HomeMy WebLinkAbout0493.091,
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Nove~ber 7, 1991
THE HOIlOJ(MILE CITY COUNCIL
Palo Alto, California
Attention: Finance committee
PROPOSED IXCREASE IN REAL PRQPERTY TRANSFE~TAX
Members of the Council:
Report in Brief
This report reccmmends City Councjl action to inc~ease the existing
real property transfer tax f~om the current rat~ of $0.275 per $500
of assessed value to $1.65 per $500 of assessed value, which is
comparable 'With the rate in San Jose and Mountain Vie·oIl. This
change 'Will result in approximately $1.:2 million in additional
annual revenue to the General Fund.
Real property Transfer . ....!U
In the process of exploring alternative or increased revenue
sources, staff obtal.ned infcrmatior. from the city of San Jose
regarding various taxes il'r.posed by that city, including a real
property conveyance tax. San Jose's tax is levied at $1.65 per
$500 of valuation t and there are certain restrictions placed upon
expenditures from proceeds of th~ tax~ After reviewing San Jose's
municipal code with the City Attorney's Office, staff determined
that San Jose's conveyance tax is almost identical in concept to
Palo Alto's already existing real property transfer t.ax.
The r~al property transfer tax ordinance (M~nicipal Code Section
2.34) ~as adopted in November 1967, ~ith a tax rate of $O~275 per
$500 of valuation. The rate has not been adjusted for 24 years.
As a consequence, it also requires modification to make it confo~
to ch4nges in state law, federal baD~ruptcy la~, and the Internal
Revenue Service Code.
CMR:493:91
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The city Attorney nas revie~ed the current ordinance and recommends
modifications in the ord inahce to rEflect changes in state and
federal law, in addition to the increase in tax rate.
Tax Rate. in lIurrou;;di.:r:tq Citie.s
staff has contocted s~rcounding cities to determine ~hether
had a real property conveyance or document transfer tax.
results of that survei' are shown below:
San JOSi:!
Mountain View
Redwood ci ty
Sunnyvale
Menlo Park
Burlingame
South San Francisco
San Mateo
San Leandro
Berkeley
Daly <:'!.ty
Fremont
San Francjsc:::.
Peidmont
Oakland
Albany
Alameda
Rtven~. Estimate
$1.65 per $500
$1.65 per $500
$1.10 per $1,000
$.55 per $500
$1.10 per $1,000
$1.10 pec $1,000
$1.10 per $1,000
$5.00 per $1,000
$2.00 per $I,ODD
$15.00 per $1,000
$1.10 per $1,000
$.55 per $1,000
$5.00 per $1,000
$6.50 per $1,000
$10.00 per $1,000
$4.40 per $1,000
$4.40 per $1,000
they
The
The real property conveyance tal( applies to both business and
residential property. The current tax at $0.275 per $500 of value
provided approximately $240,000 in revenues in fiscal year 1990-91.
At a rate vf $1.65 per $500, revenue in 1990-91 would have been
$1.47 million, an increase of approximately 500 percent. The
county of Santa Clara charg&s a 3 percent administration fee fer
tax cQllection.
ReCOmmendation
Staff recommends the City council adopt revisions to Palo Alto
Municipal Code Chapter 2.34, and incI:ease the rate of the real
property transfer tax to $1.65 per $500 of valua~ion.
CMR:4-9J:91 2
Respectfully suzmitted,
&-~ f.h11~"_ ,t'
EMILY IIAR1!ISON
Director of~ce
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City M nager
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