HomeMy WebLinkAboutStaff Report 1.A 07/24/2017DATE: July 24, 2017
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manag
SUBJECT: Revenue Measure Workshop
RECOMMENDATION
Agenda Item # LA
It is recommended that the Council provide feedback regarding placing a tax increase measure(s)
on future ballots.
BACKGROUND
In March 2017, the City Council adopted its goals for the two-year period of 2017 and 2018.
Included in the goal "Maintain Fiscal Stability" is the priority "Establish New Revenue Sources"
and within that are the tasks "revisit sales tax increase" and "consider other tax increase
opportunities".
The need to establish new funding sources, to achieve and maintain financial stability and to
address Petaluma's needs, is long-standing. It has been a recurring subject of City Council
consideration since 2010. A failed sales tax measure, Measure Q, was placed on the ballot and
decided by voters in 2014. Measure Q was for general purposes and required a simple majority
to pass. Effort was initiated in 2016 to place a sales tax measure focused only on roads on the
ballot. It was discussed as a special purpose tax, and would have required a 2/3 supermajority to
pass. That measure was not placed on the ballot due to polling that showed public support
needed to achieve the 2/3 requirement was lacking. Both general and special purpose taxes
require the approval of 2/3 of the City Council (five members) to place a measure on the ballot.
Over the past decade, Petaluma City Councils have taken a host of actions to downsize staffing
and operations to align spending with available resources. Similarly, City Councils have
increased revenues that were within their discretion to modify. They also approved viable
proposals to privatize, consolidate, and to automate so that less staff can continue to provide core
services. Importantly, they've also done what local agencies can to address PERS rates, by
establishing a lesser tier of benefit and by negotiating agreements with several employee groups
to shift a share of the City's costs to those employees.
Nevertheless, the City's five-year financial forecast, updated in May 2017, continues to project
declining fund balances, and an overall imbalance in FY 2018/19 and beyond. Forecasting has
projected negative balances of this type since it was introduced in 2011 and reflects, despite
downsizing during the recession, a structural imbalance of expenditures in excess of revenues.
This imbalance will be exacerbated over the next two decades by rising PERS rates. These rates
are projected to increase, on the average, $1 million per year for the next ten years. Increases are
based largely on obligations for payments to employees who are already retired or who no longer
work for the City. The rates are projected to decline from approximately FY 2026/27 forward
but, based on the material recently developed by the City's actuarial consultant, it will be 20
years before the rates Petaluma pays to Ca1PERS return to today's levels.
On April 24, 2017, the City Council conducted a workshop to re-initiate discussions regarding
new sources of revenues that can be used to address pension cost escalation, balance projected
deficits, and meet ongoing needs. The City Council reviewed the limited list of available
options. Options included: Sales Tax, Transient Occupancy Tax, Parcel Tax, Business License
Tax, Property Tax for Debt, Real Property Transfer Tax, and Admissions Tax. The City Council
was provided projections of the potential revenue -generating capabilities for each of these
sources, allowable uses, and voter approval requirements. Pursuing any of these sources would
require voter approval. The City Council expressed its preferences, and narrowed focus to
options that included the Transient Occupancy, Property Transfer, and Business License taxes.
There was not strong or unanimous preference shown with respect to the latter two sources.
Other options were viewed as less promising for reasons including: too little revenue generated;
limitations as a special tax, and perceived lack of voter support.
Staff indicated the matter would be brought back for further guidance.
Guidance sought includes the tax(s) to be considered for a measure, increase amounts, and
timing of election. The staff report presented to the City Council on April 24, 2017 is provided
for additional background information as Attachment 1.
DISCUSSION
Staff recommends seeking to increase two funding sources in 2018: the Transient Occupancy
Tax and the Real Property Transfer Tax. There was also support at the April 24, 2017 workshop
to increase the Business License Tax, as an alternative to the Real Property Transfer tax. The
Business License tax structure is involved, however, and seeks to strike a balance between a
variety of business types, both large and small. As such, it would need to be re -designed to
maintain balance if/when it is modified. The time associated with that effort does not lend itself
to Petaluma's desire to go to the polls by mid -2018, so increasing this taxing source is not
recommended at this time. It can be considered for an election cycle further in the future if the
Council should so choose.
Financial Forecasting
The five-year financial forecast was updated in May, 2017. It projected the General Fund will
fall out of balance during FY 2018/19, and deficits will grow in size in subsequent years.
Work on the forecasting for this report began after the FY 2017/18 budget was adopted. It
differs from the May forecast in three respects. First, working capital carryover estimates are
increased from $100,000 to $300,000 per year, based on an analysis of post -recession fund
balance totals. Second, it takes into account employee cost activity that was not incorporated in
the May, 2017 assumptions. These modifications fine-tune the model as "most likely" scenario.
Finally, the forecast model was extended to cover the ten-year period during which PERS rates
will spike. This revised set of assumptions is referenced in this report at the "base case".
Overall, in the base case, anticipated costs in excess of estimated revenues will result in a $37.1
million deficit in FY 2025/26. Attachment 2 summarizes the base case.
The following sections discuss the effect increases in the Transient Occupancy and Real Property
Transfer taxes can have on fund balances, and the ten-year projected deficit. Relying on only
these sources, no scenario discussed will eliminate the FY 2025/26 deficit; additional proceeds
from these or other sources will likely be needed before 2026.
Transient Occupancy Tax (TOT)
TOT rates charged in Sonoma County generally consist of two components: the rates adopted by
the cities for their own needs, and a separate rate collected by most jurisdictions to support either
a county -wide or local business improvement area. TOT, as discussed in this report, refers to
only the rate retained by the City. The City Council indicated an interest in increasing the City
rate from ten percent (10%) to twelve percent (12%). A two percent increase would place
Petaluma equal to the highest rates currently charged in Sonoma County..
A TOT increase can be presented to the voters as a general tax or as a special purpose tax,
depending on how the proceeds are to be used. An increase to this source is recommended as a
general tax, to retain flexibility in its use.
TOT is addressed in this forecasting in two parts. The first part addresses TOT that can be
generated from a two -percent increase on existing lodging facilities, and on two new hotels that
are either under construction or well into the planning stage. This will be discussed as "TOT —
known". The second part will add into the forecasting three possible new hotels that are earlier
in the planning stages. This scenario will be discussed as "TOT — potential". A discussion of
"TOT — known" follows. The discussion of "TOT — potential" will conclude the Financial
Forecasting section of the report, following discussions of Real Property Transfer tax scenarios.
TOT—Known. The FY 2017/18 estimate for TOT is $2.75 million, based on Petaluma's rate of
ten percent (10%). Two new hotels would add at least $500,000 per year to the current total
when they are completed. That estimate is conservative, and anticipates some cannibalization
from existing lodging. Including these two new hotels, and using this conservative estimate,
would bring annual proceeds to $3.25 million. Each percent of the TOT would be worth
$325,000. A two percent increase would generate an additional $650,000 per year. This would
be in addition to the $500,000 in revenue projected for the two new hotels, for a total of $1..15
million a year in new revenues following hotel start-up. July 2018 is used as the assumed start
date for both hotels.
Attachment 3 shows the effect of this two percent increase in the revenue stream beginning July
2018. It preserves balance into FY 2019/20, and reduces the overall deficit in FY 2025/26 from
the base case ending deficit of $37.1 to an ending deficit of $28.1 million.
Documentary Transfer Tax/Real Probertv Transfer Tax (RPTT
The California Documentary Transfer Tax Act allows a rate of $1.10 per $1,000 of value. The
tax is imposed "on each deed, instrument, or writing by which any lands, tenements, or other
realty sold within the county shall be granted, assigned, transferred, or otherwise conveyed to, or
vested in, the purchaser or purchasers, or any other person or persons, by his or their direction."
Value is typically calculated based on assessed valuation.
The law allows certain cities, mostly chartered jurisdictions, to establish RPTT at higher rates
and/or to expand the circumstances under which the tax is imposed. Petaluma is one of these
jurisdictions, and has a rate of $2.00 per $1,000 of value. It is estimated Petaluma will collect
$1.15 million in RPTT in FY 2017/18. Increasing the RPTT could be done for either general
purposes or special purposes. An increase to this source is recommended as a general tax, to
retain flexibility in its use.
Two scenarios were utilized to illustrate the effect of an RPTT on the General Fund forecasting:
increasing the tax by one dollar per .every $1,000 of valuation, and increasing the tax by two
dollars per every $1,000 of valuation. One dollar per $1,000 nets approximately $600,000, and
two dollars nets approximately $1.2 million. Scenario 1 would add $635 to the transaction costs
of a home sale, and Scenario 2 would add $1,270, based on the current average of $635,000.1
Both scenarios are displayed in Attachments 4 and 5 and add to the revenue generated by the
"TOT — known" scenario displayed in Attachment 3.
RPTT Scenario 1. Attachment 4 illustrates the effect of increasing the RPTT by one dollar per
$1,000 of valuation. Added to the "TOT — known" increase, it preserves balance farther into, but
not through, FY 2019/20, and reduces the overall deficit of FY 2025/26 from the base case to
$23.4 million.
RPTT Scenario 2. Attachment 4 illustrates the effect of increasing the RPTT by two dollars per
$1,000 of valuation. Added to the "TOT -known" and RPTT Scenario 1, it preserves fund
balance one additional year, into FY 2020/21 and reduces the overall deficit of FY 2025/26 from
the base case to $18.8 million. This second scenario is recommended, as it preserves fund
balance longer, and reduces the overall base case deficit by approximately $10 million more than
the TOT -known scenario.
TOT— Potential. As stated earlier, three additional hotels are in the early planning stages. Based
on the projects that are currently being discussed, these hotels combined would add an average of
1 Zillow, March 2017
$1.1 million a year into the TOT base using the current rate of ten percent (10%). They would
generate an average of another $220,000 per year at a twelve percent (12%) rate. The
assumption used in this forecasting is that they would all come on-line in January 2020.
Attachment 6 illustrates the effect of adding the revenues associated with these potential hotels to
the TOT -known, and RPTT scenarios. With the addition of this revenue source, fund balance is
preserved into FY 2021/22 and reduces the overall deficit at FY 2025/26 to $9.5 million
It should be noted that this forecast does not factor an economic downturn during the coming
ten-year period, although past experience suggests that some cyclical downturn can be expected.
It is also the case that during the last downturn, both TOT and RPTT were dramatically.impacted
as revenue sources. In that regard, this forecast should be considered a best case scenario rather
than a most likely scenario.
The approach the City Council appeared interested in taking in April 2017 was to focus effort on
smaller taxing sources that would affect the least number of Petaluma residents, and which could
be managed so as to show good faith to voters that trust in a tax increase is not misplaced.
Increasing the TOT and RPTT can achieve those goals, but together do not create resources
sufficient to eliminate the projected deficit through FY 2025/26.
Optimally, a funding plan that eliminates all projected deficits for the period in question would
be developed. TOT -known and RPTT scenarios preserve balance into FY 2020/21, and enable.
the City Council to take advantage of the 2020 election cycle if deficits are still projected at that
time. If the final three hotels materialize, balance can be preserved long -enough to provide three
election cycles (following 2018's) to introduce additional revenue measures that will likely be
found as needed to eliminate deficits that may be projected at that time.
A package of revenue increases that includes a two percent (2%) increase in the TOT, and an
RPTT increase from $2 to $4 per $1,000 of valuation, is recommended for the City Council's
consideration.
