An uncertain future for a ballot measure to establish a commercial property transfer tax in San Bruno remains uncertain, with Mayor Rico Medina and Councilman Michael Salazar still indicating reservations about the proposed measure as a means for the city to increase insufficient revenues.
At least four of the five council members will need to approve the measure before placing the issue on the November ballot, where it would require the approval of 50% or more of voters. The tax would target commercial properties and residential buildings with five or more units, adding a 1% fee to the sale price, which the city says would generate about $1 million a year.
It’s a proposal that comes as the city faces major infrastructure needs, at least $310 million of which there are currently no plans to address them. The city is also experiencing a growing number of high-priced real estate sales, such as the recent $328 million sale of The Shops at Tanforan or the $215 million sale of the Bayhill campus to YouTube.
“Financial challenges facing San Bruno remain significant,” said city manager Jovan Grogan, who pointed to per capita income well below many nearby towns.
But while the rest of the council has signaled support, a sticking point for Medina and Salazar has been that the new tax will force the city away from its current general law status – in which the “municipal affairs” of the city are governed by the state. law – to instead become a charter city.
Charter cities can set their own rules (within the state constitution) regarding certain tax measures, certain land uses, certain aspects of local elections and contracts – items that fall within the loosely defined framework of municipal affairs. .
Additionally, “cities that have reserved their power to regulate municipal affairs can move very quickly and with agility to regulate those affairs,” said acting city attorney Trisha Ortiz, who also noted that any new tax, including the extension of the transfer tax to other types of properties, would require a new ballot measure, even with a charter.
In addition to the tax measure, the city’s proposed charter would fully retain the state’s currently enforced “general laws”.
Still, Salazar said he fears the move could be a “slippery slope”, giving the council increased authority that could be abused. It is also stated that the tax would have a negative financial impact on small landowners. He did not specify his reservations during the council’s discussion this week, but asked that more information be made available to residents via the city’s website.
Council member Marty Medina contradicted these points, noting that “what other future councils do is up to them.”
“What we’re trying to do right now is increase the revenue in our city that affects the fewest people, and I think we can all agree that our city doesn’t have the revenue needed to provide the level of service we all want,” he said.
He pointed to a police department report that indicated insufficient staffing.
“If we’re able to pass that…we can increase the police department,” he said.
Rico Medina, meanwhile, said he’s heard concerns about including multi-family residential buildings in the measure. Last month, he expressed concern that a charter could allow the council to set salaries for its members above an existing cap.
If passed, San Bruno will join Redwood City and San Mateo as the county’s two other charter towns. Redwood City has no property transfer tax while San Mateo levies a 0.5% rate on commercial and residential sales — and voters will be asked to approve an increased rate for sales over $10 million This year.
Other nearby charter towns include Palo Alto, Mountain View, Petaluma, San Francisco and San Jose.
“Being a charter city isn’t some weird, extravagant thing that would make us unique in California,” council member Tom Hamilton said. “There are several dozen charter towns throughout the state.”
A city-commissioned poll of 446 “likely voters” found the measure would pass by a narrow margin, with 55.4% of respondents saying they would definitely or probably vote yes. Another fundraising measure, a $124 million bond the board had hoped to seek voter approval for this year, was scrapped by the board after polling found it was likely to fail.
The city council plans to hold a meeting on Aug. 3 for a vote, ahead of the Aug. 12 deadline for submitting ballot measures for the Nov. 8 election.