Surf City is looking to get residents more involved in real estate transactions, potentially forcing any affordable housing projects to go before a citywide vote before officials could move forward.
It centers on asking voters if the city should give up property tax collection on real estate deals.
“Any foregoing of property tax is essentially an expense or burden to the taxpayers that should not be capriciously done by city councils,” Councilmember Casey McKeon said during Tuesday night’s meeting.
The council approved the proposal with a 4-3 vote, with Councilmembers Dan Kalmick, Natalie Moser and Rhonda Bolton voting against the item.
The dissenting council members voiced concern about how this amendment could limit the city from creating new affordable housing projects in the city.
“Any affordable city housing project would have to go before the voters, which likely creates another barrier to creating affordable housing in the city and gives the state potentially another claim against us,” Kalmick said during the meeting.
City officials are currently embroiled in a fight over affordable housing with Sacramento officials, including Gov. Gavin Newsom.
[Read: California Sues Huntington Beach for Failing to Adopt a Housing Plan]
The proposed charter amendment was brought forward in response to the city’s creation of hundreds of middle-income “workforce” housing units back in 2021.
The city entered into an agreement with the California Municipal Finance Authority, which issued hundreds of millions in bonds for the two apartment buildings that provided middle-of-the-road rent discounts to assist residents who earn salaries around the city’s median income range.
The city’s median household income is roughly $104,000, according to the U.S. Census Bureau.
The project is aimed at encouraging people living in low-income housing to move up into a slightly more expensive place without seeing their monthly rent jump hundreds of dollars at once.
But the city gave up all property taxes on this project when it was approved, effectively losing out on approximately $15 million over a 30-year period, according to the staff report for that project.
Now, the council’s Republican majority wants to prevent similar decisions from happening again.
McKeon, who brought the proposal forward, called the 2021 project a “failure” earlier in the meeting.
State law allows an affordable housing property owner to be exempt from property tax, meaning future affordable housing proposals would mostly likely require a vote from the public if the charter amendment goes through.
Councilmember Gracey Van Der Mark supported the item and said it was brought forward to give residents more say in these kinds of decisions.
“How could just seven council members make these decisions that affect all of us?” Van Der Mark said during the meeting. “It is in the city’s best interest and the taxpayer’s best interest to give them a voice in this.”
Bolton and Moser argued the move will prevent the city from making quick and “nimble” decisions if they need to wait until a citywide vote before moving forward on timely real estate transitions, potentially causing them to miss out on opportunities.
“There are some things that go to the voters and there’s some things that don’t go to the voters because those are situations where the city needs to be able to do deals quickly,” Bolton said.
Some residents support the change in order to prevent “undisclosed housing schemes” that lack public input.
“We are being hammered daily with overblown mandates and schemes for housing beyond what is warranted, needed or within the scope of what this community should be constructing,” HB resident Ann Palmer wrote in a letter to the council.
Since the new city council majority took office, the city’s been in a fight with the state over its housing mandates.
California state leaders sued Surf City earlier this year after the city failed to adopt a new housing plan.
In April, the same Republican council majority voted against a proposed plan and left the city without a formal guide about how they were going to meet state-mandated housing goals to zone over 13,000 new homes by the end of the decade.
After that vote, Gov. Newsom released a statement condemning the city for “continuing to fail its residents.”
[Read: Surf City Cans Housing Plan, Sets Up Another Legal Fight With Sacramento]
This was after the council attempted to ban a state law known as builder’s remedy, which allows the state to approve housing projects shot down by local governments if they don’t have an approved housing plan.
Council members like Kalmick believe the council’s Tuesday move could once again land the city in Sacramento’s crosshairs due to the potential barriers when attempting to create new affordable housing.
City charter amendments require a majority vote from the public before they go into effect.
The Huntington Beach City Council meets next on August 1.
Correction: A previous version of this article stated the city issued the bonds. It was the California Municipal Finance Authority that issued the bonds. We regret the error.
Angelina Hicks is a Voice of OC Reporting Fellow. Contact her at ahicks@voiceofoc.org or on Twitter @angelinahicks13.
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