City Council considers levying fee on vacant storefronts

In a move to promote economic growth and curb the number of graffitied empty storefronts, the Berkeley City Council is considering a plan to levy fees against property owners whose ground-level properties remain vacant for six months or more.

Councilmember Jesse Arreguin presented the preliminary proposal — which introduced a $180 fee after six months of vacancy with additional $300 fees for every six months that follow — at a meeting Tuesday. The council unanimously voted to refer it to City Manager Phil Kamlarz for review and further development.

“I had been hearing not just from my district but throughout the city about how frustrated people were with vacant properties because they create blight and hurt the character of the community,” Arreguin said. “The last I heard from the Office of Economic Development, there was a 15 percent vacancy rate Downtown, and rates were almost as high in other commercial districts.”

The fees collected would help offset costs for city services — including police, public works, neighborhood services and health — that address vandalism and other undesirable activity around vacant storefronts, according to the proposal.

Jim Wong, property manager of the building at 2510 Channing Way, which has one ground-level vacancy, said he thinks the city is just trying to get more money from property owners through the new fees.

“No one wants to keep their properties vacant,” he said. “In a good economy, maybe this would make sense, but what’s the benefit to the owners now? The government, they want your bones — they want your meat.”

Councilmember Gordon Wozniak said he voted in support of the proposal because he wants to see what direction Kamlarz will take it, but he said he believes that high rent is not the biggest obstacle keeping small businesses from moving into vacant Berkeley properties. He said he believes the city can take action to help business owners, property owners and the city benefit at the same time.

“Rent is just one part of this issue,” Wozniak said. “Instead of just focusing on that, we need to look at ways to reduce red tape and provide incentives to make it easier for businesses to get started.”

Arreguin said that after researching vacancy fee policies in San Jose and other cities in the state, he found that, as a whole, they encouraged economic growth. In addition, Arreguin spoke with staff members in the Office of Economic Development and interviewed local business owners to determine whether high rent costs could be keeping small businesses from moving into the vacant properties.

“Based on that information, we found that the square foot rate was a definite obstacle for small businesses,” he said. “It wasn’t just the bad economy keeping these places empty. Property owners were leaving rent high and waiting for better offers to come in.”

The proposal also sets standards for maintenance and street presence that vacant storefronts must uphold.

“The city has a blight ordinance, but the process of getting owners to comply is lengthy,” Arreguin said. “This would add disincentives for owners to allow their properties to fall into disrepair.”

Councilmember Linda Maio said she would also like to explore alternate solutions because she is not certain that simply implementing a fee would help businesses find homes in the city.

“We don’t want to be punitive,” Maio said. “We’ll look at other options to see what will work best.  Whatever we can do to help this problem, that’s what I’m interested in doing.”