Commercial Real Estate Blog

In the San Francisco Bay Area, the closing customs vary from county to county. Some cities also assess a city transfer tax in addition to the county transfer tax. In most areas where the city doesn’t assess a city transfer tax, the county rate is $1.10 per $1,000 in property value. The below shows how closing costs and fees are customary divided in the various Bay Area counties.

Santa Clara County

Seller Pays: County Transfer Tax, Escrow Fees, Title Insurance
Buyer Pays: Recording Fees
50/50: City Transfer Taxes (San Jose, Mt. View, and Palo Alto assess a $3.30 per $1,000 city transfer tax) are normally split 50/50

San Mateo County

Seller Pays: County Transfer Tax
Buyer Pays: Recording Fees, Escrow, and Title
50/50: City Transfer Taxes (San Mateo [$5.00 per $1,000]) are normally split 50/50

Alameda County

Seller Pays: County Transfer Tax
Buyer Pays: Recording, Escrow, and Title
50/50: City Transfer Taxes are normally split 50/50. Cities in Alameda County which assess a city transfer tax are (per $1,000): Alameda ($5.40), Berkeley ($15.00), Hayward ($4.50), Oakland ($15.00), San Leandro ($6.00).

San Francisco County

Seller Pays: City and County Transfer Tax (on sales over $1M, the rate is $7.50 per $1,000)
Buyer Pays: Recording, Title, and Insurance

Contra Costa County

Seller Pays: County Transfer Tax
Buyer Pays: Recording, Title, and Escrow Fees
50/50: City Transfer Tax [Richmond - $7.00 per $1,000]

It seems an agreement has been reached between the city of San Jose and San Jose, Santa Clara Union School district officials on the funding of schools in support of the development slated for North San Jose. The agreement averts a decision by the school district to place an initiative on the november ballot will calls for a $30,000 per housing unit fee. We discussed the fee in additional detail in a previous post.

Under the terms of the deal, developers will kick-in $58 million, and the city will provide an additional $75 million in funding. The city will also be providing 8-acres of land adjacent to the Alviso Fire Station for the school district to use as a development site for a school.

The latest offer in the ongoing negotiations between the school district, the City of San Jose, and developers has Mayor Chuck Reed of San Jose offering to kick in $75 million in redevelopment funds towards building schools to support the planned developments. The $75 million is in addition to the $58 million developers have agreed to pay. The district is projecting the need for 3 new schools, including a high school requiring 30-acres of land.

The cost of the schools is estimated at over $400M by the school district. Given land costs of roughly $40-45 psf, the cost of acquiring enough land for the high school alone will be close to $60M, so it is conceivable that the cost of acquiring the land necessary for three schools is up there. Still though, $400M seems like a strong number, but this is the government we are talking about so anything is possible.

If the city and the school district are unable to come to an agreement, the school district intends on getting the support it needs from the community through the ballot initiative it is pushing. If successful, the initiative would slap a $30,000 per unit tax on new development in the area, and would raise $12.20 per unit from existing owners.

At $30,000 per unit, that is a very significant number, particularly if developers have to contend with construction prices continuing to rise, and BMR (below market rate) requirements which are imposed on them. Many developers have claimed that the additional fees would put a lid on new development. The reality is that development will more likely than not continue, land owners will simply just need to lower their price expectations as developers reflect the per-unit fee on their development proformas.

According to an article in the Los Angeles Times, Google was the third largest acquirer of land in Santa Clara County last year. The two ahead of Google in the race were real estate companies.

The article also points to plans by Google to develop a hotel and conference center on the east side of 101 in Mountain View, something that has been sorely lacking on the stretch of 101 from Sunnyvale up the Peninsula.