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With early polling results showing a likely path to victory at the ballot box, the city is planning to put a revenue measure up for voter approval this November to help fund some of its biggest projects.
A new public safety building, transportation improvements and climate change mitigations are just a few of the top priorities the city is looking to fund in the upcoming years.
In a unanimous vote on Tuesday, May 14, the City Council settled on pursuing a property transfer tax, after polling results showed it would be the most likely revenue measure to win voter approval on the November 5 ballot. Council members Ellen Kamei and Alison Hicks were absent from the council meeting.
While council members agreed on moving forward with the property transfer tax, it was not necessarily their first choice – at least when they first started exploring the possibility of putting a revenue measure on the ballot last year.
“I definitely went into it thinking we would be doing something different than what we’re recommending here tonight, and it’s primarily based on the polling and the information we got from the community,” Council member Lisa Matichak said.
The city adopted a property transfer tax in 1973, which was set at $3.30 per $1,000, and has not increased the rate since then. If approved, the revenue measure would raise the tax of residential and commercial property sales of more than $5 million, up to $15 per $1,000, according to the council report.
This would generate about $9.5 million in additional annual revenue, Assistant City Manager Arn Andrews said. The vast majority of the revenue would come from the tax on commercial properties, he added.
The council largely agreed on the “escalator” tax, while also suggesting the possibility of creating an index to keep up with inflation in home values over time.
But Council member Margaret Abe-Koga had some qualms and wanted to raise the cap on the property transfer tax to $6 million, citing the increasing value of homes in Mountain View where $5 million sales were not uncommon anymore, she said. Council member Lucas Ramirez pushed back on the proposal, stating that $5 million was a good starting point to tax properties at a higher rate.
“The additional taxes, it’s non-trivial, it’s very valuable for the city. But in terms of the total value of the property, it doesn’t feel like it’s going to be the difference maker,” he said, referring to the sale of a $5 million home.
Jessica Polsky-Sanchez, a consultant from EMC Research, also cautioned that any changes to the revenue measure, like adding a higher cap, would invalidate the results of a poll that the city conducted in March, which showed that 63% of the respondents were in favor of a property transfer tax.
The proposed revenue measure polled much higher than the alternative – a transient occupancy tax (TOT) on hotel stays that barely squeaked by with 53% of respondents in favor. The results surprised council members who all supported the idea of a hotel tax when it was suggested as a possible revenue measure last year.
Still in favor of it, Abe-Koga wanted to keep the hotel tax as an option in case there was a strong opposition campaign mounted against a property transfer tax. There typically is not a lot of opposition to hotel taxes because business travelers’ companies usually pay for the lodging, Abe-Koga said, adding that the public might have misunderstood how these taxes are applied.
The consultants, however, did not recommend the hotel tax based on the polling results, according to Andrews. “They also shared with us that they have seen over the years a consistent degradation in TOTs that could be a factor of … COVID and what happened to the industry,” he said.
Hotel stays plummeted during the pandemic, and were slow to recover following the lockdown. The results could suggest that voters are concerned hotels are still struggling post-pandemic and would be hit hard by a tax increase.
City Manager Kimbra McCarthy added that a hotel tax could be something to consider in the future, possibly on the 2026 ballot.
McCarthy also highlighted the overall positive results of the poll findings, which indicated that a large majority of voters were satisfied with the level of services and financial management of the city.
“The job that we are doing is significantly higher than what other cities have shown … Generally, what we’re seeing is in the 40% range, and ours is in the 70% almost 80%, and that’s after COVID, after the change in public rhetoric, civility, all of that,” she said.
Even so, respondents were evenly split on whether the city has a need for additional funding, according to the council report.
Respondents ranked public safety response, fixing potholes and addressing homelessness as top priorities. Adding local parks was much lower down on the list, surprising some council members.
“If you’re in an area where there are a lot of parks, you’re fine. But if you’re in an area where there aren’t a lot of parks, then it’s incredibly important to you. And so, I feel like it’s very important to me and a lot of other people, and I don’t want to lose that even though in the polling, it was ranked quite low,” Matichak said.
The city plans to reach out to the community and other stakeholders for more input before June 25, which is when the revenue measure will come before the council for adoption. The June meeting also will include recommendations about funding priorities, based on community responses, Andrews said.
We’re not happy with the price of buying a house in MV.
Yet, we add more and more to the expense.
I am talking about the cumulative costs of regulatory compliance, building permits, taxes, fees. I recall somebody calculating that the cost of buying a house in our area is 20% higher.
Well, we do it to ourselves. At least they did some polling, so if the city votes for this, that’s ok. But we will need to look inward at ourselves and ask why we complain about the price of housing and rent, yet do everything we can to drive up the price.
