22-0773 – Real Property Transfer Tax
Ballot Measure
July 26, 2022 City Council Meeting
Tim Kirby, Director of Finance
Dennis Jaw, Assistant Director of Finance
2City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting Agenda
Background of
Study Issue
FIN 21-01
Review
Exemption
Threshold
Review Ballot
Question and
changes to
Ordinance
Consider
Ballot
Argument
3City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting • City Council sponsored study issue to explore a 2022 General Election ballot measure to modify the Real Property Transfer Tax (RPTT) (FIN 21-01).
• April Study Session reviewed potential tax structures – Council directed staff to move forward with public polling
• July 12th, Council reviewed polling and directed staff to return with ballot measure language that:
Proceed with a flat tax structure
Set the exemption limit at $4 million
Propose a method to adjust the exemption limit in the future Present a resolution and proposed ballot argument
Background
4City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting • The threshold on a property sale at which point the
tax applies
• Property sales below the threshold are exempt from
the City’s RPTT
Exemption Threshold
Exemption Threshold
Property Sales Price % Of All Exempt Sales
2017-2022
Estimated annual
revenue
$3 million 95% $7.6 million
$4 million 97.5% $6.6 million
5City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting Options for Adjusting the Exemption
Threshold
The S&P/Case-Schiller Index – San Francisco Home
Price Index
The Federal Housing Finance Agency (FHFA) House
Price Index (HPI) - Purchase Only for the San Jose–
Sunnyvale–Santa Clara Area
Average Sales Price for Single Family Detached
Homes for Sunnyvale
6City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting • The State Elections Code requires a ballot measure not exceed 75 words and be presented in the form “Shall the ordinance (stating the nature thereof) be adopted?”
• The proposed ballot question is:
To protect and maintain essential city services, such as police, fire, 911 emergency response; park and fire station maintenance; addressing homelessness; and other services, shall the City of Sunnyvale adopt an ordinance enacting a real property transfer tax only for sales $4,000,000 or greater, (paid by buyers and sellers of property upon sale) adjusted for inflation, at .75% and generating approximately $6,600,000 annually, until ended by voters, requiring audits, with all funds used locally? (73 words)
Ballot Question
7City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting Ordinance Changes – Key Highlights
RPTT at the rate of .75%, only on sales exceeding $3,999,999.99 Adjustment to the $3,999,999.99 exemption threshold
Added exemptions to the tax
Provisions detailing administrative and enforcement authority Provisions allowing the City to enforce unpaid/delinquent RPTT taxes by imposing a lien or special assessment
Administrative updates and clarifications.
8City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting • Elections code allows for a ballot argument to be prepared.
The resolution provides for three options:
Authorize the City Council to submit an argument for or against as a body
Authorize one or more members to submit an argument for or against and file a rebuttal argument, if necessary, on behalf of the Council
Submit no argument
• Arguments are due by August 11, rebuttals by August 22nd.
Ballot Argument
9City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting Public Education
• If Council places the
measure on the ballot,
staff will engage a public
education consultant
• Cost is estimated to be
$60 - $75K
• Education will be primarily
through social media
channels and the City’s
website
10City of Sunnyvale – Real Property Transfer Tax – July 26, 2022 City Council Meeting Alternatives
Recommendation
1. Adopt a resolution calling for a General Municipal Election to be held in the City of Sunnyvale on Tuesday, November 8, 2022, for the purpose of submitting to City voters a measure to enact a Real Property Transfer Tax of .75% on transfers $4,000,000 or greater; requesting consolidation with the Statewide General Election and election services from Santa Clara County; directing the City Attorney to prepare an impartial analysis; and setting priorities for ballot arguments.
2. Do not adopt the resolution placing the Real Property Transfer Tax measure on the ballot and direct staff to not place the measure on the ballot in the November 8, 2022, election.
Staff Recommends Alternative 1