appropriately tailored to our circumstances.

• Continue to monitor and develop plans to maintain the affordability of units subject to City and non-City deed restrictions as these restrictions approach termination.

14 Because the site at 2018 19th Street was identified by a local architect as another potential site for affordable housing, the Housing Commission recommends that the City Council consider anew whether a proposed sale of that property is advisable in light of the issues raised at the August 25, 2015 affordable housing study session and/or in this report. 15 See “Affordable Second Dwelling Unit Program,” Sonoma County Permit and Resource Management Department and Sonoma County Community Development Commission

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In addition, it appears some for-profit developers are involved in acquiring and preserving existing units as housing affordable to renters earning 80% of median neighborhood income.16 The Housing Commission recommends that the City reach out to these developers to determine what incentives (if any) would be required to make such a program generate affordable housing in Santa Monica for those earning the Los Angeles County median family income or less (the benchmark set in the City Charter for affordable housing production), without displacing existing residents.

Further, development projects should be approved only when, in their own

right, they make a positive contribution to our community, and they also make very substantial contributions to affordable housing. The Housing Commission does not believe any new market rate or mixed use development project should be approved solely because it provides new inclusionary affordable housing units. The Housing Commission is concerned that any failure to follow this approach undermines community support for affordable housing.

Projects requiring DAs should provide affordable housing substantially in

excess of the current AHPP minimum requirements for Tier 2.17 The Housing Commission recommends that the City Council require Tier 3 projects at a minimum satisfy the City Charter requirements by providing 30% of units affordable to households earning 80% of median family income or less, with at least half of that 30% affordable to households earning 60% of median family income or less. Alternatively, the City Council should consider requiring Tier 3 projects to provide at a minimum double the current AHPP minimum requirements for Tier 2 projects.

Finally, the Housing Commission supports the staff’s intention to evaluate

and, if feasible and cost-effective, develop a program to provide financial and other incentives to landlords to rent existing units to low income households.

16 See “This investment fund has a social agenda — and high-profile backers,” 9/18/15 Los Angeles Times. 17 See Santa Monica Municipal Code §§ 9.23.030(A), 9.64.040 to 9.64.060.

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PROPOSED FUNDING SOURCES

The City should assertively pursue all options for accessing funding from County, State and federal programs. In doing so, the City should work with our County, State and federal elected representatives to press the case for using Santa Monica as a demonstration project on the viability and benefits of deconcentrating poverty. Our City’s historical dedication to maintaining an economically diverse population, our outstanding social services and public schools, and our national name recognition make us an ideal location for such a demonstration project if officials consider the new emphasis by HUD and others on deconcentrating poverty.18 Santa Monica should further enhance its case to County officials by targeting affordable housing for populations on which the County otherwise is required to spend money (such as the homeless, the disabled, veterans, formerly incarcerated persons, and family reunification populations, among others). The Housing Commission recommends that the City Council request and review reports regarding the progress of these efforts at a minimum on a semi-annual basis.

The Housing Commission recognizes that these external funding sources are

uncertain and will require long term effort to access. The City can and should continue its proud tradition of putting its own resources where its values are, and so should develop new and stable local funding sources for affordable housing sufficient to at least restore the $15 million per year from local sources spent on affordable housing prior to the dissolution of redevelopment in 2012.

The Staff Report for the August 25, 2015 City Council study session on

affordable housing identifies and discusses the following potential local funding sources:

1. Monies allocated from the City’s General Fund; 2. General obligation bonds; 3. An increase in the transient occupancy tax;

18 See HUD Final Rule “Affirmatively Furthering Fair Housing” (June 30, 2015). For example, a recent Harvard study found that children who leave concentrated areas of poverty before they are 13 reap lifetime benefits in terms of educational attainment, income, and family stability. See Raj Chetty, Nathaniel Hendren, and Lawrence F. Katz, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment” (May 2015).

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4. An increase in the sales tax; 5. An increase in the real property transfer tax; 6. A parking tax; 7. A utility user tax; and 8. A parcel tax.