The public should know that the State required MV to CUT developer impact fees in order to approve the Housing Element earlier this year, thanks to YIMBY advocacy. Local YIMBY leaders call these fees “a tax on housing”. What do these cuts mean? It means that funding previously collected from for-profit developers to pay for infrastructure enhancements is being transferred to the backs of residents when they sell their homes, if the November tax measure passes.
https://www.investopedia.com/terms/i/impact_fees.asp
“Municipalities assess impact fees on property developers to pay for infrastructure improvements that must be built due to new property development. New development brings new residents, which can put strain on a city’s infrastructure and services, including schools, libraries, water and sewerage, police and fire protection services. Impact fees are designed to offset the additional cost of maintaining these services.”
Some businesses generate pollution as part of their activities. Progressives believe that it is reasonable and fair for them to be responsible to clean up that pollution because they are the ones who generated it.
Increased strain on the infrastructure is a side effect of developers building more housing. State politicians are forcing MV to expand our housing supply by 30%, but they are NOT supplying any funds to MV to address the strains that will be put on our “infrastructure and services, including schools, libraries, water and sewerage, police and fire protection services.” Quite the opposite! State politicians forced MV to CUT development impact fees before they would approve our Housing Element! We are given the burden of expanding services – such as public safety response – for a larger population, but are deprived of moneys that we previously collected from the businesses that are responsible for putting the additional strain on the infrastructure! How is it fair or reasonable to put the burdens of paying for an increased population onto the backs of residents instead?
I’d like to see the evidence for the claim that “the vast majority of the revenue would come from the tax on commercial properties.” I don’t believe it. The biggest winner of Prop 13 was large corporations who figured out ways to essentially freeze taxes forever on commercial properties
Transferring burdens from wealthy developers to the backs of homeowners is called “Privatize the profits, socialize the costs” and “robbing Peter to pay Paul”. With this tax, homeowners are being required to pay for the gentrification of Mountain View: history shows that ALMOST ALL of the new housing constructed will be expensive, market-rate units that are only “affordable” to high wage earners. Why should existing residents, many of whom never earned the salaries that are common today, be required to pay more so that for-profit developers and high wage earners can pay less?
I’d like to see the evidence for the claim that “the vast majority of the revenue would come from the tax on commercial properties.” I don’t believe it.
I agree with Leslie on that. Typically, commercial rolls are less than 20% of property values, so I’d like to understand how this tax is structured such that Google/Intuit/etc pay 80%.
This is a very well written and comprehensive article by the author. Thank you for your excellent summary.
According to this article https://www.mv-voice.com/news/2023/09/13/citing-big-funding-needs-mountain-view-looks-to-put-ballot-measure-to-a-vote-in-2024/
The hotel tax was expected to bring in 4 to 5 Millions a year while the property transfer tax 9.5 Millions. This might also have been a factor in the polling given the City need for additional revenue.
If the property transfer tax can generate more annual revenues and if it’s the most likely to pass in November, it’s a no brainer for the City Council.
Also hard to believe someone buying a 5M+ Single Family Home would be very price sensitive.
According to SRB’s link: “The city is financially secure with enough funding in its coffers to support existing programs and services. But the city lacks the money needed to pay for critical infrastructure projects and future capital initiatives, according to a study session presented to the council on Sept. 12.”
Critical infrastructure projects … future capital initiatives … these are EXACTLY the kind expenses for which developer impact fees were collected. And the City now has a critical NEED for additional funds, again because of YIMBY advocacy that resulted in a State mandate that we increase our housing supply by 30% over the next 8 years. 30%!
Local YIMBY leaders told me they are fans of the common infrastructure, they are fans of schools and parks, they just don’t think that developers should have to pay for them. Who else should pay, I asked. The result was crickets. YIMBYs succeeded in defunding the common infrastructure, which now leaves us with two miserable choices: 1) allow the infrastructure to burst at the seams, and many/everyone will suffer the consequences, or 2) increase taxes on “somebody” else to compensate for the tax breaks that have JUST VERY QUIETLY BEEN GIVEN given to developers. To my knowledge, the Voice has never reported on that particular story.
The need for additional housing has been driven by Google’s decision to hire so many high paid workers to work in MV, and the workers desire to be able to bike to work. Google earns Billions of dollars every single day; their high paid workers drive up the cost of housing. So of course when it comes time to foot the bill to pay for the infrastructure that is necessary to have these workers live in MV, politics are played to get the EXISTING RESIDENTS to be the ones to pay. Again: Why should existing residents, many of whom never earned the salaries that are common today, be required to pay more so that for-profit developers and high wage earners can pay less?