Election Timing
At the April 2017 workshop, the City Council discussed the benefits and drawbacks of various
election dates, and appeared to agree that the City's best chances for a successful measure would
not be at a general election held in November 2018. Interest in alternate dates ranged from "as
early as possible", to the June 2018 primary election. March 2018 was also discussed as a
possibility, although questions existed as to whether that would be a by -snail election, and if
Petaluma could utilize a by -mail election for the purposes of placing a tax measure on the ballot.
Within this discussion, City Council appeared most interested in placing a potential tax measure
on the ballot for the June 18, 2018 primary election, although the topic was left open for further
consideration.
As noted in the April 24, 2017 report,. State law designates four election dates: the second
Tuesday in April in even -numbered years; the first Tuesday after the first Monday in March in
odd -numbered years; the first Tuesday after the first Monday in June in each year; and the first
Tuesday after the first Monday in November in each year. Statewide elections are generally held
in June and November in even -numbered years. In 2018, by -mail elections may be held on the
first Tuesday after the first Monday in March; the first Tuesday after the first Monday in May;
and the last Tuesday in August in each year.
Generally, local government elections calling for voter approval of taxes must be held on an
established election date (or at a special election called by the Governor). This requirement does
not apply to elections of charter cities and counties as these local governments are generally free
to select their own election dates.
Petaluma's elections have thus far been conducted at the ballot box, and not by -mail. In
conversation with the County Recorder, it appears that the March 2018 election is by -mail, but
that by -mail voting is not available to Petaluma due to the size of our population. Based on
additional research conducted by the City Attorney's Office, however, it appears that Petaluma
can conduct an election at the ballot box in March 2018. Local governments may call an election
to seek approval of a special tax or bond measure on any date allowed in state law or authorized
in their local charters. General purpose tax measures, however, must be decided at a regularly
scheduled local election, unless an emergency is declared by a unanimous vote of the local
government's governing body. This requirement applies to charter cities and charter counties,
the City Council would need to make this requisite finding.
From a timing standpoint, the City Council may want to plan for a June 2018 ballot. Legislation
to place a measure on the ballot needs to be acted on approximately three months in advance of
the election, leaving the City approximately 8 months to conduct community outreach and
education before taking legislative action on a June ballot. Approximately five months remain
before legislative action would need to be taken to place a measure on a March 2018 ballot,
which may not be sufficient time to conduct an effective education and outreach effort and
complete polling. Selection of a preferred election date at this time will enable staff to plan and
prepare for the delivery of all these activities.
Polling
Polling, as has been performed in the past in anticipation of .placing a measure on the ballot, is
recommended. Unlike earlier efforts, which conducted polling at the beginning and at the end of
education and outreach efforts, it is recommended that any measure, or measures, the City
Council may wish to place on the ballot in 2018 be polled only once — at the end of the education
and outreach process.
FINANCIAL IMPACTS
Election costs are based on the cost of an election, and the number of registered voters in a given
community.. A number of factors enter into the calculation of costs: the number of candidates
involved, the number of measures on the ballot, consolidation with State-wide elections, and the
number of entities sharing in the cost. In the past, estimates for Petaluma measures have ranged
from under $20,000 to over $60,000. An off -cycle election will likely have fewer participants to
share costs, and will be a more expensive option. Additional work with the County Elections
Office will be needed as the City Council develops its approach to better determine election costs
for the 2018 election dates discussed in this report.
L-,
ATTACHMENT(S)
1. April 24, 2017 Staff Report
2. Base Case Forecast
3. "TOT -Known" Forecast
4. RPTT Scenario 1 Forecast
5. RPTT Scenario 2 Forecast
6. "TOT -Potential" Forecast
ATTACHMENT 1
DATE: April 24, 2017
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Managcr;_- =1J_
SUBJECT: Revenue Measure(s) Workshop
RECOMMENDATION
It is recommended that the City Councit consider and provide staff feedback regarding placing a
tax increase measure, or measures, on future ballots.
BACKGROUND
In March 2017, the City Council adopted its goals for the two-year period of 2017 and 2018.
Included in the goal "Maintain Fiscal Stability" is the priority "Establish New Revenue Sources"
and within that are the tasks "revisit sales tax increase" and "consider other tax increase
opportunities". This retains priorities and tasks included in the Council's goals for 2013 through
2016. This workshop is an opportunity for the Council to re-initiate effort on both these tasks.
The necessity to establish new stable -based funding sources to address the City's needs is long-
standing. It has been a subject of recurring consideration since 2010. Until now, consideration
has focused on two tax sources: sales tax, and the transient occupancy tax (TOT). A failed sales
tax measure, Measure. Q, was decided by voters in 2014. Thus far, there has been no attempt to
increase TOT, due in some part to objections raised by the local lodging industry and in part to
the relatively small increase in revenue this alternative provided when last analyzed. A third
alternative, a parcel tax, was placed before voters in 2012 (Measure X), to finance Park
improvements. Measure Q was a general purpose tax, Measure X was a special purpose tax. A
general purpose tax requires a simple majority of votes to pass, a special purpose tax needs a 2/3
majority to pass. Both measures require the approval of 2/3 of the City Council (five members)
to place a measure on the ballot.
Effort was initiated in 2016 to place another sales tax measure, focused .on roads, on the ballot.
It was to have been structured as a special purpose tax, but did not go forward based on polling
that showed less than the requisite support to meet the 2/3 requirement.
Work was done in 2012 to quantify and to prioritize unmet park needs that could be funded with
a $52 - $500 per parcel tax. This range was selected on the basis of parcel size, and took into
account past experience with the amount Of parcel tax voters tiwould be thought likely to
0
approve, This rate was expected to raise $12 million over a 15 -year period, or about $800,000
per year. The 15 -year period was also chosen as a term that would be favorable to voters.
Work was done in 2013 and 2014 to quantify the City's unmet vehicle replacement, storm water,
facilities, transportation, and public safety staffing needs. When viewed in a thirty (30) year
window, these needs ranged from $366 to $466 million. A one -cent increase in the sales tax
would have generated an estimated $10 million per year at that time, or $300 million over thirty
years. Sales tax receipts have strengthened in the ensuing years, and a conservative estimate of
$12 million per year is currently recommended to quantify a one cent increase.
The City's set of unmet needs hasn't changed over the past three years, including the estimated
$180 million needed to bring the City's streets up to "good" condition that was re -calculated in
2016 as part of an expenditure plan developed for the special tax for roads. While some
emergency vehicles on the list provided to the City Council in 2013 were replaced through an
interdepartmental loan, and some work has been done on City fire stations, vehicle replacement
is periodic and repetitive, the work on fire stations is not the major remodels that are needed, and
a dedicated funding source to pay for this work in the fiiture is still lacking.
The City's five-year financial forecast, updated in February 2017, continues to project expenses
in excess of revenues in each of the next four years. It also projects declining Rind balances, and
imbalance during the 2018/19 fiscal year and beyond. This will be updated next week with the
presentation of the annual budget. Due to reductions recommended as part of the 2017/18
budget, projections are slightly better than February's, with imbalances commencing in fiscal
year 2019/20. As has been underscored in the past, balancing the budget is not the same as
having the resources to maintain investments in structures, infrastructure, systems, equipment,
and personnel, The unmet needs in these areas cannot be effectively addressed with existing
revenue streams.
Despite both this City's and the State of California's efforts to contain the rising cost of the
retirement system, public agencies are facing increases in their Ca1PERS rates that will impact
our budgets for the next two decades. On April 10, 2017, the City Council received a
presentation on PERS rates. Dramatic escalation is projected over the next ten years, based in
large part on the obligations for payments to employees who are already retired or who no longer
work at the City. These increases translated to approximate increases on the average of $1
million per year, for the next ten years. The rates are projected to decline from that time
forward, but based on the material presented, it will be 20 years before the rates Petaluma pays to
CalPERS will return to the same levels as they are today.
It should be noted the City Council has taken positive steps to improve its revenue picture,
increasing user fees, setting development impact fees to build capital improvements,
incorporating street impact fees into upcoming water and wastewater rate adjustments, and
increasing franchise fees to provide both general purpose and streets firnding. As well, the. City
downsized its operations curing the recession to correspond to slm-inking revenues. While
budgets are increasing, reductions curing the recession were effective enough that budgets are
still below levels in effect a decade ago.
2
DISCUSSION
This section of the report is intended to offer the City Council some alternatives for
consideration, and to develop a strategy for increasing revenues to meet needs and pension cost
escalations. The City Council is asked to determine the most palatable of the options, based on
revenue generating capability, allowable uses, approval requirements, and timing. Research
identified a limited list of alternatives cities use to levy taxes. Petaluma has already employed
several of these, and any increases or new taxes require voter approval. Alternatives include
sales, transient occupancy and parcel taxes. Also included are the utility user's tax, the business
license tax, property tax for debt, and "other" taxes. The "other" category includes taxes such as
property transfer taxes and admissions taxes. All these alternatives except for the utility user's
tax, which is prohibited by the City Charter, will be discussed in more or less detail in this report.
A good summary of California taxation is included in Attachment 1. The attachment was written
by the Legislative Analyst's Office in 2014, but is still good introductory information. To the,
alternatives - - -
Sales Tax. It is estimated Petaluma will receive approximately $12.5 million in FY 2017/18.
This represents the City's share of the Statewide base uniform sales and use tax of 8.125 percent
levied on taxable sales in Petaluma. To be conservative, and to reflect one-time and recurring
adjustments that may occur, it is estimated that a one cent increase will net $12 million a year.
Petaluma has among the lowest sales tax rates of Sonoma County cities. Only Windsor and
Cloverdale (which passed a utility user's tax) are as low. The following table compares the
current sales tax rates in Sonoma County cities
Sales Tax Rates in Sonoma County, as of April 1, 20171
City Rate M)
Cloverdale 8.125
Cotati
9.125
Healdsburg
8.675
Petaluma
8.125
Rohnert Park
8.625
Santa Rosa
8.625
Sebastopol
8.875
Sonoma
8.625
Windsor
8.1250
The current cap on sales tax in Sonoma County is 9.25 percent. Pursuant to State Law, the City
of Petaluma can increase the general purpose local sales tax by as much as 1.125 percent. This
would increase Petaluna's tax rate from S. 125% to the cap of 9.25 and could generate an
additional $13.5 million annually (based on current estimates). The following is an estimate of
proceeds using a variety of percentages, and over several periods of time:
State Board of Equalization
Estimated Sales Tax Proceeds, by Increase and Term
Increase L=
5 years
10 year
20 years
30 years
0.5% $6,000,000
$30,000,000
$60,000,000
$120,000,000
$180,000,000
0.75% $9,000,000
$45,000,000
$90,000,000
$180,000,000
$270,000,000
1.00% $12,000,000
$60,000,000
$120,000,000
$240,000,000
$360,000,000
If adopted as a general purpose tax, these funds could be utilized for any City general
governmental purpose. They could also be adopted as a special purpose tax, but the uses would
need to be designated.
Transient Occupancy Tax (TOT). It's estimated that Petaluma will receive approximately
$2.75 million in TOT in 2017/18, based on Petaluma's rate of ten percent (10%). Progress is
being made on two new hotels, which could add another $500,000 per year to the current totals
when they are completed. That estimate is conservative, and anticipates some cannibalization
from existing lodging. Including these two new hotels and using this conservative estimate,
annual proceeds could total $3.25 million. This translates to $325,000 for each percent of tax
levied, based on the current rate of 10 percent.