The Housing Commission considered each of these sources, as well as (1) a construction tax, (2) an increase in the commercial linkage fee for affordable housing, and (3) locally imposing a $75 per document recording fee.19

Existing General Fund Revenues

The Housing Commission believes that any approach to local funding for affordable housing (including funding to retain current low income Santa Monicans in their rent controlled apartments) should combine the repurposing of some existing General Fund revenues with the creation of new local funding sources. Given the level of the threat to our core City value of economic diversity, and the City Council’s designation of maintaining that diversity as one of the top three City goals, the expenditure of funds for affordable housing should be a higher priority than some existing uses of funds. The City Manager and the City Council should determine where to adjust the existing budget to repurpose those funds for affordable housing.

The Housing Commission believes that at least $7.5 million for affordable

housing should come from new general revenue taxes, and that the City should spend up to another $7.5 million of existing general revenues (roughly 2% of the current General Fund), in order to meet or exceed a total of $15 million per year in local funding for affordable housing.

New General Fund Revenues

In order to raise at least $7.5 million in new revenues, the Housing Commission gave primary consideration to the following proposals:

19 This proposal is for a local version of the bill Assembly Speaker Atkins introduced in Sacramento. It has been suggested that, unlike the other local funding sources identified, this source may not require voter approval. That is a question for the City Attorney.

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1. Real Estate Transfer Tax:

Place on the 2016 ballot the equivalent of Measures H and HH from the 2014 ballot. Measure H would have imposed an increase in the real estate transfer tax from $3 to $9 per $1000 of sales price for commercial, multi-family and single family properties sold for over $1 million. Measure HH asked the voters whether they wanted the City to spend the general funds raised by Measure H on affordable housing. The Housing Commission endorsed Measures H and HH in 2014, but Measure H was rejected by the voters. Staff estimates that the tax increase, if approved in 2016, would raise $9.6 million per year ($2.4 million for each $1.50 increase in the tax).

2. Construction Tax:

Place on the 2016 ballot a commercial and for-profit multi-family

construction tax equal to 5% of calculated value, with a companion advisory measure asking the voters whether they want the City to spend the general funds raised on affordable housing. This tax falls on commercial enterprises that create additional need for affordable housing and benefit economically from the changing economic demographics of our City. Staff is continuing to analyze the likely revenues to be generated by such a tax, but estimates that it is not less than $7.5 million per year based on recent annual permitted value.20

3. Sales Tax:

Place on the 2016 ballot a one quarter of one percent sales tax increase, with

a companion advisory measure asking the voters whether they want the City to spend the general funds raised on affordable housing. Because the sales tax proposal requires a contribution from every person and business entity that resides in, works in, or visits Santa Monica, the individual burden is modest (25 cents for every $100 spent in the City on non-exempt purchases21). Universal funding also

20 We understand that the City Attorney is reviewing whether there are any legal impediments to this proposed tax. 21 California law exempts various necessary purchases from sales taxes, such as purchases of food (including pet food) and medicine. See California State Board of Equalization, “Sales and Use Taxes: Exemptions and Exclusions” (July 2014). Former Mayor Denny Zane advised the Housing Commission at its December 5, 2015 meeting that sales tax data from Los Angeles County as a whole indicates (footnote continued)

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is consistent with the belief that maintaining Santa Monica’s economic diversity is central to its character and a benefit to everyone who participates in our City’s life. Staff estimates that such an increase in the sale tax would raise $7.5 million per year.

The Housing Commission unanimously expresses its preference for the sales

tax. The Housing Commission recognizes, however, that a majority of the voters will have the final say on any proposed tax increase, and therefore recommends that the City Council engage in polling and take still further public input before deciding on a final course of action.

PROPOSED USES OF FUNDS

The best use of affordable housing funds will depend in part on the amount of funds available and conditions at the time funding is restored. The Housing Commission offers several general recommendations.

Income Targeting

The Housing Commission recommends that locally raised affordable housing funds be used in a manner consistent with historical income targeting patterns (that is, that three-quarters of total households served be those earning 60% or less of the area median income, including at least 50% of total households served be those earning 50% or less of the area median income).22 The need appears most extreme at these lower income levels. For example, the most recent HUD data available estimates that almost 80% of the more than 8,000 Santa Monica renter households that are severely cost burdened (i.e., paying more than

that businesses and visitors pay 58% of the sales tax, and residents pay 42%. Even if residents in Santa Monica pay this same 42% of City sales tax (and Santa Monica residents might pay a lesser percentage given the City’s very high levels of tourism and business activity), each of the 93,000 Santa Monica residents on average would pay less than 10 cents per day of additional sales tax under the proposal. 22 See “Population Served – Income Level (Maximum Income)” Table for “City- Funded Housing Stock” on Affordable Housing Information Summary provided by Barbara Collins at the Commission’s June 2015 meeting.

