Real Property Transfer Tax
Tim Kirby, Director of Finance
Dennis Jaw, Assistant Director of Finance
2City of Sunnyvale – Real Property Transfer Tax - January 2024 Agenda
Overview of
Real Property
Transfer Tax
(RPTT)
Background Tax Data and
Revenue
Estimates
Council Action
3City of Sunnyvale – Real Property Transfer Tax - January 2024 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
Clara County.
• The County distributes half ($0.55/$1,000) to the
City
4City of Sunnyvale – Real Property Transfer Tax - January 2024 Real Property Transfer Tax (RPTT)
• As a charter city, Sunnyvale can pass a tax measure to levy a Real Property Transfer Tax (RPTT)
• County will continue to levy the entire $1.10/$1,000 and retain the entire portion
• In Santa Clara County, 3 other cities have alternative RPTT
• Mountain View/Palo Alto - $3.30/$1,000
• San Jose – Tiered system from $7.50 to $15/$1000
• Requires voter approval – simple majority if “General Tax” (i.e., imposed for general governmental purposes,
not committed to specific City programs or projects)
5City of Sunnyvale – Real Property Transfer Tax - January 2024 Background
• In February 2021, City Council sponsored study issue to explore a 2022 General Election ballot measure to modify the Real Property Transfer Tax (RPTT) (FIN 21-01). • During April 2022 Study Session, City Council reviewed potential tax structures and directed staff to conduct polling.
• During July 12, 2022 Council Meeting, Council provided direction for tax structure.
• During July 26, 2022 Council Meeting, Council considered but did not pass a motion to move forward with ballot measure.
• During the November 28, 2023 Council Meeting, Council directed staff to present information for consideration to place an RPTT tax measure on the November 2024 ballot
6City of Sunnyvale – Real Property Transfer Tax - January 2024 Prior Polling
(As approved by legal counsel; 50% +1 vote threshold)
(ONE RATE)
To fund essential City of Sunnyvale
services, including police, fire, 911
response, park and street maintenance,
homelessness response, and other
services, shall the City of Sunnyvale
adopt an ordinance enacting a real
property transfer tax (paid by buyers and
sellers upon sale) on sales over
$3,000,000 paid at the rate of .75%,
exempting sales of $3,000,000 or less,
and generating approximately
$7,250,000 annually, until ended by
voters, with required audits and all funds
used locally?
(TIERED RATE)
To fund essential City of Sunnyvale
services, including police, fire, 911
response, park and street maintenance,
homelessness response, and other
services, shall the City of Sunnyvale
adopt an ordinance enacting a real
property transfer tax (paid upon sale)
only for sales over $3,000,000 paid at
these rates: $3,000,000 to $4,999,999at
0.75%, $5,000,000 to $9,999,999 at 1.0%,
and over $10,000,000 at 1.5%, generating
approximately $15,100,000 annually,
until ended by voters, with required
audits and all funds used locally?
7City of Sunnyvale – Real Property Transfer Tax - January 2024 One Rate Polling Results
26%
19%
7%
1%
14%
25%
7%
Total
Yes
52%
Total
No
41%
Initial Vote Vote After
Critical
Vote After
Education
31%
24%
4%
1%
12%
23%
5%
Total
Yes
58%
Total
No
37%
26%
18%
7%
4%
14%
27%
5%
Total
Yes
51%
Total
No
45%
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
8City of Sunnyvale – Real Property Transfer Tax - January 2024 Tiered Rate Polling Results
27%
20%
4%
1%
13%
32%
4%
Total
Yes
50%
Total
No
46%
29%
22%
2%
2%
10%
29%
6%
Total
Yes
53%
Total
No
41%
25%
20%
2%
3%
8%
33%
7%
Total
Yes
48%
Total
No
45%
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Initial Vote Vote After
Critical
Vote After
Education
9City of Sunnyvale – Real Property Transfer Tax - January 2024 2022 Proposed 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.
10City of Sunnyvale – Real Property Transfer Tax - January 2024 1,225
1,344
976 949
1,583
1,166
766
$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 2022 2023*
# of Sales Tax Received
Source: HdL Coren & Cone
Property Sales and Transfer Tax Received (All property types) Historical Data
11City of Sunnyvale – Real Property Transfer Tax - January 2024
97.0% 97.2% 96.0% 96.2% 97.0% 95.6%
98.8%
75%
80%
85%
90%
95%
100%
2017 2018 2019 2020 2021 2022 2023*
<$4M $4M-$10M $10M+
Source: HdL Coren & Cone
Breakdown of Sales by Sales Price Category
12City of Sunnyvale – Real Property Transfer Tax - January 2024 Exemption
Threshold
Average Annual Revenue
Increase over Current Tax
(2017 through 2023)
Revenue Increase in
2021
(high year)
Estimated Revenue
Increase in 2023
(low year)
$3,000,000 $6.8 million $12.3 million $1.2 million
$4,000,000 $6.1 million $10.4 million $1.1 million
$5,000,000 $5.9 million $10.2 million $1.1 million
Based on historical data
Tax Estimates
Exemption
Threshold
Average Annual Revenue
(2017 through 2023)
Revenue in 2021
(high year)
Estimated Annual
Revenue in 2023
(low year)
none $1.5 million $2.4 million $0.6 million
Current ($1.10/$1,000, shared with County)
$7.50/$1,000, as previously directed by Council
13City of Sunnyvale – Real Property Transfer Tax - January 2024 Potential Timeline
Jul Aug Sep Oct Nov Dec
Deadline for
Ballot -
August 9
Council
Receives
Polling
Results
Public Education
Election –
November 5
Polling
Potential
Election Call
Ballots
Mailed to
Voters
Jan Feb Mar Apr May Jun
14City of Sunnyvale – Real Property Transfer Tax - January 2024 Alternatives
Recommendation
1. Provide direction to staff on the parameters of a potential Real Property Transfer Tax measure to be publicly polled and approve Budget Modification No. 11 in the Amount of $40,000 for polling consultant costs.
2. Direct staff to take no further action.
Staff Recommends Alternative 1
15City of Sunnyvale – Real Property Transfer Tax - January 2024 Questions/Feedback