Search Backing rentHead realTiles-brown
Rent Control Home

 Follow us:

facebook



  • Property-Tax-Related Surcharges

    In some instances, in addition to the MAR and one-half of the Rent Control registration fee, owners may charge tenants a pro rata (proportionate) share of some of the property taxes they pay. The surcharges are limited to five line-items on the owner's property tax bill which result from ballot measures approved by Santa Monica voters in prior elections. Surcharges may be passed-through if all the following are true:
    • The tenancy began before March 1, 2018;
    • The property value was not reassessed on or after March 1, 2018 due to a sale or voluntary improvements, and;
    • The owner properly noticed the tenant which includes providing a copy of the property tax bill to the tenant - unless the only tax being passed through is the School District Parcel Tax (see below).

    IMPORTANT! If the property value is reassessed on or after March 1, 2018 due to a sale or voluntary improvements, the owner may no longer pass through these property-tax-related surcharges to any tenant.

    The five line-items below may be passed through if the conditions above are true.

    How does the property owner calculate the total surcharge for each unit?

    To calculate the monthly amount that may be added to each tenant’s rent, first, divide the amount on the tax bill of each of the five allowed items by the total number of units on the property regardless of their size, whether they are occupied, or how much rent is paid for them. Then, divide the resulting number by 12 months. Finally, apply the limits as indicated below.

    IMPORTANT! There are limits on property-tax-related surcharges. Surcharges are limited to the actual prorated amount using the calculation explained above; 4% of the MAR; or $35 per month - whichever of the three amounts is less.

    Example: 

    The total of the five line-items on the tax bill is $1,856.00. There are four units on the property. Using the formula stated above, the actual prorated amount per unit is $1,856.00 ÷ 4 units ÷ 12 months = $38.67. The allowed surcharge would be $38.67, 4% of each unit's MAR, or $35.00, whichever is less.

    Look at the table below and see how the allowed surcharge differs depending on which limit applies. Remember, surcharges may not be passed through to tenants who started renting on or after March 1, 2018 or if the property is reassessed due to sale or major improvements on or after that date.

    Units Tenancy
    Start Date
    MAR Limit #1
    Actual
    prorated
    amount
    Limit #2
    4% of MAR
    Limit #3
    Maximum
    Allowed
    Surcharge
    Reason
    #A 12/15/2017 $2,600 $38.67 $104.00 $35.00 $35.00 Limit #3 ($35) is the lowest
    #B 4/15/2018 $3,200 $38.67 $128.00 $35.00 $0 No surcharge for tenants
    moving in after 3/1/2018
    #C 6/1/1999 $740 $38.67 $29.60 $35.00 $29.60 Limit #2 (4% of MAR) is the
    lowest
    #D 4/10/2011 $1,960 $38.67 $78.70 $35.00 $35.00 Limit #3 ($35) is the lowest

    How does the tenant know that the owner has done the calculation correctly?

    To pass through surcharges, the owner must attach a copy of the property’s tax bill to the rent increase notice provided to the tenant. Because the School District Special Tax is the same amount for each property, owners need not provide a copy of their tax bill if this is the only tax that they want to pass through. A copy of the tax bill allows the tenant to verify that the amounts being passed through are correct.


    May the owner redact or "black out" portions of the tax bill for privacy?

    Yes. The owner may black out portions of the bill, but the property address, tax amounts and dates must be identifiable.


    Summary of when pass-through of surcharges is allowed:
    Tenancies started on or after March 1, 2018 Not Allowed
    Tenancies on properties reassessed due to a change in ownership on or after March 1, 2018 Not Allowed
    Tenancies on properties reassessed due to significant improvements on or after March 1, 2018 Not Allowed

    Tenancies started before March 1, 2018 where there has been no reassessment due to a property transfer or significant improvements since March 1, 2018

    Allowed but limited
    to actual total prorated
    surcharges, 4% or MAR
    or $35, whichever is less

    What about low-income tenants who can’t afford to pay all of these surcharges?

    Low-income tenants may get an exemption from the Clean Beaches and Ocean Parcel Tax. This is the only tax for which there is an exemption based on the tenant's income. Once a tenant has been granted the exemption, the owner's tax bill will be reduced. This reduced amount may only be passed onto the remaining units on a pro rata basis. In other words, if any unit has been granted an exemption of the Clean Beaches and Ocean Parcel Tax, the amount on the tax bill for that item should be divided only by the number of units without the exemption and passed through to only those units. Exemption applications for tenants are available at the Rent Control office and here.

