Real Property Transfer Tax and
Civic Center Phase 2: Main Library
Bond Measures
Tim Kirby, Director of Finance
Dennis Jaw, Assistant Director of Finance
2City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Possible Revenue Measures to be Placed on the
Ballot for the November 2024 Election
Real Property Transfer Tax Library General Obligation
Bond
3City of Sunnyvale – Real Property Transfer Tax - May 2024 Current
Council
Consideration
- RPTT
• Polled on the viability of:
• RPTT at the rate of .75%, only on sales
exceeding $3,999,999.99
• Adjustment to the $3,999,999.99 exemption
threshold to account for inflation
• Annually or every 5 years
• Possible exemptions for Single
Family/Duplex Residential Properties
• Possible tax expiration of 30 years (vs. “until
ended by voters”)
• Council may provide alternative direction
4City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 $2,413,563
$1,047,133
$12,844,391
$2,970,470
$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 2022 2023
Current Proposed Measure
Source: HdL Coren & Cone
Average annual difference: $6.2 million
Updated Revenue Projections
*Excludes very large, uncommon sales.
5City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 1188 1307 936 913 1536 1112 826
37 37 40 36 47 48 18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020 2021 2022 2023
<$4M >$4M
Source: HdL Coren & Cone
Breakdown of Sales by Sales Price Category
6City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 13 14
5 16
15 17 7
20 21
31 18
29 27 10
4 2 4 1 4 4 1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2017 2018 2019 2020 2021 2022 2023
Residential Commercial/Industrial Other
Source: HdL Coren & Cone
“Other” category includes Government owned, Churches, Agricultural, and Vacant Over $4M Sales by Type
7City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 *Average excludes very large, uncommon sales.
Analysis of Revenue Risk from New Tax
• Current average revenue
since 2017 from RPTT is
approximately $1.5M/yr*
• City would need to average
$200M in property sales
valued over $4M each year
to avoid loss of revenue
• Historical sales data on sales
over $4M shows risk of
revenue below the current
average is low
FY Ending Total Sales
2023 $396,062,727
2022 $1,220,420,000
2021 $1,712,585,500
2020 $717,435,000
2019 $1,477,278,010
2018 $583,167,364
2017 $1,134,149,500
8 Hypothetical Ballot Measure Language
Q4. Do you think you would vote “yes” or “no” on this measure? Sunnyvale City Services Funding Measure. To fund essential city services, including police and fire protection;
911 emergency response; disaster preparedness;
addressing homelessness; tree, park, and street
maintenance; and other services, shall the City of Sunnyvale adopt an ordinance enacting a 0.75% real property transfer tax (paid by buyers and sellers upon sale) on property sales over $4,000,000, and generating approximately $6,100,000 annually until ended by voters, with required audits and all funds used locally?
General-purpose; 50% Vote Threshold
9 34%
28%
5%
3%
8%
16%
6%
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Q4. Do you think you would vote “yes” or “no” on this measure? Total
No
28%
Total
Yes
67%
Two-thirds expressed initial support for the
hypothetical measure, with twice as much intensity
among supporters than among opponents.
62%
without
“leaners”
10 Q4 & Q13. Do you think you would vote “yes” or “no” on this measure? 35%
24%
4%
4%
8%
18%
7%
Initial Vote After
Hypothetical Ballot Language
Final Vote After Supportive
and Critical Statements
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Total
No
30%
Total
Yes
63%
Final support was only slightly lower than
initial support, though the intensity of yes/no
voters was essentially identical.
34%
28%
5%
3%
8%
16%
6%
Total
No
28%
Total
Yes
67%
59%
without
“leaners”
11City of Sunnyvale – Real Property Transfer Tax - May 2024 Examples of Tax Paid –
RPTT (when sold)
* If tax measure is
passed as polled
Property Sale
Amount
City Transfer
Tax*
County Transfer
Tax
$3,500,000 None $3,850
$4,000,000 $30,000 $4,400
$20,000,000 $150,000 $22,000
$100,000,000 $750,000 $110,000
12City of Sunnyvale – Real Property Transfer Tax - May 2024 Business Community
Feedback/Concerns
• Unfair, as it targets commercial/industrial and large residential properties
• Will impact triple net leases, driving up rent costs
• Hits small businesses especially hard
• Costs will trickle down to consumers and further
increase prices
• May drive businesses to other cities
13 Hypothetical Ballot Measure Language
Q3. Do you think you would vote “yes” or “no” on this measure? Sunnyvale Library Measure. To provide residents with a larger, modern, energy-efficient, and earthquake-safe library;
expand spaces for library collections and materials, events, and programming for children, teens and seniors; and replace deteriorating infrastructure and outdated technology, shall the City of Sunnyvale issue (SPLIT SAMPLE C: $240,000,000)
(SPLIT SAMPLE D: $290,000,000) in bonds at legal interest rates with an average levy of (SPLIT SAMPLE C: $23) (SPLIT SAMPLE D:
$27) per $100,000 of assessed value, generating approximately (SPLIT SAMPLE C: $15,400,000) (SPLIT SAMPLE D: $18,600,000) annually while bonds are outstanding, with audits, citizen’s oversight, and all funds used locally?