TOT rates charged in Sonoma County generally consist of two components, the rates adopted by
the cities for their own needs, and a separate rate collected by most jurisdictions to support either
a countywide or local business improvement areas. TOT as discussed in this report refers to only
the rate retained by the cities. The following table provides a comparison of those TOT rates in
Sonoma County:
Transient Occupancy Tax Rate Comparison, Sonoma County Cities
City
Rate
Cloverdale
10%
Cotati
10%
Healdsburg
12%
Petaluma
10%
Rohnert Park
12%
Santa Rosa
9%
Sebastopol
10%
Sonoma
10%
Windsor
12%
A two percent increase would place Petaluma equal to the highest rates charged in Sonoma
County, a three percent increase would exceed all Sonoma County rates and a four percent
increase would be the equivalent of larger cities such as San Francisco and Oakland. Using the
$325,000 per year estimate for a one percent increase, a two percent increase would generate an
additional $650,000, three percent would generate $975,000 a year, and Cour percent would
generate S1.3 million a year.
Like the sales tax, a TOT increase can be presented to the voters as a general tax or as a special
purpose tax, depending on how the proceeds are to be used. The percentage needed for passage
follows the same requirements, a simple majority for a general purpose tax, a 2/3 majority for a
special purpose tax.
Parcel Tax. A parcel tax is a levy on parcels of property, and is typically set at some fixed
amount per parcel determined as necessary to pay for a specific service or improvement. A
parcel tax cannot be based on a property's value. As a tax levied on property, it must be
structured as a special tax, does not make revenue available for general purposes, and requires a
2/3 majority for passage.
As an item added to the property tax bill there's a sense that parcel taxes over a certain amount
will be viewed unfavorably by tax payers. The rates discussed in the Background section of this
report regarding Measure X were set with that consideration in mind. This approach limits the
amount of revenue such a measure can generate, again, using the Measure X example, rates of
$52 -$500 per parcel, were estimated to generate approximately $800,000 per year. A revenue of
this nature would best be used to finance a project, or set of projects, but cannot be used for
general purposes.
Property Tax for Debt. Proposition 13 specifically restricts the amount of property tax that can
be levied on real property, and the amount it can be increased annually. One exception to this is
an increase to finance infrastructure improvements through bonded indebtedness. Constructing a
new Fire Station, using money borrowed against this source, would be one example of how this
alternative might be used. As a property-based charge, the law requires such a levy to be
approved as a special purpose tax, which requires a 2/3 majority to pass. It cannot be used for
general governmental purposes.
Business License Tax. Like nearly all California cities, Petaluma levies a business license tax, a
tax on businesses for the privilege of conducting business within the City. These taxes can differ
in structure, ranging from flat fees, sliding scales based on the number of employees, vehicles,
square footage, gross receipts, gross payroll, or some combination of these elements. Petaluma's
business license tax starts at a flat rate of $45 and increases depending on the type of business,
and gross receipts. Approximately 5,200 businesses pay Petaluma's business license tax, at an
average of $230 per business, per year. This generates $1.3 million a year, which is used as
general purpose revenue.
Comparing Petaluma's structure to those of surrounding communities does not lend itself to one
usefirl table. As such, Attachment 2 provides a summary of our business license structure, and
those in select surrounding communities. PetalL11118's rates were established in 1993, and last
adjusted in 1995. Doubling the entire program, as an example, Could generate an additional $1.3
million per year. Increasing the business license tax could be done as a general purpose, or a
special purpose tax.
Other Taxes
Documentary Transfer Tax/Real Property Transfer Tax. The California Documentary
Transfer Tax Act allows a rate of $1.10 per $1,000 of value. The tax is imposed "on each deed,
instrument, or writing by which any lands, tenements, or other realty sold within the county shall
be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or
purchasers, or any other person or persons, by his or their direction." Value is typically
calculated based on assessed valuation. In most cases, typically involving general law cities and
counties, this rate is shared between the city and the county. In that case each agency charges
$.55 per $1,000 of assessed valuation, for a combined total of $1.10. A full listing of these rates
is provided in Attachment 3.
The law allows certain cities, mostly chartered jurisdictions, to establish real property transfer
taxes at higher rates and/or to expand the circumstances under which the documentary transfer
tax is imposed. Petaluma is one of these, with a rate of $2.00. Added to the $1.10 charged by
Sonoma County, the combined rate charged to transactions in Petaluma is $3.10 per 1,000 of
valuation. The following table provides a list of the rates in effect in other Sonoma County
cities, the County rate, and the combined rate:
City
Gen Law/
City Rate
County
Combined
Chartered
Per $1,000 Av
Per $1,000 Av
Rate
Cloverdale
general law
$ 0.55
$ 0.55
$ 1.10
Cotati
general law
$ 1.90
$ 1.10
$ 3.00
Healdsburg
general law
$ 0.55
$ 0.55
$ 1.10
Petaluma
chartered
$ 2.00
$ 1.10
$ 3.10
Rohnert Park
general law
$ 0.55
$ 0.55
$ 1.10
Santa Rosa
chartered
$ 2.00
$ 1.10
$ 3.10
Sebastopol
general law
$ 0.55
$ 0.55
$ 1.10
Sonoma
general law
$ 0.55
$ 0.55
$ 1.10
Windsor
general law
$ 0.55
$ 0.55
$ 1.10
It is estimated Petaluma will collect $1.15 million in real property transfer taxes in 2017/18. As
detailed in Attachment 3, some cities levy higher rates, with as much as $15 dollars per $1,000 of
valuation charged in Berkeley and Oakland. A doubling of Petal urea's rate at the current
transaction volume would generate an additional $1.15 million per year. By way of illustration,
that increase would add $1,270 to the transaction costs of the sale of a ]ionic, based on the
current average of $635,0002. Increasing the real property transfer tax could be done for either
general purposes or special purposes.
Admissions Tat. An admissions tax is a per ticket charge for attendance at a facility or event
within the City. Events that serve as serve as fundraisers for nonprofit organizations can be
exempted. In some cases, it may be required to exempt non -profits from the tax. It can also be
written to charge an admissions tax in certain event venues such as a stadium or parade.
' Zillow, N/loch 2017
.y 6
Currently, eleven cities around the state are collecting an admissions tax. The table below
summarizes the revenues and rates for the admissions tax of each city, for FY 2013/143.
City
Rate
Revenue
Avalon
4% of price of entry
$ 549,968
Azusa
$.5 per ticket
$ 8,408
Fairfield
$5.00 per person, golf courses
$ 507,735
Indian Wells
10 percent price of entry
$2,244,120
Inglewood
10 percent price of entry
$ 237,180
Irwindale
3 percent price of entry
$ 24,431
Pasadena
5 percent, max of $.5
$ 448,264
Pomona
$.02 per carnival ride
$ 219,586
San Fernando
$.3 per ticket
$ 770,051
San Francisco
$.5 per ticket $25 and under
$2,413,555
$1.50 per ticket over $25
Santa Cruz
5 percent on price of entry
$2,274,117
Petaluma could choose to levy an admissions tax, which could be for either general
governmental or special purpose. The amount of revenue that would be generated is dependent
on what admissions are taxed, at what rate, and on the number of tickets sold. Research was not
done with individual businesses in Petaluma to determine their "occupancy" rates. Estimates
were based on approximately 2,200 seats between live music venues and movie theaters, and
occupancy rates of between 30 and 60 percent were applied. Actual numbers for fair attendance
and ticketed fairgrounds events were also used. On those bases, initial estimates indicate
Petaluma could generate approximately $400,000 a year if a $0.50 admissions tax were levied.
Higher occupancy rates, or a larger levy, would create greater revenue opportunities.
There are other fiuiding mechanisms, such as benefit assessment districts for example, that could
be used to fund certain improvements, but are not discussed here. The foregoing alternatives
present what appears to be the broadest opportunities for generating the kinds of revenue needed
to keep the City solvent into the future and to meet some of its unmet needs.
In that regard, it's recommended that the City Council give the strongest consideration to
revenues such as sales tax that provide the greatest support, and to those which lend themselves
to general governmental purposes rather than to restricted purposes. In any event, the Council
may need to package several of these alternatives together, or introduce them sequentially to
voters; in order to provide the kind of financial stability and preservation of service this
community deserves.
One final note, in this regard. Senate Bill 1 was just signed into law, which will lend some
support to fixing Petaluma's roads. The increase is modest, but it will provide approximately 1/3
more finding for streets than is currently available, reducing the amount that must be generated
locally. Further, discussions are occurring regarding the extension of Measure NI, a local sales
tax for transportation that has been funding area highway widening efforts and providing some
support to local street and road work. A continuation of, and increase in, that source will also
3 CalirorniaCityFinance.com computations fi•om FY13-14 data reported to the California Slate Controller
W
provide needed relief to Petaluma, and further reduce the need to fund these improvements with
local tax sources. Funding from these sources can have the benefit of enabling the City to
address the single largest concern of our residents, our roads, and free up taxing capacity that can
be used to focus on other City needs.
Election Timin
State law designates four dates as established election dates: the second Tuesday in April in
even -numbered years; the first Tuesday after the first Monday in March in odd -numbered years;
the first Tuesday after the first Monday in June in each year; and the first Tuesday after the first
Monday in November in each year. Statewide elections are generally held in June and November
in even -numbered years.
Local government elections calling for voter approval of taxes generally must be held on an
established election date (or at a special election called by the Governor). This requirement does
not apply to elections of charter cities and counties as these local governments are generally free
to select their own election dates; or for by -mail ballot elections. By -mail ballots may be held
one of three dates: the first Tuesday after the first Monday in May in each year; the first Tuesday
after the first Monday in March in even -numbered years; and the last Tuesday in August in each
year.
Petaluma's elections have thus far been conducted at the ballot box, and not by mail. Research
can be done to determine how a by -mail balloting may be accomplished if the City Council
wishes to further consider that option.
It's clear that local governments may call an election to seek approval of a special tax or bond
measure on any date allowed in state law or authorized in their local charters. It also appears that
as a charter city, Petaluma may be able to call an election on other dates of its choosing, although
more research will be needed to determine the limitations on that ability. There is, however,
another limitation that applies to elections for general purpose taxes. These measures must be
decided at a regularly scheduled local election, unless an emergency is declared by a unanimous
vote of the local government's governing body. This requirement applies to charter cities and
charter counties, although these entities generally have broad authority to set the dates of their
regularly scheduled elections.
During goal setting this year, the Council briefly discussed the wisdom of conducting a tax
measure at other than a November election, considering either a June primary election or one of
the other elections provided for by State Law. Taking into consideration the number of measures
that can appear on a primary or general election ballot, it may make strategic sense to opt for an
"off -cycle" election date so that voters' attention is directed solely to Petaluma. Such dates can
easily accommodate special purpose tax measures, but if the City Council wishes to place a
general purpose tax, or taxes on such a ballot it will need to make findings of emergency.
Unfortunately, it appears that the fiscal conditions to support those findings will be existent for
the General Fund, based on current forecasting.
FINANCIAL IMPACTS
Election costs are based on the cost of an election, and the number of registered voters in a given
community. A number of factors enter into the calculation of costs, the number of candidates
involved, the number of measures on the ballot, consolidation with statewide elections, and the
number of entities sharing in.the cost. In the past, estimates for Petaluma measures have ranged
from under $20,000 to over $60,000. An off -cycle election will probably have less participants
to share costs, and as such could be a more expensive option. Additional work with the County
Elections office will be needed, as the City Council develops its approach, to better determine
election costs during 2017, or prior to November of 2018.
