SAN LEANDRO — Voters will be asked this fall to raise the property transfer tax so the city can pick up an extra $4 million a year to weather a revenue shortfall stemming from the coronavirus pandemic.
The tax, which is levied upon the sale of real property such as a house or apartment building, currently is $6 per $1,000 of the purchasing price in San Leandro. The tax measure that will appear on the Nov. 3 ballot proposes to almost double the amount to $11 per $1,000.
As a result, a house that sells for $700,000 would cost the buyer a transfer tax of $4,200 today but $7,700 if the tax increase is approved by a simple majority of voters.
Deputy City Manager Eric Engelbart said he plans to file the paperwork with the Alameda County Registrar of Voters on Friday, the deadline for getting tax measures on the ballot.
“We are putting our city in a viable position,” Mayor Pauline Russo Cutter said July 20, when the council unanimously decided to ask voters to consider it. “Now that we have COVID-19 it makes it even more crucial like this to rely upon (additional revenue), especially as we start looking at ways to advance our city services for the homeless, for housing, for different operations that we feel help make a just and more equitable community.”
The city says it expects to lose about $9 million in revenue because of a local economy cratered by shelter-in-place orders that have left businesses shuttered for months and workers unemployed or furloughed, Engelbart said.
The city commissioned an outside firm that surveyed 630 residents in late May and early June 2020 to gauge whether there’s enough support for a transfer tax hike. Only 50.1% said they would, an indication that the measure’s chance of passing is tenuous.
The survey also asked residents what specific city programs and services they considered the most important to fund with the tax money. Approximately 2,100 responded and the top priorities that emerged were maintaining rapid 911 response times, programs that reduce crime and prevent youth violence, and fixing potholes and repaving city streets and sidewalks.
“I want to be able to support the tax,” resident Cynthia Chandler told the council. “I want to be able to organize support for the tax. Regrettably, I believe I cannot do so until there is a demonstrated commitment from the city, staff and council to change the historic patterns and not use the revenue to fortify the historically, hyper-inflated, police budget.”
In June, the council pulled $1.7 million from the police department’s $42 million budget, though where that money eventually will be spent still must be determined. The move was in part a response to the national and local debate about how law enforcement interacts with the public and demands to defund police departments.
“I have been getting a lot of opposition (over the possible tax increase) in regards to the police department,” Councilman Victor Aguilar said. “I just want to let the public know that this will be voted on and you have the right to say where this funding can be allocated towards.”
Money from the transfer tax goes into the city’s general fund, which the council can spend on programs and services as it sees fit, regardless of residents’ priorities.
The council has the option to revise the transfer tax ordinance after the election to allow an exemption for first-time home buyers.
The property transfer tax in the city of Alameda is $12 per $1,000 and in Hayward it’s $8.50. In Oakland, the amount is $10 per $1,000 if a property sells for $300,000 or less and $15 if the price exceeds that.