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50% of their income for housing) are households earning 50% or less of the area median family income (the large majority of whom earn 30% of less of area median family income).23 And 95% of the more than 3,000 applicants on the City’s local affordable housing Waiting List who work or live in Santa Monica identified themselves as members of households earning 50% or less of the area median family income when they applied in 2011 (including 80% earning less than 30% of area median family income).24 No funds should be used for households earning in excess of 80% of area median income.

Community / Program Targeting

Protection Of Lower-Income Rent Controlled Tenants

As discussed, the Housing Commission favors development of a $250,000 pilot rental assistance program to keep low-income Santa Monicans in their rent controlled unit, followed by expansion of the program if the pilot results confirm a greater need exists and that the program at scale would be cost effective.

Property Acquisitions

The Housing Commission recommends that the City strongly consider

issuing lease-revenue bonds backed by at least a portion of the new revenue streams generated, and using the bond proceeds to acquire land or buildings suitable for affordable housing. There is little doubt that the cost of acquisition will only rise in the future.

Non-Profit Funding

The Housing Commission recommends that the City continue its historic commitment to funding non-profit housing providers for both the acquisition and rehabilitation of existing units and the construction of new units as deed-restricted

23 See HUD CHAS Data for Santa Monica, California (based on 2008-2012 ACS Survey) at Chart entitled “Income by Cost Burden (Renters only)”, available at http://www.huduser.gov/portal/datasets/il/il15/index.html. 24 See Santa Monica Housing Division, Local Waiting List (Aug. 15, 2011).

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affordable housing.25 The City’s non-profit housing providers historically have delivered more affordable units, and much deeper affordability, than for-profit developers of inclusionary affordable units.26

The City’s excellent social services programs which serve seniors, persons

with disabilities, veterans and chronically homeless individuals, leverage County, State and federal funds for supportive housing. As new affordable housing revenues become available, the City should continue its proud tradition of providing a share of that funding to create additional supportive housing units in Santa Monica.

Finally, the City should work with its non-profit housing providers to

determine whether there are cost-effective opportunities for acquisition and rehabilitation of non-occupied properties (such as older commercial buildings) that could qualify for tax credits (thereby lowering the cost to the City of adaptive reuse). 27

25 41% of City loans to affordable housing non-profits have been for acquisition and rehabilitation of existing rental units. See Staff Report 1421presented at 8/25/15 City Council Study Session on Affordable Housing at p. 5. 26 Compare “Population Served – Income Level (Maximum Income)” Table for “City-Funded Housing Stock” with “Population Served – Income Level” Table for “Inclusionary Housing Stock” on Affordable Housing Information Summary provided by Barbara Collins at the Commission’s June 2015 meeting. 27 See discussion at pages 4-5 & note 13.

2425 Colorado Avenue. Suite 180 1999 Harrison Street Suite 1290Santa Monica, CA 90404 Oakland, CA 94612Phone: (310) 828-1183 Phone: (510) 451-9521Fax: (310) 453-6562 Fax: (510) 451-0384

TO: Interested Parties

FROM: Fairbank, Maslin, Maullin, Metz & Associates (FM3)

RE: Summary of City of Santa Monica Issues 2014 Survey

DATE: May 16, 2014

Between April 12th – 19th, 2014, Fairbank, Maslin, Maullin, Metz & Associates (FM3) conducteda telephone survey of 501 City of Santa Monica voters who are likely to vote in the November2014 General Election.1 The margin of error for the full sample is plus or minus 4.4 percent;margins of error for subgroups will be higher.2

The three main goals of this survey are to:

(1) Examine general perceptions of the City(2) Explore perceptions on the need for additional funds to provide affordable housing in

the City(3) Gauge the level of support for measures that would help address the need for additional

affordable housing in Santa Monica

The key survey findings include:

A majority of voters consider the City to be headed in the right direction About half of all voters perceive the City has a need for additional funds, both generally

speaking and specifically to provide affordable housing A majority of voters support a ballot measures to create new revenue for the City by

increasing the existing documentary transfer tax A majority of voters support an advisory ballot measure encouraging the City Council

to use that revenue to provide affordable housing in Santa Monica

The balance of this memo provides a detailed summary of the findings.

