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Property Taxes Under the State Constitution, Property Taxes are applied to taxable real and personal property (i.e., possessory interest, and other personal property considered to be permanently attached to the property) and are set at 1% of the assessed value. Property Taxes are adjusted based on the following: The assessed value of real property that has not changed ownership increases by the change in the California Consumer Price Index up to a maximum of 2% per year. Property that changes ownership; is substantially altered; is newly constructed; “state-assessed” rather than “local-assessed” property; and personal property (i.e., possessory interest, and other personal property considered to be permanently attached to the property), is assessed at the full market value in the rst year, and subject to the 2% cap, thereafter. In 1979, to mitigate the loss of Property Tax revenues after approval of Proposition 13, the State legislature approved AB 8. This action was approved to provide a permanent method for allocating the proceeds from the 1% property tax rate, by allocating revenues back to local governments based on their historic shares of property tax revenues. The City’s Property Tax is collected by Alameda County. The Alameda County Assessor maintains the property tax assessment rolls. The City currently receives approximately 12% of the property tax levied. Most of the revenue is received in December and April each year. Supplemental taxes are the result of the reassessment of property as of the 1st day of the month following either an ownership change or completion of new construction. In most cases, this reassessment results in one or more supplemental tax bills being sent to the property owner during the year, in addition to the annual property tax bill. Motor Vehicle In-Lieu Tax (VLF) is a tax imposed by the State on the ownership of a registered vehicle in lieu of personal property tax. VLF is collected by the State Department of Motor Vehicles (DMV) and more than 95% of these fees are divided equally between counties and cities, and their aggregate shares are distributed in proportion to the respective populations of the cities and counties. The State withholds less than 5% of these fees for the support of the Department of Motor Vehicles. Until 1998-99, the annual license fee was 2% of the market value of the vehicle as determined by the DMV. In 1998-99, the State reduced the license fees by 25%, but agreed to backll local jurisdictions for this loss in revenue. In 2004, the Governor lowered the annual VLF to 0.65%, from 2%. In the budget agreement between the Governor and cities and counties, the Governor agreed to backll the 1.35% difference in VLF with property taxes from the Education Revenue Augmentation Fund (ERAF). Beginning in 2005-06, this property tax in lieu of VLF was presumed to grow at the same rate as the change in gross assessed valuation of taxable property in the City from the prior year. Personal Property Tax is assessed at the rate of 1% of the market value on a business’ personal property, such as ofce furniture, machinery, and other equipment. The tax is billed by Alameda County in a single installment due August 31st, and most of the amount due to the City is remitted in September and credited to the General Fund. Property Tax revenues are the City’s second largest General Fund revenue source. City of San Leandro | Proposed Biennial Budget FY24-25 Page 88