Call to Action: Please attend the April 24th San Jose City Council Meeting

This is an urgent call to action!

Where: San Jose City Hall
What:   City Council Meeting
When:   April 24th at 3:00 PM

Dear SCCAOR Members,

Coming before the San Jose City Council on Tuesday, April 24th will be a bevy of housing issues including amendments to the Tenant Protection Ordinance (TPO), the Apartment Rent Ordinance (ARO), and the Ellis Act. Of primary concern are the proposed amendments to the Apartment Rent Ordinance (ARO) and the Ellis Act.

The amendments to the ARO, which regulates the affordable housing market (units built in or prior to 1979 and are subject to Rent Control) in San Jose, would severely limit the ability for property owners with master-metered units to pass on utility costs incurred by the tenants.

The City Housing Department is making the following recommendations regarding the Ratio Utility Billing System (RUBS):

  1. Determine that RUBS is not allowed in San Jose.
  2. Allow landlords with written utility pass through contracts for water, sewer, and/or garbage in place prior to January 1, 2018, to petition for a one-time rent increase equal to the lesser of:
      1. The average monthly charges for water, sewer and/or garbage passed through to the tenant over the 2017 calendar year; or
      2. An amount equal to the sum of the 2018 Santa Clara County Housing Authority
      3. Utility Allowance rates for multifamily water, sewer, and garbage costs; and
  3. Allow landlords with written gas and/or electric pass through contracts in place prior to January 1, 2018 to petition for a one-time increase if a landlord’s units are not separately metered for gas and electricity and the landlord has complied with the requirements of Civil Code Section 1940.9. The increase shall be the lesser of:
      1. The average monthly charges passed through to the tenant over the 2017 calendar year; or
      2. An amount equal to the sum of the 2018 Santa Clara County Housing Authority Utility Allowance rates for multifamily gas and electric costs.

These recommendations are violations of YOUR property rights and those of your clients. They interfere in the contractual relationships between property owners and their tenants, and inhibit the ability for property owners to turn a profit. This will only encourage these units to be pulled from the market whereby decreasing the supply of valuable affordable housing.

What SCCAOR is proposing instead:

1) Keep RUBS as is until a technological alternative is developed that is cost effective to implement.
Right now, it would cost up to $15,000 per unit to install sub-meters. This is simply not a reasonable cost to incur without the ability to recoup the cost. With the 5% rent increase cap, it is impossible to factor costs of this scale into the allowable rent increase.

2) Develop a strategy and a reasonable timeline to retire RUBS only after the cost-effective alternative to sub-metering has been developed.

RUBS is a system utilized by mom and pop housing providers that allows for tenants in master-metered units to pay their fair share of utility costs that THEY incur. Without RUBS, what incentive will tenants have to act responsibly when it comes to utility usage? What about water conservation? Energy efficiency? Without skin in the game, there is no incentive.

The one-time pass-through which the Housing Department is proposing is not a solution. It is a band aid that will only kick the can down the road or force housing providers to incur and absorb unreasonable costs associated with switching to sub-meters.

We need to ensure that the San Jose City Council doesn’t fall for this trick. Let’s remind San Jose City Council that property rights matter and that the REALTO voice is strong.

The second matter of concern coming before City Council on April 24th is an amendment to the Ellis Act (the provision that guides and regulates removal of ARO units from the market) which changes amends the re-control provisions. Re-control is the part of the Ellis Act which dictates how many units MUST come back to the market as affordable units.

The Housing Department is proposing the following Ellis Act amendments:

  1. Modify the re-control provisions to subject the greater of either the number of apartments removed from the market, or 50% of new apartments built to the Apartment Rent Ordinance (ARO).
  2. Modify the re-control provisions to subject all new units (not just the affordable units) to the current annual general increase of 5%.
  3. Allow an exemption from the re-control provisions if at least twenty (20) newly constructed rental units are being created. The re-control requirement under this Section will be waived if the property owner:
    1. Develops fifteen percent (15%) of the newly constructed units as on-site affordable rental units consistent with the affordability restriction requirements in the Inclusionary Housing Ordinance; and
    2. Develops an additional five percent (5%) of the newly constructed units as on-site affordable rental units restricted at 100% of area median income.
  4. Include apartments buildings with three units under the Ellis Act.
  5. Allow non-ARO apartments with three units or more built after 1979 to provide 120-day notification to their tenants and the City and to provide relocation consultant services to impacted tenants.