But the joke is ultimately going to be on the high paid workers themselves. ALMOST ALL of the new housing is going to be expensive, market rate units, I wouldn’t be surprised if the average home price creeps up above $5 million in the next few years. The only ones who can afford to buy such homes are high paid workers. So in the end they are increasing taxes on themselves, without even realizing it.
I am with Ramirez. “I’d like to understand how this tax is structured such that Google/Intuit/etc pay 80%.” But it’s not going to happen. Increasingly, only the little people pay taxes in this country.
There is so much jealousy and hatred directed at seniors living on fixed incomes, people who bought homes here decades ago when MV was pretty much a dump with a ton of Chinese restaurants on Castro. “They are rich! They don’t deserve to own homes that have increased so wildly in value.” Somehow the fantastic wealth of Google never gets brought up, the company whose hiring practices are responsible for the need to expand MV’s infrastructure. Let’s be honest about that. And the wealth of Google workers never gets brought up, people who earn salaries and stock options that enable them to bid up housing prices here to fantastic levels. No, the “wealth” of existing residents here is the only “wealth” that should be tapped to pay for infrastructure so that Google can hire as many high paid workers as they desire.
I recently did an exercise that might shed light on how soon the average home in Mountain View will be worth $5 million.
My folks bought a home in 1975 for $100,000. They sold it many years ago, but today that home is worth $1,500,000. It has appreciated 1500% over 50 years, which means that the avg yearly appreciation was 30%. Wow.
Today the median home price in MV is $2,050,500 (see https://www.redfin.com/city/12739/CA/Mountain-View/housing-market). The source says that is a year-over-year increase of 10%.
10% year over year appreciation is the more conservative number.
Using stupid math, 10% yearly equates to 100% increase over 10 years (in reality the appreciation would be greater because of compounding, but let’s try to keep things simple here). So in 10 years, the median home price in MV would be expected to be $4,101,000. And 3 years after that, the median home price will be $5 million or more. Which means that in 13 short years, the TYPICAL home sold in MV will be subject to the increased property transfer tax.
The situation is even worse using 30% as the yearly appreciation number. I think it’s fair to say that appreciation of homes in the Bay Area has been even higher than appreciation in Southern California.
Using stupid math again, 30% yearly equates to 100% increase over less than 4 years. So in 4 short years, the median home price in MV would be expected to be $4,101,000. 30% of $4,101,000 is $1.2 million. Which means that in 5 short years (!), the TYPICAL home sold in MV will be subject to the increased property transfer tax.
People should understand that this proposal by the City Council is not a “sock it to the rich” proposal. People should understand that in somewhere between 5 years and 15 years, the TYPICAL home sold in MV will be subject to the increased property transfer tax.
People who believe that it is fair and reasonable for the homeowners in MV to bear the costs of expanding the common infrastructure so that Google can hire as many high wage workers as they want, should certainly vote in favor of this measure. I will not be voting for it, I think this solution reeks of Wealth Inequality. IMHO, Google should bear the majority of these costs, not existing or even future residents.
The total impact fee to install a new single-family house in Mountain View ranged from 300-340k total. Installing new sewage, electricity, and a curb ramp, costs far less than 300k, even in a high-cost-of-living area, and often, these were already installed.
These impact fees were not subsidizing improvements needed to install the actual home, but rather to subsidize property owners that pay abysmal property taxes because they bought their property a long time ago. It was extortion of new homeowners to subsidize older home buyers.
It also makes little sense, because Mountain View rarely creates new parks, and the highest cost after purchasing land, is maintenance, which is not a one-time charge. The idea of the impact fees was that development would subsidize these, which is flawed, as you can only develop so much, especially if the city wants to block further density. Thankfully, the US Supreme Court ruled on the 24th in Sheetz v. El Dorado County that this extortion was illegal.
“The total impact fee to install a new single-family house in Mountain View ranged from 300-340k total. Installing new sewage, electricity, and a curb ramp, costs far less than 300k, even in a high-cost-of-living area, and often, these were already installed.”
Do you understand that developer impact fees are imposed to enhance the common infrastructure, NOT to “Installing new sewage, electricity, and a curb ramp”? Do you understand what the common infrastructure even is? These services include “schools, libraries, water and sewerage, police and fire protection services.” They also include Parks and open spaces. Such services are NOT free.
“These impact fees were not subsidizing improvements needed to install the actual home, but rather to subsidize property owners that pay abysmal property taxes because they bought their property a long time ago. It was extortion of new homeowners to subsidize older home buyers.”