ATTACHMENTS
1. Summary of California Taxation: "A Look at Voter -Approval Requirements for Local
Taxes"
2. Business License Fee Comparison Schedule
3. California City Documentary and Property Transfer Tax Rates
ATTACHMENT 1
Introduction
For about 100 years, California's local governments generally could raise taxes without directly
securing their residents' consent. Beginning in 1978, the state's voters amended the California
Constitution several times to require that local government tax increases be approved by local
voters. Recently, the Legislature has shown interest in exploring changes to voter -approval
requirements for local taxes. Several proposals to place changes before the voters have been
introduced during the current legislative session. This report was developed to provide contexf for
discussions about the state's voter -approval requirements. We do not offer any suggested changes to
these requirements. The report is divided into four sections:
Local Government Basics. 'This section provides a brief introduction to local governments
in California.
'doter -Approval Requirements for Taxes. This section summarizes the state's existing
system of voter -approval requirements for local taxes.
Hoiv California's Requirements Evolved. This section explains how the state's complex
voter -approval system evolved.
ALook at Election Results. This section reviews outcomes of local tax elections over the last
15 years.
LOCAL GOVERNMENT BASICS
Understanding California's voter -approval this section we provide a brief introduction to local
requirements for local taxes necessitates some basic governments in California.
knowledge of local governments, Therefore, prior to California Has Over 5,000 Local
our discussion of voter -approval requirements, in Governments. Californians receive services from
AN LAO BRIEF
over 5,000 local governments—counties, cities,
school districts, community college districts,
and special districts (such as'fire districts, flood
control districts, and water districts). Each local
government has a local governing body (such
as a city council or board of supervisors) that
makes decisions about its programs, services, and
operations. Local residents generally elect the
members of local governing bodies.
Role ofLocal Governments. Cities, counties,
and special districts share the responsibility of
providing municipal services—such as police, fire
protection, sewer, water, parks, and libraries—to
California residents. Counties, in addition to
providing some municipal services, also provide
countywide services, such as health and social
service programs. School and community college
districts are the primary provider of education
from kindergarten to lower -level post -secondary
education and vocational training.
Local Governments May Increase Property
Taxes Only to Finance Voter Approved Debt.
Taxes levied on property owners based on a
property's value are known as ad valorem taxes.
(For the remainder of the report, ad valorem
property taxes are referred to simply as property
taxes.) The State Constitution limits, with narrow
exceptions, the property tax rate to 1 percent. Local
governments may raise the property tax rate only
for two purposes: (1) to pay debt approved by voters
prior to July 1, 1978 and (2) to finance bonds for
infrastructure projects.
Cities and Counties Have Broad Tax
Authority. Outside of the property tax, cities and
counties have authority to impose a broad range
of taxes, including sales taxes, parcel taxes, utility
taxes, hotel taxes, and business taxes. Figure 1
provides descriptions of the primary types of taxes
that local governments may impose.
Special Districts and School and Community
College Districts Have Mom Narrow Tax
Authority. Most special districts and school and
community college districts are authorized to levy
only parcel taxes to fund services. Parcel taxes
generally are paid by most property owners within
each local government's jurisdiction. In some cases,
however, certain groups of property owners—
such as senior citizens—may be exempted. A
limited number of special districts—primarily
transportation districts—also may levy sales taxes.
Figure 1
Local Governments Levy Many Types of Taxes
Property Tax A levy on property based on the properties'
Cities, counties, special districts, and
for debt assessed value and used for voter approved debt.
school and community college districts
Parcel Tax A levy on parcels of property, typically set at some
Cities, counties, special districts, and
fixed amount per parcel. Cannot be based on a
school and community college districts
property's value.
Sales Tax A levy on the retail sale of tangible goods. Cities, counties, and some special
districts
Hotel Tax A levy on the occupancy of hotels, motels, or other Cities and counties
short-term lodging.
Utility Tax A levy on the use of utilities, such as electricity, Cities and counties
gas, or telecommunications.
Business Tax A levy on operators of businesses. Cities and counties
Other Taxes Other types of taxes including Mello -Roos taxes Primarily cities and counties
and property transfer taxes.
2 Legislative Analyst's Office www,lao.ca.gov i
AN LAO BRIEF
Local governments must obtain the approval
of local voters to raise taxes. The only exception
to this rule is for property tax rate increases to
pay debt approved by voters before 1978. Local
government voter -approval requirements vary
based on several factors, including the type of
local government raising the revenues, the revenue
mechanism, and the use of the revenues. In this
section we summarize California's complex system
of voter -approval requirements for local taxes.
Is the Charge a Tax?
Some types of local government charges are
not considered taxes and, therefore, are not subject
to voter approval. In general, a local government
levy, charge, or exaction is a tax and subject to
voter approval unless it meets at least one of seven
Figure 2
exemptions defined in the State Constitution.
Figure 2lists these exemptions. Some charges
are categorically exempt: fines and penalties for
violating the law, entrance charges and charges
for use of government property, local property
development charges, and property assessments
and property -related fees imposed in accordance
with Proposition 218 (discussed in more detail
below). Other charges are exempt if they satisfy
certain conditions. Charges for a government
service, benefit, or product are exempt if the local
government (1) charges no more than its reasonable
costs, (2) provides the service directly to the payer,
and (3) does not provide the service to non -fee
payers. In addition, regulatory fees are exempt if the
fee is limited to the local government's direct cost
to regulate the fee payer.
Local Government Charges Exempt From Voter Approval
y A charge imposed for a specific benefit conferred or privilege granted directly to, the payer that is not
provided to those not charged, and which does not exceed the reasonable costs to the local government
/ of conferring the benefit or granting the privilege.
v A charge imposed for a specific government service or product provided directly to the payer that is not
provided to those not charged, and which does not exceed the reasonable costs to the local government
of providing the service or product.
V/ A charge -imposed for the reasonable regulatory costs to a local governmentfor issuing licenses and
permits, performing investigations, inspections, audits, enforcing agricultural marketing orders, and the
administrative enforcement and adjudication thereof.
y A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease
/ of local government property.
v A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local
government, as a result of a violation of law.
Y/ A charge imposed as a condition of property development.
Y Assessments and property -related fees imposed in accordance with the provisions of Article XIII D.
www,lao.ca.gov Legislative Analyst's Office 3
AN LAO BRIEF
Determining the Applicable
Voter -Approval Threshold
All Local Government Taxes Fall in One of
Three Categories. New local government taxes
generally can be placed into one of three categories:
(1) property taxes to finance debt, (2) general taxes,
and (3) special taxes. Each of these categories has
different rules regarding voter approval. Figure 3
displays a process that can be used to determine
to which of the three categories a proposed tax
belongs and to determine the tax's voter -approval
requirement. Below, we define each of these
categories of taxes and discuss the applicable voter -
approval requirements.
Requirements Vary to Increase Property Tax
for Infrastructure Bonds. As discussed above,
the property tax may be raised only to (1) pay
debt approved by voters prior to July 1, 1978 and
(2) finance infrastructure bonds. Additional, voter
approval is not required to increase property tax to
pay debt approved by voters prior to July 1, 1978.
Voter approval is required to increase the property
tax to finance infrastructure bonds. The voter -
approval requirement to raise property taxes to
fund bonds depends on the type of infrastructure
project to be funded. Generally speaking, property
tax increases for infrastructure bonds require
approval by two-thirds of local voters. Property
tax increases for school facility bonds that satisfy
certain conditions, however, can be approved by
55 percent of local voters. 'These requirements are
described in more detail in Figure 4 (see page 6).
Simple Majority Approval Is Required for
General Taxes, A general tax requires approval by
a simple majority of voters, (A simple majority is
50 percent of voters plus one additional voter.) A
general tax is a tax (1) levied by a general purpose
government—city or county—and (2) expended,
at the discretion of the local government's.
governing body, on any programs or services. All
non -property taxes which cities and counties are
authorized to levy may be imposed as general taxes.
Tivo-Thirds of Voters Are Requir-ed to Approve
Special Taxes. Special taxes require approval from
two-thirds of local voters. A special tax is a tax that
meets one of the following conditions:
Special -Purpose District Tax. All taxes—
other than property taxes for infrastructure
bonds—levied by special districts, school
districts, and community college districts
are special taxes.
• Tax Dedicated to a Specific Purpose. A
city or county tax dedicated to a specific
purpose or specific purposes—including a
tax for a specific purpose deposited to the
agency's general fiend—is a special tax. All
non -property taxes that cities and counties
are authorized to levy may be raised as
special taxes.
• Tax Levied on Property. All taxes levied
on property other than the property tax—
typically parcel taxes—are special taxes.
Election Timing
State Law Establishes Official Election Dates,
State law designates four dates as established
election dates: (1) the second Tuesday in April in
even -numbered years, (2) the first Tuesday after
the first Monday in March in odd -numbered years,
(3) the first Tuesday after the first Monday in June
in each year, and (4) the first Tuesday after the
first Monday in November in each year. Statewide
elections generally are held in June and November
in even -numbered years. Local government
elections—including elections called for voter
approval of taxes—generally must be held on an
established election date or at a special election
called by the Governor. his requirement does not
apply to:
i I4 Legislative Analyst's Office www.lao.ca.gov ,.
AN LAO BRIEF
Figure 3
How. to Determine the Voter -Approval Threshold for a Proposed Local Government Chargea
a This graphic excludes property tax increases to pay debt approved by voters prior to July 1, 1978.
A
www.lao.ca.gov Legislative Analyst's Office 5
AN LAO BRIEF
Elections of charter cities and charter
counties (cities and counties that are
governed primarily by their own charter
as opposed to state law) as these local
government are generally free to select
their own election dates.
Elections of school districts that have
consolidated their election with a city or
county.
Elections for school facilities bond
measures that are to be approved by
two-thirds of local voters.
All -mail ballot elections, which may be
held on one of three dates: (1) the first
Tuesday after the first Monday in May in
Figure 4
each year, (2) the first Tuesday after the first
Monday in March in even -numbered years,
and (3) the last Tuesday in August in each
year.
Additional Limitations Apply to Some Taxes.
Local governments may call an election to seek
approval of a special tax or bond measure (except
for school facilities bond measures subject to a
55 percent voter -approval threshold) on any date
allowed in state law or authorized in their local
charters. Additional limitations, however, apply to
elections for general taxes and school facilities bond
measures subject to a 55 percent voter -approval
threshold. General taxes must be decided at a
regularly scheduled local election, except in the
case of an emergency declared by a unanimous vote
Conditions a School Facilities Bond Must Meet to
Qualify for 55 Percent Voter Approval
ME���
The bond measure includes:
• A requirement that the bond funds can be used only for construction, rehabilitation, equipping of school
facilities, or the acquisition or lease of real property for school facilities.
• A specific list of projects to be funded and certification that the school district board or community
college board has evaluated safety, class size reduction, and information technology needs in,
developing the list.
• A requirement that the school district board or community college board conduct annual, independent
financial and performance audits until all bond funds have been spent to ensure that the bond funds
have been used only for the projects listed in the measure.
Two-thirds of the governing board of the school district or community college district approve placing the
bond measure on the ballot.
V/ The bond measure is decided at a statewide primary, general, or special election or a regularly
scheduled local election.
