Vacancy tax possible for Berkeley’s November ballot to spur renting empty units

Many homes owned by individuals and not corporations are exempt.

green multifamily home
Multifamily residence at Ellsworth and Russell streets in South Berkeley, Feb. 12, 2021. Photo: Pete Rosos

Berkeley residents may vote this November on a vacancy tax to charge landlords who have left specific rental units empty for over a year, following a vote by the City Council late Tuesday night.

The tax would apply to multiplexes, condominiums, rental Accessory Dwelling Units, or ADUs, and a still-to-be-determined portion of the 1,000 to 5,000 vacant units identified by data from the Berkeley Rent Stabilization Board and the U.S. Census, according to Vice Mayor Kate Harrison’s proposal.

It is modeled after existing vacancy taxes in Oakland, San Francisco and Vancouver, Canada, designed to ease the housing crisis by urging landlords to either renovate and rent their homes or sell the property to someone who has the finances to do so.

See live Tweets from Tuesday’s meeting

“The vast majority of property owners in Berkeley will be unaffected by the tax, and many many property owners will benefit from nearby derelict properties being fixed up,” Harrison said, describing a “terrible” vacant building across the street from her home that has fallen into disrepair. 

Harrison added that the tax proposal, which she says will generate between $4.5 million to $9 million, will lessen housing speculation by corporations while protecting small landlords with several exemptions (such as a senior who is unable to stay in their home while receiving care). It would charge property owners between $3,000 to $6,000 a year, depending on their property type. Commercial properties are not included in this item due to existing hardships from the pandemic, she said.

The potential tax would go into effect in 2024 and revenues could go toward building affordable housing, social housing support and city housing acquisition projects, Harrison suggested. 

Though the Council ultimately agreed to send it forward for study, Mayor Jesse Arreguín said he’s not fully convinced the tax would make a strong impact on the city’s housing availability. He said he voted yes because he’s willing to consider it, but also pushed back after Harrison claimed addressing vacancies could likely generate as much housing as new developments on BART properties.

“There is more work to be done,” Arreguín said, tuning into the meeting from Washington, D.C. “Respectfully, I don’t think this is ready to go to ballot.”

Council members Tuesday night asked for more data and questioned whether existing vacancy data truly reflects how many units have been left unattended in Berkeley and if the tax would inordinately harm small landlords already impacted by the COVID-19 pandemic and eviction moratorium restrictions or potentially harm seniors of color who still have properties in Berkeley.

Councilmember Susan Wengraf and others said Berkeley should also strive to maintain a “healthy” vacancy rate of around 5% (compared to the current 8.3%), allowing residents to move if they want and find housing in general.

The City Council discussed the vacancy tax on June 14, 2022. Credit: Screenshot

Harrison’s proposal almost didn’t move forward after Councilmember Rashi Kesarwani, who represents West Berkeley, suggested it be postponed and studied in the land use committee so it doesn’t compete with important roads and infrastructure bonds already on November’s ballot. Wengraf also urged the tax only apply to multiplexes with 10 or more units to avoid harming small landlords who are having difficulties renting their properties.

Harrison, who was not in support of either possibility, and at one point, frustrated with the possibility of the item being postponed, said, “We do not want to make corporations pay, and that is the reality of what’s happening here … you’re sending it off to Siberia.”

Krista Gulbransen, representing landlords with the Berkeley Property Owner’s Association, said a very small portion of properties would actually fall under the tax — making it ineffective — and that it would “really harm” the property owners required to pay.

The majority of public commenters were in strong support of the measure, including Moni Law, chair of the Berkeley Community Safety Coalition, who said the vacancy tax would bring properties back on the market in a much shorter window of time than building new housing, with existing rent control, or “naturally-occurring affordable housing.”

Community housing educator and activist Alfred Twu said they would be personally willing to knock on doors to garner support for the tax if it made it to the ballot, and Igor Tregub said, “this is one of the most efficient ways to generate housing when it is so desperately needed.”

The tax proposal will go to the city manager’s office for more study and another City Council vote before it appears on the November ballot. If it makes it to the ballot, it would be a special tax requiring a two-thirds vote to pass.

Supriya Yelimeli is Berkeleyside's homelessness and housing reporter. Email: supriya@berkeleyside.org. Twitter: SupriyaYelimeli. Phone: 510-585-8315.