What SCCAOR is proposing instead:

  1. Reject staff recommendation #1 and replace with: Subjecting new units to re-control at the greater of a 1:1 replacement ratio of the previously existing number of units; OR, 20% of the total project units.
  2. Support staff recommendation #3: allow an exemption from the re-control provisions if at least twenty (20) newly constructed rental units are being created. The re-control requirement under this Section will be waived if the property owner:
    1. Develops fifteen percent (15%) of the newly constructed units as on-site affordable rental units consistent with the affordability restriction requirements in the Inclusionary Housing Ordinance; and
    2. Develops an additional five percent (5%) of the newly constructed units as on-site affordable rental units restricted at 100% of area median income.
  3. Reject staff recommendations #2, #4, and #5

The reasoning is that by limiting the required number of units subject to re-control to 20%, it aligns with existing requirements in the Inclusionary Housing Ordinance. Also, maintaining an option for developers an option for exemption from the re-control provision is a step in the right direction.

The remainder of the Housing Department’s recommendations however, are just attempts to start pushing rent control on market rate units. This is an unacceptable assault on private property rights.

Join SCCAOR on Tuesday, April 24th to protect private property rights and mom and pop businesses from predatory regulations.

Your Role: you will have 2 minutes to advocate for the REALTOR® position on the proposed violations to your property rights.

 

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Christina Garavaglia-Branche Joins SCCAOR as Government Affairs Director

Christina Garavaglia-Branche

The Santa Clara County Association of REALTORS® (SCCAOR) has announced the hiring of Christina Garavaglia-Branche as their Government Affairs Director. Christina will manage SCCAOR’s legislative and political affairs program in developing local, regional, state and federal public policy governing private property ownership and other related issues.

“I am excited to join SCCAOR and work on behalf of its members to meet their political needs as real estate professionals,” said Garavaglia-Branche. “I look forward to using my experience in politics and housing policy to facilitate lasting relationships and strengthen SCCAOR’s voice and influence in the community.”

Garavaglia-Branche’s local political experience will be a huge benefit for SCCAOR’s goal of promoting and protecting private property rights. Christina was Dev Davis’ Campaign Manager during her successful run for the District 6 City Council in 2016. Christina then worked as a Policy Liaison for Councilmember Davis. Prior experience includes working as legislative staff at the California State Assembly where Christina focused on statewide Housing and Economic Development Policy.

SCCAOR CEO Neil Collins is also pleased with the Association’s newest addition. He said of Garavaglia-Branche’s hiring, “She brings a wealth of political knowledge to the table. There is no bigger issue than the lack of housing in Santa Clara County so I knew we needed to hire a professional with real housing policy experience. It’s great to have someone like Christina fighting for the REALTOR® Party.”

One of her first tasks as Government Affairs Director will be to lead a group of SCCAOR Members to Sacramento for California Association of REALTORS® Legislative Day. Over 2,000 California REALTORS® will come together for the opportunity to meet and discuss real estate issues directly with their state legislators and staff.

 

George and Grace

A graduate of San Jose State University (Go Spartans!), Christina enjoys calligraphy, horseback riding, and photography. She lives with her husband Matt and their two dogs, George and Grace in South San Jose.

 

For more information about SCCAOR Government Affairs, visit our website.

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REALTORS® Gathering Signatures for Property Tax Fairness Initiative (Portability)

The Santa Clara County Association of REALTORS® (SCCAOR) and the California Association of REALTORS® (C.A.R.) are embarking on a historic effort to support seniors, the disabled and victims of natural disasters, while at the same time unlocking homeownership opportunities across the state. C.A.R. is going to qualify an initiative for the November 6, 2018 General Election ballot which will allow senior homeowners (55+) to keep all or most of their Proposition 13 property tax savings when they move. Every REALTOR®, Affiliate, their clients, and families are urged to sign the petition.


Why does this matter?

Proposition 13 protects homeowners from rapidly increasing property taxes. However, seniors worry that they cannot afford a big property tax increase if they sell to downsize or move closer to their families. As a result of this “moving penalty,” nearly three-quarters of homeowners 55 and older haven’t moved since 2000. The same is true for the severely disabled and those whose homes are destroyed by natural disasters. The current property tax system is arbitrary, unfair and needs to be fixed.


What will the Property Tax Fairness Initiative do?

