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Amend Oakland's Property Tax to clarify transfers of real property
City of Oakland
City Charter Amendment - Majority Approval Required
Official Final Results
Pass: 37192 / 74.8% Yes votes ...... 12516 / 25.2% No votes
Index of all Measures
|Information shown below: Summary | Fiscal Impact | Impartial Analysis | Arguments | Full Text|
ShalI City of Oakland's Real Property Transfer Tax be amended to clarify that the tax applies to transfers of real property caused by changes in the ownership or control of corporations and other legal entities, such as mergers and acquisitions?
The City can use revenue from the RPTf for any legal municipal purpose, including but not limited to municipal services and other governmental purposes. This measure must be approved by a majority of the electorate.
s/JOHN RUSSO City Attorney
Oakland's existing RPTT imposes a 1.5% real property transfer tax on all transfers by deeds, instruments, writings, or any other document by which interests in real property located within Oakland are granted, assigned, conveyed or transferred (Oakland Municipal Code section 420.020). In addition to the application of the RPTf, the proposed amendment:
1. Removes the current requirement of conformity to statewide rules (2nd paragraph of section 4.20.020).
2. Adds definition of "person" and "persons" to the tax. The ordinance will only be effective if Measure H is approved by the majority of the voters. If approved, the measure will go into effect ten (10) days after the vote is declared by the City Council.
City staff estimates that from FY 2003 to FY 2007, approximately $19.2 million in RPTf revenues from at least 92 Oakland properties was not realized. The amounts not collected were due to current ordinance restrictions that exclude an imposition of the RPTf on transfers of real estate resulting from changes in the ownership or control of a legal entity, by merger, consolidation, or acquisition.
|Impartial Analysis from Oakland City Attorney|
The RPTf can be found at Chapter 4.20 of the Oakland Municipal Code. The language of the existing RPPT is broad enough to apply to transfers of real property that result from corporate mergers, acquisitions, etc. However, this measure seeks voter approval to clarify and specifically state that the RPTT applies to changes in real property ownership resulting from corporate mergers, consolidations, acquisitions, or other methods.
The amendment provides that the RPTT is imposed on "changes in control and ownership of legal entities" - that transfer property located within Oakland. Also, the amendment defines the term "changes in control and ownership of legal entities" as "any direct or indirect acquisition or transfer of ownership interest or control in a legal entity that constitutes a change in ownership or transfer of the real property of the entity under California Revenue and Taxation Code section 64...." (Oakland Municipal Code section 4.20.030).
The City can use RPTT revenue for any legal municipal purpose, including but not limited to police, fire, street resurfacing, traffic lights, infrastructure maintenance, library and parks and recreation programs; therefore, the RPTT is a general tax. (California Constitution Article XIII (C), section l(a).) General taxes must be approved by a majority of the Oakland voters who cast ballots. (California Constitution Article XllI(C), section 2(b).)
s/JOHN RUSSO City Attorney
League of Women Voters
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|Arguments For Measure H||Arguments Against Measure H|
|Without raising the tax rate, Measure H will correct a loophole to ensure that corporations are treated the same as residential homeowners, as the City originally intended. The Real Property Transfer Tax funds vital municipal services, such as police, fire, senior services, storm drains, streets, parks and libraries.
Measure H is not a new tax, and the rate will not increase. Measure H simply clarifies the existing Real Property Transfer Tax ensuring fair and equitable treatment of the tax as it applies to corporate mergers, consolidations, and acquisitions.
The current Real Property Transfer Tax was adopted in 1974. The State requires voter approval of changes to any tax ordinance. This change will help balance our city budget and fund vital public services, such as police, infrastructure, building maintenance, youth programs, fire, paramedic and library services.
s/Wade W. Sherwood Member, Oakland Commission On Aging
s/Douglas Wong Retired Fire Fighter
s/Susan Montauk Parks & Recreation Commissioner
s/Ronile Lahti Library Advocate
s/Kenneth L. Katz Chair, Splash Pad Neighborhood Forum
The City can not predict how much revenue will be generated because corporations rarely disclose their intention to buy another company.
Since 1974, Oakland has exempted companies which merge from paying property transfer taxes as a way to promote a business-friendly environment. This has worked successfully for 35 years even as voters approved other changes to property transfer tax requirements on two occasions. Only now that the City finds itself deep in debt do politicians seem intent on finding money any way possible.
Measure H is not a solution to Oakland's budget problems. Let's keep Oakland a good place for doing business.
Vote NO on Measure H.
s/Patricia Scates, Chair Board of Directors, Oakland Metropolitan Chamber of Commerce
|Vote NO on Measure H. Protect Oakland jobs and promote a business-friendly environment.
