Tomorrow, on Tuesday, June 11th, the City Council will hold the first of a series of public hearings on a specific tax proposal that, if passed, would increase taxes solely on the sale of real estate.

These public hearings will focus on the proposed structure of a proposed Real Property Transfer Tax ( RPTT), targeting only residential and commercial properties when they are sold, with the potential for the issue to be decided by our voters on the November ballot.

No one likes taxes.

And it is challenging to ask voters to approve new ones, even when applied to a limited number of people. But the City’s financial situation, while improving, is not yet stable.

The overwhelming approval by Benicia voters of Measures A and B provided critical funding to maintain service levels for most City programs. But it will not provide enough to address our remaining financial challenges.

We still have a shortfall of tens of millions of dollars to address our need to upgrade deteriorated city facilities, improve our parks, and continue to maintain top quality employees.

The City Manager has been quite transparent in discussing his plan to develop enough sustainable revenue to carry Benicia forward into the future and address our many unfunded needs. At the same time, he will shortly announce even more internal, significant, cost-savings brought about by restructuring of departments and reduction in personnel.

A Real Property Transfer Tax already exists. Solano County taxes all Benicia property at $1.10 per $1000 of sales price (0.11%).  We are asking voters to allow it to be raised in a way that is similar to other neighboring communities. It is paid by either the buyer or seller (or negotiated) in real estate transactions, and is paid as part of closing costs.

Historically, there are between 200-250 property sales per year in Benicia. Unless and until you plan to sell a property here, you would be unaffected.

We should also look to the possible future housing growth in the city.  If we do see new home construction, we will have in place a taxing tool to collect our fair share of the sales transaction.

Only charter cities are allowed to increase this tax (if approved by voters), so a companion measure is required that authorizes a limited Charter, restricted only to this use.

Related issues that will be discussed by the Council, and for which public comment is desired, include the following:

• • Should there be a flat tax where all property sales be taxed at the same rate?  Or should the rate be progressively higher as the sales amount increases?
  • What rates are appropriate in each case?
  • Should property sales under $500,000 (for example) be exempt?
  • Should transfers among immediate family members be exempt?
  • How will commercial property sales (which do not happen often) be managed—variable or flat rate?

Other anticipated exemptions involve circumstances such as sales due to a divorce, non-profit ownership, sales by government entities, and corporate re-organizations under bankruptcy laws

Again, your input is desired, either by attending any of the meetings (in person or virtually) listed at the end of the staff report, or by submitting written comments to the city clerk at lwolfe@ci.benicia.ca.us.

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Save these dates

Below is the City of Benicia’s projected timeline for next steps to place the limited charter and RPTT on the ballot for the November 2024 election:

• Tuesday, June 11, at 5:30pm (tomorrow): Special City Council Meeting – Limited Charter Public Hearing #1; Direction on RPTT Rate Models and Exemptions*
• Sunday, June 23: Notice of Public Hearing #2 (by publishing in Benicia Herald Sunday Edition and posting at three public places within the City)
• Tuesday, July 16: Limited Charter Public Hearing #2 – City Council Meeting
• Tuesday, August 6: Last day for City Clerk to submit resolutions to Registrar of Voters to place a measure on November 5, 2024 Ballot

For more information about attending these meetings, either virtually or in-person, view the City of Benicia’s Tuesday, June 11 Full Agenda Packet.

*The City has a closed session starting at 4:30pm. The public portion of this meeting is scheduled to start at 5:30pm, but may start as late as 6pm.