Study Issue FIN 21-01 -
Explore a 2022 General
Election Ballot Measure to
Modify the Real Property
Transfer Tax
Tim Kirby, Director of Finance
Dennis Jaw, Assistant Director of Finance
DRAFT PRESENTATION
2City of Sunnyvale – Real Property Transfer Tax - April 2022 Agenda
Background of
Study Issue
FIN 21-01
Overview of
Real Property
Transfer Tax
(RPTT)
Review of
Possible Tax
Structure
Scenarios and
Effects
Receive
Feedback
from Council
DRAFT PRESENTATION
3City of Sunnyvale – Real Property Transfer Tax - April 2022 Background of Study Issue FIN 21-01
• Proposed by former Councilmember Fong in February 2021 • Co-Sponsored by Mayor Klein and Councilmembers Larsson, Din, Cisneros and Melton
• Intended to increase revenue as a response to increasing c
osts to deliver City programs and projects.
• Councilmembers expressed desire to not increase tax for s
ales under $3.0 M
• Requires voter approval – s imple majority if “General Tax” (i.e., imposed for general governmental purposes, not
committed to specific City programs or projects)
DRAFT PRESENTATION
4City of Sunnyvale – Real Property Transfer Tax - April 2022 Real Property Transfer Tax (RPTT)
• Tax paid when property is sold
• Generally paid 50/50 by Seller/Buyer, but can be
negotiated.
• Currently $1.10/$1,000 of Sale Price levied by Santa
C
lara County.
• The County distributes half ($0.55/$1,000) to the City • As a charter city, Sunnyvale can pass a tax measure to l
evy a Real Property Transfer Tax (RPTT); however
County will continue to levy (and retain) the entire
$1.10/$1,000.
DRAFT PRESENTATION
5City of Sunnyvale – Real Property Transfer Tax - April 2022 1,225
1,344
976 949
1,583
$2,413,563
$0-
500K
$1.0 M
$1.5 M
$2.0 M
$2.5 M
$3.0 M
0 200
400
600
800
1,000
1,200
1,400
1,600
1,800
2017 2018 2019 2020 2021
# of Sales Tax Received
Source: HdL Coren & Cone
Property Sales and Transfer Tax Received (All property types) Historical Data
DRAFT PRESENTATION
6City of Sunnyvale – Real Property Transfer Tax - April 2022 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020 2021
<$3M $3M-$5M $5M-$10M $10M+
Source: HdL Coren & Cone
Breakdown of Sales by Sales Price Category
DRAFT PRESENTATION
7City of Sunnyvale – Real Property Transfer Tax - April 2022 Study Process
Researched other jurisdictions within California,
particularly neighboring Cities
Discussed with Property Tax Consultant and
selected potential structure options
Engaged with consultant to gather City-specific
data and generate models
DRAFT PRESENTATION
8City of Sunnyvale – Real Property Transfer Tax - April 2022 Review of Scenarios
DRAFT PRESENTATION
9City of Sunnyvale – Real Property Transfer Tax - April 2022 Scenarios
Modeled
Scenario 1: Mountain
View/Palo Alto Tax Level
Scenario 2: Scenario 1 with
$3M Sales Price Floor
Scenario 3: San Jose Multi-
Tiered System
Scenario 4: San Leandro
level with Price Floor
DRAFT PRESENTATION
10City of Sunnyvale – Real Property Transfer Tax - April 2022 • Current Mountain View (1973) and Palo Alto (1992)
tr
ansfer tax levels
• San Jose also charged this rate until July 1, 2020.
• This is in addition to DTT levied by County (for a total tax paid of $4.40/$1,000).
$3.30/$1,000 of Sale Price
Scenario 1: Flat Increase – Neighbor Levels
DRAFT PRESENTATION
11City of Sunnyvale – Real Property Transfer Tax - April 2022 $2,413,563
$14,481,378
$0-
$2.0 M
$4.0 M
$6.0 M
$8.0 M
$10.0 M
$12.0 M
$14.0 M
$16.0 M
2017 2018 2019 2020 2021
Current Scenario 1
Source: HdL Coren & Cone
Total difference over 5 years: $43.2 M
Flat Increase (Mtn. View/Palo Alto) vs. Current
Tax Revenue Received by City
DRAFT PRESENTATION
12City of Sunnyvale – Real Property Transfer Tax - April 2022 • Same as Scenario 1, but not charged to properties
s
old for less than $3M
• County will still charge the $1.10/$1,000 to a ll
properties (and retain the entire amount).
$3.30/$1,000 of Sale Price for Properties above $3M
Scenario 2: Flat Increase With $3M Minimum
Price
DRAFT PRESENTATION
13City of Sunnyvale – Real Property Transfer Tax - April 2022 $2,413,563
$6,454,665
$0-
$2.0 M
$4.0 M
$6.0 M
$8.0 M
$10.0 M
$12.0 M
$14.0 M
$16.0 M
2017 2018 2019 2020 2021
Current Scenario 2
Source: HdL Coren & Cone
Total difference over 5 years: $13.7 M
Flat Increase (MV/PA) w/ $3M Floor vs. Current
Tax Revenue Received by City
DRAFT PRESENTATION
14City of Sunnyvale – Real Property Transfer Tax - April 2022 • Passed as Measure E in the City of San Jose on March
3 , 2020, effective July 1, 2020
• Difference: San Jose exempts under $2M. In this
sc
enario, under $3M is exempt.
