Berkeley voters will determine this year whether they want to implement a 10-year “empty homes tax” for vacant properties in the city.
Measure M, proposed by Councilmember Kate Harrison, is designed to boost the rental market by disincentivizing property owners from leaving units empty and is projected to raise $4 million-$6 million a year.
It applies to properties with units that are vacant for six months of the year (consecutively or not) and would go into effect on Jan. 1, 2024, and last until Dec. 31, 2035, unless voters choose to extend it before that date.
Harrison and advocates say the tax targets corporate property owners who speculate on the market and withhold units until rents can be increased or rentals can be turned into condos. They see it as another piece in addressing the housing crisis in Berkeley. Harrison also points to the “social cost” of scattered, empty homes in neighborhoods, exemplifying “blighted” homes that have fallen into disuse in her campaign for the tax.
Opponents are concerned the tax applies too broadly and wouldn’t raise a significant amount of money in Berkeley’s rental market. The proposed tax has several exemptions in place.
Measure M needs a simple majority to go into effect. If it passes, the tax could be deposited to the housing trust fund, which finances various affordable housing projects, or the general fund, but this has not been determined yet.
We answered some of the most common questions about the vacancy tax.
How much will the vacancy tax charge?
The vacancy tax begins at $3,000 or $6,000 per unit annually. It charges $3,000 per unit for the landowner’s first property and $6,000 per unit for any additional properties.
After one calendar year, that range doubles to $6,000 to $12,000 and is subject to inflation.
A report by city staff said the tax would generate $3.9 million to $5.9 million annually.
What is Berkeley’s vacancy rate?
According to Berkeley’s Rent Stabilization Board, 1,128 units under rent board authority in Berkeley are currently sitting vacant. According to census data, those units are part of the 4,725 empty units across the city, amounting to a 9% vacancy rate in Berkeley.
The city does not have a method to track vacancies across buildings not registered under the rent board, and some question the accuracy of the census data, pointing to nearly 5,000 empty units.
When the census was taken in April 2020, that number was sourced from vacancies of any length, including empty homes for weeks between tenants or units left vacant by students during the pandemic. The 2010 census, in comparison, found a vacancy rate of 3,425, or around 7%.
Measure M is specifically targeted for the 1,128 vacant units under the rent board’s jurisdiction that are included in the Rent Registry, according to Harrison.
“We’re not looking at properties that just happen to be vacant today because that happens all the time,” Harrison said. “We’re looking at places that are on this list that have been consistently vacant. About 97% of the ones that were vacant last year were vacant five years ago. It’s a consistent pattern.”
The remaining units in the city, which include single-family homes, would also be subject to the tax, but the city manager’s office will be responsible for creating processes for residents to determine if they need to pay the tax. This could include notification and appeals processes.
Who is exempt from the vacancy tax?
- Currently, nonprofits, low-income seniors, owner-occupied properties with four or fewer units (not including corporate entities) and properties in probate or under construction are exempt from the potential tax.
- Residents in nursing care are exempt under an “owner in care” vacancy exclusion period.
- If a property owner dies, the home will be exempt under an “owner death period” for two years or until it moves through probate court (whichever is longer).
- Other exclusion periods include a building permit application period, building rehab, disasters, homeowners’ exemption and the lease period.
Do other cities have vacancy taxes?
Berkeley’s vacancy tax is modeled after an existing vacancy tax in Vancouver, British Columbia, Canada. That tax was based on a percentage of the assessed property value for specific units.
According to staff reports, 21.2% of vacant units in Vancouver returned to the market after the tax was enacted, and the city generated $46 million Canadian dollars.
Oakland created a vacancy tax similar to the one proposed in Berkeley in 2018 and brought in $5.6 million in its first year. The city’s tax, unlike Berkeley’s, is connected to vacant land rather than existing units. Oakland is also in the process of adding several additional exemptions to its tax.
San Francisco has a similar vacancy tax on this year’s ballot.
Do vacancy taxes increase affordable housing?
Opponents of vacancy taxes argue that the charge levied on only a small fraction of properties in the city doesn’t make a difference in increasing housing affordability or improving rents.
While it may fill some vacant units, they question the exact revenues projected from the tax. There isn’t strong data available showing exactly how many corporate-owned homes sit vacant for over six months at a time in Berkeley.
Supporters say it’s a housing crisis measure designed to pull any eligible units into the housing market to lessen regional strain.
Berkeley is currently addressing the housing crisis with a range of strategies, including building new housing, buying existing units, and trying to preserve affordability through rent control and below-market-rate housing.
The deadline to register to vote online or by mail in Alameda County is Oct. 24, and the election is Tuesday, Nov. 8. We put together a guide to the essentials of how to register and vote, what’s on the ballot, voters’ rights and more.
Here are some other helpful election resources:
- The city of Berkeley’s election portal and candidate statements
- Don’t know your Berkeley City Council district? The city website has a handy tool for that.
- Voter’s Edge: View a personalized ballot by entering your address.
- Voter guides from the Daily Cal, CalMatters, KQED, the Bay Area News Group and The League of Women Voters Berkeley Albany and Emeryville
- Check your voter registration status (and sign up to get election materials online).
- Find your voter profile (Alameda County registrar of voters).
See complete 2022 election coverage on Berkeleyside.