Berkeley to consider placing a vacant-home tax on the ballot. Will it help with the housing crisis?

Berkeley voters could decide in November whether to tax thousands of vacant homes in a bid to address the region’s housing crisis by pressuring property owners into renting their properties. If landlords choose to keep the units vacant, they’d be taxed to raise money for affordable housing.

Vice Mayor Kate Harrison will introduce a proposal at Tuesday’s City Council meeting that would ask voters to weigh in on whether to tax the owners of multiunit buildings, single-family homes and condominiums owned by a corporation or LLC. Accessory dwelling units will be exempt. Units must have been empty for more than a year.

Harrison said the proposal will help address the city’s housing crisis because it will encourage property owners to rent out empty units.

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.

Berkeley — along with the rest of the Bay Area and most of the state — has produced far too little housing to keep up with population growth over the last few decades. But while the city is going through a small housing boom — with towers up to 25 stories currently in the works for downtown and plans for residential buildings up to 12 stories at the city’s two BART stations— it could take years for those units to become available for rent. Even still, they won’t make up for decades of underbuilding, so officials are looking at other options to fill the need.

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.

Property owners say the proposal is ill-timed. The pandemic’s eviction moratorium, which is still in effect in Alameda County, has hurt many landlords who have one to two rental units, said Krista Gulbransen, the executive director of the Berkeley Property Owners Association, which has 700 members.

“People are very scared to rent out if they are not a big owner,” Gulbransen said. “We’ve got the pandemic and an eviction moratorium that continues to be in place, and people are even more hesitant to get into rental situations.”

Gulbransen said her group could support a proposal that targets only large and corporate landlords.

“We think if you have an available unit and it works for you to rent it out, you should,” she said. “Having said that though, this is a problem. It tries to control the way people use their property. That’s problematic for us.”

Housing experts say the vacant-property tax is a relatively new strategy to add a modest number of units to the rental market in the Bay Area but the tax alone isn’t going to address huge housing shortages and affordability problems.

David Garcia, a policy director at UC Berkeley’s Terner Center for Housing Innovation, said the tax is unlikely to result in millions of dollars of revenue and hundreds of homes back on the rental market. Instead, it will likely result in one or the other.

“It is one tool in a tool box that needs to include many other things,” Garcia said. “It’s certainly not going to create the kinds of units needed to really address the shortfall of overall supply.”

Garcia applauded Berkeley’s other efforts to address housing affordability — with its move to eventually end single-family zoning and building housing at BART.

Harrison said her proposal is inspired by a similar measure in Vancouver, which introduced the Empty Homes Tax in 2017.

A report by Vancouver city staff showed “strong evidence” that the tax reduced the number of vacant residential properties. From 2017 to 2019, the number of vacant properties decreased by 26% and more than $86.6 million of the tax revenue was put toward affordable housing initiatives.

Similar to Vancouver, Harrison said the revenue from the special tax in Berkeley would be put toward affordable housing — specifically new projects and the acquisition or rehabilitation of existing buildings.

Leah Simon-Weisberg, the chair of Berkeley’s Rent Board, supports Harrison’s proposal, arguing that leaving properties vacant is “irresponsible.”

“This is one of the many different policies that we need to implement so we can get closer to having our housing used as it’s intended, which is as a home,” she said.

Affordable housing developers also support the vacancy tax because the revenue could be used to fund more projects.

Rev. Sophia DeWitt, a policy director at East Bay Housing Organizations, which represents affordable housing developers, said the tax revenue could potentially help with the production of affordable housing.

If the council approves Harrison’s measure, the city attorney will develop language for a ballot measure. The council has until July to decide whether it will be placed on the ballot.

Sarah Ravani (she/her) is a San Francisco Chronicle staff writer. Email: Twitter: @SarRavani

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