V/ The property tax rate levied as a result of any single election will not exceed $60 (for unified school
district), $30 (for a school district), or $25 (for a community college district), per $100,000 of taxable
property value.
y The bonds issued, when combined with other bonds issued by the district, will not exceed 1.25 percent
of property value in the district or 2.5 percent of property value in unified school districts and community
college districts.
The governing board of the school district or community college district appoint a citizens' oversight
committee to inform the public concerning spending of the bond revenues.
6 Legislative Analyst's Office www,lao.ca.gov
AN LAO BRIEF
of the local government's governing body. (This
requirement applies to charter cities and charter
counties, although these entities generally have
broad authority to set the dates of their regularly
scheduled elections.) School facilities bond measures
subject to a 55 percent voter -approval threshold must
be decided at a regularly scheduled local election or a
state primary, general, or special election.
A W
California's voter -approval requirements for
local taxes evolved over multiple decades, as can
be seen in Figure 5. In this section, we discuss the
major events in the evolution of voter -approval
requirements for local taxes.
Prior to Proposition 13, Most Taxes Could
Be Raised Without Voter Approval. Local
governments generally could raise or lower a tax
without the assent of local voters prior to voter
approval of Proposition 13 in 1978. For most
local governments, the property tax was the most
significant source of local tax revenue. Each local
government annually determined the amount
of property tax revenue necessary to finance the
desired level of services and set its property tax
rate—by a vote of its governing board—to collect
that amount. A property owner's property tax
bill reflected the sum of the individual rates set
by each taxing entity serving the property. State
law provided most local governments very limited
authority to levy other non -property taxes. Cities,
especially charter cities, were an exception as they
had greater authority to levy non -property taxes.
Although voter approval generally was not required
Figure 5
Major Milestones in the Development of
Voter -Approval Requirements for Local Taxes
:.—� ----=ee--- Vii= _ _ u;,�� ,�'a....� e�� — _•..,,�- � -mar- �^^ -- �:.,,� a S', os, ;a
1978 Proposition 13 • Lowered the property tax rate to a maximum of 1 percent (for general
purposes).
• Required special taxes to be approved by two-thirds of voters.
1982
City and County of
• Defined a special tax as a tax levied for a specific purpose.
San Francisco v. Farrell
1986
Proposition 46
• Allowed local governments to raise the property tax rate to finance
infrastructure bonds if approved by two-thirds of local voters.
1986
Proposition 62
• Required general taxes to be approved by a simple majority of voters.
(Did not apply to charter cities.)
1996
Proposition 218
- Required all general taxes to be approved by a simple majority of voters.
• Defined a special tax as all taxes (1) levied by special districts and school
and community colleges districts and (2) used for specific purposes.
• Required all parcel taxes to be levied as special taxes.
2000
Proposition 39
• Lowered the voter -approval threshold for school facilities bond measures
to 55 percent.
2010
Proposition 26
• Narrowed the scope of charges that local governments can levy without
voter approval.
a Excludes
provisions related to state taxes or local
assessments and tees."
www.lao.ca.gov Legislative Analyst's Office 7
AN LAO BRIEF
for local taxes until 1978, as discussed in the by two-thirds of local voters. However, the measure
nearby box, voter -approval requirements for local did not explicitly define the term special taxes and
government debt date back to the 191h century. different local governments interpreted this term
Proposition 13 Fundamentally Altered Local
Government Finance. In June 1978, California
voters approved a constitutional amendment
that fundamentally changed local government
finance. (Proposition 13 also required state taxes
to be approved by two-thirds of both houses of
the Legislature, Requirements for state taxes
are not discussed in this report.) Specifically,
Proposition 13 lowered the aggregate property tax
rate in each county to a constitutional maximum
of 1 percent (plus amounts necessary to pay debt
approved by voters prior to Proposition 13) and
assigned responsibility for property tax allocation
to the state, In effect, Proposition 13 eliminated
local government control over property taxes and
immediately reduced local government property
tax revenues by more than 60 percent.
Voter Approval Required for "Special Taxes."
Proposition 13 also required special taxes levied by
local governments to be approved by two-thirds of
local voters. At the time of Proposition 13's passage,
the ramifications of this provision were unclear.
Some supporters of Proposition 13 indicated
that they intended special taxes to refer to all
non -property taxes levied by local governments,
thereby requiring all new local taxes to be approved
differently, Notably, the City and County of San
Francisco suggested an alternative definition of a
special tax: a tax levied for a specific purpose. Based
on this reasoning, in 1980 the City and County of
San Francisco increased a tax on businesses for
general government purposes without obtaining
approval of two-thirds of voters. The legality of
the new business tax was challenged—in City and
County of San Francisco v. Farrell—and, in 1982,
the California Supreme Court ruled in favor of San
Francisco, In doing so, the Court defined a special
tax as a tax levied for a specific purpose, as opposed
to a tax used for general government purposes.
(This ruling is hereafter referred to as the Farrell
decision.) By extension, taxes levied for general
government purposes, general taxes, were not
subject to voter approval.
Voter Approval Requirements Extended to
General Taxes, Following Proposition 13, many
cities that had historically been reliant on the
property tax began to enact other non -property
taxes. Business taxes, hotel taxes, and utility
taxes that had comprised a small portion of city
revenue prior to Proposition 13 began to comprise
a growing share of city revenues. In many cases,
these taxes were enacted as general taxes and,
Vote Requirements for Local Debt Were Established in the 19th Century
The State Constitution of 1879 required most local governments to obtain approval from
two-thirds of local voters prior to issuing long-term debt. While these requirements remain in effect
today (voters relaxed these requirements for school facilities bonds in 2000), the breadth of their
application has declined over time. Various types of long-term obligations commonly incurred by
local governments—such as lease -revenue bonds, certificates of participation, pension obligation
bonds, and pension liabilities and other retiree benefits—have not been held to be debt subject to
voter -approval requirements. Long-term obligations not subject to voter -approval were far less
common among local governments over a century ago than they are today.
8 Legislative Analyst's Office www.lao.ca.gov
AN LAO BRIEF
therefore, did not require voter approval. In
response to this trend, in 1984 the proponents
of Proposition 13 advanced another initiative
constitutional amendment, Proposition 36, that
would have required all local government tax
increases (both general and special taxes) to be
approved by two-thirds of local voters. Voters
did not approve Proposition 36. Two years later,
voters approved Proposition 62, which required
general taxes to be approved by a simple majority
of local voters. Proposition 62 also reiterated that
special taxes must be approved by two-thirds
of local voters. Some challenged Proposition 62
in court, arguing that it (1) constituted an
unconstitutional referendum on taxes and (2) as a
statutory measure, did not apply to charter cities,
which derive their taxing authority from the State
Constitution. In 1990, prior to the California
Supreme Court ruling on Proposition 62, voters
rejected a measure (Proposition 136) proposing to
amend the State Constitution to require, among
other provisions, simple majorityvoter approval
of all local government general taxes. Five years
later, the California Supreme Court upheld the
constitutionality of Proposition 62, for all local
governments other than charter cities.
Legislature Authorizes local Governments to
Levy Parcel Taxes. While Proposition 13 capped
property taxes, it did not prohibit other levies on
property owners not based on a property's value.
During the 1980s, the Legislature enacted a series
of legislation that authorized local governments to
levy a new type of tax on property owners: the parcel
tax. Unlike the property tax which varies based on a
property's value, a parcel tax is typically set at a fixed
amount per parcel (or fixed amounts per room or
per square foot of the parcel). Under Proposition 13,
parcel taxes are the only source of locally controlled,
general purpose tax revenue for most special
districts, school districts, and community college
districts.
Proposition 218 Adds Voter Approval
Requirements to the State Constitution. In
November 1996, voters approved Proposition 218,
which added to the State Constitutionn-a collection
of voter -approval requirements for local taxes.
Proposition 218 also made other important
changes to local government finance, which are
summarized in the box on page 10, In several
respects, Proposition 218 simply constitutionalized
aspects of the voter -approval system that
already existed in statute and case law. First,
Proposition 218 reinforced Proposition 62's
simple majority approval requirement for general
taxes. In doing so, Proposition 218 extended
voter -approval requirements of general taxes to
all local governments—including charter cities.
Proposition 218 also largely affirmed the Farrell
decision's definition of special taxes—special
taxes are those dedicated for specific government
purposes. Proposition 218 established in the
State Constitution that special taxes are (1) all
taxes levied by special districts and school and
community colleges districts and (2) taxes
for specific purposes, even if the revenues are
deposited in an agencys general fund. Finally,
Proposition 218 added to the State Constitution
the requirement that all parcel taxes must be
approved as special taxes, thereby requiring them
to be approved by two-thirds of local voters.
Proposition 218 also introduced a new requirement
that a general tax must be presented to voters at a
regularly scheduled local election, except in cases of
an emergency declared by a unanimous vote of the
local government's governing body.
Voters Relaxed Proposition 13's Limit
on Property Taxes. During roughly the same
period that two measures (Proposition 62 and
Proposition 218) were approved to expand the
voter -approval requirements of Proposition 13,
voters approved two measures that relaxed the
Constitution's limitations on property taxes.
a
www.lao.ca.gov Legislative Analyst's Office 9
AN LAO BRIEF
In June 1986, voters approved Proposition 46, measures proposed to lower the voter -approval
which amended the provisions of Proposition 13 threshold (the proportion ofvoters that must
to allow local governments to raise the aggregate approve a tax measure) for school facilities bond
property tax. rate for the purpose of financing
infrastructure bonds if approved by two-thirds
of local voters. (Property tax increases to fiend
infrastructure bonds are hereafter referred to as
measures. Specifically, Proposition 170 (November
1993) and Proposition 26 (March 2000) proposed
to lower the voter -approval threshold from
two-thirds to a simple majority. These measures
"bond measures.") Following Proposition 46, three were not approved byvoters. The third measure,
Proposition 218 Addressed More Than Voter Approval of Taxes
Proposition 218, a constitutional amendment approved by voters in November 1996, added to
the State Constitution a collection of -voter-approval requirements for local taxes, Proposition 218
also constrained the revenue -raising capacity of local governments in other ways, described below.
Tightened Approval Requirements for Property Assessments. Local governments may levy a
charge, known as an assessment, on property owners to pay for a particular public improvement
or service—such as flood control improvements, streets, lighting, and landscaping—that benefits
the properties. Assessment rates are linked to the cost of providing the service or improvement.
Proposition 218 established requirements local governments must follow to impose an assessment.
First, a local government must verify that property owners would receive a specific, direct benefit
from the project or service being funded by the assessment. Second, a local government must
estimate the cost of providing the specific benefit to each property owner. Next, each property
owner's assessment should be set such that the assessment does not exceed his or her proportional
share of total costs. Finally, the local government must notify all affected property owners by mail.
Each assessment notice must contain a mail -in form for the property owner to indicate hi's or her
approval or disapproval of the assessment. The assessment maybe imposed only if 50 percent or
more of these forms, weighted by the assessment amount each property owner will pay, support the
assessment.
Constrained Local GovernmentAttthority to Impose Certain fees ort Property 01vners.
Proposition 218 limits local government authority to impose property related fees." This term is
defined as fees imposed "as an incident of property ownership" and includes fees such as those
for garbage service, sewer service, and storm water management. Under Proposition 218, revenues
from these fees may not be used for a general governmental service or for a service not immediately
available to the fee payer. In addition, the amount of the fee may not exceed the local government's
proportionate cost to provide the service to the property owner. Finally, Proposition 218 specifies
that, before imposing or increasing these fees, the local government must (1) mail information to
fee payers, (2) reject the fee if written protests are presented by a majority of the affected property
owners and (3) hold an election except for fees for water, sewer, and refuse collection.