Everyone understands the City's need for more revenue. But this measure offers no predictable source of income. That's no way to balance a budget.
Vote NO on Measure H.
In the longer term, the Chamber is concerned that it could harm Oakland's ability to attract new companies and keep the ones already located here. For instance, this reclassification could stop companies in emerging industries such as green technology and biotech from locating in Oakland. We can't afford to risk seeing these kinds of jobs go elsewhere.
Vote NO on Measure H.
In the midst of an economic downturn, we should be encouraging investment and economic growth. Passage of this measure could scare potential buyers from acquiring or merging with Oakland-based companies because of excess transaction costs. It's irresponsible to block companies from joining forces when they could produce more jobs for Oakland residents and more revenue for the City.
Vote NO on Measure H.
The City has not been collecting this tax and has no reliable indicators to project potential revenue. Oakland politicians should find better ways to balance the budget.
Please support local companies by voting NO on Measure H.
s/Patricia Scates Chair, Board of Directors , Oakland Metropolitan Chamber of Commerce
Measure H is fair: It would apply the same Real Property Transfer Tax criteria to corporations as it now applies to homeowners.
Business leaders support Measure H because they know a level playing field is better for business. No company should get a competitive advantage over others just because it can take advantage of a loophole that isn't available to everyone.
Labor leaders and community advocates support Measure H because they know it will help preserve existing jobs and continue important city services for Oakland's working families and retirees.
Measure H is fiscally responsible: It is not a new tax, it simply ensures that corporate mergers, consolidations and acquisitions pay their fair share of the Real Property Transfer Tax as originally intended. Because the loophole Measure H closes doesn't apply to very many transactions, the revenue it produces will vary from year to year - but every bit of new revenue will help bring our budget back in balance.
Measure H is equitable: It will provide needed funds for vital public services that benefit local business and residents alike - such as police, fire, park and street maintenance and other essential city services.
Vote YES on Measure H.
s/Helen Hutchison, President League of Women Voters of Oakland
s/Henry Chang, Jr. Former Councilmember At-Large
s/Susan Montauk Parks Advocate
|Full Text of Measure H|
|Amendment to the City of Oakland's Real Property Transfer Tax to clarify that the tax applies to changes in ownership or control of corporations and other legal entities
WHEREAS, pursuant to Chapter 4.20 of the Oakland Municipal Code, the City of Oakland imposes a real property transfer tax on transfers of real property located in Oakland; and
WHEREAS, the Council determines that although not expressly stated in the language of the ordinance, it was the intent of the Council to impose the tax on all transfers of real property unless expressly excepted from taxation; and
WHEREAS, transfers of real property occurring as a result of changes in the ownership of corporations, and other legal entities, t;rough mergers, consolidations, and acquisitions escape taxation, while Oakland homeowners and small businesses pay the real estate transfer tax; and
WHEREAS, the Council determines that it is in the best interest of the City of Oakland to submit an amended real property transfer tax to the voters that will clarify the intent of the ordinance to fairly and equally tax all transfers of real property, including transfers of real property that result from changes in ownership and control of corporations and other legal entities; and
WHEREAS, the Council determines that statewide rules sometimes conflict with Oakland's interests as an independent charter city and that current requirement of conformity with statewide rules should be removed; and
WHEREAS, accordingly, without increasing the tax rate, the City Council of the City of Oakland desires to amend Chapter 4.20, sections 4.20.020 and 4.20.030 of the Oakland Municipal; and
WHEREAS, all revenues received from the tax will be deposited in the general fund of the City to be expended for general fund purposes; now, therefore, be it
RESOLVED: That the City Council of the City of Oakland does hereby request the Board of Supervisors of Alameda County order the Special Municipal election consistent with the provisions of state law; and be it
FURTHER RESOLVED: That the City Council of the City of Oakland does hereby submit to the voters at the special election not more. than 88 days and not more than 150 days from the date of passage of this resolution the text of the proposed ordinance, which shall be as follows: AN ORDINANCE AMENDING THE REAL PROPERTY TRANSFER TAX, CHAPTER 4.20 OF THE OAKLAND MUNICIPAL CODE, TO CLARIFY APPLICATION OF THE TAX TRANSFERS OF REAL ESTATE RESULTING FROM CHANGES OWNERSHIP AND CONTROL OF' CORPORA. TIONS AND OTHER LEGAL ENTITIES.