Two-thirds Vote Threshold
14 Q3. Do you think you would vote “yes” or “no” on this measure? 40%
21%
6%
1%
11%
18%
3%
33%
23%
6%
2%
10%
22%
4%
$240MM $290MM
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Total
No
34%
Total
Yes
62%
Total
No
30%
Total
Yes
67%
Initial support for either
amount was in the mid 60s.
15 65% 66%
56%
34% 30%
38%
4% 4% 7%
Initial Vote After
Hypothetical Ballot
Language
Vote After Supportive
Statements
Final Vote After
Supportive & Critical
Statements
Total No
Total Yes
Undecided
Q3, Q5, Q10 & Q12. (Split C) Do you think you would vote “yes” or “no” on this measure? Initial support appeared to start at a measure’s
ceiling, which is right around two-thirds.
Combined $240MM/$290MM Bond
16City of Sunnyvale – Real Property Transfer Tax - May 2024 Examples of Tax Paid –
Library Bond (Annually)
Assumes 25-year bond
with a 4% average
interest rate
Assessed Value $240M Option
($23/$100k AV)
$290M Option
($27/$100k AV)
$840,000 $193 $227
$2,200,000 $506 $594
$20,000,000 $4,600 $5,400
$100,000,000 $23,000 $27,000
17City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Potential Ballot Measure Timeline
Jun Jul Aug Sep Oct Nov
Deadline for
Ballot -
August 9
Public Education
Election –
November 5
Potential
Election Call
Ballots
Mailed to
Voters
18City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Real
Property
Transfer
Tax
Pros
• General tax, no restriction on use of
revenue
• Can pass on only 50% threshold, polled
higher
Cons
• Volatile revenue source, difficult to
budget ongoing services
• Increased revenue relatively low as a
percent of GF overall budget
• No dire need for funds, as FY 2024/25
Recommended Budget provides
significant Service Level Set-Aside to
fund new and increased services.
• High possibility of an opposition
campaign
19City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Library
Bond
Measure
Pros
• The Sunnyvale Library is a very popular
service amongst the public
• Library will not be built in the near future
without a measure, stalling the Civic
Center Modernization Plan
• Possible passage of California ACA1 may
reduce the threshold
• Presidential election year may increase
chance of passing
• Ultimately would result in greater overall
revenue vs. RPTT within same time frame
Cons
• Currently requires 66.7% approval to pass
• Polling indicates support is not certain
20City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Alternatives
Council Action
1. Direct staff to return to Council with actions necessary to place a RPTT ballot measure on the November 2024 ballot to levy a City Real Property Transfer Tax of $7.50/$1,000 for sales over $4 million.
2. Direct staff to return to Council with actions necessary to place a RPTT ballot measure on the November 2024 ballot with an alternative tax rate or structure.
3. Direct staff to return to Council with actions necessary to place a general obligation bond measure to support the issuance of $290 million in bonds for the construction of a new library on the November 2024 ballot.
4. Direct staff to return to Council with actions necessary to place both measures on the November 2024 ballot.
5. Approve Budget Modification No. 24 in the amount of $40,000 and direct staff to conduct a third poll to determine the viability of placing both RPTT and Library Bond measures on the November 2024 ballot.
6. Do not direct staff to move forward with either ballot measure.
Staff Recommendation
Alternative 3 - Direct staff to return to Council with actions necessary to place a general obligation bond measure to support the issuance of $290 million in bonds for the construction of a new library on the November 2024 ballot.
21City of Sunnyvale – Possible Action Regarding Placing a Revenue Measure on the November 2024 Ballot – May 15, 2024 Questions