Voters Given Polver to Reduce or Repeal Taxes and Other Charges Via Initiative.
Proposition 218 also included a provision which expressly authorizes local residents to reduce or
repeal any local tax, assessment, or fee through the initiative process.
10 Legislative Analyst's Office . www.lao.ca.gov
AN LAO BRIEF
Proposition 39, approved by voters in November
2000, lowered the voter -approval threshold to
55 percent for school facilities bond measures
meeting certain conditions. Proposition 39 and
legislation enacted to implement Proposition 39—
Chapter 44, Statutes of 2000 (AB 1908, Lempert),
as amended by Chapter 580, Statutes of 2000
(AB 2659, Lempert)—defined the conditions a bond
measure must satisfy to qualify for a 55 percent
voter -approval threshold. These conditions are
described in Figure 4 on page 6.
Proposition 26 Broadened the Definition of
a Tax. It generally is easier for local governments
Over the past 15 years, voters have considered
over 3,000 local tax and bond measures (property
tax increases to fund infrastructure bonds) under
the rules described earlier in this report. In this
section, we discuss the main findings of our review
of the outcomes of these measures.
The passage rate of tax and bond measures
increased during the past 15 years.
Proposition 39 led to a substantial increase
in the passage rate of school facilities bond
measures.
Voter support of tax and bond measures
is influenced by many factors, including
location, revenue sources, use of the
revenues, and election timing.
Variation in voter -approval requirements
results in variation in passage rates.
Certain taxes, subject to a higher voter -
approval threshold, pass less often despite
receiving more yes votes.
About the Data. We compiled data from
two primary sources: (1) California Debt and
to approve new fees—which can be imposed by
a majority vote of the governing board without
voter approval—than to approve new taxes.
Proposition 26, approved by voters in November
2010, amended the State Constitution to recast as
taxes some charges that local governments formerly
could levy without voter approval. (Proposition 26
also recast as taxes certain charges that the
Legislature formerly could impose as fees.) Under
Proposition 26, a local government levy, charge,
or exaction is a tax and subject to voter approval
unless it ineets at least one of seven exemptions.
Figure 2 on page 3 lists these exemptions.
Investment Advisory Commission summary
reports of state and local elections and (2) the
California Elections Data Archive maintained by
the Institute for Social Research at California State
University, Sacramento, These sources provide
the outcomes of most local tax and bond measure
elections over the period 1998-2012. The dataset
does not include information about measures
proposed by special districts at local special
elections.
Passage Rates. of Tax and Bond
Measures Have Increased
Tax Measures Are Now Passing More
Frequently. As Figure 6 shows (see next page), the
statewide passage rate of tax measures increased
over the period 1998-2012. Voters approved a little
less than half of tax measures in 1998, compared
with nearly two-thirds of tax measures in 2012.
The increase in the passage rate of tax measures
does not appear to reflect an increase in voter
support for taxes because the average percent of
electors voting yes for tax measures was fairly flat
during this period. Instead, the upward trend in the
www.lao.ca.gov Legislative Analyst's Office 11
AN LAO BRIEF
Figure 6
Passage Hate of Local Tax
Measures Increased Over Past 15 Years
60
50
40
30
20
t_TD Average Percentage of Electors Voting Yes on Tax
- w
Emm Passage Rate
10
------ -- ------------
98-99 00-01 02-03 04-05 06-07 08-09 10-11 2012
- i
Proposition 39's reduction
in the voter -approval
threshold for school facility
bonds, which comprise
a significant majority of
local bond measures. As
Figure 7 shows, the passage
rate of school facilities
bonds increased by almost
30 percentage points
following voter approval of
Proposition 39 in 2000. in
the 12 years following voter
approval of Proposition 39,
83 percent of Proposition 39
school facilities bonds
passage rate of tax measures appears to be due to an passed, compared to
increase in the number of proposed general taxes 54 percent of bonds for the 12 year period prior to
relative to the number of proposed special taxes. Proposition 39. Factors other than Proposition 39's
Largely because general taxes are subject to a lower change in the voter -approval threshold for school
voter -approval threshold, general taxes typically facilities bonds—such changes in availability of
pass more often than special taxes. state matching funds or the various transparency
Passage Rate of Bond Measures Increased requirements for Proposition 39 school facilities
Significantly Following Proposition 39. The bonds ---could have contributed to the increase in
statewide passage rate of bond
measures also increased during
this period. Voters approved
58 percent of bond measures
in 1998, compared with
80 percent in 2012. Similar
to tax measures, the increase
in the passage rate of bond
measures does not appear to
reflect an increase in voter
support for bonds. The average
percent of electors voting
yes on bond measures was
roughly flat during this period.
Rather, the increase in the
passage rate of bond measures
appears to be the result of
12 Legislative Analyst's Office www.lao.ca.gov !i
AN LAO BRIEF
the passage rate of these measures. However, the
fact that we find no increase in the percent of yes
votes received by school facilities bond measures
suggests that the effect of these other factors was
limited.
No Clem- Trend In Passage Rate of Nonschool
Bond Measures. Although the passage rate of
school facilities bonds increased, we find that there
was no clear trend in the passage rate of nonschool
bond measures. During this period, voters
approved 57 percent of nonschool bond measures.
Location, Revenue
Source, and Purpose
Affect Passage Rates
Taxes Passed
More Often in Some
Counties, The passage
rate of tax and bond
measures varies
significantly from
county to county.
Voters approved over
80 percent of tax and
bond measures in some
counties, while voters
approved less than
a third of measures
in other counties.
Figure 8 displays the
passage rate for each
county.
A Higher
Percentage of Taxes
Paid by a Narrow
Group Passed Than
Other Types of Taxes.
Voters approved a
higher percentage
of taxes levied on
a narrow taxpayer
base—such as business taxes and hotel taxes—than
other types of taxes. Figure 9 (see next page) shows
the number of approved and failed tax measures
by revenue source. As suggested by Figure 9, the
passage rates of business taxes (68 percent) and
hotel taxes (60 percent) exceeded the passage
rates of other major types of local government
taxes, specifically utility taxes (57 percent), sales
taxes (54 percent), and parcel taxes (51 percent).
Although business and hotel taxes passed more
often, they represent less than 20 percent of
approved tax measures (in part because only
Figure 8
Local Tax and Bond Measure Outcomes Vary Across Counties
Note: According to our data, no measures were proposed in Alpine County between 1008 and 2012.
www.lao.ca.gov Legislative Analyst's Office 13
AN LAO BRIEF
Figure 9
Which Types of Local Taxes Have Higher Passage Hates?
Number of Proposed Local Taxes by Type, 1998 to 2012
Business Tax
%;:
Hotel Tax -
Approved Tax Mea
'.`� Failed Tax Measure
Utility Tax
Sales Tax
Parcel Tax
100 200 300 400 500 600 700 80
cities and counties may impose these taxes). Over
two-thirds of approved measures were parcel taxes
and sales taxes (taxes that also maybe imposed by
special districts and/or schools).
Taxes for Education Pass More Often Titan
Taxes for Other Purposes. Education -related tax
and bond measures passed significantly more
often than measures dedicated for other purposes.
Figure 10
shows the
passage rates
of taxes
dedicated
to various
70
Purposes.
Education- 60
related 50
measures 40
also 30
comprised 20
a significant
io
majority
(75 percent) School K-14 Nonschool
Facilities Education Infrastructure
of approved Bonds Bonds
measures.
Election Timing
Affects Passage Rates
Tax wid Bond
Passage Rate' Measures More Likely
5:
r= to Pass at Off -Cycle
68% '' Elections, As discussed
sures �.
previously, local
s 60
governments have
substantial autonomy
57
in deciding when to
59
present tax and bond
�_
measures to voters for
<_s 51 - approval. In examining
—r—T� city and county tax and
0 900 1,000 1,100 bond elections during
the period 2002-2011,
we found placing a
measure on a statewide ballot significantly affected
its passage rate. (This analysis is limited to cities
and counties because voter registration data was
not readily available for other local governments.)
During this period, the passage rate of city and
county tax and bond measures on a statewide ballot
was 58 percent compared to 68 percent for measures
not on a statewide ballot.
Figure 10
Taxes for Education Passed More Often Than Taxes for Other Purposes
Passage Rate of Local Taxes by Purpose, 1998 to 2012
80
14 Legislative Analyst's Office www.lao.Ga.gov
Water Public Transportation Library Heallh Parks
Safety and
Recreation
AN LAO BRIEF
Vote1• Participation Is Higher- at Statewide
Flections ... We also found that voter participation
was higher for tax measures on a statewide ballot.
On average, 55 percent of registered voters cast a
vote on city and county tax and bond measures on
a statewide ballot, compared to only 30 percent of
registered voters for city and county measures not
on a statewide ballot,
... However, Voter- Participation Does Not
Appear to Explain Differences in Outcomes.
Differences in voter participation, however, do not
appear to explain why measures on a statewide
ballot are less likely to pass. Even among measures
with roughly similar voter participation rates,
we found that the passage rate of measures on
a statewide ballot fell below measures not on a
statewide ballot. For example, measures with voter
participation between 20 percent and 30 percent on
a statewide ballot had a passage rate of 54 percent
compared to 74 percent for measures not on a
statewide ballot. Additional
comparisons are shown on
Figure 11.
Some Taxes Passed Less
Frequently Despite Being
Favored by More Residents
California's voter -approval
system for local taxes provides
for a higher voter -approval
threshold for certain types
of taxes than for others.
Specifically, special taxes and
bond measures are subject
to a higher voter -approval
threshold than general taxes.
Additionally, rnonschool bond
measures face a higher voter -approval threshold
than school bond measures. One result of requiring
higher approval thresholds for some taxes is that
they were approved less often than other taxes
despite receiving more yes votes. For example,
58 percent of electors, on average, voted in favor
of city taxes, a significantly lower percent than the
percent.voting for special district taxes (63 percent)
and school and community college district taxes
(68 percent). Nonetheless, as Figure 12 shows (see
next page), city taxes passed about as often as
school and community college district taxes and
significantly more often than special district taxes.
Similarly, 63 percent of electors, on average, voted
for city and county taxes for specific purposes,
compared to 55 percent of electors for general
taxes. General taxes, however, passed considerably
more often than city and county taxes for specific
purposes -18 percent more general taxes passed
than special taxes.
Figure 11
No Clear Relationship Between Voter
Participation and Tax Measure Outcomes
Passage Rate of City and County Taxes, 2002-2011
® Non -Statewide Elections
80
' Statewide Elections
70
60
50
4030 t
lar
r pt IN {l dies{
20 —_:=
tS
10
r
RM
Less Than 20% 20%-30% 30%-40% 40%-50% Greater Than 50
Voter Participation
www.fao.ca.gov Legislative Analyst's Office 15
AN LAO BRIEF
Figure 12
Special District Taxes deceived Anore Yes Votes
But Passed Less Often Than City Taxes
® Average Percent of Electors Voting Yes on Tax
80%
70
60
50
40
30
20
10
Special Districts Cities School and Counties
Community
College Districts
California's system of voter -approval
requirements is complex. As described in the
first section of this report, local government
approval requirements vary based on many factors,
including the type of local government raising
the tax, the revenue mechanism, and the use of
the revenues. The system has become increasingly
complex in every decade since the 1970s. As
discussed in the report's second section, the current
system developed in a piecemeal fashion. Neither
the voters nor the Legislature have been asked to
consider the current system as a complete package.
