San Rafael council votes to place 1% real property transfer tax on November ballot

San Rafael ' The City Council voted unanimously on July 20 to put a proposed increase in the city's real property transfer tax before voters in November 2026.

City staff proposed raising the city's transfer tax from $2 per $1,000 of a sale to $10 per $1,000 (effectively 0.2% to 1%). Interim City Manager Paul DiVasio told the council staff estimates the change would generate about $6 million a year, a sum staff said would help fund long-term infrastructure needs including pavement maintenance, sidewalk and storm-drain repairs, and ongoing support for a "safe team" alternative-response program for people in crisis.

The measure would be a general-purpose tax, DiVasio said, which means the City Council would retain discretion over how to spend the revenue; the proposed ballot language would include oversight and audit provisions similar to other voter-approved measures in San Rafael. DiVasio and finance staff also outlined findings from a recent poll they commissioned: when asked cold, both a public-safety parcel tax and a transfer tax showed roughly 51% initial support, and support rose for the property transfer tax after respondents heard arguments in favor.

Why it matters: San Rafael retains a smaller share of the constitutionally capped 1% property tax than many nearby cities, staff said, leaving a gap the city has historically tried to fill with voter-approved measures. City officials told the council the proposed transfer tax would diversify revenue sources and provide funding to maintain services residents said they prioritized in the survey, including 9-1-1 and fire response, road repairs and homelessness-related services.

Council debate and public reaction: Council members pressed staff on several points before the vote, including whether to make the revenue dedicated to specific uses (a "special" tax requires a two-thirds threshold) or leave it as general-purpose revenue, how much of the revenue would come from residential versus commercial sales, and whether a tiered structure that taxed higher-value transactions more heavily would be viable. DiVasio said the city's historical transaction data showed much of the transfer-tax revenue comes from lower-value sales, and survey testing suggested tiering did not increase voter support.

During public comment, real-estate professionals and several homeowners expressed opposition, saying the fivefold increase at closing would place a large burden on sellers (particularly older residents downsizing) and risk reducing turnover. Others urged approval, saying the funding would preserve safety and basic services downtown and citywide.

Formal action: Vice Mayor Kurtz moved to adopt the resolution calling the municipal election to submit the measure to voters, authorizing the city attorney to prepare an impartial analysis and authorizing filings of an argument and rebuttal. Councilmember Bushey seconded. The council voted 4-0 to place the measure on the November 3, 2026 ballot.

Next steps: If the council's action stands, the county will be asked to consolidate the city's measure with the November election, the city attorney will prepare the impartial analysis, and the mayor and Councilmember Bushey were authorized to file an argument and rebuttal. The measure would require a simple majority (50%+1) to pass as a general-purpose tax.