Legislators consider raising property transfer tax to create more supportive housing
Nevadans may see a tax on property transfers go up as a way to boost housing options for people with behavioral, mental and physical disabilities, although the proposal faces an uphill climb because it needs bipartisan support in the Legislature.
On Tuesday, legislators discussed SB68, a bill sponsored by the Clark County Regional Behavioral Health Policy Board that would raise real property transfer taxes statewide by 20 cents per $500 of value. The funds would bolster supportive housing — defined as affordable housing that costs no more than one-third of the tenant’s income, with wraparound services included.
Those services could include substance use disorder recovery services, mental health support and flexible employment opportunities. In some instances, supportive housing could act as a step to transition out of homelessness or assist with permanent supportive housing.
According to the Nevada State Apartment Association, rents have risen 15.3 percent in Northern Nevada and 26.2 percent in Southern Nevada since 2020, creating an affordability crunch. Stable housing for those with behavioral, mental and physical disabilities can be even harder to manage if they are not only dealing with high rents, but also difficulties accessing mental health and other services.
Sarah Adler, the lobbyist for the Nevada chapter of the National Alliance on Mental Illness (NAMI), said though supportive housing is usually focused on providing stable housing for the unhoused population, it is also used for people with disabilities who wish to live independently.
"These folks are right now living with, supported by their families. But all of us at my and your parents' age and generation, we're aging, and we know we won't be able to sustain our loved ones forever,” Adler said in an interview before the hearing. “We are seeking permanent supportive housing for our loved ones before we pass away and they become homeless."
Supporters of SB68 — including representatives from regional housing authorities and NAMI — gave more than an hour of testimony before committee chair Sen. Dina Neal (D-North Las Vegas) limited testimony to keep the meeting to a reasonable length.
"This bill has the opportunity to change lives and create supportive services that are currently lacking and nonexistent in the state," said Serena Evans, the policy director for the Nevada Coalition to End Domestic and Sexual Violence, who added that she appreciated that the bill would cover people with PTSD.
SB68 would raise taxes, and thus require a two-thirds supermajority of legislators to pass. The proposed tax increase received pushback from Realtors associations during Tuesday's hearing.
Nevada REALTORS President Tom Blanchard previously said in a press release that the group — which is a major campaign donor to many legislators — is opposed to any increase in the state’s real property transfer tax.
"[The real property tax] is one of the most regressive taxes we have that hits hardest those that we are trying to help," Keith Lynam — chairman of the legislative committee for Nevada REALTORS — said during Tuesday's hearing, referring to the transfer tax putting a strain on people trying to buy their own home. "We feel that we should be sending out a lifeline, not a cinder block. We are at the table working towards affordable housing, and we are ready to help provide real solutions."
The Nevada Association of Counties (NACO) was also in opposition because of concerns over non-elected officials administering the funds.
Following the hearing, Adler clarified during an interview with The Nevada Independent that the regional boards — whose members are appointed — will only decide how much of the new funds should go to supportive services and how much should go to housing stability, but they have no authority over the actual expenditure of the dollars. Funding decisions ultimately come down to the Nevada Housing Division, she said.
Adler also said she was sympathetic toward first-time homebuyers but "this was the best opportunity we could find to aggregate enough money every year to move the ball down the field."
She also argued that the cost of the real property transfer tax would be made back in equity within the first year of homeownership.
"And the other thing is that if we address the plight of the homeless, it will increase property values," Adler said.
The real property transfer tax is set at a statewide base value of $1.95 for each $500 of value on transfer transactions, though some counties have a higher rate. Clark County has the highest transfer tax in the state, at $2.55 per $500 of value on transfer transactions, or about one-half of 1 percent.
However, an investigation from the Las Vegas Review-Journal last year found many of the largest real estate sales involving casinos or other major properties used limited liability companies to skirt paying any transfer taxes through exceptions laid out in state law.
A tax increase would also need support from Republican Gov. Joe Lombardo, who said before taking office that the state’s budget surplus means “there is no need for a tax increase of any sort.”
"Governor Lombardo and Sheriff Lombardo have both said frequently that they know incarceration is not the answer to mental illness and addiction,” Adler said. “I believe that when members of the Legislature and Governor Lombardo have the opportunity to be exposed to SB68, they will understand that, right, incarceration is not the answer, and, in fact, it's a very expensive alternative to supportive housing.”
Lombardo’s office said they “monitor all bills as they work through the legislative process and engage when we feel necessary,” but did not provide further comment on SB68.
According to a fiscal note provided by the Nevada Housing Division, the 20-cent tax increase envisioned by SB68 would result in an estimated $14.3 million in new tax revenue in the 2023-24 fiscal year, and $19.1 million in the next fiscal year.
Adler said that though SB68 would fill in the gaps in revenue for supportive housing, it will be one part of many organizations working together to provide supportive, affordable housing to those who need it.
Adler estimated if SB68 passes, around 1,300 units of supportive housing would be created in Las Vegas, with another 500 located in the rest of the state. She noted that means there could be housing for about 25 percent of the people experiencing homelessness who were counted in a 2022 point-in-time census.
“But we will make a very significant dent in the need,” Adler said. “Every single unit of supportive housing that we can create creates the opportunity for a safe and dignified life for that individual.”
Updated 3/7/2023 at 7:22 p.m. to include details from the hearing. This story was updated at 10:45 a.m. on 3/9/23 to correct attribution of a quote. The speaker was Keith Lynam.