OPINION: Parcel Tax Should Not Be Levied In 2016
City revenues from Real Property Transfer Tax (RPTT) have far exceeded projections.
The following is a letter sent to the Piedmont City Council.
Jan 2, 2016
Piedmont City Council
Re: Jan 4 Agenda Item 5: Parcel Tax
Dear Mayor Fujioka and Council,
The 1990-1991 Real Property Transfer Tax (“RPTT”) was $384,494 (2007 MTRC Report attached). The 2014-15 RPTT is $3.9M (Eric Cheung 20151102 attached). This steady, inexorable 10.13% annual increase is omitted from the 2015 BAFPC Report and at this rate the RPTT will be over six million dollars in five years.
There are many more up years than down years for the RPTT and the increases include 43%, 50%, and 94%. From 1991 to 2007 the largest decrease is -16%. (2001-2011 City table and 2011-2015 Budget material attached).
While the 2015 Budget Advisory and Financial Planning Committee (BAFPC) Report is admirable in some respects, the bias is a conservative approach from both a demand and supply perspective. The future may hold more financial demands on the City and the BAFPC is prudent here. However, the supply side of taxpayer funding is presented in an overly conservative approach by underestimating RPTT and real property tax revenue. Staff estimates support this approach; a recent example is the $2.8M estimated for 2014-15 RPTT in the proposed budget when the actual figure is $3.9M.
The BAFPC is overly conservative in estimating ever increasing revenues in other areas. The BAFPC uses a $1.6M estimate for average Real Property value in town which is inconsistent with recent sales data which reveals the average Piedmont home sold for $2.13M and the median sale was $2M. Coming online are eight new homes in Piedmont, the seven Piedmont Station units and the Lexford Road project. And as the aging-in-place Proposition 13 residents die off, their low value homes will be sold and represent a much higher tax revenue basis.
Even during the worst economic downturns, Piedmont property values do not plummet like so many other Cities and regions. There is a flattening out and slowdown of sales. And then the inexorable march upwards begins again. (The largest decrease in the RPTT from 1990 to present occurred from 2006-07 to 2007-08 at a negative 32%.)
Regionally Oakland has become a destination and is enjoying increasing home values as those wishing to live in San Francisco are priced out. This is fostered by tech companies moving to Oakland. Piedmont continues to be the premier sought after location, especially for the increasing number of affluent Techies flocking to Oakland.
No increase in the Parcel Tax is warranted or can be reasonably justified. Despite the City Hall and the Post attempting to take advantage of a tax compliant resident base, as with the ill-conceived Sewer tax of 2012, taxpayers saw through that scheme and taxpayers will view any increase in the parcel tax in the same manner. I find it odd that the asked for $11M increase of the 2012 Sewer Tax was never explained, given that the same sewer mainline completion and EPA compliance is now being accomplished for $1M.
With revenues as robust as they are today, I ask the Council to forgive the coming year’s Parcel Tax.
Respectfully,
Rick Schiller, Piedmont taxpayer
http://www.ci.piedmont.ca.us/html/govern/staffreports/2016-01-04/parceltax.pdf
Editors’ Note: Opinions expressed are those of the author.
