Business owners confront city regarding newly collected tax

Taylor A. Vega/Staff

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Following years of frustration with the city’s operation of their commercial space, business owners of the Telegraph Channing Mall finally demanded action from Berkeley City Council after they were hit with an unexpected tax.

Nestled between Durant Avenue and Channing Way, the mall is home to a dozen stores including Cheese ‘n’ Stuff, Joy’s Sportswear and Revolution Books. The shops are located in an alleyway just beneath the Telegraph Channing Parking Garage.

Without notice, business owners were assessed a possessory interest tax over the summer, which gave the merchants about a month to make a per-square footage payment to the city of Berkeley. Merchants such as Sam Juha, who has owned Cheese ‘n’ Stuff for 27 years, have never before paid this property tax to the city but have annually paid a similar tax to Alameda County.

Although the merchants had agreed to the tax in their leases, it was never previously assessed. The city’s decision to collect the tax spurred the business owners to gather at the Sept. 17 City Council meeting to demand immediate financial relief.

Charles Lee, who owns Michelle’s Yogurt and Sweets, explained to council members that the tax adds further economic burdens to his business. He said that businesses in the Telegraph Channing Mall were subject to a 4 percent annual rent increase that he deemed unfair when juxtaposed with only a 1 to 2 percent rate of inflation.

Lee said that he pays $3.40 in rent per square foot, while the vacant space adjacent to his was previously rented for less than half that figure. Kirstie Bennett, an owner of The Framer’s Workshop, said that the city’s decision to collect the possessory interest tax cost her more than $3,000.

“This particular problem of communication is really new,” Bennett said. “The problems in the mall are not.”

Without a designated property manager from the city, renovations and improvements to the mall come at a slow pace, according to Juha. In a report filed by Deputy City Manager William Rogers, the mall’s management was impacted by the resignation of a city employee within the Real Property Management unit. For now, the city is searching for a leasing and management agent for the mall, according to city spokesperson Matthai Chakko. It is considering contracting the management of the mall to a private entity.

Juha and Lee pointed to poor lighting, paint and signs in the alley that could be easily remedied with the help of a city official acting as the unit’s manager. Councilmember Kriss Worthington, whose district contains the mall, called the current management situation “chaotic.”

Worthington said that, at the request of Mayor Tom Bates, the mall’s business owners and Rogers will meet on Oct. 8 to smooth over these issues.

Contact Kimberly Veklerov at [email protected].