____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: _______________________
Disposition: ___________________________
Agenda Item No: 2.c
Meeting Date: October 5, 2026
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: City Manager’s Office
Prepared by: Paul Navazio,
City Manager
City Manager Approval: ______________
TOPIC: REAL PROPERTY TRANSFER TAX BUDGET PLANNING
SUBJECT: RESOLUTION ESTABLISHING BUDGET PLANNING GUIDELINES FOR POTENTIAL
REAL ESTATE PROPERTY TAX REVENUES
RECOMMENDATION:
Staff recommends that the City Council adopt a Resolution establishing budget planning guidelines for potential property transfer tax revenues, consistent with prior staff recommendation and City Council direction.
BACKGROUND:
Staff has expended considerable effort over the past year to develop strategies to ensure fiscal stability for the City, consistent with the Council’s Strategic Plan and annual workplans. These included development of a Fiscal Sustainability Framework, updating of five-year budget forecasts, presentation of a balanced budget (including significant cost-savings measures), planning for the extension/replacement of expiring voter-approved tax measures, and exploring options to provide increased revenues to address a growing list of unfunded needs.
A component of this work effort has focused on potential new revenue measures. Following preliminary discussions at both the Finance Subcommittee and the City Council (Jan-Mar), and subsequent analysis and feedback (April-June), at their meeting of July 20, 2026, the City Council took action to place a measure to increase the City’s existing Real Estate Property Transfer Tax before the voters at the November 2026 general election.
This agenda item has been prepared to seek formal City Council action establishing guidelines for the allocation of any increased tax revenues, consistent with the priority needs identified in the months-long process of developing the proposed revenue measure:
• Finance Subcommittee (see meetings of: January 20th, May 12th, and June 9th), and • City Council (see meetings of: February 2
nd, May 18th
, June 1
st
, June 15th, and July 20th).
The City Council has provided similar guidance in the past related to prioritizing General Fund tax revenues; specifically, actions taken to allocate 1/3 of the Measure E 0.75% Transaction and Use Tax revenues for Essential Facility capital improvements.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS:
If approved by the voters at the November 2026 election, the City’s revenues collected through the Real Estate Transfer Tax are estimated to increase by roughly $6.0 million per year. Further, as a general purpose tax, the revenues collected represent discretionary General Fund revenues, subject to appropriation by the City Council through the annual budget process.
However, it should also be noted that should the voters approve the revenue enhancement measure at the November election, partial-year funding would become available in the current fiscal year. If this occurs, the City Council action related to the recommendations included in this staff report would provide the basis for future budget amendments to be presented for City Council consideration following the election. Any related budget amendments would be presented to the City Council at the first meeting in conjunction with the FY2026-27 First Quarter Budget Update, scheduled for November 16th (or December 7 th, depending on the timeframe for certification of election results.
As previously discussed, the priority needs that have consistently formed the basis for the City’s exploration of a potential revenue enhancement measure include infrastructure and public safety. The following funding allocations were presented to both the Finance Subcommittee and City Council in the course of finalizing the revenue measure recommendations.
Specifically, consistent with the allocations presented above, it is recommended that the City Council authorize, subject to approval by the voters, that revenues collected from any increase in the Real Estate Property Transfer Tax be allocated as follows:
Category / Priority
Share of Incremental Tax
Est./Yr. ($) % Split
Tax Rate
Factor
Capital Infrastructure & Deferred Maintenance Projects $4,000,000 2/3rd = 67% 0.53% Funding Need/Priority
Infrastructure $ 4,000,000
Streets/Roads - Pavement Maintenance 2,000,000
Sidewalks
Bike/Ped Safety Improvements
Parks - Deferred Mainetnance/Replacement 1,000,000
Building/Facilities - Deferred Maintenance 1,000,000
Public Safety $ 2,000,000
SRPD Permanent Funding for SAFE Team / Expanded Hours 800,000 Alternative Response to Calls For Service
Community Service Officers 500,000
Relief to sworn police officers / response
Downtown and low-level service response
SRFD
Additional Ambulance (Paramedic) Unit (1 of 2 needed) 700,000 Address cross-staffing at two stations
Improved Response times for Fire/EMS calls
$ 6,000,000
Property Transfer Tax (Increase)
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Streets/Roads $2,000,000
Park Improvements $1,000,000
Building / Facilities $1,000,000
Public Safety $2,000,000 1/3rd = 33% 0.27%
SAFE Team (recurring funding) $800,000
Community Services Officers (new) $500,000
Ambulance Unit (new) $700,000
Totals ($ est.) $6,000,000 100% 0.80%
In addition to the recommendations related to primary funding allocations, it is also recommended that staff be directed to work with the Voter-Approved Tax Oversight Committee to consider how best to track incremental revenues and expenditures related to the proposed revenue measure to facilitate and promote transparency and accountability.
FISCAL IMPACT:
There is no direct fiscal impact associated with this report. However, the recommendations contained in this report would impact future budget allocations for incremental general purpose tax revenues, subject to approval by the voters at the November 2026 election.