Recently, the Legislature has shown interest in
exploring changes to voter -approval requirements
for local taxes. In this report, we do not offer any
suggested changes to the state's system of voter -
approval requirements. Nonetheless, because our
analysis in the third section of this report shows
that the decisions Californians make about voter -
approval requirements have significant implications
for local government finance, we suggest that
the Legislature and voters carefully weigh the
ramifications of any potential changes to these
requirements.
LAO Publications
This brief was prepared by Brian Uhler and reviewed by Marianne O'Malley, The Legislative Analyst's Office (LAO) is a
nonpartisan office that provides fiscal and policy information and advice to the Legislature.
To request publications call (916) 445-4656. This brief and others, as well as an e-mail subscription service,
are available on the LAO's website at wwwAao.ca.gov. The LAO is located at 925 L Street, Suite 1000,
Sacramento, CA 95814.
16 Legislative Analyst's Office www.lao.ca.gov
City of Petaluma, CA
Business License Fee Comparison Schedule
4/17/2017
City Minimum fee Gross receipts fee (or cost of operations * ** ****)
Petaluma
Santa Rosa
Retail
Wholesale/Suppliers
Public Utilities
Miscellaneous
> $281,250
45.00 or. 0.00016
ATTACHMENT 2
Retailing Services Contractors Professions
Wholesaling Health Care Centers Land Developers
Manufacturing Property Rental Recreation
Corp/ Admn Headqtrs ** Public Utilities Entertainment
> $25,000 > $25,000 > $25,000 > $25,000
max tax) $ 25.00 plus 0.00034 0.00084 0.00109 0.00168
Napa
$0-49,999 $
$50,000 -149,999 $
$150,000 - 249,999 $
$250,000 - 499,999 $
$500,000 - 999,999 $
$1,000,000 - 1,499,999 $
Each $100k over $1,500k $
Service
Admin Headqtrs*
Contractors Professions
Manufacturers*
Entertainment
First owner $
Recreation
Service and Utility
Property Rental
> $281,250
> $140,625 > $93,750
0.00016
0.00032 0.00048
Retailing Services Contractors Professions
Wholesaling Health Care Centers Land Developers
Manufacturing Property Rental Recreation
Corp/ Admn Headqtrs ** Public Utilities Entertainment
> $25,000 > $25,000 > $25,000 > $25,000
max tax) $ 25.00 plus 0.00034 0.00084 0.00109 0.00168
Napa
$0-49,999 $
$50,000 -149,999 $
$150,000 - 249,999 $
$250,000 - 499,999 $
$500,000 - 999,999 $
$1,000,000 - 1,499,999 $
Each $100k over $1,500k $
25.00
50.00
75.00
110.00
165.00
250.00
10.00
All
Rohnert Park
Retail and Wholesale and
First owner $
50.00
Service and Utility
plus:
Each addit owner/employee $
15.00
Annual $
250.00
Contractor A & B
Half year $
150.00
Small business *** $
100.00
Annual $
150.00
Contractor C
Half year $
100.00
Small business *** $
75.00
First unit $
50.00
Rentals - Single Family
Plus..
Each addit unit $
25.00
First unit $
50.00
Rentals - Other
plus:
Each addit unit $
5.00
Professional $
200.00
Professional
plus:
Each support staff $
15.00
"
Novato
Contractors (state licensed)
Jan -Dec operation $
216.00
April - Dec operation $
162.00
July- Dec operation $
108.00
Oct - Dec operation $
54.00
<$50,001
Professionals
Per professional:
Jan -Dec operation $
216.00
April -Dec operation $
162.00
July -Dec operation $
108.00
Oct - Dec operation $
54.00
plus:
$500,001 - 750,000
Per additional owner/ employee:
$750,001- 1,000,000
Each empl/owner##2 -10 $
22.00
Each empl/owner#11- 50 $
16.00
Each empl/owner H51 + $
11.00
0.00030 > $1,000,000
General Business/Misc
One owner:
Jan - Dec operation $
135.00
April - Dec operation $
101.00
July - Dec operation $
67.00
Oct - Dec operation $
33.00
plus:
Per additional owner/ employee:
Each empl/owner #12 -10 $
22.00
Each empl/owner ##11- 50 $
16.00
Each empl/owner 451 + $
11.00
San Rafael
Contractors
and Service ****
Wholesale and Retail
$0-25,000 $
Multiple Rentals
Three units
$ 90.00
plus:
60.00
Each unit over three
$ 25.00
$50,001-100,000 $
Real Estate Brokers
<$50,001
$ 100.00
$50,001-100,000
$ 150.00
$100,001- 200,000
$ 200.00
$200,001- 300,000
$ 275.00
$300,001-400,000
$ 375.00
$400,001- 500,000
$ 475.00
$500,001 - 750,000
$ 625.00
$750,001- 1,000,000
$ 850.00
$1,000,001- 2,000,000
$ 1,200.00
>$2,000,001
$ 1,200.00 plus 0.00040 > $2,000,000
Contractors
and Service ****
Wholesale and Retail
$0-25,000 $
40.00
$25,001- 50,000 $
60.00
$50,001-100,000 $
80.00
$100,001- 200,000 $
80.00
plus
0.00070 > $100,000
$200,001-300,000 $
150.00
plus
0.00060 > $200,000
$300,001 - 500,000 $
210.00
plus
0.00050 > $300,000
$500,001 - 1,000,000 $
310.00
plus
0.00040 > $500,000
1,000,001- 2,000,000 $
510.00
plus
0.00030 > $1,000,000
2,000,001 - or more $
810.00
plus
0.00020 > $2,000,000 j
or whichever is greater for Contractors and Service:
Base rate $
187.59
plus:
Each full time employee $
23.40
Each part time employee $
11.70
I
Professional
and Semi Professional
$0-50,000 $ 80.00
$50,001- 100,000 $ 120.00
$100,001- 200,000 $ 180.00
$200,001- 300,000 $ 270.00
$300,001- 400,000 $ 352.00
$400,001- 500,000 $ 428.00
$500,001- 750,000 $ 540.00
$750,001-1,000,000 $ 690.00
$1,000,001 - 1,250,000 $ 780.00
$1,250,001-1,500,000 $ 880.00
$1,500,001-1,750,000 $ 990.00
$1,750,001- 2,000,000 $ 1,100.00
$2,000,001- or more $ 1,100.00 plus 0.00030 > $2,000,000
Apartment Owners
0.0017 > $0
or (whichever is greater)
per unit $ 32.85
Real Estate Businesses
Basic rate $
187.59
plus:
Each broker/agent salesperson $
54.47
Each full time employee $
23.40
Each part time employee $
11.70
* Petaluma - Administrative Headquarter and Manufacturers % based on Gross Receipts or Cost of Operations, whichever is higher
** Santa Rosa - Corporate and Administrative Headquarters % based on Cost of Operations
*** Rohnert Park - Small Business: Gross Receipts under $75,000 per year
**** San Rafael -Administrative offices, financial institutions, or commercial activity without gross receipts must use the cost of operations
ATTACHMENT 3
California City.. Q6cumentary and Property Transfer Tax Rates
Governance: Per $1000 Rov&TaxCnd* Pers1000
General Law
or Chartered
PvopertyVa|ue!Sec 118114192S
CitVRub
Countv Rate
PonpnrtyVu|uo
Total
C6WForni6iCituFipvanxocn*" page I of 13
12.60
PIEDMONT
Chartered
$13.00
$1.10
$ 14A0
ION CITY
General Law
$0.55
$0.55
$ 1.10
AMADOR
General Law
$0.55
$0.55
$1.10
BUTTE COUNTY
$1.10
$1.10
BIGGS
General Law
$0.5,5
$0.55
$1.10
Chartered
Chartered
COLUSA COUNTY
$1.10
$1.10
COLUSA
General Law
$0.55
$0.55
$ 1.10
NTIOCH
General Law
$0.55
$0.55
$ 1.10
C6WForni6iCituFipvanxocn*" page I of 13
California City Documentary and Property Transfer Tax Rates
Governance: Per $1000 € Rev&Tax Code I Per $1000
General Law PropertyValue Sec 11911-11929 PropertyValue
`=37
or Chartered
City Rate
County Rate
Total
........................................
MORAGAGeneral
Law
I I
$ 0.55
111 11
$ 0.55
$ 1.10
..................................................................................................
OAKLEYGeneral
..................................................................................................................................
Law
$ 0.55
$ 0.55
$ 1.10
.........................................................................................................
ORINDA
General Law
....................................................................................................................
$ 0.55
$ 0.55
$ 1.10
PINOLE
................................................................................................................................................
General Law
$ 0.55
$ 0.55
$ 1.10
...................................................................................................................................................................................................................................
PITTSBURG
General Law
$ 0.55
$ 0.55
$ 1.10
.....................................................................................................................................................................................................................................I........,...1....I._..
PLEASANT HILL
General Law
$ 0.55
$ 0.55
$ 1.10
RICHMOND
.......................................................................................................................................................
Chartered
$ 7.00
$ 1.10
$ 8.10
SAN PABLO
....................
General Law
........ .....................................................................................................
$ 0.55
$ 0.55
$ 1.10
............................................................................................................................................................................................................................
SAN RAMON
. Chartered
$ 0.55
$ 0.55
$ 1.10
....................................................................................................................................................................................................................
WALNUT CREEK
General Law
$ 0.55
$ 0.55
,RE!,,11�01-TE COqNTK$1.10
.............................................................................................................................................................
$110
CRESCENT CITY
..............................................................................................................................................................
General Law
$ 0.55
$ 0.55
.. 1.10
DORADO COUNTY
...................................................................................................................................................
$1.10
$1.10
PLACERVILLE
...................... .....................................
General Law
.......... ................................................................:................
$ 0.55
.....
SOUTH LAKE TAHOE
.......................................................................................................................................................
General Law
$ 0.55
$ 0.55
$ 1.10
•
.................................................................................I.,--.......................................I...:.....I.....I........,
$110
$110
CLOVIS
General Law
$ 0.55
......................
$ 0.55
............. I .............. ..........
$1.10
COALINGA
..........................................................................................................................................................
General Law
$0.55
FIREBAUGH
General Law
$ 0.55
$ 0.55
$ 1.10
........................................................................................................................................................I.......,...................
FOWLERGeneral
Law
$ 0.55
$ 0.55
$ 1.10
...................................................................................................................................................................................................................................
FRESNO
Chartered
0.55
$ 0,55
.....10
HURON
I.$
General Law
$ 0.55
$ 0.55
$ 1.10
...................................................................................................................................................................................................................................................
KERMAN
General Law
$0.5 5
$ 0.55
$ 1.10
..........................................................................................................................................................................................................................
KINGSBURG
Chartered
0.55
.................F............,.......................,..,.,..,........,..................................................,................................................................................................................................
MENDOTA
General Law
..................................................................................................................................................
$ 0.55
$ 0.55
$ 1.10
ORANGE COVE
General Law
$ 0.55
......... .....................................................................I..........................
$ 0.55
$ 1.10
.................. .................................................................................................
PARLIER
General Law
$ 0.55
$ 0.55
$ 1.10
.....................................................................................................................................................................................................
