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Pleasanton will not become a charter city anytime soon after a City Council majority pressed pause on staff’s efforts to continue exploring the possibility of becoming one during last week’s council meeting.
The city, according to staff’s presentation on July 15, would have ultimately left the decision up to the voters during next year’s election as a ballot measure — Pleasanton would have had to pay between $194,000 to $291,000 to place the measure on the November 2026 ballot.
However, councilmembers Craig Eicher and Matt Gaidos and Mayor Jack Balch informally directed staff to stop exploring the possibility of becoming a charter city for several reasons, including waste of staff time and concerns regarding the city’s key reason for becoming a charter city — implementation of a higher, voter-approved real property transfer tax.
“This may be a different conversation in a year or 18 months once the ramifications of our budget and the cuts that we’ve had to make have gone forward but I just don’t know that we’re there yet,” Gaidos said. “With the amount of staff time it would take and the amount of money it would take to explore it, I don’t see it as a wise use of resources.”
During the May 7, 2024 council meeting, Councilmember Julie Testa asked staff to explore the creation of a charter for the city during the matters initiated portion of the meeting. With majority consensus, the council at that time agreed to have staff compile more information about the process to become a charter city and the benefits of becoming one.
According to assistant to the city manager Aarón Zavala, a charter city derives its authority directly from the California constitution rather than from state law. A charter itself is a formal document that outlines the powers and structure of a municipality like Pleasanton.
“The simpler the charter, the more flexibility the city maintains,” Zavala said.
He said 126 of 482 California cities are charter cities and that those cities have control over municipal affairs such as public contracting, prevailing wage, fiscal affairs — including real property transfer taxes — and planning and zoning, with some limitations.
One of the main reasons Testa brought the topic of becoming a charter city up to the council in 2024 was because she said she wanted Pleasanton to have more local control over housing developments.
“I wish that everyone had the courage — all the cities would have the courage — to come together to stand up to the overreach that the state is imposing on our cities,” Testa said.
And while Zavala told the council that planning and zoning have traditionally been municipal affairs, local authority has been largely eroded by state legislation — he pointed out how recent state laws still apply to charter cities and that state housing mandates override local control even for charter cities.
That’s why staff’s focus when looking at the benefits of becoming a charter city shifted to looking at implementing a higher real property transfer tax.
“Becoming a charter city would give us enhanced local control over municipal revenues; specifically the ability to implement a voter-approved real property transfer tax,” Zavala said. “This represents the opportunity for increased fiscal sustainability for our community.”
As a general law city, Pleasanton is subject to state law on all matters. The current transfer tax is $1.10 per $1,000, which is split with the county — meaning Pleasanton only gets 55 cents per $1,000 every time a house is sold in the city. Pleasanton cannot increase that tax without charter status.
Other cities in the East Bay like Berkeley and Oakland have real property transfer taxes ranging from $10 per $1,000 to as high as $25 per $1,000 depending on property value
According to Zavala, during the 2023-24 fiscal year Pleasanton received $853,000 in real property transfer tax revenue but added that if the city had gone forward with pursuing charter status and had voters approved a higher transfer tax, the city would have generated $7 million to almost $10 million in revenue even with a $6 transfer tax rate per $1,000.
“From my seat today, the value of a really simple, single page charter that unlocks the potential for real property transfer tax is probably the most appealing reason for the city to be looking at it right now based on our overall financial conditions,” City Manager Gerry Beaudin said. “You’ve asked us to consider new and different ways to bring revenue into the organization, and this is a really interesting tool that cities around us have used.”
Vice Mayor Jeff Nibert was particularly invested in exploring the idea of becoming a charter city in order to pursue placing a higher transfer tax measure in front of voters because he thought it was a good alternative to address the city’s structural deficit in the wake of Measure PP — a half cent sales tax increase measure — failing to get voter approval last year.
“We have to do something in regard to our structural deficit. We can’t just reject things out of hand,” Nibert said. “I don’t see anything wrong with exploring the charter.”
“I think it’s incumbent upon the council to address our city’s severe structural deficit and the mounting challenges that face us in the future and we shouldn’t take anything off the table,” he added.