The measure, when approved by voters, will eliminate the “moving penalty” and fix property tax laws to allow seniors aged 55 and over, the disabled and victims of natural disasters to sell their homes, maintain their property tax protections and continue to pay their fair share in taxes. According to the California Legislative Analyst’s Office, tens of thousands additional homeownership opportunities will occur annually.


Doesn’t
current law protect homeowners?

The amount any homeowner pays in property taxes is based on the assessed value of their home at the time of purchase. Generally, Proposition 13 limits property taxes to 1 percent of the assessed value at the time of purchase even if the value of the property subsequently increases.

Unfortunately, homeowners lose their Proposition 13 property tax savings when they move to another home. Under another law, Proposition 60, senior homeowners – defined as 55 years of age or older – are allowed to transfer their property tax base to another home in the same county so long as the purchase price of the replacement home is equal to, or less than, the sale price of the original residence.

Existing laws related to this issue are arbitrary and geographically restrictive:

Under Proposition 60, a senior homeowner is limited to making only one such transfer over the course of his or her lifetime. And, if the spouse of a senior homeowner has already transferred a property tax base, that senior homeowner is disqualified from making another transfer of the tax base.

Proposition 90 is an extension of the original Proposition 60 program. Proposition 90 allows senior homeowners to transfer their property tax base to a home in a different county so long as that county accepts such transfers. (At last count, only 11 counties are accepting transfers from other counties.)

C.A.R.’s Property Tax Fairness Initiative eliminates the geographic restrictions and single-use provision to allow seniors, the disabled and victims of natural disasters to keep their property tax protections. They can move, while still paying their fair share in property taxes. Eliminating the “moving penalty” will unlock tens of thousands of homes for new homebuyers, helping to address California’s historic housing supply crisis.

Passing the Property Tax Fairness Initiative is a win-win for California.


How can I help?

Every California REALTOR® has been mailed a copy of the petition. The best way to help promote the initiative right now is to sign it, collect 4 additional signatures from other REALTORS® who are registered voters, and return the petition to the Santa Clara County Association of REALTORS®. More petitions are available at the SCCAOR office and REALTORS® are encouraged to gather signatures from their clients and while walking their farms.

 

You can learn more on C.A.R.’s website

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San Jose Business License Tax Changes

Important changes have been made to the San José business tax , which was approved by San José voters on November 8, 2016 (Measure G). The approved changes took effect on July 1, 2017 and impact REALTORS, brokers, and rental property owners of single family homes and duplexes.

The City’s business tax was first adopted in 1963, and the methodology for calculating the current business tax was first adopted in 1984. The current rates had not been increased since 1986. Last year, more than 65% of San José voters approved the business tax increase, Measure G and new rates at the November 2016 election.

The adjustments to the business tax that took effect on July 1, 2017, include:

  • Increasing the base tax from $150 to $195.
  • Increasing the incremental tax and making it more progressive
  • Increasing the cap (the maximum amount of the tax affecting large businesses)
  • Updating the application of the tax to more classes of businesses
  • Adding inflation-based adjustments for future tax rates

ONLINE REGISTRATION AND PAYMENT

Businesses are able to register and pay their business tax online. More information can be found on the “Make a Payment” website.

VOTER APPROVED CHANGES TO THE BUSINESS TAX

  • The charts on the Business Tax Rates page represent the structure of the current and voter-approved business tax rates effective July 1, 2017.
  • Addition of a Financial Hardship Exemption for Small Business Owners with Limited Household Income
  • San José currently allows for several exemptions for the payment of the current business tax based on the poverty level guidelines established by the U.S. Department of Health and Human Services. The HHS poverty level is currently set at $12,060. Since the cost of living in the Bay Area is greater than the national average, the City Council approved an income threshold at two times (2X) the annual level established by the HHS which is $24,120. This hardship exemption is applied based on business income regardless of total household income.
  • As part of the modernization, San José voters approved adding an additional exemption category for small business owners with limited household incomes. A small business can be exempt where the adjusted gross income of the small business owner does not exceed four times (4X) the annual poverty level established by the HHS. This threshold would be based on a household income of $48,240.

 

Extended Deadline to Register a New Residential Landlord Business — Now December 15, 2017

New residential landlords of one or two rental units will now pay the San José business tax for the first time as of July 1, 2017. The City Council established a grace period until December 15, 2017, so that these residential landlords can apply for and secure a valid business tax certificate from the City and pay the business tax without incurring penalties and interest. If the payment of the business tax is made after December 15, 2017, then interest and penalties will accrue retroactively to July 1, 2017.