REEDLEY
..
General Law
$0 .55
$ 0.55
$ 1.10
........................................................................................................................................................................................I...............
BANGER
General Law
$ 0.55
$ 0.55
$ 1.10
SAN JOAQUIN
General Law
...... ......... ........
$ 0,55
.......... .............. ............ .........
$ 0.55
.... .... ....... ............ .............................
$ 1.10
I ...... I............
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........................................................................................................................
$ 0.55
$ 1.10
COUNTY$
1.10
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$ 0.55
$ 0.55
$ 1.10
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$ 0.55 ..........................................
$ 0.55 ............. ......................
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$110
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$ 0.55
...... ...................................................................
$ 0.55
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$ 0.55 .............
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$ 0.55
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$ 0.55
$ 0.55
$ 1.10
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$ 0.55
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RIO DELL
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$ 0,55
$ 0.55
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mjgc rev20Dec2016
CaliFomiaCityFinance.coKA
page 2 of 13
`=37
California Citv Documentary and Property Transfer Tax Rates
BALDWIN PARK
....................................I.........1111,.........................
BELL
BELLFLOWER
...................................................................................
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.............................................
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mjgc rev20Dec2016
General Law
Governance:
Per $1000
€ Rev&Tax Code
Per $1000
$ 0.55
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PropertyValue
Sec 11911-11929
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County Rate
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General Law
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$ 0.55
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General Law
$ 0.55 ............................................................................................
$ 0.55
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$ 1.10
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$ 0.55
$ ...55
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Chartered
$ 0,55
$ 0.55
$ 1.10
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$ 0.55
$ 0.55
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General Law
$ 0.55
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General Law
$ 0.55
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$ 1.1 0
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$ 0.55
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$ 0.55
$ 0.55
$ 1.10
DELANO
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Chartered
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General Law
$ 0.55
$ 0.55
$ 1.10
.........................................................................................................................................................................................................
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$ 0.55
$ 0.55
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$110
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General Law
$ 0.55
$ 0,55
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General Law
$ 0.55
$ 0.55
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.............................................................................................................................................................I.....................................................1...I-
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General Law
$ 0.55
$ 0.55
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Chartered
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$ 0.55
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$ 1.10
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$ 0.55
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..........................................................................................................................................................................................................................
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Chartered
$ 0.55
$ 0.55
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.......................................................................................................................................................................................................................................................1111...
ARCADIAChartered
$ 0.55
$ 0.55
$ 1-10
ARTESIA
General Law
$ 0,55
$ 0.55
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$ 0.55
$ 0.55
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BALDWIN PARK
....................................I.........1111,.........................
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BELLFLOWER
...................................................................................
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mjgc rev20Dec2016
General Law
$ 0.55
$ 0.55
$ 1.10
........................................................................................................................................................................
Chartered
$ 0.55
$ 0.55
$ 1.10
General Law
$ 0.55
$ 0.55
$ 1.10
........................................................................................................................................................................
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$ 0.55
$ 0.55
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........................................................................................................................................................................
$ 0.55
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CafifomiaCityFihavice.com
page 3 of 1.3
California City Documentary and Property Transfer Tax Rates
Governance: Per $1000 Rev&Tax Code Per $1000
General Law PropertyValue Sec 11911-11929 € PropertyValue
or Chartered City Rate County Rate Total
BRADBURY
General Law
$ 0.55
$ 0.55
........................................................................
$1.10
BURBANKChartered
$ 0.55
$ 0:55
$ 1.10
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........................................................................
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$ 0.55
$ 0.55
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CARSON
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$ 0.55
$ 0.55
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.......... .............. ...............
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$ 0.55
$ 0.55
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..0.55
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$ 0.55
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.........................................................................................................................................................................................I...................
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$ 0.55
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.........................................................................................................................................................................................................
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General Law
$ 0.55
$ 0.55
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EL MONTE
..........................................................................................................................................................
General Law
$ 0.55
$ 0.55
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EL SEGUNDO
General Law
$ 0.55
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GLENDALE
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$ 0.55
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$ 0.55
........... .................. ..................
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$ 0.55
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.....................................................................................................................................................................................................................................................
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$ 0.55
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$1.10
mjgc rev20Dec2016
CaWorninCity Fina
nce,com
page 4 of 13
,4
a
California City Documentary and Property Transfer Tax Rates
Governance: Per $1000 Rev&Tax Code Per $1000
General Law PropertyValue Sec 11911-11929 PropertyValue
or Chartered City Rate County Rate Total
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$ 0.55
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$ 0.55
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mjgc rev20Dec2O16
Ca1iFominCit.9Fiyxay%ce.coPA
page 5 of 13
'1
California City Documenta!y and Property Transfer Tax Rates
General Law PropertyValue Sec 11911-11929 PropertyValue
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page 6 of 13
California City Documentaryand Property Transfer Tax Rates
General Law PropertyValue Sec 11911-11929 PropertyValue
Total
or Chartered City Rate County Rate
ALISO VIEJO
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$0.55
$0,55
$ 1.10
COSTA MESA
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California City. Documentary and Property Transfer Tax Rates
Governance: Per$1000 Rev&Tax Code por*10OO
Generai'Law PropertyValue Sec 11911-11929
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California Citv Documentary and Property -Transfer Tax Rates
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CuKf»n,i«Cit«Fihu»ce.««*^
page gcfj3
California City Documentary and Property Transfer Tax Rates
Governance: Per $1000 Rev&Tax Code . Per $1000
General Law PropertyValue Sec 11911-11929 PropertyValue
or Chartered City Rate County Rate Total
VISTA......................................................................
........Chartered..............
$..0:55........,....................:55.................,..........
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$100,000 AV => 0.5%,
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Chartered
Over $1 million AV => 0.75%,
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$110
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Law
$ 0.55
0.55
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General Law
$ 0.55
$0 .55
$ 1.10
.......................................................................................................................................................................................................................
LODI
General Law
$ 0.55
$ 0.55
$ 1.10
...............................................................................................................................................................................................................
MANTECAGeneral
..
Law
$ 0.55
$0.55
......................................................................
$ 1.10
............................................................................................................................................
RIPONGeneral
Law
$ 0.55
$ 0.55
$1.10
..................................................................................................................................................................................................................................
STOCKTONChartered
$ 0.55
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$ 0.55
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.................. ......................
General Law
$ 0.55
$ 0.55
$ 1.10
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General Law ...............$.0.55
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EL PASO DE ROBLES
General Law*,
-**--$--0 .55
$ ...55
$ 1.10
GROVER BEACH
General Law
$ 0.55
$0.55
$ 1.10
MORRO BAY
General Law
$ 0.55
.................................................................................................................
$ 0.55
$ 1.10
.........................................................................
PISMO BEACH
..................................
General Law
$ 0.55
$ 0,55
$ 1.10
SAN LU15 OB1SP0
Chartered
$ 0.55
$ 0.55
$ 1.10
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.................................................................................................................................................................
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..1.10
ATHERTON
General Law
$ 0.55
$ 0.55
$ 1.10
BELMONT
General Law
$ 0.55
$ 0.55
$ 1. 10
.....................
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...................................................................................................................................
General Law
$ 0.55
$ 0.55
$ 1.10
BURLINGAME
General Law
$ 0.55 I......................
$ 0.55
,. .......... .....,...... .............,...............................
$1.10
................. ........................ ........................................
COLMA
... .......... ....
General Law
........... .....................
$ 0.55
0.55
$ 1.10
......................................................................................................................................................................
DALY CITY
General Law
$ 0.55
$ 0.55
$1.10
...................................................................................................................................................................................................................
EAST PALO TO
General Law
$ 0,55
$0.55$1.10
FOSTER CITY
......................................................................................................................................................
General Law
$ 0.55
0.55
$ 1 10
HALF MOON BAY
General Law
...... ..............
$ 0.55
..................... ........... ............. ........
$ 0.55
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$ 1.10 ......
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General Law
$ 0.55
$ 0.55
$1.10
MENLO PARK
..........................................................................................................................................................
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$ 0.55
$ 0.55
$ 1.10... I...........
....................................................................................................................................................................................I...I...I.,..
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General Law
$ 0.55
$ 0:55
....................
$ 1.10.............
.................................................................................................................I...........................
PACIFICA
General Law
$ 0.55
$ 0.55
$ 1.10
PORTOLA VALLEYGeneral
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Law
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$ 0.55
$ 0.55
.... ........................ ..........
$ 1.10
..... -.......... I.............
....................................... .........................
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........
$ 0.55
....... ............... ................. ...................
$ 0.55
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$1.10 ,....
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...................................................... .......... .......... ......................
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................................
General Law
$ 0.55
$0.55
$1.10
SAN CARLOS
General Law
$ 0.55
....... ............................
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$ 0.55
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injgc rev20Dec2016
Ca(iforninCity Firtance.com
page 10 of 13'.
California City Documentary
and Property
Transfer Tax Rates
Governance:
Per $1000
Rev&Tax Code
Per $1000
General Law
PropertyValue
Sec 11911-11929:
PropertyValue
or Chartered
City Rate
County Rate
Total
BUELLTON
General Law
$ 0.55
$ 0.55
$ 1.10 ..
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...................................................................................................................................................
General Law
$ 0.55
$ 0.55
$ 1 10
GUADALUPE
............................................................................................................................................................
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$ 0.55
$ 0.55
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LOMPOC
General Law
$..0.55
$ 0.55
01...............
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SANTA BARBARA
Chartered
$ 0.55
$ 0.55
$ 1 10
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..........................................................................................................................................................................................0.55,............................�
SANTA MARIA
Chartered
$ 0.55
$
..............................................................................................................................................................................................................................
SOLVANG
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$ 0.55 ....................................:................................................................
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....................................................................................
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$ 0.55 ......
$ 0.55
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$ 0.55
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1.10......,........
.
GILROY
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$ 0.55
...............................
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......... ......0.55 ......... .................
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....�
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LOS ALTOS
General Law
$ 0.55
$
• 1.10
LOS ALTOS HILLS
General Law
$ 0.55
$ 0.55
LOS GATOSGeneral
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$ 0.55
............................. ........................
$
.......... ..,...,......,...........,........I"......
1.10 ............
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MILPITAS
.... .........................
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•
$ 0.55
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............................................
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0:
$ . 55..........................
$ 0.55 ......,.....,..........,.
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$ 0.55 .........................
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MOUNTAIN VIEW
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$ 3.30
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4.40
...........................................................................................................•........................................................,.................,.........,...
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$ 3.30
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..................
........................................................................................................................................................................
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$ 0.�5
$ 055
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$ 0.55
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$.1.10 ...,............
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$ 0.55
$ 0.55
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$ 0.55
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$ 0.55
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$ 0.55
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............
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...........................................................................................................................
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..........................................................................................................................................................................................................
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$ 0.55............................
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mjgc rev20Dec2016 CalirominCityFinance.com page 11 of 13
I
California City Documentary and Property Transfer Tax Rates -
---------'------'
YRE�4
P $1000 1
Rev&Tax CodePer$1000
General Law
PropertyValue
Sec 11911-11929
PropertyValue
or Chartered
Rate
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---------'------'
YRE�4
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Cakfo rkiia City Fikmme.com page 12 of 13
California City Documentary and Property Transfer Tax Rates
General Law PropertyValue Ser, 11911-11929 PropertyValue
or Chartered City Rate County Rate
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ATTACHMENT 6