Do you have ANY kind of link to prove your claim? You are posting misinformation. Again, the fees are imposed to enhance the COMMON INFRASTRUCTURE, things that the entire community benefits from, which must be enhanced when the population increases.
You can’t put 10 lbs of stuff into a 5 lb sack. If MV increases it’s population by 30% and measures aren’t taken to improve the common infrastructure, the result will be overcrowding of schools, libraries, parks & open spaces, shortages of water and electric supply, increased response times for police and fire emergencies. A certain political movement talks about making MV more “livable” and “walkable”, but many of it’s followers don’t appear to value parks and open spaces for the public. I find such thinking to be short-sighted. The BEST part of my daily walks is through parks that previous generations provided for my benefit. I feel for those who live in parts of MV who don’t have access to open spaces, and thus have no choice but to live in a concrete jungle.
I find it sad and scary that members of a certain political movement don’t see the value provided by schools, libraries, parks and open spaces, or even police and fire response activities. They don’t understand how such activities are funded, so they are happy to cut that funding. When one makes one’s bed, one has to lie in it. The errors in such thinking will only be visible in 10 or fifteen years, sadly. I wonder how many such people will even be living in MV at that time?
The City impact fees are IMO very reasonable. But to cut them (by State Law) is unreasonable [except / YIMBY me /low and moderate small housing]
I swear I don’t quite understand MAK’s reasoning in this issue. Glad it looks like the transfer tax is going to be Up In November. Representative government – they survey and propose – the General Election Ballot decides to Adopt/or Not.
But – Is MVWSD stalling until SPECIAL ELECTION for Spring for a Per-Sq-Ft special tax for education (expiring Flat Tax on Parcels next year)? Special elections are very costly.
Leslie: using “stupid math” may in fact just get U “stupid answers” rather than smart and thoughtful answers?
Supreme Court case “remanded” / back to CA crt of appeal /
The court found that such fees MAY violate the Fifth Amendment if they do not have an “essential nexus” to the government’s land use interest and “rough proportionality” to the development’s impact on that interest. It determined that impact fees are not exempt from these requirements merely because they are legislatively enacted.
That was the League of California Cities take on the result.
SO … if impact fees can be shown to reasonably (Not beyond a reasonable doubt!) have an “essential nexus” and “rough proportionality” to the developments impact – AOK!
That is why Leslie and others – this case is Back in CA court / and the plaintiff was awarded $996 for his expenses in filing with the USA Supreme Court.
“using “stupid math” may in fact just get U “stupid answers” rather than smart and thoughtful answers?”
I called it stupid math because so many in the population are not wizards at math. I tried to keep the example as easy as possible so more people could follow the logic. If housing appreciates at 10% every year, using stupid math we can see that the value will double in 10 years, because 10×10% is 100%. Using precise math, the formula is actually (1.1)^^10 which equals 2.59 (or 259%). In other words, the situation is even worse than what I said, the average house price will actually MORE THAN DOUBLE in 10 years. Everything I wrote is true, I was being conservative.
Using precise math, (1.1)^^12 = 3.13 (or 300%). Using precise math, if housing appreciates at 10% a year, housing process will TRIPLE in 12 years. TRIPLE!
The average house price in Mountain View is $2 million today. Precise math tells us that in TWELVE YEARS, the average house price will be $6 million, and so the average homeowner will be subject to the higher property transfer tax. My point is that this is not a “sock it to the rich” proposal, in a very short time this increased tax will be paid by the average family whenever they sell their home.
Meanwhile, just like Prop 13, commercial property has a very low turnover rate, and clever lawyers have figured out ways so that “ownership” doesn’t change even when commercial property is sold. So businesses will be subject to the tax only very rarely.
By all means, everyone who wants to increase taxes on ordinary homeowners, and allow big businesses like Google to skip out on paying their fare share, should support this measure. Everyone who thinks “only the little people” should pay taxes” should support this measure. Sadly, there are a number of voters who want to “sock it to homeowners” even while they lament that the cost of housing is too high. There is a deep logic flaw in that thinking.
“Representative government – they survey and propose – the General Election Ballot decides to Adopt/or Not.”
Survey? The level of surveying performed has not been impressive. This survey only consists of responses from those who happened upon the survey and chose to respond. And the objective was to impose a tax that had the best chance of winning with 51%, whether the proposed tax is logical or fair or not. It was crafted for that purpose. The City needs money now. Our leaders don’t mention that one of the reasons that we need money is because the State forced us to cut development impact fees in order to get our Housing Element approved. So the financial burdens that were previously imposed on developers will be transferred to ordinary homeowners if this tax is approved by voters in November.