Path forward unclear for property transfer tax in San Bruno

At least four of the five members of the council will need to approve the measure before placing the question on the ballot, where it would require 50% or greater approval. The tax would target commercial properties and residential buildings with five or more units, adding a 1% fee on the sale price, something the city estimated would generate roughly $1 million annually.

It’s a proposal that comes as the city’s seen an increasing amount of high-dollar property sales, like the recent $328 million sale of The Shops at Tanforan, or $215 million sale of the Bayhill campus to YouTube.

The city is also facing a projected deficit for the next five or more years as it contends with hundreds of millions in unfunded infrastructure needs and per-capita revenue far lower than many of its neighbors.

“We’ve had over $400 million in land sales just in the last 2.5 years or so, so I don’t know that we want to wait any longer and I think the more support we have from the council the more likely it will be successful at the ballot box,” Vice Mayor Linda Mason said, in an effort to persuade her colleagues.

Several nearby cities already have a similar tax. San Mateo levies a rate of .5%, while others have rates as high as 1.3%. Some also have progressive rates like Berkeley’s, which slides up to 2.5% for transactions over $2.5 million.

A poll commissioned by the city of 446 “likely voters” found the measure would pass with a slim margin, with 55.4% of respondents saying they would either definitely or probably vote yes.

Salazar previously expressed concerns that the tax would have a negative financial impact on small-time landowners, however, he said his concerns now were largely to do with added authority the charter could afford the city.

The city’s current general law status means it must act within state statutes and administrative regulations. With a charter, the city could establish its own rules (still within the state Constitution) related to “municipal affairs” including taxes and assessments.

“I’m less confident on this not being a slippery slope, because while we may be well intentioned today, some future council may have some other ideas,” Salazar said.

He questioned whether the City Council could decide after the fact to extend the tax also to single-family homes. He pointed also to poor constituent turnout during the hearing, which was not held during the council’s normally scheduled meeting.

“This is probably one of the most important things that we will discuss this year,” he said. “I don’t believe that doing this in this manner and with the response that we’re getting does any justice nor does it create a sense of trust in the community.”

According to the city’s legal counsel, any new tax, including extending the transfer tax to other property types, would require a new ballot measure even with a charter.

“As written, the power stays with the voters,” City Manager Jovan Grogan said.

But Rico Medina said he had further concerns, and claimed the charter would enable the City Council to establish salaries for members above an existing ceiling.

“It’s great that my colleagues want to talk about ‘hey there’s potential for some one-time monies,’ but also all of the other elements that go along with a charter city is what I’m also looking at as well,” he said.

To ease Salazar’s concerns regarding transparency, Mason and Councilmember Marty Medina shared support for discussing the item an additional time during a future meeting ahead of the second public hearing.

“This issue is so important, that it would be great to get 5-0 going forward,” Marty Medina said. “This is something we talked about a number of years ago … and here this council is still trying to figure out how do we raise revenues without impacting the overwhelming majority of our residents, and this is how we do it.”

The council’s next meeting will be held June 14. A date for the second public hearing has not been set.

corey@smdailyjournal.com

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