Huntington Beach will explore having voters decide if property tax exemptions should be given for apartments complexes that would be bought and converted into middle-income housing.
It would require a change to the city’s charter, and a charter review ad hoc committee will determine the details of what the amendment might look like, but Councilmember Casey McKeon argued already two complexes are now off the property tax rolls and “all the residents of Huntington Beach are picking up this tab, and they did not get to vote on it.”
The City Council approved the deals for converting the Elan and Breakwater apartment communities in 2021, but the proposal by McKeon and Councilmember Gracey Van Der Mark, which the City Council approved in a 4-3 vote Tuesday, July 18, would have voters decide if future properties bought with tax-exempt bonds should go through.
The charter amendment could target a novel way that has been used in several California communities for financing middle-income apartments. A joint powers authority, a quasi-public entity, buys existing apartment communities with tax-exempt bonds and rents out units to people earning 80% to 120% of the area median income. It then partners with a private company to manage the complex.
The city agrees to forgo property taxes on the properties to help keep them affordable, but once the bond is paid off the city will own the apartment and can sell it for profit.
Councilmember Rhonda Bolton criticized the proposal for not allowing the city to remain nimble in making deals. She added that the return on investment for the city in such scenarios is high since Huntington Beach should be able to sell the properties for hundreds of millions of dollars while forgoing far less in property taxes.
A staff report from 2021 projected that the city could make $647 million from selling the Elan and Breakwater apartments in about 30 years. The city estimates it is forgoing about $21 million in property taxes until the bonds…
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