1 Respondents were given a choice to conduct the survey in English or Spanish.2 Some results do not equal 100% due to rounding.

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 2

(1) General Perceptions of the City:

A majority of voters have positive views of where the City is headedAs seen in Figure 1 below, 51 percent of voters feel that the City of Santa Monica is headed inthe right direction and about one-third (36 percent) perceive that the City is pretty seriously offon the wrong track. Thirteen percent are undecided.

Figure 1: Opinion of Santa Monica Voters on the Direction of the City

(2) Perceptions of the Need for Additional Funding for Affordable Housing:

More than one half of all voters perceive that the City generally needs additional fundsFifty-six percent of respondents said that the City of Santa Monica has a great (15 percent) orsome (41 percent) need for additional funds to provide the level of city services that residentsneed or want (see Figure 2 below). Thirty-five percent identified little or no need for additionalfunding. The balance of voters (nine percent) are undecided.

Fifty-six percent of respondents said that the City has a need for funds to provide additionalaffordable housing. This is equal to the percentage who said the City had a general need forfunds, but twice as many (29 percent) identified the need for funds for affordable housing as a“great need.” Thirty-two percent identified little or no need for additional funding to provideaffordable housing, while twelve percent are undecided.

Figure 2: Perception of the City’s Need for Additional Funds

51%

36%

13%

0% 20% 40% 60% 80%

Right Direction

Wrong Track

Don't Know

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 3

(3) Support for Documentary Transfer Tax/Affordable Housing Companion Measures:

Initial/Current level of support

A majority of voters (57 percent) initially support a general purpose, simple majority measureto increase the existing documentary transfer tax by six dollars per one thousand dollars ofsales on commercial and non-commercial property sold for over one million dollars.

Respondents were initially read the following possible ballot language:

“Shall the existing documentary transfer tax on commercial and non-commercial propertysold for over one million dollars in the City of Santa Monica be increased by six dollars perone thousand dollars of sales?”

City of Santa Monica voters indicated that if the election was held “today,” a majority (57percent) would support the measure.3 Initially, 32 percent of voters do not support the measure.4

A further eleven percent are undecided (see Figure 3).

Figure 3: Vote on the Documentary Transfer Tax Increase Measure

Voters were also asked about a companion measure that would advise the Santa Monica CityCouncil to use funds from the documentary transfer tax increase to provide affordablehousing in the City. A majority of voters (59 percent) initially support the advisory measure.

Respondents were initially read the following possible ballot language:

“ADVISORY VOTE: To provide affordable housing for low-income people who live or workin Santa Monica, including working families, seniors on fixed incomes, veterans, thehomeless, and people with disabilities, shall the City of Santa Monica provide loans toqualified non-profit housing organizations to repair, renovate, build and acquire affordable

3 Definitely vote yes: 27 percent; probably vote yes: 15 percent; lean toward voting yes: 15 percent.4 Definitely vote no: 21 percent; probably vote no: seven percent; lean toward voting no: four percent.

27%

15%

15%

4%

7%

21%

11%0% 10% 20% 30% 40%

Definitely yes

Probably yes

Undecided, lean yes

Undecided, lean no

Probably no

Definitely no

Undecided

TotalYes57%

TotalNo

32%

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 4

housing if voters approve increasing the existing documentary transfer tax by six dollars perone thousand dollars of commercial and non-commercial property sales of over one milliondollars in the City of Santa Monica?”

City of Santa Monica voters indicated that if the election was held “today,” a majority (59percent) would support the simple majority measure.5 Initially, 30 percent of voters do notsupport the measure.6 A further twelve percent are undecided (see Figure 4).

