Atherton City Council to explore development tax


The possibility of a construction and development tax will be up for discussion during the Atherton City Council's Wednesday afternoon, Dec. 4, meeting. Such a tax could have generated anywhere from about $800,000 to $2.5 million annually in past years, according to a town staff analysis.

Among growing municipalities like Atherton, a development tax can provide substantial revenues, according to a town staff report prepared for the Dec. 4 meeting.

"If you really think about us (Atherton), we don't have commercial (businesses), we don't have any utility tax," Vice Mayor Rick DeGolia said during a June council meeting. "What we have is residents and development within those residences, and that construction impacts everybody, and everybody's feeling that impact and it's one of the most common comments we (town officials) all get. So I think people would feel good to support the town with a development tax."

In June, the council instructed staff to schedule further discussion of a possible construction and development tax, derived from work on residential properties.

"Municipalities review revenue alternatives regularly to help diversify revenue to the General Fund and Capital Improvement operations," the staff report says. "The Town's previous review of revenue alternatives, such as Business License Tax, was an important step as the Town continues to explore ways to not be so heavily reliant on property tax revenues."

The tax, the report notes, could be applied to all construction permits based on the valuation of the permit. It would generally be imposed only on new construction, and would be based on the number of units, number of bedrooms or square footage.

Staff notes that because the amount of revenue derived from these taxes would fluctuate from year to year, it should not be used as a source of funding for ongoing operations.

For example, during the 2018-19 fiscal year, a 1% tax on construction projects in town (which were valued at $132 million) would have brought in about $1.3 million.

The staff provides estimates of what 0.5% to 2% taxes on construction in town would net the town.

The council began discussing options to bolster revenue for the town's general fund in 2014, according to the staff report. In 2017, it examined implementing a business license tax, but opted not to go forward with such a tax.

If the development tax is set up as a general tax, it can be enacted only if approved by a majority of voters in a general election, according to staff. This means that the earliest such a tax could be on the ballot would be during the 2020 general election, and ballot language would need to be finalized and approved by the council by next August, according to staff.

A special election would allow for a longer timeline, but would require the measure to be a special tax, meaning that the tax would need to be imposed for a specific purpose, the staff report says. Special taxes also require a two-thirds voter approval to pass.

The staff report can be viewed, here.

The meeting takes place at 4:15 p.m. in Holbrook-Palmer Park's Pavilion, 150 Watkins Ave. in Atherton.


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11 people like this
a resident of Atherton: Lindenwood
on Dec 4, 2019 at 12:35 pm

Here we go again.
The Town couldn't get a parcel tax passed.
They increased building permit fees,
and with a surplus in the bank, the town
wants more fees.
On rebuild projects (about 10 in Lindenwood alone)
the real estate tax that trickles down to the Town
is quite substantial.
Please, Town, justify the need for the funds.

10 people like this
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Dec 4, 2019 at 2:25 pm

Peter Carpenter is a registered user.

The Town was forced to withdraw an ill advised road impact fee and refund the funds obtained from that fee.

The residents told the Town to stop the parcel tax.

LAFCO told the Town that it would not be successful in its attempts to divert taxpayer funds from the Fire District.

When will the Council quit looking for more money and instead start focussing on living within its means?

4 people like this
Posted by My take
a resident of Atherton: West Atherton
on Dec 4, 2019 at 3:08 pm

Agree with Peter. This town just has to start living within its means. Therefore, I'm against the tax.

However, as a general proposition, the business in Atherton, and it's a big business, is real estate development. Rather than trying to soak the residents with alarm fees, parcel taxes, etc., this would be the way to garner revenue. HOWEVER, that revenue is not needed and will just lead to more spending beyond means. We need to stop this.

4 people like this
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Dec 4, 2019 at 3:16 pm

Peter Carpenter is a registered user.

" the business in Atherton, and it's a big business, is real estate development."

And as a result every year the Town sees an almost TEN percent increase in its property tax revenues!!

So what is the problem?

4 people like this
Posted by Tobin
a resident of Atherton: West Atherton
on Dec 4, 2019 at 3:22 pm

Such a tax would make sense if it would be used exclusively to repair damage to Town roads, a large part of which is caused by construction and off haul trucks. This would link the source of the damage to the source of funds to repair that damage. But I suspect that this could then be called a road impact tax and thus not be legal.

4 people like this
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Dec 4, 2019 at 3:37 pm

Peter Carpenter is a registered user.

From the Town's own budget document:

"From FY2011/12 to FY 2018/19, Atherton has seen a growth in assessed value of approximately 71%. "

8 people like this
Posted by Sandy Crittenden
a resident of Atherton: Lindenwood
on Dec 4, 2019 at 8:57 pm

This is another burden on the residents of Atherton. The Town is not short of funds, just as they were when they lost the battle over the Special Parcel Tax. The council is very generous with the taxpayers money in compensating the Town staff and Police.
Atherton has no businesses, That is true, but they have multi-million homes that pay sky-high taxes. And these tax revenues keep increasing each year as another older home is sold. Modest examples show that homes that were originally assessed at $200,000 are selling for $5,500,000. Big tax increase. Then the original house is torn down and a new $10,000,000 house takes its space. From $200,000 to $15,500,000 puts smiles on the council and staff's face. They are rolling in cash.
The fly in the ointment is the Civic Center. They are short on funds since they gave up raising donations to pay for it and blindly charged forward to build an over-sized home for the staff and police. They should put on the ballot at citizen approved bond to finance the finish the of the Civic Center.
This proposed Building Tax will go on forever, long after the Civic Center is built and paid for. Government is like Jabba-The-Hutt, you feed him and he grows
larger and demands more. There is no satiating their hunger for money.
The campaign committee that defeated the Special Parcel Tax is still active and very well funded. The annual fee to the state has been paid for 2020. These funds will gladly be spent on defeating this tax or any other tax that is challenged on the residents. Enough is enough.

Like this comment
Posted by Thank you
a resident of Atherton: other
on Dec 4, 2019 at 9:16 pm

Thank you, Sandy!

2 people like this
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Dec 5, 2019 at 2:33 pm

Peter Carpenter is a registered user.

This Town Council is REALLY willing to do ANYTHING for cash!!

"The Council has agreed to enable a donor who makes a 100% tax deductible donation of at least $5m to the project to name the new street that will run past these buildings and connect Fair Oaks Lane and Ashfield Road."

Just imagine if President Trump or President Putin were such a donor? Or the next Jeffrey Epstein?

Trump Way or Putin Plaza or Epstein Hideaway.

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