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Senate Bill 2 – More money down the rabbit hole of government agencies

Senate Bill 2 is moving rapidly through the State Legislature in Sacramento. Under SB2 our government and regional agencies would once again benefit from sucking money out of resident’s pockets by creating yet another “fee” (code word for levying a “tax” without a vote) that would be collected every time anyone filed any type of document related to real estate transactions.

Regardless of what they want to call it, this “fee” is a regressive tax on homeowners and home buyers, and will increase the cost of housing in California. But that doesn’t matter to legislators, because it makes them look like they care about the “correct” issues and the state’s finance department says it will generate a half billion dollars every year! Yippee!

SB2’s proponents, Senator Atkins and coauthors Senators Beall, Bradford, Dodd, Galgiani, Hertzberg, Hill, Hueso, Jackson, Mendoza, Mitchell, Roth, Skinner, Wieckowski, and Wiener, and Assembly Members Bonta, Gloria, and Thurmond, believe that the need for SB2 is urgent and beyond question. But, this bill is not a new idea.

A similar proposal and a host of other nefarious taxes and fees were introduced back in in 2013, such as SB 391, by Mark DeSaulnier (D-Concord). Like SB2 his bill proposed assessing the recording of every real estate document in California to create a Sacramento controlled fund for “affordable housing.”

Similarly, that bill required that revenues collected at the county level be sent quarterly to the super slush fund run by the unelected bureaucrats as the Department of Housing and Development (HCD). In the case of SB2 that will be called the “Building Homes and Jobs Fund.”

The Legislative Counsel’s Digest of SB2 states:

The bill would impose a fee, except as provided, of $75 to be paid at the time of the recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, per each single transaction per single parcel of real property, not to exceed $225. By imposing new duties on counties with respect to the imposition of the recording fee, the bill would create a state-mandated local program.

The bill would require that a county recorder quarterly send revenues from this fee, after deduction of any actual and necessary administrative costs incurred by the county recorder, to the Controller for deposit in the Building Homes and Jobs Fund, which the bill would create within the State Treasury.

So how will this “honey pot” be spent in order to produce “affordable housing?” On that, the bill is pretty vague.

The bill would, upon appropriation by the Legislature, require that 20% of the moneys in the fund be expended for affordable owner-occupied workforce housing and 10% of the moneys for housing purposes related to agricultural workers and their families, and would authorize the remainder of the moneys in the fund to be expended to support affordable housing, home ownership opportunities, and other housing-related programs, as specified.

And that’s about it. Not only does the bill leave it to prevailing political influence to decide how to interpret these rough percentage categories, or to decide what projects qualify under those categories, but the remaining 70% of the money will be at the complete discretion of something called the "Building Homes and Jobs Trust Fund Governing Board" (politically appointed special interests) and HCD to distribute, with minimal oversight.

This means those funds will disappear into the depths of agencies whose programs provide assistance for, among other things, emergency housing, multifamily housing, farmworker housing, home ownership for very low and low-income households, downpayment assistance for first-time home buyers -- which all sounds good in theory but somehow very little of that money seems to ever trickle down to the local level to solve our affordable housing challenges. Wonder why?

I also do not see anything in this bill that would prohibit the state from issuing bonds against the revenues and using collected funds to cover the costs of issuance of bonds (investment bankers) and if HCD chooses, it also appears the funds can be used to run related programs at HCD.

Talk about lack of transparency.

Oh, and just to make sure it gains PAC support from special interests, when combined with other laws moving rapidly through Sacramento, such as SB35, legislators will make sure that any projects funded pay government set “prevailing wages,” thus ensuring that it will be much more difficult for the housing to be affordable or for local labor to be employed, to build it.

But this is what our government has become: a black hole that sucks in funds, expands staff and benefits, and ensures no specific goals or accountable results in return. Our local county government, by the way, gets none of this money above and beyond the actual costs of collection that they can prove.

Aren't there more productive, more leveraged and less bureaucratic ways to stimulate the development of affordable housing in a way that empowers local government to actually address the housing needs they face? For that discussion please see:

The link to the text of SB2 is found below.