OPTIONS:
The City Council has the following options to consider on this matter:
1. Adopt resolution, as presented
2. Adopt resolution with modifications.
3. Direct staff to return with more information.
4. Take no action.
RECOMMENDED ACTION:
Staff recommends that the City Council adopt a Resolution establishing budget planning guidelines for potential property transfer tax revenues, consistent with prior staff recommendation and City Council direction.
ATTACHMENTS:
1. Resolution
RESOLUTION NO.
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL ESTABLISHING BUDGET PLANNING
GUIDELINES FOR POTENTIAL REAL ESTATE PROPERTY TAX REVENUES WHEREAS, the City Council of the City of San Rafael ("City Council") has directed staff to develop strategies to ensure the long-term fiscal stability of the City, consistent with the City Council's Strategic Plan and annual workplans; and
WHEREAS, in furtherance of this direction, staff has undertaken a comprehensive fiscal stability effort over the past year, including development of a Fiscal Sustainability Framework, updates to the City's five-year budget forecasts, adoption of a balanced budget incorporating significant cost-savings measures, planning for the extension or replacement of expiring voterapproved tax measures, and exploration of options to address a growing list of unfunded needs; and
WHEREAS, as a component of this effort, the City Council and its Finance Subcommittee engaged in a months-long process to evaluate potential new revenue measures, including discussions at Finance Subcommittee meetings held on January 20th, May 12th, and June 9th, 2026, and at City Council meetings held on February 2nd, May 18th, June 1st, June 15th, 2026, and July 20th; and
WHEREAS, at its meeting of July 20, 2026, the City Council took action to place a measure before the voters at the November 2026 general election to increase the City's existing Real Property Transfer Tax (the "Measure"); and
WHEREAS, throughout the process of developing the Measure, the priority needs identified by the Finance Subcommittee and the City Council have consistently centered on infrastructure and public safety; and
WHEREAS, if approved by the voters, revenues generated by the Measure are estimated to increase City revenues by approximately $6.0 million per year, and, as a general purpose tax, such revenues would constitute discretionary General Fund revenues subject to annual appropriation by the City Council; and
WHEREAS, should the voters approve the Measure at the November 2026 election, partial-year funding may become available in the current fiscal year, in which case this Resolution shall provide the basis for future budget amendments to be presented for City Council consideration in conjunction with the FY2026-27 First Quarter Budget Update, scheduled for November 16th, or at the meeting of December 7th, contingent on the timing for certification of election results; and
WHEREAS, under Vargas v City of Salinas (2009) 46 Cal.4th 1, the City Council may provide guidance to staff on how to implement a proposed measure if passed by the voters for planning purposes, and the City Council has previously provided similar guidance regarding the prioritization of General Fund tax revenues, including its action to allocate one-third of Measure E 0.75% Transaction and Use Tax revenues to Essential Facility capital improvements; and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Rafael that the foregoing recitals are true and correct and are incorporated herein by this reference; and BE IT FURTHER RESOLVED, that, subject to and contingent upon approval by the voters of the Measure at the November 2026 general election, the City Council hereby establishes the following budget planning guidelines for the allocation of incremental revenues collected from the increase in the Real Property Transfer Tax:
Category / Priority
Share of Incremental Tax
Est./Yr. ($) % Split
Tax Rate
Factor
Capital Infrastructure & Deferred Maintenance Projects $4,000,000 2/3rd = 67% 0.53% Streets/Roads $2,000,000
Park Improvements $1,000,000
Building / Facilities $1,000,000
Public Safety $2,000,000 1/3rd = 33% 0.27%
SAFE Team (recurring funding) $800,000
Community Services Officers (new) $500,000
Ambulance Unit (new) $700,000
Totals ($ est.) $6,000,000 100% 0.80%
BE IT FURTHER RESOLVED, that the allocation guidelines set forth above are intended to reflect the City Council's policy priorities and shall inform, but not bind in a manner that eliminates the City Council's discretion over, the annual budget process; the City Council retains full authority and flexibility to appropriate incremental revenues to the highest priority needs within and among the categories identified above through the annual budget adoption and amendment process; and
BE IT FURTHER RESOLVED, that staff is directed to work with the City's Voter-Approved Tax Oversight Committee to develop a methodology for tracking incremental revenues and related expenditures associated with the Measure, in order to promote transparency and accountability to the public; and
BE IT FURTHER RESOLVED, that, in the event the Measure is approved by the voters and partial-year revenues become available during the current fiscal year, this Resolution shall serve as the policy basis for future budget amendments to be presented to the City Council for consideration following certification of the election results; and BE IT FURTHER RESOLVED, that the City Clerk is directed to transmit a copy of this Resolution to the City Manager and Director of Finance for implementation.
I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael, held on Monday, the 5
th day of October 2026, by the following vote, to wit:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
_______________________
Lindsay Lara, City Clerk