Testa also said that while the transfer tax wasn’t her main motivation for bringing this matter up to the council, she still thought there were no downsides to becoming a charter city and that additional revenue thanks to a higher transfer tax would have definitely helped the city’s fiscal challenges.
“A charter city gives a city a lot of autonomy and while the courts aren’t currently favoring the cities, to be in a position to act if things shift would be a good thing,” Testa said. “Again, I wasn’t looking at a transfer tax when I asked to have this discussion but I applaud our staff for looking at ways to help us get out of our deficit.”
But as Testa also pointed out, a lot of charter cities haven’t been winning in legal proceedings, which is something that Gaidos noted as an Alameda County deputy district attorney and criticized.
Gaidos said that maybe five or six years ago, he would have understood if the city would have explored the possibility of becoming a charter city to combat the growing state mandates over housing at the time but after reading the “progeny of cases that have preceded through the appellate court”, he couldn’t support moving forward. Especially given the fact that Measure PP lost last year.
“With the benefit of being a practicing attorney and reading all those appellate cases and seeing the direction that they are going, I just don’t see that it brings us any tangible benefit other than the ability to ask our voters for a transfer tax that I don’t think will pass in November of 2026,” Gaidos said.
Eicher also said he didn’t see any reasons for becoming a charter city other than seeking to increase the transfer tax and while he said he appreciated the discussion, he thought putting a tax on homeowners might do more harm than good.
“I think it does create a barrier to entry into the housing market which will reduce the turnover in our community and will affect long term homeowners the most,” Eicher said.
A number of residents and real estate practitioners also spoke out in opposition to becoming a charter city and pursuing such a tax.
“There are also long-term residents that — due to the appreciation of housing — have high capital gains to consider,” Will Doerlich, a real estate broker, said during the meeting. “Saddling them with a steep, potential real estate transfer tax bill may actually have a chilling effect on their real estate transaction and a home that doesn’t sell won’t generate any transfer tax revenue.”
Balch also said he spoke with other cities who shared their concerns regarding how the state is starting to make grant funding and access to capital a bit more dependent upon general law versus charter cities.
“If it was the way to the promised land, I’m surprised that we’re not one of several hundred cities converting to charter,” Balch said. “And I’m very worried about unintended consequences.”
He added that it was a bad time to pursue charter status or a higher transfer tax because the city just approved its budget and is looking at ways to improve its economy.
“I personally worry we’re creating a false expectation of a solution that really diverts us away from the groundwork we have put in place for economic growth in Pleasanton,” Balch said, adding that it doesn’t mean the city shouldn’t look at other options like a hotel transfer tax.
However, Nibert and Testa vehemently disagreed with how the council majority wasn’t at least open to exploring a revenue generating tax measure as it faces a severe structural deficit.
“For heaven’s sake, I don’t know what people are talking about up here,” Nibert proclaimed during his final comments. “Yes we have a balanced budget (but) the balanced budget that we have doesn’t do enough. Far from it.”
Nibert said they need to solve the structural deficit without relying on unpromised economic growth years down the road.
“I don’t see any unintended consequences coming from having a charter that (is limited) to implementing a transfer tax,” Nibert said.
Testa agreed with Nibert, echoing similar sentiments.
“I’m tired of hearing we have a balanced budget because it doesn’t mean anything,” Testa said. “Because every city that has gone bankrupt has had a balanced budget the year before they went bankrupt.”
Still, the rest of the council did not change their positions.
“I just don’t think that the voters are going to see it as anything other than another tax and I don’t think, as currently situated now, seven months behind a measure that didn’t pass that it’s a good use of staff time and resources and city money to pursue it,” Gaidos added.
Stop coming up with new ideas to tax residents. Get the city’s house in order by reducing its expenses and increasing revenue by encouraging more businesses and housing.
Pleasanton has been seeing population and business decline the same time city’s budgets have been increasing over the past 5+ years.
It’s time to cut costs – by consolidating city’s operations and reducing employees. If the current city council, manager and staff cannot do it – it’s time to look for alternatives who can.