Santa Monica expects $50M yearly revenue from new transfer tax

Legal challenge to Measure GS works its way through courts

Santa Monica Mayor Gleam Davis

Santa Monica Mayor Gleam Davis (, Getty)

The City of Santa Monica is projecting a $50 million boost in annual revenue from Measure GS, the real estate transfer tax that was approved by voters last November, even as a legal challenge crawls through the court system. 

The tax measure, which was proposed by Sue Himmelrich, the city’s previous mayor, charges an additional 5 percent tax for property sales of at least $8 million. The funds are allocated for the city’s homelessness prevention, affordable housing programs and schools. 

The estimate was included in the city manager’s report on Santa Monica’s proposed biennial budget for the fiscal 2023 to 2025 period. 

“The volatile nature of this revenue source, based on sales of very high-value properties, and its administration and programming, requires a longer horizon for the programming of these funds,” the report read.

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The projection comes months after the California Business Roundtable, a group that includes the state’s largest employers, filed a lawsuit to block the measure, arguing that the tax violates the state constitution by dividing the proceeds between affordable housing projects and local schools. 

The measure earmarks the first $10 million raised each year for funding schools. The next $40 million will go towards the city’s affordable housing projects. Anything over $50 million, meanwhile, will be split 80/20 between housing and schools. The legal challenge remains on-going, court records show. 

The city is also projecting $5 million in annual revenue for the next two years through Measure CS, a hotel tax that was also approved last year. The measure, which increases Santa Monica’s transient occupancy tax by 1 percent for hotel stays and 3 percent for homeshare stays, will fund a modest expansion of the city’s Section 8 program.  

To deal with programs from its two new revenue streams, Santa Monica is establishing a new department, called the Housing and Human Services Department. The agency will focus on the city’s homelessness programs. As part of the new department, the city will reinstate the position of housing manager, which was eliminated in 2020.