 

Frequently Asked Questions:

How do I register my Business in San Jose?
Register your business online by clicking here.

How do I access paper forms?

For pdf forms, including Residential Rental Property Registration and Broker Declaration of Employed Sales Agents Please click here.

Do I qualify for a hardship exemption from the Business Tax?

You may also declare a hardship exemption by using the forms here. Businesses Exempt from the tax are sole proprietorships and small businesses with no employees with gross receipts less than $24,120 or household income below $48,240.

Who does the business tax apply to?

Rental Property Owners of all types, including room rentals, short term rentals, single family rentals and duplex rentals. Brokers, and their Agents are also responsible for the tax along with other small businesses.

What about Room Rentals?

If you rent a room in your home for long term rentals you will have to register as 1 unit. If it is a short term rental like Airbnb you will also have to register.

What are the costs?

$195 base cost. $30 per employee or agent under a broker beginning at the 3rd employee. No charge for the first two employees or agents. The rates for rental units are similar with the first two rental units having no additional costs with an added $10 per unit cost for owners of 3 – 35 rental units. Learn more about the business tax rates here.

What are the fines?

Each annual business tax payment is due and payable on the 15th day of the calendar month in which the business began.Should the tax remain unpaid by the due date, a penalty of 25% is assessed. Should the tax remain unpaid for a period exceeding one calendar month beyond the due date, an additional 25% penalty is assessed. The interest rate of 1.5% a month will also be assessed on unpaid tax and penalties.

How far back can they go back and fine you for past years?

If you are a business owner that owes a business tax before the implementation of Measure G, the city of San Jose will require retroactive payments and fines for unpaid taxes going back to January 2014.

If you are a business newly impacted by the business tax ordinance under Measure G, you have until December 15, 2017, to register your business with no fine or late fees.

Is the city is not notifying rental property owners and businesses of their new obligations under measure G?

The City of San Jose has not undergone proactive measures other than their usual communications channels.

For further questions and more information go to  www.sanjoseca.gov/businesstax or call the San Jose Department of Finance at (408) 535-7055.

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Property Tax Portability Helps Seniors and First Time Homebuyers

The California Association of REALTORS® (C.A.R.) is embarking on a historic effort to increase homeownership opportunities, one that we know REALTORS® can feel good about supporting. C.A.R. is going to qualify an initiative for the November 2018 ballot which will allow senior homeowners (55 years of age and older) to keep all or most of their Proposition 13 property tax savings when they move.

This is important because seniors, who are often on a fixed income, fear they will not be able to afford a big property tax increase if they sell their existing home and buy another one, discouraging them from ever moving. As a result of this “moving penalty”, almost three-quarters of homeowners 55 and older haven’t moved since 2000. C.A.R.’s portability initiative would allow senior homeowners to transfer their property tax base from their current residence to a replacement residence located anywhere in California.

The measure, if approved by voters, will let thousands of seniors, currently “locked into” their homes by low property tax rates purchase a home that will better suit their needs while expanding the housing inventory for young families seeking to buy a home.  According to the California Legislative Analyst’s Office, tens of thousands additional homeownership opportunities will occur annually.

This initiative will need to qualify for the November 2018 ballot. To support this effort and for other advocacy and education efforts, C.A.R.’s Board of Directors approved a $100 increase to the Issues Fund Assessment for 2018. All REALTORS® will be required to pay this assessment. Members who have already paid their 2017-2018 REALTOR® dues bill in full will receive a revised dues bill with the new amount, and will have to pay the assessment. Members on installment plans will also receive revised dues bills with an updated payment schedule.

There are opportunities for REALTORS® to be involved as well. We are asking you to help gather signatures on petitions. This will be a great chance for you to show your clients all you are doing to promote homeownership opportunities and create tax savings for seniors. REALTORS® will also be asked to help educate their clients and the public about the benefits of the initiative, and, of course, next November we will need to get voters to the polls to win on election day.

 

We know you will have many questions.   Please see the links to resources below.  If after reviewing the resources below you have additional questions, please feel to contact C.A.R. via email at portability@car.org or by phone at (916) 492-5200.

 

Sign up here to receive paperwork to gather signatures.

Tax Portability Talking Points (via C.A.R.)

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Contact Your Elected Officials