Source: Thomas P. Tunny - Reuben, Junius & Rose, LLP
In our last update, we reported on two of the ballot measures presented to the voters on the November 8 ballot. An additional measure was Proposition W, which was approved by the voters and authorized an increase in the Real Property Transfer Tax on properties sold for at least $5 million. The Real Property Transfer Tax is imposed on any transaction that results in a “transfer” of real property in the City. The definition of a “transfer” is broad and includes certain transfers of corporate stock, partnership shares, or limited liability company interests, if the transfer would constitute a “change of ownership” under California law.
Proposition W increased the Real Property Transfer Tax rate from 2% to 2.25% on properties with a value of at least $5 million and less than $10 million; from 2.5% to 2.75% on properties with a value of at least $10 million to less than $25 million; and 2.5% to 3% on properties with a value of at least $25 million.
Measure W did not include an effective date for the Transfer Tax increase, and thus the increase will become effective 10 days after the election results are certified, which likely will correspond with an effective date in early December.
On August 4, 2016 the Planning Commission approved the proposed Planning Code Amendment for the City's new Transportation Demand Management (TDM) Ordinance. The Ordinance is now scheduled to be heard at the Board of Supervisor's Land Use and Transportation Committee on Monday, November 28. If approved, it will then go to a hearing before the full Board of Supervisors for adoption.
TDM is a transportation policy measure that seeks to reduce automobile use. The new TDM Ordinance will apply to most new development projects as well as some changes of use to existing property. Smaller residential projects – those with nine units or less – would not be subject to the legislation. Residential projects that are 100 percent affordable housing would be exempt.
Project sponsors will be required to submit a TDM Plan with their first development application. The TDM Plan is required to document the project’s compliance with the TDM Program Standards. Some projects will be able to meet the Program Standards by complying with TDM measures already required by the Planning Code. Those projects that need to go beyond Code requirements to meet their targets will choose from a menu of TDM options. These TDM options include:
- subsidize transit passes;
- subsidize bike share and/or car share membership;
- increased on-site car share supply;
- increased bicycle parking;
- reducing on-site parking supply;
- real-time transportation information displays; and
- family-specific benefits like round-the-clock access to car seats for car share vehicles.
The proposed TDM Program has raised some concerns in the development community. Although the goal of reducing automobile use is laudable, the TDM Program will impose yet another significant cost on development, including projects providing much-needed housing. In addition, the Program may require some projects to reduce the amount of parking in order to satisfy the assigned TDM measure value, which will be based primarily on the number of parking spaces provided by the project regardless of its location or overall parking efficiency. Some of the TDM measures are relatively easy to incorporate into a project, however, certain larger projects with an overall higher parking count may be required to make significant adjustments, which may also include reduction of overall parking count to not exceed existing neighborhood parking rates.
We will continue to monitor the TDM Ordinance as it proceeds through the legislative process.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.