In addition to the Maximum Allowable Rent (MAR) and registration fee, owners may charge tenants a pro rata (proportionate) share of the following items from the property owner's property tax bill:
Together with registration fees, the addition of these surcharges will usually add less than $50 per month to a tenant’s monthly rent, though the amount can be higher for some condominiums.
How does the property owner calculate the total surcharge for each unit?
The surcharges must be divided equally among all the units on a given property, regardless of their size, whether they are occupied, or how much rent is paid for them.
To come up with the monthly amount that may be added to each tenant’s rent, first, divide the amount of any allowed tax item by the total number of units on the property. Then, divide the resulting number by 12.
How does the tenant know that the owner has done the calculation correctly?
In order to pass through any surcharge (except for the School District Special Tax), the owner must attach a copy of the property’s tax bill to the rent increase notice provided to the tenant. The owner may blank out portions of the bill as necessary to protect the owner’s privacy, but the property address, tax amounts, and tax dates must all be visible.
Because the School District Special Tax is a flat $366.45 per property, owners need not provide a copy of their tax bill if this is the only tax that they intend to pass through to the tenant.
What about low-income tenants who can’t afford to pay all of these surcharges?
Low-income tenants may get a waiver from the Clean Beaches and Ocean Parcel Tax. This is the only tax for which there is a waiver based on the tenant’s income. Once a tenant has been granted a waiver, the owner’s tax bill will reflect a reduction of the tax. This reduced amount may only be passed onto the remaining units on a pro rata basis.
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 either of these taxes may not charge tenants for them either.
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.
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.
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.
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.
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 you. The amount is currently $366.45 per year per parcel, although 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.