City Council discusses proposed business license tax increase

Ethan Epstein/Staff

Berkeley City Council discussed a proposed business license tax increase for rental properties during a special meeting Tuesday evening.

Stephen Barton, former deputy director of the Berkeley Rent Stabilization Program, presented a report to the council advocating the tax increase. The tax would rise incrementally in proportion to city rental prices.

The city’s current business license tax — roughly a 1.1 percent tax on businesses’ gross receipts — is applied to rental properties of three units or more. According to the report, the tax would be increased to nearly 2.88 percent, resulting in an additional monthly payment of approximately $30 per unit. Nearly $4 million of the revenue is expected to be collected annually by the city as a result of the increase.

Money collected from the tax increase would be placed in the city’s Housing Trust Fund, a pool of capital that is used to facilitate the development of affordable housing units.

Representatives from various Bay Area affordable housing-management firms attended the meeting, discussing with the council about how using innovative methods to fill the trust fund could promote the groundwork for new affordable developments.

“We see the need for this type of housing directly through the types of desperate calls we get,” said Susan Friedland, executive director of Satellite Affordable Housing Associates, during the meeting’s public comment session. “We see the need pressing around us from every corner.”

Dan Sawislak, executive director of the nonprofit Resources for Community Development, called the increase “an investment that returns a lot of money,” adding that funding from federal entities such as the U.S. Department of Housing and Urban Development has become increasingly limited.

But for some residents, the proposed increase targets a “narrowly focused group,” according to Krista Gulbransen, executive director of the Berkeley Rental Housing Coalition. Gulbransen suggested a square-footage tax — a “progressive tax” in which owners of larger businesses pay more — as an alternative to the original proposition.

Several council members, however, spoke in support of the increase, including Councilmember Jesse Arreguin, who said he hopes the measure will appear on the ballot during the elections in November 2016.

Discussion on the agenda item was tabled until a special meeting Feb. 16, after the council’s winter recess.

Contact Adrienne Shih and Emma Soldon at [email protected].