Jun 23 2020
OPINION: Piedmont Property Transfer Tax Increase Is Not Needed
Piedmont is the highest taxed of comparable Bay Area cities.
The City Council is considering a raise to the tax when a Piedmont home is sold.
The City Council is currently considering a proposal from the Budget Advisory and Financial Planning Committee (BAFPC) to raise the real property transfer tax (RPTT) the tax buyers and sellers pay when buying a home in Piedmont. The current rate is $13/$1000* of the sales price and increases of 3, 3.5 and 7% are being considered. The rationale given is to raise $850,000 annually to pay for facility maintenance. Historically the RPTT has been $2.8M and revenue above that has been dedicated to facility maintenance. Over the past 10 years, RPTT has averaged $3.25M and with that excess, the Facility Maintenance Fund now stands at $5.8M. An analysis of RPTT growth over the past 20 years shows a very consistent increase in revenue, the one outlier being the years 2008 to 2010 (Figure 1.) Using the RPTT growth rate from the past 20 years shows that by 2030, RPTT revenue will be $4.5M.
Why this matters is that Council must choose a tax increase to put before the voters in November 2020, and should not raise taxes unless necessary. An analysis by BAFPC shows that Piedmont is the highest taxed of comparable Bay Area cities (http://piedmont.hosted.
The City Finance Director estimates that the RPTT will be $2.2M next year and using that as a baseline justifies a 7% increase in order to raise the $850,000 for facility maintenance (Table 1). If the preceding 10-year average of the RPTT is used, a 3% increase will rise enough for facility maintenance (400,000 + 805000 = $1.2M). Assuming Piedmont home values continue to increase, no tax increase is needed – the steady increase in real estate values will raise more than enough for facility maintenance ($1,200,000).
Garrett Keating, Former Piedmont City Council Member
There is a typo. I believe the rate is now $13/thousand, not 13%/thousand as stated.
The transfer tax is $13 per $1000 on full value. Probably just a clerical error stated as “13%/$1000” in the post.
It is on top of the $1.10 per $1000 that the County collects.
My bad. Yes I’ve used percentage instead of dollars. I don’t think it affects the analysis. Perhaps PCA can edit.