Figure 4: Vote on Advisory Measure to Use Documentary Transfer Tax Measure Funds toProvide Affordable Housing

Reaction to information about the package of ballot measures

Respondents also heard the following statement about the current documentary transfer tax andthe proposed changes to the tax brought about by passing the measure:

“I would now like to tell you a little bit about the documentary transfer tax. It is an existing,one-time fee that the city imposes when residential and commercial real estate is sold.Currently in Santa Monica, the fee is set at three dollars per every one thousand dollarsregardless of the price of the real estate that is sold. The ballot measure we have beendiscussing would increase that rate to nine dollars per every one thousand dollars in salesprice only for property sold for over one million dollars in Santa Monica. It will not changethe rate for property sold for less than one million dollars.”

Fifty-two percent of respondents said that the information made them more likely to support themeasures, while twenty-one percent reported that it made them less likely and thirty-threepercent said it did not change their position on the measures.

5 Definitely vote yes: 29 percent; probably vote yes: 18 percent; lean toward voting yes: 12 percent.6 Definitely vote no: 18 percent; probably vote no: eight percent; lean toward voting no: four percent.

29%

18%

12%

4%

8%

18%

12%0% 10% 20% 30% 40%

Definitely yes

Probably yes

Undecided, lean yes

Undecided, lean no

Probably no

Definitely no

Undecided

TotalYes59%

TotalNo

30%

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 5

Reaction to educational and critical statements about the ballot measures

In order to test a variety of Santa Monica voters’ opinions (pro and con) about the proposedcompanion measure, the survey presented respondents with a series of both educationalstatements describing the need for increasing the availability of affordable housing in the City, aswell as critical statements suggesting reasons why voters should not vote for the proposedmeasures.7

Educational Statements

After each educational statement was read, respondents were asked to indicate whether hearingthe educational statements made them more inclined to vote for the measure. More than 60percent of Santa Monica voters said they were more inclined to support the measures becauseeducational messages included the need to provide a safety net for vulnerable individualsand ensuring local control and accountability for affordable housing funds. The individualresults on these messages are presented below:

This measure provides a safety net to Santa Monica residents who are vulnerable to losingtheir home (67 percent more inclined to vote yes after hearing this statement).

This measure gives Santa Monica locally controlled funds to make affordable housing moreavailable (66 percent more inclined to vote yes after hearing this statement).

This measure includes strict fiscal accountability to ensure that funds will be spent aspromised (64 percent more inclined to vote yes after hearing this statement).

A presentation of educational statements increases support for the documentary transfertax measure to 61 percent, with 32 percent opposed and seven percent remainingundecided. Support for the companion advisory measure increases to 67 percent (two-thirds of the electorate) with 29 percent opposed and five percent remaining undecided.

After the initial vote in response to the documentary transfer tax ballot summary, an explanationof the documentary transfer tax and a reading of educational messages, voters were asked againhow they would vote on the measure if an election were held “today.” On the second vote,support increased by four percent, from 57 to 61 percent.8 Opposition remained at 32 percent.9

The percentage of undecided voters declined from eleven to seven percent.

On the second vote, support for the companion measure advising the City to use the revenuegenerated by increasing the documentary transfer tax to provide affordable housing rose eightpercent from 59 to 67 percent.10 Opposition fell one point from 30 to 29 percent.11 Thepercentage of undecided voters declined from 12 to five percent (see Figure 5).

7 Statements are paraphrased in this memo to highlight the key aspect of the statements.8 Definitely vote yes: 31 percent; probably vote yes: 18 percent; lean toward voting yes: 12 percent.9 Definitely vote no: 22 percent; probably vote no: seven percent; lean toward voting no: three percent.10 Definitely vote yes: 32 percent; probably vote yes: 22 percent; lean toward voting yes: 13 percent.11 Definitely vote no: 21 percent; probably vote no: five percent; lean toward voting no: three percent.

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 6

Figure 5: Vote after Educational Statements on the Documentary Transfer Tax Measureand Companion Advisory Measure

Critical Statements

Voters were also read critical statements and asked to indicate whether hearing the respectivestatement would make them more inclined to vote against the measure. The impact of thecritical statements is more modest than the educational statements. More critical messagesmotivated between 35 and 45 percent of respondents to say they would be more inclined to voteno on the measure. These results never met the legal threshold of 50 percent needed to defeat ameasure. The critical statements include claims that the measure will increase density and trafficin Santa Monica, that the City already has the necessary funds to provide additional affordablehousing and that taxpayers are already overburdened.

