With the November election in the rear view and a California primary coming in March 2020, San Leandro is already looking at various revenue-generating ballot measures to fortify finances facing a structural deficit and a looming downturn in the economy.
“We are, as a city, facing a number of long-term financial challenges.” San Leandro Assistant City Manager Eric Engelbart told the City Council on Nov. 19.
The city is facing unfunded deferred maintenance and capital projects, Engelbart added, a General Fund structural deficit, and various public safety needs; including modernization of its fire stations, public safety building upgrades, and Fire Department vehicle and medical equipment needs.
The council directed city staff to begin studying the feasibility of ballot measures, possibly for the March 2020 primary, that range between a parcel tax, Real Property Transfer Tax, Vacant Property Tax, and modifications to the Business License Fee.
San Leandro’s current Real Property Transfer Tax is 6 percent per $1,000 of value, making it the lowest among Alameda County charter cities.
Discussion, however, focused on a Real Property Transfer Tax. Two weeks prior, voters in Oakland, Berkeley, and Hayward approved increases in the one-time tax applied to buyers and sellers of real estate.
While Oakland and Berkeley has a tiered structure for applying the tax, Hayward voters increased the tax from 4 percent per $1,000 of property value to 8.5 percent. The change means San Leandro’s current 6 percent per $1,000 of value is now the lowest among Alameda County charter cities.
Nearby Alameda assesses $12 per $1,000 of value. If San Leandro were to raise the amount to $11 per $1,000 of value, city staff estimates it would add roughly $3 million annually in new revenue.
Hayward voters, however, faced an onslaught of opposition for the Measure T Real Property Transfer Tax increase last fall from the National Association of Realtors, who poured large amounts of money into the campaign to defeat the measure. The same occurred in Oakland and Berkeley. In Hayward, Measure T passed with 58 percent support.
A tiered approach appealed to at least two councilmembers. “Middle-class families are going to face challenges for every single dollar they spend,” said Councilmember Benny Lee, who feared the increased tax would hinder homeownership for some. Councilmember Pete Ballew urged for a carveout to attract first-time homeowners to San Leandro.
Ballew also expressed interest in exploring a vacancy tax similar to the model approved by voters this month in Oakland. Taxing unused commercial properties might spur a boost in city’s economy, he said. “A vacancy tax is not going to pay our bills, but it would really incentivize people with some bigger properties to give us some development opportunities as well.”
Although another election cycle is nearing because of the switch in the state primary from June to March in 2020, but there is still time for San Leandro. “We have time and we have options,” said San Leandro City Manager Jeff Kay. Successful measures typically correlate with high turnout, he added. “We believe the primary will be unusual with very high, high turnout.” For that matter the November 2020 presidential election will undoubtedly features extraordinary turnout.
In recent years, San Leandro voters have been generous when it comes to approving new taxes. Measure Z, the quarter-cent sales tax increased approved in 2010 and reauthorized in 2014 (Measure HH), is often credited with keeping the city in the black during the Great Recession. Two years ago, voters approved a package of three tax measures that included the small business license fee, hotel tax, and cannabis business tax. San Leandro sat out the previous election cycle, although, a proposed parcel tax was briefly discussed.