• County will still charge the $1.10/$1,000 to all
p
roperties (and will retain entire amount)
Source: County of Santa Clara Office of the County Clerk - Recorder Scenario 3: Multi-Tiered Rates
Property Sales Price Rate
$3,000,000 - $4,999,999 $7.50/$1,000
$5,000,000 - $9,999,999 $10.00/$1,000
$10,000,000+ $15.00/$1,000
DRAFT PRESENTATION
15City of Sunnyvale – Real Property Transfer Tax - April 2022 $2,413,563
$26,911,664
$0-
$5.0 M
$10.0 M
$15.0 M
$20.0 M
$25.0 M
$30.0 M
$35.0 M
$40.0 M
2017 2018 2019 2020 2021
Current Scenario 3
Source: HdL Coren & Cone
Total difference over 5 years: $87.6 M
San Jose Multi-Tier Structure vs. Current Tax
Revenue Received by City
DRAFT PRESENTATION
16City of Sunnyvale – Real Property Transfer Tax - April 2022 • Same as Scenario 2, but amount modeled to Measure
V
V passed in San Leandro in November 2020.
• County will still charge the $1.10/$1,000 to a ll
properties (and retain the entire amount).
$11/$1,000 of Sale Price for Properties above $3M
Scenario 4: Higher Flat Increase With $3M
Minimum Price
DRAFT PRESENTATION
17City of Sunnyvale – Real Property Transfer Tax - April 2022 $2,413,563
$21,515,549
$0-
$5.0 M
$10.0 M
$15.0 M
$20.0 M
$25.0 M
$30.0 M
2017 2018 2019 2020 2021
Current Scenario 4
Source: HdL Coren & Cone
Total difference over 5 years: $65.9 M
San Leandro w/ $3M Floor vs. Current Tax
Revenue Received by City
DRAFT PRESENTATION
18City of Sunnyvale – Real Property Transfer Tax - April 2022 $0-
$10.0 M
$20.0 M
$30.0 M
$40.0 M
2017 2018 2019 2020 2021
Current Mtn View/Palo Alto
MV/PA >$3M San Jose >$3M
San Leandro >$3M
Comparison of All Scenarios
DRAFT PRESENTATION
19City of Sunnyvale – Real Property Transfer Tax - April 2022 November 2020 Elections
Source: CaliforniaCityFinance.com
City County Prior Rate Rate Valuation Yes% P/F
Santa Monica Los Angeles
$3/$1,000 $3/$1,000 < $5M
73.1% Pass
$3/$1,000 $6/$1,000 $5M+
San Francisco San Francisco
From
$5/$1,000 to
$30/$1,000
From
$5/$1,000 to
$60/1,000
6 Tiers,
$7.50/$1,000
for $1-$5M
58.0% Pass
Albany Alameda $11.5/$1,000 $15/$1,000 All 57.9% Pass
San Leandro Alameda $6/$1,000 $11/$1,000 All 54.2% Pass Culver City Los Angeles $4.50/$1,000
$15/$1,000 $1.5M-$3M
53.3% Pass$30/$1,000 $3M-$10M
$40/$1,000 $10M+
Piedmont Alameda $13/$1,000 $17.50/$1,000 All 47.8% Fail
DRAFT PRESENTATION
20City of Sunnyvale – Real Property Transfer Tax - April 2022 • City of San Mateo – 0 .5% ($5/$1,000) of total sales
price.
• City of Berkeley – 1 .5% ($15/$1,000) for properties up to $1.5M, 2.5% ($25/$1,000) for properties over
$1.5M
• Cities of Oakland, Richmond, San Francisco – m ultiple tier systems similar to San Jose
Source: www.CaliforniaCityFinance.com
Taxes Levied by Other Notable California Cities
DRAFT PRESENTATION
21City of Sunnyvale – Real Property Transfer Tax - April 2022 Potential Timeline
Jun July Aug Sep Oct Nov
Deadline for
Ballot -
August 12
Council
Receives
Polling
Results
Public Education
Election –
November 8
Polling
Potential
Election Call
Ballots
Mailed to
Voters
DRAFT PRESENTATION
22City of Sunnyvale – Real Property Transfer Tax - April 2022 Councilmember
Feedback
Options:
• Provide feedback on desired tax
structure(s) and move forward with
public polling
• Request that staff to return on a
later date with additional
information/modeling
• Defer tax measure until 2024
• Discontinue consideration of tax
measure
DRAFT PRESENTATION
23City of Sunnyvale – Real Property Transfer Tax - April 2022 Questions/Feedback
DRAFT PRESENTATION