After hearing critical statements about the measures, 59 percent of Santa Monica votersstill support the documentary transfer tax measure. Thirty-three percent oppose themeasure and eight percent are undecided. Sixty-two percent support the companionadvisory measure, 29 percent oppose it and nine percent are undecided.

In spite of critical statements made against both measures, voters continue to support themeasures at higher levels than the 50 percent plus one threshold necessary for passage (seeFigure 6: Vote after Critical Statements and Figure 7: Progression of Vote). Fifty-ninepercent said they would vote yes to increase the documentary transfer tax, a decline of only twopercentage points from the vote after educational messages.12 The percentage of voters whoreport they would vote no increases one percentage point from 32 to 33 percent.13 Theundecided voter percentage also increases by one percentage point from seven to eight percent

12 Definitely vote yes: 26 percent; probably vote yes: 19 percent; lean toward voting yes: 14 percent.13 Definitely vote no: 24 percent; probably vote no: five percent; lean toward voting no: four percent.

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 7

Opinions on the companion advisory measure to dedicate funds to providing affordable housingare somewhat more fluid as support falls five percentage points from 67 percent to 62 percent.14

The percentage of voters who report they would vote no increases one percentage point from 28to 29 percent.15 The percentage of undecided voters increases from five percent to nine percent.

Figure 6: Vote after Critical Statements on the Documentary Transfer Tax Measure andCompanion Advisory Measure

Figure 7: Progression of Votes on the Documentary Transfer Tax Measure and CompanionAdvisory Measure

14 Definitely vote yes: 32 percent; probably vote yes: 17 percent; lean toward voting yes: 15 percent.15 Definitely vote no: 23 percent; probably vote no: four percent; lean toward voting no: two percent.

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 8

Support for the ballot measures at different tax rates and structures

A majority of respondents reported that they would support an alternative dedicated measure thatwould expressly link the increase in the documentary transfer tax to spending on providingaffordable housing.

The alternative measure was supported by as many as 61 percent of respondents with 35 percent opposedand 3 percent undecided. This level of support is well above a simple majority, but below the two-thirdsthreshold needed for this dedicated type of measure to pass.

More than half of voters reported that different tax rates and structures would make themmore likely to support the measures.

As the structures of the measures are still being determined, the survey tested different tax ratesand structures to understand their impact on overall support. More than half of voters said thatthe following would make them more likely to support the measures:

If the documentary transfer tax were set at a higher rate for higher-priced properties (57percent Much More/Somewhat More Likely)

If the documentary transfer tax increase only applied to sales of property over five milliondollars (57 percent)

If the measure raised the documentary transfer tax by $3 instead of $6 per $1,000 of sales (54percent)

Importance of how the Documentary Transfer Tax funds are spent

Nearly three-fourths of Santa Monica voters report that they would be more likely tosupport the ballot measures if funds were used to support vulnerable seniors.

Among the many potential ways to increase affordable housing in Santa Monica, voters reportedthe following four components would make them much more or somewhat more likely tosupport the measures at rates of between 62 and 72 percent:

Using funds for rental housing support for vulnerable seniors who are at risk of losing theirassistance due to state actions (72 percent Much More/Somewhat More Likely)

Making loans to non-profit housing organizations to renovate older apartment buildings foradditional affordable housing (69 percent)

Providing short-term, transitional housing subsidies to Santa Monica residents who are at riskof becoming homeless (69 percent)

Making loans to non-profit housing organizations to acquire land and build additionalaffordable housing (62 percent)

Roughly seven-in-ten Santa Monica voters report that they would be more likely to supportthe measures if funds were set aside in a separate trust fund used solely for providingaffordable housing or if the measure required that preference for affordable housing begiven to people who live or work in Santa Monica.

Summary of the Key Results from the 2014 City of Santa Monica Issues Survey Page 9

Voters were asked about several accountability provisions to ensure funds are used as promised.Respondents said the following provisions would make them much more or somewhat morelikely to support the measure at rates between 53 and 72 percent:

Requiring that all funds be set aside in a separate Santa Monica Affordable Housing trustfund so that funds cannot be used for other purposes (72 percent Much More/Somewhat MoreLikely)

Requiring that preference for affordable housing funded by the measure be given to peoplewho live or work in Santa Monica (69 percent)

Requiring the measure to expire after 10 years (53 percent)