City Council ballot measure proposes tax on vacant storefronts

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Berkeley’s vacant storefronts are the subject behind a possible ballot measure proposed during the Berkeley City Council meeting Tuesday that would penalize landlords for keeping their properties unoccupied.

Put forward by Mayor Tom Bates and Councilmember Jesse Arreguin, the potential ballot measure, if passed, would enact a tax on vacant storefronts after two years of vacancy, charge the owners 50 cents per square foot and allow for the amount to increase with additional years of vacancy.

Vacant storefronts have been an issue for more than six years, said Arreguin’s Chief of Staff Anthony Sanchez. Gathering inspiration from other cities that impose vacancy penalties, in 2011, Arreguin proposed a vacancy registration fee that asked city staff to investigate a potential fee or tax for commercial spaces. In 2013, Arreguin and Bates requested a report from the city manager about the status of the fee, and the issue has now come back for this year’s ballot. 

Currently, there are 91 vacant storefronts in Berkeley, according to the city’s Office of Economic Development website. Proponents of a vacancy tax say these empty storefronts are negatively affecting the businesses and communities next to them by being unoccupied for so long.

“One of the problems with vacant buildings is that they attract people urinating and defecating, they attract graffiti — they generally affect the ambiance of the whole neighborhood,” said Councilmember Kriss Worthington. “Blighted commercial buildings bring down all the businesses in that neighborhood.”

Supporters of this measure feel that, when pressured with added fees and taxes, landowners will lower their high rental prices, which will allow more business owners to afford renting their properties.

According to Worthington, one of the top reasons businesses go out of business that landlords raise rent prices at the ends of leases, which the business owners are often unable to afford.

“There are impacts with vacant storefronts — you have to spend money in terms of public works and police dealing with vacant properties,” Arreguin said. “It has an impact, not only on the character in terms of our community but also in terms of our local businesses.”

While proponents argue the fault of vacant storefronts is on landlords for not lowering rent to make their properties more affordable, others believe the threat of being taxed will cause landlords to hastily choose tenants who will not necessarily benefit the community.

“My greatest concern is that it might detract from a sound retail attraction strategy where you really try to have the best land of businesses in the district,” said Roland Peterson, executive director of the Telegraph Business Improvement District. “If you have too much of one thing and not enough of the other, then the district does not perform at its optimal best.”

Moving forward, the city will survey a sample of 500 Berkeley residents about this potential ballot measure, among others, and present the findings to the council in April.

Contact Chris Tril at [email protected] and follow him on Twitter @ctril.