Sunnyvale voters likely to support property transfer tax

Sunnyvale officials may have found a new source of revenue, with a green light from residents to place a proposed tax measure on the November ballot.

A city survey collected responses from 444 Sunnyvale voters, 63% of whom supported a possible property transfer tax measure after hearing the pros and cons. The details in the poll mirror a 2022 proposal to add a 0.75% tax on all property transfers of $4 million or more. The poll had a 4.9% margin of error.

City officials have been considering a real property transfer tax for the November ballot since last December, when Mayor Larry Klein and Councilmember Richard Mehlinger raised it as a way to meet increasing demand for services. The Sunnyvale City Council on Tuesday voted 6-1, with Councilmember Russ Melton voting no, to wait for results from a library bond survey before deciding which of the two to put on the ballot.

“The fact that we have encouraging survey results now is, in my opinion, a very good argument for putting (the tax measure) on the ballot now,” Mehlinger told San José Spotlight.

Funds from the tax would not be specifically earmarked, but could be used for a variety of city programs and services. Mehlinger said residents would be able to weigh in on how the money is spent if a tax measure passes. One beneficiary, if the tax passes, could be a potential guaranteed basic income program.

The survey also asked voters what they felt needs the funding. Most of the top-ranked topics were about public safety, such as maintaining the city’s police, fire and 911 emergency response times. Other highly rated issues included park maintenance and street flood prevention.

The proposed transfer tax is inspired by San Jose’s Measure E, a tax on all property transfers of more than $2 million approved by voters in 2020. Those funds are allocated toward affordable housing development.

Not everyone on the council is onboard with the proposed tax. Melton, the sole dissenter, said he’s concerned about the lack of clarity on where the tax revenue could go. He also pointed out that the city council killed two proposals to allocate more resources to its public safety department during a workshop ranking city priorities.

“It flies in the face of what the residents are telling us,” Melton told San José Spotlight.

Melton, who has previously opposed the tax, said the city already has a property transfer tax, which is split with Santa Clara County. The county taxes property transfers at a rate of $1.10 per $1,000, half of which goes to the city, according to city documents. If the city enacts its own tax, the county would retain the full amount and the city’s tax would be levied alongside applicable real estate transfers.

He said this could deter people from buying property in Sunnyvale, namely commercial property.

Mark Hinkle, president of the Silicon Valley Taxpayers Association, shares that sentiment. He said businesses would likely push that cost down to customers or be otherwise dissuaded from buying property in Sunnyvale. While the association’s board has not taken a stance on it yet, Hinkle said it will likely oppose the measure, as it will increase the cost of living in Sunnyvale by increasing the cost of goods and services.

“People think that businesses pay taxes, but actually it’s their customers paying the taxes, because that’s just the cost of doing business,” Hinkle told San José Spotlight. “All costs of doing business are passed on to the consumer.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.