The San Diego Regional Chamber of Commerce on Friday called on the mayor and City Council to review its plan to generate new revenue for the city’s crumbling infrastructure.
The chamber is proposing a $2 fee per day on all rental car transactions, and consideration of an increase in the real estate transfer tax to $3.60 per $1,000 on real estate sales. The tax is paid on the sale of property, based on the purchase price of the property at the time of sale, according to the chamber’s communications manager Kristine Norquist. The total property transfer tax paid to both the city and county of San Diego amounts of $1.10 per $1,000 of sales price for all property transfers that occur within city limits. In 2003, the city’s real estate sales totaled $19 billion.
According to the chamber’s economic research bureau, if a home were sold within the city of San Diego for $580,000, an estimated real estate transfer tax of $638 would be assessed, with half of that amount, or $319, going to the city. If the tax were raised to $3.60, an estimated transfer tax of $2,088 would be assessed, of which the city would get $1,450, and the county $638 on the sale of the same property.
A $2-a-day hike in rental car fees could generate added annual revenue of $1.2 million, based on an average of five cars rented for an average of three days, according to bureau statistics.
“Historically, the chamber hasn’t advocated tax increases,” said Norquist, “but due to the critical state of the city of San Diego’s infrastructure, we are now urging the City Council to consider these new revenue sources.”
Mike Murphy, chamber chairman, and president and chief executive officer of Sharp HealthCare, noted that the plan would have to go before the voters.
“The chamber hopes that if the discussions go well, it could be on either the primary or the general election ballot in 2006,” he said.
The new revenue raised would be used for street and sidewalk maintenance, particularly repair of the many potholes plaguing the city streets, and other infrastructure needs. Oversight committees would be created for both the rental car fee and transfer tax, and both would be ended after five years.
“One of the impediments in building new housing in older neighborhoods of San Diego, housing that is viable to the business community, is the ongoing infrastructure issues,” said Murphy. “These tax increases, on a sunset basis, could be used to improve the infrastructure in this city in a drastic manner over the next five years. Which would then give us more housing options.”
Mayor Dick Murphy responded that, “Generally, I oppose new taxes. However, I would be willing to consider a car rental surcharge, which would be primarily paid by tourists, if it were spent exclusively on road repair and resurfacing.”