    Low-income owners are also eligible for a Clean Beaches and Ocean Parcel Tax exemption. Any owner (regardless of income) who is at least 65 years old and occupies his or her property as their primary place of residence is eligible for an exemption from the School District Special Tax. Owners who do not have to pay the Clean Beaches and Ocean Parcel Tax or the School District Parcel Tax may not charge tenants for these items. Clean Beaches Parcel Tax exemption applications for owners are available at the City's Office of Sustainability and the Environment. To apply for an exemption from the School District Parcel Tax, file online here.


    UP Yellow Circle

     

    What are the taxes that may be passed through and what are the related rent control regulations?

    Community College Bond  appears on the tax bill as COMMNTY COLLEGE. The Community College bonds provide funds for the construction and renovation of several buildings at Santa Monica Community College. Amounts vary by property depending on the assessed value and may be adjusted each January.

    Regulation 3105 - Community College District Special Bond

    • Based upon property's assessed value
    • Includes bonds approved by Santa Monica voters: 1992 (Measure T), 2002 (Measure U), 2004 (Measure S), 2008 (Measure AA), 2016 (Measure V) 

    UP Yellow Circle

    Unified Schools Bond appears on the tax bill as UNIFIED SCHOOLS. The Unified Schools bonds provide capital for the renovation of Santa Monica’s public schools. Amounts vary by property depending on the assessed value and may be adjusted each January.

    Regulation 3105 - School District Special Bond Tax

    • Based upon property's assessed value
    • Includes bonds approved by Santa Monica/Malibu voters: 1990 (Measure ES), 1998 (Measure X), 2006 (Measure BB), 2012 (Measure ES)

    UP Yellow Circle

    Stormwater Management User Fee appears on the tax bill as SM STRMH2O FEE. This fee pays for periodic upgrades to the storm drain system; enforcement of local, state and federal storm water regulations; the implementation of the Santa Monica Bay Restoration Plan; and programs such as Best Management Practices, aimed at reducing urban runoff flowing into Santa Monica Bay. As with the bonds listed above, amounts vary by property and may be adjusted each January.

    Regulation 3106 - Stormwater Management User Fee

    • Established by City Ordinance 1811 (CCS), July 25, 1995
    • Shall expire upon repeal or expiration of SM City Ordinance 1811
    • Fee varies depending on type of building, size of parcel and a "run-off" factor

    UP Yellow Circle

    Clean Beaches & Ocean Parcel Tax appears on tax bill as SM CLN BEACH TAX. This fee pays part of the cost of the City’s Watershed Management Plan. The goals of the Plan are to reduce urban runoff pollution; reduce urban flooding; increase water reuse and conservation; increase recreational opportunities and open space; and increase wildlife and marine habitat. Amounts vary by property and may be adjusted each year.

    A waiver of this surcharge is available for low-income tenants. Low-income property owners may apply for an exemption from the entire tax.

    Regulation 3108 - Clean Beaches and Ocean Parcel Tax

    • Measure V approved by voters November 2006
    • Tax Amounts established by City Ordinance 2214 (CCS), July 25, 2006
    • Expires upon repeal or expiration of SM City Ordinance 2214
    • Fee varies depending on type of building, size of parcel and a "run-off" factor
    • Owner and Tenant Exemption:
      • available for low-income residents pursuant to Resolution 10248 (CCS)
      • income eligibility tied to Utility Users Tax exemption (adjusted annually)
      • refunds from the Clean Beaches and Ocean Parcel Tax fund are issued to owners for qualifying tenant's annual portion of tax
      • future tax bills are adjusted to waive income-qualifying tenant's share

    UP Yellow Circle

    School District Parcel Tax appears on tax bill as SMMUSD-MEAS-R. This parcel tax supports smaller class sizes and helps fund art, music, libraries and other programs for Santa Monica's public schools. The amount of this tax is the same for every parcel, and owners are not required to provide a copy of their tax bill to pass this surcharge on to tenants. The law establishing the tax provides for an annual adjustment for inflation.

    Owners who are at least 65 years old by June 30 may request an exemption from the School District each year for the full amount of this tax. If granted, the owner will not be charged this tax, and there will be no pass-through to tenants.

    Regulation 3109 - School District Qualified Special Tax (Measure R)

    • Approved by voters February 5, 2008
    • No expiration date
    • Parcel tax - amount is the same for every parcel regardless of number of units and assessed value
    • Adjusted annually for inflation
    • Owner Exemption (100%): available for senior owner-occupiers on property

    UP Yellow Circle

    May the owner pass through a portion of the rent control registration fee?

    Yes. Provided the owner paid the fees by the due date (August 1 in most years), the owner may pass through a monthly surcharge of one-half of a unit's registration fee to units not qualifying for a fee waiver.

City of Santa Monica © 2018

1685 Main St., Santa Monica, CA 90401 · (310) 458-8411 · TTY (310) 917-6626