In his op-ed article urging a Yes vote on Measure U1 and a No vote on Measure DD—the two rental housing tax hikes appearing on the Berkeley ballot—Stephen Barton, the former Berkeley housing director, embarrasses himself by shilling for big real estate developers and their regressive approach to housing tax policy.
For voters just starting to pay attention, Measure DD would raise the Berkeley tax on owners of residential rental units from 1.081% of gross receipts on rents to 1.5% of gross receipts. That’s a 40 percent increase in the tax rate. Measure U1 would raise the Berkeley landlord tax even higher—from 1.081% of gross receipts to 2.88%. That’s a 166% hike. In both cases, the revenue is intended to support city affordable housing programs—though it could lawfully be used by the City Council for any legitimate municipal purpose.
Barton urges a Yes vote for Measure U1 because Berkeley city officials estimate it will raise more revenue. But here is the rest of the story.
First, unlike Measure DD, which increases the landlord tax across the board, Measure U1 contains a provision exempting certain politically influential groups of landlords, most notably owners of newly-constructed apartment complexes for the first 12 years of occupancy. It’s a tax break worth millions of dollars to big developers and investors in luxury housing projects already exempted from Berkeley rent control. This tax break unfairly and unwisely shifts tax burden away from luxury apartment developers and onto longtime owners of rent-controlled residential properties—landlords who also happen to be the largest source of below-market-rental housing in Berkeley. It’s an approach to taxation only Donald Trump could love.
Secondly, Barton fails to acknowledge that city revenue projections for Measure U1 relative to Measure DD are only half the story. Because Measure U1 creates a two-tier tax system for landlords—by raising the tax on some but not on others—it would carry new administrative and enforcement costs that would offset new revenue. On a net basis, Measures DD and U1 are effectively revenue neutral. In fact, on Aug. 30, an Alameda County Superior Court judge ordered city officials to acknowledge on the ballot that Measure U1 contains these exemptions and to adjust revenue projections accordingly.
Vote no on Measure U1. It shifts tax burden away from big developers and onto longtime owners of rent-controlled housing and eventually their tenants. Vote Yes on Measure DD—to raise more money for city affordable housing programs while protecting local providers of rent-controlled housing and our city’s rent-controlled housing stock.
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