Either today or tomorrow, a housing package will go up for a vote in the California State Assembly. The final sticking point seems to be Senate Bill 2 (SB2), which would create a new dedicated funding source for affordable housing and homelessness rapid-rehousing. If it fails, it may scuttle the whole package. It should pass, but even if it doesn’t, it shouldn’t force the governor to veto the whole package.
What does SB2 do?
In brief, SB2 will raise fees on real estate paperwork filings by $75. The one exception is for home buying and selling: if you sell your house to someone who will live in it, then there is no fee increase for either your paperwork or theirs. All other transactions, including refinancing, liens, and commercial transactions, will be subject to the additional fee.
The fees will raise between $200 million and $300 million. 20 percent will be earmarked for state-supported affordable housing construction, and the rest will be earmarked for localities for a grab-bag of housing programs, including rapid-rehousing for the homeless, supporting construction of new homes, and down payment assistance .
Who does it impact?
Real estate owners who are doing more than buying or selling their own home. Investment buyers, developers, commercial owners, and people doing other things with their property are going to see their fees rise.
These are predominantly wealthier people. According to the US Census, the median household income of a homeowner is $91,056, vs. $47,237 for a renter . Though some of that difference might be made up by household size differences, that is unlikely.
The coalition opposed to SB2 published a table of some of the alterations in their opposition letter . Given that many transactions require more than one document, the result is sometimes a significant increase in filing fees. Foreclosure increases from $43 to $268 and construction loans increase from $128 to $353, for instance. Sob-story filings, such as in the death of a spouse, go up from $36 to $261.
It’s still worth it
Fees are not great ways to raise revenue. They ought to be used to cover whatever costs the fee-payer incurs, especially if that cost would otherwise be borne by society at large. They are not well-suited to be general-purpose revenue-generating devices. However, they can be a way around making politically poisonous decisions about what taxes to raise and what programs to streamline. In an optimal world, SB2 would probably raise taxes or find savings elsewhere and not raise filing fees.
Unfortunately, we do not live in an optimal world. We can damn political realities to hell as much as we like, but they will remain political realities nonetheless. So, living in this second-best world, fees can be a way to target a certain set of users for revenue. By raising fees only on real-estate transactions, the target will always only be those who are wealthy enough to buy or own property, even if the homeowner is in more dire straits than normal.
Another way to look at this bill is whether or not a similar bill should be repealed if it were already in place. Would it be fair to lower fees on some real estate transactions to cut off support for affordable housing, homelessness, and down payments? Not really. Those who will be helped by SB2 are likely in more need than those who would be hurt. Further, the argument against raising fees in that letter , that it hurts people who are otherwise in dire straits and results in bad recordkeeping, is an argument against the fees in general.
California is desperately short on housing . $200 million is a drop in the bucket, but it’s $200 million more than California had before. The funding mechanism isn’t great, and it will hurt some that shouldn’t be, but the funding is targeted at the neediest of Californians. SB2 deserves to pass.
 Lisa Engel, “Assembly Floor Analysis: SB 2 (Atkins), As Amended August 29, 2017” (Sacramento, CA: Housing and Community Development, August 29, 2017).
 “Table B25119 Median Household Income the Past 12 Months (In 2016 Inflation-Adjusted Dollars) by Tenure,” 2016 American Community Survey 1-Year Estimates (Washington, DC: US Census Bureau, 2010).
 “SB2 (ATKINS) - OPPOSE (as Amended August 29 2017),” August 29, 2017.
 Adam Nagourney and Conor Dougherty, “The Cost of a Hot Economy in California: A Severe Housing Crisis,” The New York Times, July 17, 2017, sec. U.S.