Be it ordained by the People of the City of Oakland:
Section 1. The Municipal Code is hereby amended to add, delete, or modify sections as set forth below (section numbers and titles are indicated in bold type; additions are indicated by underscoring and deletions are indicated by
Section 2. Code Amendment. Section 4.20.020 of the Oakland Municipal Code is hereby amended to read as follows:
4.20.020 Imposition of tax. There is imposed a tax on all transfers by deeds, instruments, writings, or any other document, or changes in control and ownership of legal entities, by which any lands, tenements or other interests in real property located in the city, are or is granted, assigned, transferred, or otherwise conveyed to or invested in a transferee, or transferees thereof, which shall be levied at the rate of one and one-half (1.50) per cent of the value of consideration.
Section 3. Code Amendment. Section 4.20.030 of the Oakland Municipal Code is hereby amended to read as follows:
"Person" and "persons" mean any natural person, receiver, administrator. executor. assignee, trustee in bankruptcy, trust, estate, firm. co-partnership, joint venture, dub, company, joint stock company, business trust. limited liability company. municipal corporation, political subdivision of the state of California, domestic or foreign corporation, association, syndicate, society, or any group of individuals acting as a unit. whether mutual. cooperative, fraternal, nonprofit, or otherwise. and the United States or any instrumentality thereof, and any natural person, who as an individual or with a spouse, owns fifty-one (51 %) percent or more of the capital stock of a corporation obligated to file a declaration and pay tax pursuant to this chapter; and in addition. is a person with to control the fiscal decision-making process by which the corporation allocates funds to creditors in preference to its tax obligations under the provisions of this chapter. A person as defined herein. who is also an officer or director of a corporation obligated to file declarations and pay tax pursuant to this chapter, shall be presumed to be a person with the power to control the fiscal decision-making process. Whenever the term "person" is used in any clause prescribing and imposing a penalty, the term as applied to association shall mean the owners or part owners thereof, and as applied to corporation, the officers thereof. "Real property" and "realty" mean real property as defined by and under the laws of the state of California.
"Value of consideration" means the total consideration, valued in money of the United States, paid or delivered, or contracted to be paid or delivered in return for the transfer of real property, including the amount of any indebtedness existing immediately prior to the transfer which is secured by a lien, deed or trust or other encumbrance on the property conveyed and which continues to be secured by such lien, deed of trust or encumbrances after such transfer, and also including the amount of any indebtedness which is secured by a lien, deed of trust Of encumbrance given or placed upon the property in connection with the transfer to secure the payment of the purchase price or any part thereof which remains unpaid at the time of transfer.
"Value of the consideration" also includes the amount of any special assessment levied or imposed upon the property by a public body, district or agency, where such special assessment is a lien or encumbrance on the property and the purchaser or transferee agrees to pay such special assessment or takes the property subject to the lien of such special assessment. The value of any lien or encumbrance of a type other than those which are herein above specifically included, existing immediately prior to the transfer and remaining after such transfer, shall not be included in determining the value of the consideration. If the "value of the consideration" cannot be definitely determined, or is left open to be fixed by future contingencies, "value of the consideration" shall be deemed to mean the fair market value of the property at the time of transfer, after deducting the amount of any lien or encumbrance, if any, of a type which would be excluded in determining the "value of the consideration" pursuant to the above provisions of this section.
Unless a transfer is a "gift", i.e., "free and clear" of liens or encumbrances, it is presumed that the value of consideration of a given property being transferred is the fair market value of that property, unless circumstances supporting a departure therefrom can be furnished to the sole satisfaction of the Director or his or her designee(s).
Section 4. Severability. Should any provision of this Ordinance, or its application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this Ordinance or the application of this Ordinance to any other person or circumstance and, to that end, the provisions hereof are severable.
Section 5. Majority Approval; Effective Date. This Ordinance shall be effective only if approved by a majority of the voters voting thereon and shall go into effect ten (10) days after the vote is declared by the City Council.
Section 6. Council Amendments. The City Council of the City of Oakland is hereby authorized to amend Sections 4.20.020 and 4.20.030 of the Oakland Municipal Code as adopted by this Ordinance in any manner that does not increase the rate of the real estate transfer tax, otherwise constitute a tax increase for which voter approval is required by Article XIII C of the California Constitution or entirely dispense with the requirement for independent audits stated in Section 4.28.190.
FURTHER RESOLVED: That the City Council of the City of Oakland does hereby find and determine that pursuant to Article XIIIC, section 2(b) of the California Constitution the City Council of the City of Oakland has adopted a resolution declaring the existence of a fiscal emergency in the City of Oakland that necessitates asking the voters to approve the amendment to the real estate transfer tax tax before the next regular election of the Oakland City Council.