News / Articles

LWVP published Pros and Cons on Piedmont's November 2020 ballot measures TT & UU. You can Download a formatted version here or read the text of the Pros and Cons below.

Amends the Existing Real

Property Transfer Tax

 

THE QUESTION

Should the Piedmont City Code be amended to increase the existing real property transfer tax to $17.50 per $1,000 of transfer price?

 

THE SITUATION

Real Property Transfer Tax (RPTT) is a one-time tax levied on a property at the time of sale. In the City of Piedmont, the tax is currently at the rate of $13.00 per $1,000 of the value of the property transferred. This rate was set in 1993. RPTT applies when there is a financial transaction with a money exchange taking place. The Piedmont Municipal Code currently includes exemptions from the real property conveyance tax for transfers that relate to public agencies, bankruptcy proceedings, foreclosures, terminations of partnerships, and debt securitization.

Piedmont’s current RPTT rate of $13.00 per $1,000 on full value is lower than both Berkeley and Oakland, but higher than most other cities in California. The majority of California cities have no RPTT. Based upon local real estate practice and customs in Piedmont, city transfer taxes are typically split between the buyer and seller, but individual buyers and sellers are free to negotiate any arrangement they wish.

The Budget Advisory and Financial Planning Committee has recommended that minimum additional funding of approximately $850,000 per year for the next five to ten years is needed to maintain the existing condition of city buildings, parks, streets and sidewalks. Measure TT is estimated to generate approximately $948,462, providing additional funding above the amount estimated for maintenance of Piedmont facilities, if the City Council voted to allocate these funds for that purpose.

 

THE PROPOSAL

The real property conveyance tax is levied when real property is either sold or transferred to a new owner in exchange for anything of value, and is collected for raising revenue for the usual and current expenses of the city where the real property is located. If adopted, Measure TT would increase the existing real property transfer tax to $17.50 per $1,000 of transfer price. Measure TT would modify the existing exemption for public agencies to specifically exclude property transfers made from a public agency to a nonprofit corporation where the acquisition, construction or improvement of such property is made with tax-exempt bond financing.

At the median home sales price of $2,200,000, an RPTT rate increase to $17.50/$1000 would add $9,900 in taxes, which would typically be split between the buyer and seller of the property but can be negotiated. Measure TT does not include a sunset provision and the increased tax rate would remain in force indefinitely.

 

Fiscal Effects:

It is estimated that revenues from this tax will generate approximately $948,462 of additional revenue annually. Funds generated by the proposed tax increase are not restricted and may be used for any City general revenue purpose.

 

A “YES” vote on Measure TT would be in favor of increasing the real property conveyance tax to the new rate of $17.50 per $1,000.

A “NO” vote on Measure TT would be against the increase in the real property conveyance tax and would maintain the current rate of $13.00 per $1,000.

 

Authorizes the City to Issue Bonds to

Reconstruct the Piedmont Community Pool

 

THE QUESTION

Should the City of Piedmont be authorized to issue up to $19.5 million in general obligation bonds to finance the costs of improvements for the Piedmont Community Pool and adjacent areas?

 

THE SITUATION

The existing Piedmont Community Pool opened in 1964 and is now in its 56th year. The usual lifespan of most outdoor pools is 50 years. Prior to closure due to COVID-19 shelter-in-place orders, the City was spending approximately $1,000 a day to keep the pool safe and operational. The City believes that residents rely upon the Piedmont Community Pool as a resource to learn to swim, exercise, compete, play, and socialize.  It has also been a steady source of employment for local youth. Based on a July, 2020 Concept Study, the estimated cost for replacement of the Piedmont Community Pool including bath house, pools and surrounding site work is $18.8 million.

 

THE PROPOSAL

If adopted, Measure UU would authorize the City of Piedmont to issue up to $19.5 million in general obligation bonds to finance the costs of replacing the Piedmont Community Pool and adjacent areas. General obligation bonds are a form of municipal indebtedness used to finance public improvements and are authorized by the California Constitution and California Government Code. The proceeds of the bonds may only be used for the design and construction of improvements for the Piedmont Community Pool and adjacent areas.   Plans for replacing the pool and surrounding facilities have not been finalized. It is proposed that the three existing pools be replaced with two pools to meet resident needs: a warmer recreation pool with areas for safe water play, swim lessons, therapeutic swim, and physical rehabilitation; and a wider and deeper pool for recreation, physical education, water aerobics, water polo, swim team, and lap swimming. The new pool facilities, restrooms, and related areas would conserve energy and water, comply with state and federal disability and safety standards, and provide restroom access for those using the tennis courts.

The bonds will be secured by ad valorem taxes levied on taxable real property in the city. The interest rate for the bonds will depend on the bond market at the time the bonds are sold, but cannot be higher than 12%. The city estimates that the property taxes levied to repay the bonds would average 2.6 cents per $100 of assessed property value. Measure UU requires accountability including a separate account for the funds and annual reporting by the city’s Finance Director to the City Council. The City Council must also establish and appoint an oversight committee to review and report on how the proceeds of the bonds are being spent.

 

Fiscal Effects:

If all of the bonds were issued and sold, the best estimate of the total debt service, including the principal and interest is $37,446,788.

 

A “YES” vote on Measure UU would be in favor of authorizing the City of Piedmont to issue general obligation bonds in an amount not to exceed $19,500,000 for the purpose of constructing improvements to the Piedmont Community Pool .

A “NO” vote on Measure UU would be against authorizing the City of Piedmont to issue general obligation bonds in an amount not to exceed $19,500,000 for the purpose of constructing improvements to the Piedmont Community Pool.