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Santa Bárbara staff recommends exploring property transfer tax to fund housing after survey shows mixed support
Summary
City staff presented survey results and recommended pursuing a November 2026 ballot measure raising the city's property transfer tax on high-value sales (proposed example: $9.50 per $1,000 on sales over $3 million) to generate an estimated $5–6 million annually; council directed staff to continue outreach and return with options for June.
City staff told the Santa Bárbara City Council on March 3 that a targeted increase in the city's real estate transfer tax could produce a multi-million-dollar, though volatile, revenue stream to support affordable housing and other priorities.
Director of Finance Martini presented survey and fiscal analyses and said staff's illustrative proposal — raising the transfer-tax rate to $9.50 per $1,000 on transactions above $3 million — would historically have generated roughly $5 million to $6 million annually. "This is more volatile than other taxes," Martini said, noting revenues depend on the number and size of property sales and on interest rates and broader market activity.
Consultant Adamson, who conducted the December survey of likely November 2026 voters, said housing affordability and cost of living ranked highest among voter concerns. The survey found a plurality of likely voters expressed support for transfer-tax concepts once they heard informational statements, but neither tested measure cleared a two-thirds approval threshold in initial testing. "The funding needs are real, but the level of voter support will depend heavily on the measure's design and the outreach campaign," Adamson said.
Councilmembers pressed staff on design choices, including excluding multifamily rental buildings, tiered thresholds and whether to present a per-$1,000 fee or a percentage. "I'm concerned about volatility and unintended impacts on transactions," Councilmember Freeman said. Martini answered that staff ran multiple scenarios, showing exclusion of multifamily units would reduce revenues by about $1 million annually in their sample. He also flagged a pending state initiative and litigation risk that could change the city's options.
Public commenters were divided. Representatives of the hotel and tourism industry warned that increasing the transient occupancy tax or transfer tax could harm tourism, reduce visitor spending and put local jobs at risk. "An increase in TOT or transfer taxes will make our destination less competitive," said Billy Mats of the Santa Barbara Hotel Collection. By contrast, housing advocates and labor representatives urged the council to adopt revenue measures that are progressive and dedicated to a housing trust fund. "We need predictable funding for affordable housing," said Laura Robinson of SEU local 2020.
The staff recommendation asks the council to authorize further outreach and education and to return in June with a resolution and refined options for putting a transfer-tax measure on the November ballot if the council chooses to proceed. Staff noted that, if placed on the ballot and approved by voters, the new rate would take effect January 1, 2027.
Action on the consent calendar earlier in the meeting was approved unanimously; there was no final council vote on the transfer-tax proposal on March 3. The council generally directed staff to continue community engagement, analyze tiered and exclusionary designs, and develop draft ballot materials for council consideration by midyear.
The council's next steps include additional outreach to housing stakeholders, real-estate professionals and the public and a planned staff return in mid to late June with options and, if directed, a proposed resolution to place a measure on the November 2026 ballot.
