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Property Transfer Tax Ballot Measure

Alameda City Council has approved a measure for the November ballot that would increase real property transfer tax. That would add to the cost of buying a home in Alameda.

City Council is motivated by the current budget shortfalls which are the result of the economic downturn. But Council seems to have lost sight of a significant point – the economic downturn is being led by the housing market, and the collapse of mortgage lenders. IndyMacBank failed last week and was taken over by federal regulators, and the Fed has promised to step in and save Fannie Mae and Freddie Mac. The subprime mortgage crisis is causing a housing turnover slowdown – in fact, part of the reason for the City of Alameda’s budget shortfalls is lower real property tax due to the subprime mortgage crisis. So, when house sales slow, and transfer tax drops as a result, what’s the obvious answer? Increase the transfer tax! The problem is that a tax of $14.50 per $1,000 of property value against zero home sales is the same as $5.40 per $1,000 of property value – zero. Will this increase generate as much tax as city staff thinks?

Meanwhile, as reported earlier, the City’s redevelopment agency, the Community Improvement Commission, continues to vaccuum up property tax dollars. City Council needs to re-evalute redevelopment and see if some of the $15 million annually that redevelopment consumes can be re-directed back into the general fund.

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