Berkeley Officials Propose Taxing Landlords for Vacant Properties to Increase Rental Supply

People walk in front of Sather Gate on the University of California at Berkeley campus in
AP Photo/Jeff Chiu

The California city of Berkeley hopes voters will approve levying a tax on landlords who have vacant properties in an effort to create more rentals. The money from the taxes would be used to pay for more inventory of affordable housing.

Vice Mayor Kate Harrison was expected to announce the proposal, slated for the November ballot, on Tuesday that would tax landlords of multi-unit buildings, single-family homes, or condominiums, owned by an LLC or corporation. 

Properties that have been vacant for more than a year would face the tax.

The San Francisco Chronicle reported on the development:

If Harrison’s proposal makes the ballot, Berkeley would follow similar measures or proposals raised in Oakland and San Francisco. Oakland’s vacant property tax took effect in 2019 and made about $7 million in its first year of implementation. San Francisco is considering a similar measure for the November ballot.

The proposal would tax smaller properties $3,000 per year and tax larger properties $6,000 per year. If the units stay vacant for more than two years, the tax would double to $6,000 and $12,000 respectively. Extensions will be granted for units under renovation or going through probate. If approved, the tax could generate between $4.5 million and $9 million annually in the third year.

It’s unclear exactly how many units would be freed up if the measure goes to the voters and they approve it, but a staff report estimates it could also result in 1,000 vacant units becoming available for rent. Berkeley has 4,725 vacant housing units, according to the staff report, citing census data, but some are under renovation, and some owners might choose to pay the fine rather than rent their units. The city has 52,331 rental units in total.

Landlords with a small portfolio are opposed to the tax idea because they are still facing a coronavirus eviction moratorium that is still in effect in Alameda County.

“People are very scared to rent out if they are not a big owner,” Krista Gulbransen, executive director of the Berkeley Property Owners Association, said in the article.

Gulbransen said her group might support taxing corporate landlords but, overall, is opposed to a measure that “tries to control the way people use their property. That’s problematic for us.”

David Garcia, a policy director at University of California Berkeley’s Terner Center for Housing Innovation, said the tax could be “one tool in toolbox that needs to include many other things.”

Garcia is a supporter of social justice housing ideology, including eliminating single family homes and building multi-unit properties at public transportation hubs.

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